ladies and gentlemen good day and welcome to mold Tech Technologies limited 1q fy24 conference call hosted by antique stock broking as a reminder all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes should you need assistance during the conference call please signal an operator by pressing Stars Then 0 on a touchstone phone please note that this conference is being recorded I now have the conference over to Mr Danish karya from antique stock broking thank you and all to you sir yeah thank you warm welcome to all the participants uh uh for the q1 fy24 conference call of multech Technologies from the management we have Mr J lakshman Rao chairman and managing director of the company and the finance team uh I would love like to hand over the call to them to Mr J lakshmandra and post which we will open the flow for Q a session thank you and over to you sir good morning jayesh and all the participants and thanks for your interest in joining our first conference call of small Tech Technologies limited uh I'm glad to inform you that we have a very robust growth in the q1 uh the sales are up by 35 percent and profit uh after tax is up by 103 if it has grown 86 percent uh and overall Outlook is much better now because the especially our growing area mechanical engineering Services we have started with a good opening of project flow typically our project flow starts towards the end of first quarter of U.S that is uh Jan March ending yeah all the new projects are generally initiated at this stage and they start picking a pace from April onwards and by second quarter that is July to uh I would say still Jan or even up to March there will be Progressive delivery and Progressive invoicing in our company so that's why the q1 tend to be the starting of the busy season but Q2 to Q4 in our Indian fi uh the invoicing improves and the numbers also sell so I'm glad to inform you the beginning is good the as of today they work on hand for mes a short of from 200k last year to 1.1 million that's uh four to four and a half times and we anticipate the accumulative increase in the project flow in mes because we also entered into uh fresh tools designing and drafting services and the pilot projects are going on with couple of clients and hopefully in few quarters that will emerge as another new segment of business and revenues so that is how the mes is shaping up and on the Civil side also we have a strong honor book so from Q2 onwards the numbers will further improve our hope and in the field of acquisition we are still looking at couple of options but we are very keen to have companies who will continue to work with us management and very few such opportunities are coming but we are patiently waiting for a proper Target once we have that we wish to improve move into structural designing and architectural services where we have much better value add so that is the background of q1 and the beginning of Q2 I would now rather take more question and answers so that we can have a meaningful discussion or back to the immediate audit thank you very much we will now begin the question and answer session anyone who wishes to ask a question may press star and one on the Touchstone telephone if you wish to remove yourself from the question queue you may press star and do participants are requested to use answers while asking a question ladies and gentlemen we will wait for a moment while the question queue assembles our first question is from the line of Devi srimali from DS investment please go ahead sir yeah hi good afternoon and congratulations for a good setup number just a couple of broad you know questions around how do you see the opportunity size in terms of the key Market or the segmentary focus and what percentage do you see getting offshore and if we connect this to our aspiration that what what sort of market share or player we want to be how do you see basically two three years Outlook from here that would be my first one okay you want to continue or you want me to answer this yeah I could please answer this then I will tell you okay uh the outlet for next two three years is very good because uh we are not only established ourselves as a player in BMW services for tier one clients our flying field is now increasing see like any engineering for uh example even in civil it will take for five to eight years for any company to establish its credentials setup systems showcase the projects we have done so that you will be in the eyes of bigger players so today multi can civil has already reached that couple of years ago we our work in the Civil has been well established because there are Monumental buildings or structures built across United States without detailing and connection designing inputs so we can refer in any City uh be it the aerody airport beat a plan to beat Amazon warehouse or be it a 64 storage building in Chicago we have several examples to prove ourselves and we also been given Awards by some of the trade bodies in the United States in the field of civil Structural Engineering so there over the last 10 years because we started spectral steel only from 2010 onwards after our Recreations so since then it took us about 10 years to establish ourselves now already several projects of you know exemplary projects we have done including the World Trade Center when it was revealed we did a part of the detailing and connection design work so that way we have established ourselves and in this field of engineering especially civil or even automobile to that matter your credentials your experience matters a lot so today we have crossed that even in the field of mechanical engineering in mainly automobile BIW body and white division we started with just 2D detailing today we do 2D 3D Robotics and even simulation so end-to-end solution we are able to deliver for last three four years fortunately we got an opportunity to work for Tesla very early in 2019 1819 and that has become a benchmark and now in a electrical Vehicles field we have been well valued as a experienced design company so as you know there are several uh EV projects lithium-ion