Thank you. The first question comes from the line of Amit Dixit with Goldman Sachs. Please go ahead.

Congratulations for a good set of numbers again. A few questions, if I may. The first one is essentially, if I look at the projections or the commentary of global OEMs, including GE, Mitsubishi, Siemens, I mean, that seems to be very, very bombastic. I me an there is -- they are fully booked for next 10 years. So in this scenario, how do you see the landscape changing for Azad? I mean the growth that we have projected 25% in revenue appears to be actually a little bit on conservative side, given the overall macro tailwinds that we are seeing. So -- and we have got, of course, relationship with all the global OEMs. So just wanted your thoughts on that?

Amit, thanks for the question. Yes, you're right. There is massive pressure from our existing customers. And what we say 25% plus is a growth number. As during the last call and this call and a couple of calls, we have been mentioning that we are moving t o the new facility, and it's not a small facility, which is in the making. And we could successfully come to a level of stabilization that is 70%, 80% done. But we can't see that massive jump immediately, right? Because we need capacity, we need infra, we need the orders, qualifications, redo delta qualifications. So these things will definitely eat up a lot of time. And this is bound to happen with any organization, right? You must be knowing all the stringent processes these OEMs carry or the stringent products what we manufacture. You're right. Definitely, there will be a jump coming in. Maybe in coming quarters, I would definitely elaborate on the numbers of the growth w e are seeing. But we -- as we get stabilized 100%, my take is I would only give a growth number, what we are saying is conservative, you're right. And this statement is going to change maybe just because in the coming quarter also, we see that the 70%, 80% is what we see the stabilization part done. Now the spindlesare running, the material has been churning out, but the effect will not come overnight, right? So this takes at least this quarter, you will definitely see some movement of the revenues going up. But it's always nice to give a guidance and maybe in the next coming quarter, I can change my statement. And definitely, we can see after the stabilization is done, definitely, we see a massive growth.

No, great. I mean, got it. The second one is essentially on ATGG engine. So I just wanted to understand the road map of delivery. And if I'm not mistaken, there are 18 to 20 engines that you have to deliver in maybe 1.5 years. So just wanted to understand where we are on that development process?

So Amit, I would just give you an idea, it was years, years got to months, now it has come to weeks. So we are not far away. Even we are super excited, especially me, myself, I'm super excited to deliver this to the government, much needed for the country at this hour. So it's not far away.

Okay. One data bookkeeping question, if I may. Is it possible to break receivable and inventory days into segment for this year?

Yes. So as we gave a statement in the last call also, '26 was something and we were consolidating a lot of things, stabilization was most important. A lot of our bandwidth of the entire management went up in trying to make these facilities up and running. That's most important priority one. And then coming to the level where we have already WIP work in progress to cut down these inventories, as I promised in H1, you will see a drastic change coming to closer to 200 days. And H2, we get down to 160, 170 days. That's we have already planned, and it's in execution, and we will achieve it.

Next question comes from the line of Suraj Malu with Catamaran.

Sir, I have 2 questions. One is in Q1 FY '26, you had mentioned a plan of creating total 8 dedicated facilities over 12 to 18 months, of which 4 have been completed. So are we on track to set up 4 more new facilities over 6 months?

Yes, you're right. We are on track.

Okay. And the second question is, as and when you win some long -term contracts, you mentioned some contracts are 5 years, some are 6, some are 4, right? So of the existing order backlog of around INR6,000 crores, what will be the time line over which you will need to deliver this?

So these contracts have specific delivery schedules. And so every contract has a schedule at a part number level agreed with the customer. And then the capacity that we are bringing online, so just coming to the same thing that we were talking about, in th e last about 18 months, we've gotten about 4 plants up, right? Now on the basis of the ramp-up plan and the customer delivery schedules, the capacity is coming online for these 4 plants. So if you look at it, over 5 to 6 years, we should be able to -- on an average, these contracts extend to over 5 to 6 years.

Got it. And last...

Yes. So if you just look at the guidance that we are talking about, 25% plus on the number, you will realize that over the next 5 years, we should be able to more or less consume INR6,500 crores.

Sure. So this -- I mean, I can -- let me tell you broadly between our customers or let me tell you broadly between our segments. I mean, customers will be difficult for us to communicate. So today, we have over $400 million worth of orders towards Energy, approximately $200 million plus for Aerospace & Defence and about $100 million plus in Oil & Gas.

Next question comes from the line of Gaurav with Avendus.

My first question is on this new contract that you've got from Mitsubishi for the nozzle and vanes for the hot section. So just want to understand a couple of things. When you said it's a single - source order, does it mean that these were originally manufactured by Mitsubishi, which is now being outsourced to you subjected to qualifications or you have won it from some other vendor? Second, how big is this opportunity, especially on the hot section for the nozzle and vanes? And third question is more on the Aerospace, which is for the Pratt & Whitney and Rolls -Royce order, where are we in the qualification cycle?

Yes, Gaurav. The first question, just remind me if I'm right. The first question you asked is was these parts manufactured by Mitsubishi or some other vendor? So it was manufactured in-house. The parts are very critical in nature, right? So this is the combustion area. So a lot of controls and checks are required to produce this part. It's not just someone has an infra or some kind of equipment, these parts just go like that. It needs a lot of specialized infra and specialized talent to h andle these kind of components. So either they keep it in-house or they give it to the most trusted partner. So they can't have multiple partners in this. So it's decided Mitsubishi says, hey, you have to focus completely on this, and we only dedicate this to you and same thing we expect from you. So this is the conversation because of the nature of the product. This is mandatory, it happens that way. So one, it's developing there. Second, if you're talking about market, I would -- it's a very lengthy explanation. So what I can tell you is you can go to the competition. Now we are going to be head on is you can study with Howmet Aerospace or PCC. So these are the companies who are t he players who are in this segment. So we have stepped ourselves in this door, right? So that will give you more this thing. And if you can have more details because it's a very lengthy conversation, so we can come back. You can contact us after the call or something I can explain you more in detail.

All right. Okay. Okay. And on the Pratt & Whitney and the Rolls-Royce order book.

Yes. So in this 4 engine manufacturers on the airfoil is what we started. The first one was Rolls- Royce. So we have -- in H2, we are expecting to supply the first qualification batch. And once that is approved, and I think from -- we can see some momentum coming from Q4 FY '27 or early of FY '28. That's where the supply starts. And followed by -- as you can see, it took 2.5, 2.5 years to come to the stage, and this is normal. And we could do it in 2.5 years. It's also a great thing. It's not a small thing to do it in 2.5 years. So same cycle will be followed. The next is Pratt & Whitney, then comes Safran and then it's followed by then.

All right. All right. If you allow me just one question on the numbers a bit, which is on the margins. So what I understand is that you have just commissioned the 4 plants, they are underutilized, and yet we get to see your margins going up every quarter. So is it the case that we can see more margin surprise from here on because we are yet to see any operating leverage benefits from the new plants?

We always say 33% to 35% plus, and that plus can be anything. So keep expecting some kind of -- definitely a growth is always because we just don't make -- we just don't produce. We do a lot of improvements, continuous improvements on the floor. So that's our team's culture. So definitely, I wish and hope that we deliver that plus every time.

Next question comes from the line of Bhavika Singhvi with Niveshaay.

First of all, many congratulations for great set of numbers. So the first question I have is related to the utilization as currently, we are -- like we have been maintaining quite good utilization. So the upcoming facility, like the one we have already in stalled and the one is going to come in 6 months, do we expect the same utilization or it will defer in terms of like how much time we can expect it to come at the same level of 90% plus utilization?

Yes. Bhavika, see, if any plant is inaugurated, that means brand -new building, brand -new machines. We don't wait for the shop to complete 100%. When you talk about Baker Hughes, we were around 50%, 60% of the capacity machines were inside. And when we cut the ribbon, we start producing the parts the same day. But when you see in the numbers, it will take some time to flow of the material to come to the dispatch area, right? And that's what I was giving an answer in the -- to Amit also that the Q1 of this -- the current month quarter, which is going on, this is the churnout month. So the revenues will follow once the metal gets started dispatching. So once it's inaugurated, definitely, the spins are running and the metal starts in the flow.