battery plants are coming up all across Europe and the companies like fft where we are related with are very active in this field of EV we have been working with sft and vdl for last three to five years so they are not believe in our abilities and they see our quality improved and consistency has been very greatly acceptable to them so now they are calling our people over for uh on on-site jobs and keeping our team internally to monitor the project progress so with these relations moving up I see a great feature ahead in the next two or three years thank you for that detail answer it clarifies a lot of things so if I can connect some you know similar data so if if you know we were to look at our last two years growth rate which has been quite good so would it be fair to say that you know we will have organic growth which is probably similar to what we have done in 23 but at the same time we are also looking at acquisition which will further boost our growth how would you look at the growth quality as well would it be large integrative or do you think we are a very decent margin and right now this is what we want to maintain doing that and topic fi20c level margins so yeah I have had 23 level margins will be definitely improved as our capacity utilization is improving in mes so of course jumping like 105 last year and Evita may not be possible every year but definitely we'll be seeing a a good uh growth in Evita levels even on the compared to the 22-23 figures uh we started with a good bang today uh with the ebitda growing at uh 86 percent that is up from uh it was around uh 18 in q1 last year is up to 27 now from 5.31 crores to 9.85 uh is the jump that's about human growth is 86 percent in the beta so probably even reaching a 40 to 50 percent overall Evita is what we are targeting for the current uh Financial year or compared to last year that's great to hear and my last would be uh our projects more you know few quarters type of visibility do you have a mix of long-term contract as well as short-term that can be my last one yeah our projects are typically long term because none of the buildings are built in three months and uh of course we are not up to the end of the building we are mainly in the phase of starting right from Foundation till the end of the main structure that is called steel structure so our job starts right from their foundations design and Foundation uh construction happens by them none of the works we are involved no supervisory or no site visits but our team in USA could place in Atlanta they interact with the project managers and Direction contractors of the buildings in USA and they clarify on-site clarifications rarely they visit also but who are moving into structural designing and Architectural our relations with the general and contractors who are the top end of the Civil Spectrum would increase so going forward this will be the target for voltage by through a proper acquisition of a architectural come structural designing company we will be directly dealing with the general contractors and take the end-to-end responsibility of the project design project architectures and even detailing 3D and 2D detailing currently we are only in 2D and 3D and little bit of connection design but our connection design is now well established we are fulfillingness in all the states able to almost all the states for stamping the designs which is very essential for the construction industry in USA so now with these credentials we have to build up our credentials in design are not frictional that is true only inorganic means it's better because otherwise we have to struggle again another eight to ten years to establish our name in designing and architectural services so we are keenly looking at a design uh acquisition acquisition of a designing an artificial firm we are looking at two three options closely but uh I'm very particular about having a proper fit especially the promoters of that company should continue with us for at least a period of five to six years because their their credentials are always linked with the core team of the engineering so that is where we need to build up uh otherwise it will take several years for us to establish so having started the designing for correction designs for last three years I know it will take another five six years by inorganically acquiring a company we will be quickly Bridging the Gap so that is a way of grow growth in the field of civil coming to Mechanical right from baw now our in relations with the tier one clients like fft or vdl or guest amp are improving now all these people are into different fields of Automotive not necessarily body and white Interiors exteriors wiring harnesses stamping dice all these areas also we are now able to interact and start doing the pilots so these Pilots once proved there will be more and more opportunities to work with them in other trees and diversify our service range so that that can phenomenally bring Improvement if you succeed in taking those opportunities thank you for explaining the acquisition it's the last one would be the tech position maybe request you to join the question queue for follow-up questions thank you our next question is from the line of Proline from goldfish please go ahead with your question sir hi Mr Rao thank you for conducting this call for the first time it gives us some insight about your company I have few questions on your core division which is civil and Structural Engineering so uh just from the point of view of demand landscape uh can you help us understand where is the majority of demand coming from is it from residential commercial or industrial construction and then within competitive landscape can you help us understand what is the advantage of Indian detailers is it this low cost or is it something else as well and within that well well where does Malta extend whether there are many Indian detailers which we found out right I mean they're doing our research so can you help us understand what is the advantage that montec has versus some of these appears within who are based out of India and you have also in the press release mentioned that you are moving up the value chain in terms of fixing billing uh right and moving into tier one plant and our hourly rates are also increasing so can you help us understand as to I mean what does this fixed team billing actually means and what does it mean for our profitability what does this uh mean for our margins and within in the last question for this segment would be in this whole uh uh I mean you know within the connection and member design capabilities as we mentioned that you are now present in our state now so what percentage of Revenue comes from this segment and I mean you know compared to our skills and maybe still detailing are I mean our skills in connection and member designer also now at par and established and is this a slightly higher margin business so yeah these are the questions more on your post uh and your code segment yeah we are not in residential majority of our buildings are fixed City I mean commercial and Industrial uh buildings including airports including stadia including a multi-sured high-rise buildings it could be sometimes essential but majority are commercial warehouses uh airports so any huge construction activity now we are moving more and more into bigger projects uh the projects earlier we were doing are hardly three to seven or eight stories currently we are even handling 60 storage buildings uh huge warehouses of Amazon or airports for some of the expansion projects of airports so we have moved from day to day Mom and Pop projects to very high-end Industrial and Commercial buildings even industrial plants we provide structural designing and I mean sorry structural detailing and connection Design coming to your second question of uh fixative margins yes free shipping margins are better because we charge three to three thousand dollars per head per person and the utilization of those persons will be provided to our I support media which we have developed in-house so the client feels comfortable he knows how his resources are occupied with when they can load further work so that way they will be a happy and we are happy because we have a fixed Revenue low bench and the profit margins are there to be with the margins are to the tune of fifty percent so we still have more and more fixative assignments which we are gradually improving currently uh it's concluding around 10 to 12 percent of our revenues and we are aiming at growing that to 15 to 20 percent uh that is your second question coming back to your value chain that is what I was talking to you we want to move from low end detailing to higher end member design collection design means how do you connect the members the member design itself is the high engine and that member design cannot be outsourced unless there is a PE stamping the drawings calculations stamping means the professional engineer certified by the board of American structural Society or whatever it is uh they are only like say your Chartered Accountants here in India or our so-called uh structure licensed Engineers who need to stamp the drawings for ambulance foreign engineer who has to study several years of engineering and practice and write examinations to pass and then only is authorized to stamp the drawings so we have on board the two fees of American origin one of them is an Indian citizen we return back to India and working in a ryderabad office one of them is an American living in USA so these two people almost cover majority of the sampling uh requirements of 50 states of USA every state board has its own PE clarification I mean licensing even if you have passed the PE exam you have to again take on filthy some obligations at different uh State levels and then only on authorizer to sign and see the drawings so that level of uh Revenue stream or the cost for such kind of services is at least more than 100 of what currency we are charging let's say we are charging 45 28 or 30 at the most in detailing we can aim at 60 to 100 in design member design but currently we are not doing member design we are doing member connection design that means how the members have to be connected to every corner or every joint that itself is fetching a more than 54 centimeter like fix a team that is a I would rather say anything better than 15 this year and there our turnover as of today is hardly half a million that is around constituting less than three percent of our top line but we are focusing on that this here again people don't just take you for granted just because you have a big team but they will look at your previous background previous connection design Works where you have done and what are the buildings and take the referrals and then they take a chance to come in why should they come in because in U.S they pay 120 an hour so it's better to pay 60 to 80 an hour to Indian uh Professional Engineers who are authorized and able to stamp it so the cost Arbitrage is so uh encouraging for them to try our services and we have now started this two three years ago today I'm glad to say it has come to a sizable uh Revenue stream but it has several potential to grow several times so maybe 10 times or 100 times in the next few years but it all takes a proper way to approach the market gain the conference of The Architects and sectoral Engineering I mean General Contractors through a proper execution a variety of projects are through an acquisition so our game plan our business plan is to go through an acquisition of a established design firm which may also have architectural services so that we are directly jumping two steps of the value chain and dealing directly with the general contractors who are the major relation makers and who we can give right from architectural if they like it otherwise at least from structural till detailing Outsourcing and in the process they are also saving costs so this is the game plan we are in and as I told you the 10 years or 11 years of our credentials are helping us to ramp up a little faster than what it otherwise would take but an acquisition can really make it uh really fast like you save at least five to seven years so that's very clear thanks a lot just one follow-up question would be can you help us understand uh what is the order book in your course Division I mean in your course division or I mean at least in terms of your own air growth on photons growth any number that you want to share in your civil and structure design segment what is the order book looking like right now uh if you look at last year we did about 12 and a half to 13 million per annum for the full year civil so 13 million we did uh now our order book is around 4.1 million dollars as on today uh that is more than uh 30 percent above our average uh odd book but in the mechanical side there is a spot from 200k last year this time it is around 1.1 million and we hope uh mechanical