And the second question I have on the segment side, as we did quite good on the Energy & Oil segment. So I just want to understand what's driving the growth in the segment? Is the new addition of the customers or the new products we are adding in the portfolio? If you can give the clarity on that?

Yes. So in that case, I'll tell you, these requirements were always there with Azad, right, right from day 1 when we started. We just didn't have the capacity. As we are setting up the capacity, as we are inaugurating these plants, this is where we start t aking orders. It's us who were not taking orders because we didn't have capacity. Now we are increasing the capacity, and we are opening the door to take more orders. So this is where the growth is coming in. So this requirement was not today. It was there with us from day 1.

Okay. So am I understanding right that we are getting from the same products? We are not adding new products like in this segment?

No. So the right way to understand this is, see, I think it's not a straightforward approach, right? So every time our growth with the customer happens on multiple fronts, right? So first is you have certain parts that have been qualified. So we are rampin g up our market share on those qualified parts over time, right? So let's say, we were doing a certain kind of wallet share with our customer on those parts. Now because of our progressive deliveries, our wallet share on those parts will continue to grow. So most of the growth that you see today is coming out of qualifications of parts that have been done and ramp -up that is coming in. Second lever for our growth is that we are also adding adjacent categories or more part numbers to our overall capability. When Mr. Chopdar was talking about how -- or one of you all asked us a question about how we've signed a contract with Mitsubishi, that's an additional capability, higher entry barrier than the current product and diversified product portfolio, right, with a much higher asset turn, much higher market. So we are also adding those. And the third lever for our growth is that we are also adding other customers that have -- where we can deploy our capabilities that we have built horizontally, right? So this industry, right, any of these industries that we are a part of by nature, have 3 or 4 major players dominating the entire industry, whether it's Energy, whether it's Aerospace & Defence & Oil & Gas. So the capabilities that Azad is building across our customers are very selectively building it so that we can horizontally deploy it and grow the business in the years to come. So when we are committing a 25% plus growth, that is not on the back of products that we are going to qualify. That is on the back of the wallet share that we are gaining on qualified products, right? I hope that answers your question.

This is also very important to understand by time that whatever we say the growth numbers are on the qualified products. We never have taken in consideration what is going to come, what we have to qualify, right? Let it be the engine, let it be the hot gas components, though the markets are big and all we know that we have signed up. We are definitely going to qualify, definitely going to increase revenues. But our culture here is what is achieved, what is qualified, what is the growth numbers coming up from them. So that's the reason we give a very decent number. And definitely, we see upside going forward, definitely.

Okay, understood. And just last on the Aerospace & Defence side, like currently, it holds 70% of our total revenue. So do we see the same percentage going forward? Or we are expecting the Aerospace division getting increased in terms of share of the revenue?

So let me take this up. I think we've tried to address this even in the past. See, Azad has been trying to build a well-diversified business across every sector, right? So if you look at the history, you will be able to see the demonstration of how we are lo oking at diversifying. So back in the 2020 or 2021, Azad was largely an Energy business, focusing on one product category, which was compressor airfoils, right? And over the last 5 years, you see Azad has diversified at multiple levels, whether it is segments and then in the segments, product categories as well, right? So going forward -- so let's say, we want to look at Azad 5 years from today, you will see that Azad is a fairly diversified business where Energy will be contributing anywhere between 55% to 60% and the balance will be contributed by our other verticals, which is Aerospace & Defence and even Oil & Gas for that matter. So we expect our verticals to continue to grow because we have a lot of headroom and become balanced, diversified over the next 4, 5 years.

So out of 80% of current Energy & Oil & Gas, how much is the Oil & Gas segment?

Oil & Gas, we are working -- we are still under qualification. Baker Hughes is one of our only customers in this segment, and we want -- we are in the process of building capabilities right now. So if you look at any revenue contribution for the current ye ar, it was not material. It was under about INR10 crores between -- because we are largely doing qualification. But FY '27 will be the first year where you will see a ramp-up in this and you will be -- because we've just started. In fact, the last notification that we gave in April 2026, was inauguration of the facility, right? And this 1 month old. But you will be able to see how we quickly ramp up in this industry or in the sector in the current financial year. So we expect to add material numbers by our Oil & Gas segment this year. And it will follow the same trajectory, right? It took us -- see, I mean, it's important to understand that it took us from 2008 to 2020 to get to about INR120 crores. And it took us -- we've grown 5x in the last about 5, 6 years, right? Aerospace was started in 2018, 2019. And in 5, 7 years, we've been able to deliver INR100 crores of top line in that vertical. And similarly, Oil & Gas will not even take 5, 6 years. Oil & Gas should be able to breach that number over the next couple of years. So this is how the ramp-up would -- and this is the nature of this industry, right?

Next question comes from the line of Pratik Dharmshri with Union Mutual Funds.

Yes. Many congratulations for a fantastic set of numbers, Rakesh and the team. Just one question from the risk side. Any risk are you currently observing from this Middle East geopolitical tension on supply chain or it's business as usual for us? How are we seeing things?

Yes. See, we have -- if you take away the macro risks that are there in every business that is existing today, from our business perspective, I think we have derisked ourselves from majority issues that can be faced in our business, right? Our business can get impacted if we do not have demand. We have purchase orders and visibility over the next 5, 7 years. The other thing that we can have a risk on is capacity creation, which we've been able to do to a large extent. Third one was manpower, which we are today doing. So it's about our ability to be able to do all of this together. So that execution risk remains. And we today are focusing on normalizing our working capital cycle along with it as well. So we don't see -- from a risk perspective, I think we've been able to manage that because our customer relationships are structured around qualifications, which are -- which have taken several years to do and are based on multiyear contracts. So we don't see risk from that perspective.

Got it. Just a follow-up. In terms of the new theme which is emerging on energy side, which is nuclear. Do we have any scope or any opportunity which can -- we can participate or play in the nuclear opportunity?

So we are already a player that is working in the nuclear space. In fact, our energy segment, when we talk about it, we cater to gas turbines, nuclear turbines and thermal turbines as well. So we make critical rotating components for even nuclear turbines, and we make it for the world's largest customer, which is based out of France. It is a government -owned entity called EDF, Arabelle -- and a fully owned subsidiary of EDF, which is Arabelle Solutions. So they audited Azad for a few years. We cleared all our qualifications. We cleared all our entry barriers, and we've been supplying nuclear for the last couple of years. So today, in fact, we are one of the most -- one of the only qualified partners in the country to be producing nuclear tur bine airfoils. So we are ready and geared up for the opportunity that we are seeing, whether in India or globally.

Next question comes from the line of Sahil Karia with White Pine Investment Management Private Limited.

Just wanted to ask how many ATGG engines we have the order for? And what would be the delivery time lines?

So it will be difficult to share that information as it's a part of a coveted national defense program. And like our Chairman addressed this before, I think it's a matter of -- we are in the process of delivering it and soon we will be able to share more updates on it officially. But we may not be able to discuss specific numbers about it. We can tell you that, yes, there have been great advancements internally. We are very confident moving forward on this space, but sharing specific numbers around this will be difficult. Thank you.

Okay. And the next question was what was the capex number for FY '26 and the planned capex for FY '27?

For FY '26, I already covered in my presentation, we have done the capex of around INR392 crores capitalization during the year. And for FY '27, we are on the trajectory to ramp up the upcoming plants.

So what would be the number, if you could quantify it?

Sorry?

What would be the number for FY '27, if you could quantify the number for FY '26?

Yes, INR180 crores to INR190 crores will be coming there, which will happen towards...

Okay. And sir, do we have any plans in entering the heat treatment plant or the surface treatment plants? So I guess it is...