will start adding numbers like last year from the Q2 Q3 onwards because typically there the invoicing happens only after some benchmarks so projects are coming in time but their execution and delivery is generally typically starts after three months so we hope the invoicing will pick up from Q2 onwards and peak in Q3 and Q4 like it happened last year sure sir that's it from my side I'll come back in the queue but this was very clear thanks a lot for this thank you thank you ladies and gentlemen in order to ensure that the management is able to address questions from all participants in the conference please limit your questions to one or two more participants should you have a follow-up question we would request you to rejoin the queue thank you our next question is from the line of abhijen from grow Capital please go ahead um sorry to interrupt me with a question to use your handset please sir yeah good morning sir and thank you for attending we just wanted to understand in the look at life there uh how much handling do you have in terms of you know sourcing your work or how do you Source your work in terms of civil engineering is it the subcontractor actually has in this or is it the designing minerals in terms of repeats and uh is it majorly you know what is the split between government or state governments work versus you know professional work like Amazon or others so I just wanted to get a sensor back so we are completely working with private projects sometimes we provide contractors may get government work like University buildings or some buildings for the state but we our dealing is always with the private parties we never dealt with the government directly uh coming to your repeat clients yes we have several repeat clients and we are keep adding new clients and most of our repeat clients are the base who give good reference about our company when a new fabricator is to use our work in detailing our main contact point is uh fabricated so this is what I want all of you to understand that at present we are at almost at the bottom of the pyramid uh maybe second step is connection design that we have started two three years ago which is giving us a credibility and a respect Among The Architects and Structural Engineers who deal for the GC GC mean general contractor so once we ourselves become a makers and then we can not only get this sectional and Architectural work from them we can ourselves decide we are the detailing company for them and we can even charge them higher rates so this is very crucial stage of the company I would say and if we take proper steps in the next couple of years uh things can be available thank you so much sir and I just wanted to congratulate you on segregating the CEO position and appointing a full-time CEO so congratulations on that I think it's a very professional move from your side and thank you so much thank you our next question is from the line of Mr Naveen from NS Capital please go ahead good morning sir thank you for the opportunity on the mes site sir just want to understand if we are fully tied to just automobile sector or do we have exposure to any other sectors like utilities power Etc yes we are into power and utilities exactly you mentioned it we are in poles and transmission tower design and there also revenues are around 1.2 1.3 million out of the 5.5 million we did last year around 20 25 percent of our revenues are coming from poles and Powers structure details it will be structures and we are now entering in uh stamping Dyson tools and viral harnesses and looking at other areas of automobile mainly automobile because our contacts are well established with automobile and with the EV Vehicles happening and several uh uh new models are being brought in uh there is expected to be huge demand for automobile services in the next three to five years right right all these civil sides are very quickly uh where do you see traction locally sir is it rarousing or is it data centers oh yeah it's happening Centers High rail buildings uh in USA and even uh schools and some infrastructure projects of the government which are of course executed by private parties are also on the increase so in spite of the so-called Russian talk we are not finding any reduction in the flow of work our targets brilliant one last thing sir your leadership in both uh packaging and technologies have been very inspiring how do you intend to split your time going forward sir will the next Generation take care of packaging and you will be more involved in Technologies going forward uh if you could share some right on uh that that will be helpful sir yeah yeah I'm fortunate that all our second generation people are actively involved in both the companies uh you all know that they are very well educated my son is an IIT really I am Lucknow uh daughter-in-law is from symbiasis is also from symbiosis my doctor is a chartered accountant so all these people are now currently involved while uh three of them are involved in uh uh Mountain packaging in marketing and finance area who is the next Microsoft employee he's the active in business development in mptl So currently with Prasad being a head of operations now I have hardly two three uh I mean three four days in a month it was paid for the older Technologies in framing division in