I'm sorry, can you repeat that? Your voice is a little muffled. Can you please repeat your question?

Do we have any plans of introducing heat treatment plants or surface treatment plants in-house?

So we already have state -of-the-art heat treatment facility, both -- and we have vacuum heat treatment as well. We are NADCAP approved, by the way. We just got NADCAP approved for heat treatment. Also on the special processes, yes, that's the plan because there are some dependencies on our supply chain. So what we are doing is we are ultimately going to have every special process in Azad. However, the critical special processes are already in -house, like shot peening and coatings, all these are already in-house, but a few more left that is also going to be in-house.

Okay. And just an add on the capex. We had announced our capex in Saudi Arabia with Baker Hughes. So are we on track with the plans? Or is there some delay due to the...

I'm sorry, can you repeat your question? Your voice is not very clear.

Yes, your voice is breaking. Can you just come in the range and talk?

Yes. So we had announced our capex in Saudi Arabia with Baker Hughes. So are we on track with the plans or there's some delay there due to the war?

No. So that is still on. From an opportunity perspective, I think we are still going ahead with that. But yes, the time lines have been shifted. We are still in discussions with our customer on how do we best take this forward given the current situation and priorities. So while you see we had signed an MOU, we inaugurated a Baker Hughes plant for us in our dedicated facility. So our growth plans with our customers remain, and that is an opportunity that is there. But we will have -- our current management bandwidth is t oday focused on what is there in the current plant, and we want to get that capacity up and running. That opportunity, which exists in the Kingdom of Saudi Arabia is available for us and will continue. But I think we want to take it up not as the most important priority today. We want to get our current plants up and do that, and then that can happen alongside. But that opportunity still lies.

Next question comes from the line of Rishika with Goldman Sachs.

I'm sorry, can you repeat your second question again?

Just your views on potential benefits from the upcoming engine ecosystem in the country.

Okay. So the first one, Rishika, I think we are building out -- so we've already completed 4 plants, 4 lean facilities in the capex that we were deploying towards creating additional capacity and the balance 4 plants will be completed in this financial year, right? Every plant has a schedule that we are following on in terms of commissioning, how -- when are we looking at ramping it up . And obviously, as explained by our Chairman and CFO, it takes specific time before we are able to get a pl ant to a reasonable amount of utilization, right? That is a natural course. So that is coming up. In terms of the engine ecosystem, I think I would make it broad-based even further saying that the opportunity that Azad today is sitting on, we've -- Azad has positioned itself always as a manufacturer of highly engineered critical components across these 3 segments, which are mission and life critical. With the demand for these engines going up over time with backlogs of our customers increasing, Azad is obviously looking at a much larger opportunity in this domain and which also means that the ecosystem in India should be thriving. And with indigenization plans of the government, with indigenization plans of how we are stacking up, we are moving from building capability for one engine, and we will only scale it up like from the engine that we are building, we will move from the current 3.7 to 4 kiloton engine to a higher capacity going forward and eventually contribute to much larger programs. But the entire engine ecosystem, we are seeing this demand grow and capacity is being added for -- a lot of capacity being added in the country. We won't be able to talk too much about the Indian program. But yes, I see -- we see that India is going through that phase where we will now start contributing meaningfully to our GDP from a precision manufacturing industry perspective.

That's helpful. Just one more question. What about the third expansion plan of 85,000 square meter plant that you are planning? When will that civil work start?

So ma'am, as pointed out, this year, our focus is very clear. We want to get the current facility and the balance plants committed. And our next priority would be to ramp these up slowly. Once this is done, we will take on the next facility because today, we are creating capacity based on the schedules that we have with our customers and order book. So once this is completed, our next focus will be building the second plant up over time.

Next question comes from the line of Manish Ostwal with Nirmal Bang Securities Private Limited.

Yes, sir. I joined the call a bit late because I was under the impression of 12:00. So my question might be repetitive. I just wanted to understand your thought process around the working capital management and the cash flow generation of the company. We have invested a lot of money in the capacity building, but how we are managing working capital? And what sustainable cash flow we can think of in our business?

Yes. If you see we have upfront invested into the inventory and all the plants are at different level of capacity ramp-up as Mr. Chopdar and Vishnu explained. So these plants are at different level of maturity, but your investment has to be upfront. That i s the reason this year, the inventory is slightly looking elevated. Looking forward from FY '27 and onwards, we see that this inventory will be converted into the revenues and that will ease out the cash flow from that particular perspective.

All right, sir. I'll go through the entire transcript after the call.

Mr. Chauhan, please go ahead with the question.

Sir, congratulations on the new contract wins and the hot section already in order. I just wanted -- I guess you gave a breakup on order book. I was just reiterating the number, it will be around INR9,000 -- INR8,500 crores around, right, INR8,500 crores. Is my understanding correct?

No. So we are talking about a rolling order book, right? So that is about INR6,500 crores net of what we have delivered this year.

So my question was basically on the renewals and amendments on the long -term contracts that we had and also the new orders that we had after the Q3 that you indicated order bo ok was around INR6,500 crores?

Yes. So we've added contracts and some of these contracts we are -- we cannot disclose the order value, and that's why whatever can be publicly disclosed is about INR6,500 crores, but it is INR6,500 crores plus, right? That is the order book that we are looking at from a long -term perspective.

Got it. And sir, also on the hot section nozzle vane segment, like without getting into all the customer confidential details, I just wanted to understand the manufacturing processes. Is it broadly similar to existing airfoil work where you get -- you receive a near shape forged cast [inaudible 0 55:26 ] you perform on high precision machine finishing? Or does this require something materially different?

Yes. So I think, see, the process of manufacturing hot section components cannot be discussed on the call. We would -- if you're very keen, we would invite you to our company and please visit us. We'll be able to explain the manufacturing process. But I can only give you one statement that there are only 3 players around the world of precision manufacturing that have been able to crack this materially, okay? So the complexity in manufacturing these components is very, very high. The majority of those -- yes. So the process is different than the existing manufacturing process. If you want to know more operational details, if you're keen, if you plan to visit, we'll request our SGA team to sort of arrange a plant visit and this can be addressed at the plant.

Sure, sir, sure. And sir, basically, this question was basically around given the higher complexity and single source position, this is definitely be margin accretive, right? And how will it be during ramp-up and mature volumes and this will obviously be above company's blended EBITDA margin band, right?

Sir, I mean, we won't be able to share -- see, this is a single contract and you're asking us specific information on the contract. It will be difficult to share. But once you understand the process of manufacturing, most of these questions that you're ans wering will be addressed. So I would request you to please come down and spend some time with us. We'll be able to explain. And you can also look at to draw parallels, please look at the top 2 or 3 players that are making these kind of components and what is the kind of profitability and bottom line that they do on these segments. This is publicly available information. You can look it up and you'll get a sense of it as well.

True, sir. And also one accounting clarification. I guess in the FY '25 annual report, you mentioned you -- there is capitalized on new product development program. Can you clarify what exact costs are capitalized and which balance sheet line they sit in the FY '26 quantum? And if these costs were fully expensed, what would the EBITDA PAT margin would have been -- would look like?

Yes. We generally don't capitalize any development cost in our balance sheet and we expense out as a part of our accounting policies. There can be some tools specifically designed for the customer, which are capitalized to that extent, but the general deve lopment cost or the general expenses are expensed out in the in the balance in the pre-industry.

Ladies and gentlemen, that was the last question for today. We have reached the end of question- and-answer session. I now hand the conference over to the management for closing comments.

So thank you. So with this, I think I'd like to take this opportunity on behalf of Azad Engineering, our Chairman, our Board of Directors and all of us. Thank you so much for giving us this opportunity to talk about our business, present our thesis and sha re how we will be executing FY '27 and beyond. Thank you so much. We are very excited about the current phase that Azad Engineering is in, our sectors are and how our capacity is coming up online. So we are only looking at upwards and onwards from this point. Thank you so much.

Thank you. On behalf of Azad Engineering Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.