training the targets and monitoring the equality aspects because uh sits in Atlanta so I monitor through 1C and the core team of people here uh on a monthly to three times through mrm and PRM reviews and getting the annual Time same direction broadly percent or twenty percent the time is still unpacked is also but not maybe TCS and uh Tech Mahindra they are much bigger in size and uh but we are in a niche player we analyzed none of these names uh engineering all three of them are chemical and Aerospace and other areas whereas our specialty as an English player is more there is no listed company in our space of civil structural designing or detailing there are quite a few I would say five or six uh decently known detailing companies privately held size one of them are as big as our team or maybe a little less than our team and several others are not even half of our size thank you sir I'll join back in the queue if I get an opportunity but otherwise your leadership in both this very inspiring sir and thank you for connecting the call thanks for your compliments thank you our next question is from the line of Dolly Chaudhary from nirishai investment advisors please go ahead um hello sir thank you for the opportunity and congratulations on this number uh I have a few questions so first of all I also guided that the mechanical decision will be growing further so I wanted to know the revenue mix that we can expect in upcoming quarters from both the division like what was the ratio of Civility uh yeah it is uh still in the same ratio it was in line with what it was at the q1 this is a quarter also the growth is mainly due to civil but going forward because of the improved work on hand for mechanical uh Q2 onwards the numbers of percentage of mes might increase better than last year and might end up better than last year separating is purely Market driven but as far as our current market situation is concerned uh both the divisions are having better than last year's uh work on hand and especially the Our concern area is mes because last year it was so good but we were little concerned how it will start but it started well this year too and uh as I mentioned in my press note our invoicing starts picking up after second third month of receiving the project so the billing of mes also will improve from second quarter like last year and going forward performance should be better than what it is in this q1 see in the mechanical division poles and transmission towers are very fast within a month we typically complete a process maximum two months but in the case of baw it can be sometimes if it is only a 2d work it can be a month or two but nowadays we are taking end-to-end projects where they spread around six to eight months depending upon the input movement from the clients but not less than uh five months in any case sometimes due to delays or clarifications or Corrections rework this stretch it or even up to seven eight months okay so that will be ordering all the best for the future thank you our next question is from the line of Deepak podar which are five capitals um your line has been unmuted you can go ahead with the questions am I Audible yeah yeah yeah hi Susan thank you very much sir for taking uh my question so I've heard two questions first of all I just wanted to understand uh is there any other industry also here we are like trying to cater to apart from the industry we are currently catering and secondly a clarification you mentioned we are looking at an a better growth of 40 50 so is it an absolute habit of the margins you are talking about here that's it machines we already have a small team working on that and other areas these two entries embedded electron uh but there we are ready to start at beginning because our hands are full with white harnesses and uh this thing can be domain and the PMC area where we already have a team bus bodybuilding is another area we have done few projects so that is the other lines rather than civil and I mean automobiles coming to your question on ibika what I am thinking is the absolute numbers we used to achieve at least 40 percent growth in uh Evita that said it was around 43 crores uh this time we wish to see reaching around 60 crores is the internal margin so we have an internal Target to reach you know close to 60 or at least 55 to 60 cross Evita in The Current financial year okay understood yep that's very clear sir thank you very much all the very best thank you our next question is from the line of Amman which from a suit Investment Management please go ahead good morning sir my first question is on your hiring we hired around 150 150 people so if you can talk about uh what is their current utilization what is the current attrition rate in the industry given there's a very big demand and also if you can talk about for the full year uh this year and for next year what uh what kind of number of people we are looking to hire so yeah we heard a record number of 115 trainings uh training Engineers this year uh because we foresee in all our areas there could be a growth and we also find our internally trained and groomed managers are performing better both in terms of quality and attitude and Engineering depth so we found people who are coming from outside competitors I I mean with all district uh meant we've been seeing in one of those attitude or quality Consciousness or the productivity so our team is more and more believing that our internal training being now very strong both we are in Emmys also who are taking a general manager for training uh recently while in civil we have the team for last four or five years so our internal training has now become pretty strong we have extraordinary examples even 3D models 3D printed models and other things will teach our Indian engineers how to handle American projects and American Construction standards which is never taught in schools so we are also putting a learning management system in place which will enable the knowledge transfer across the people from Seniors to Juniors and these initiatives should reduce one is our cost of Manpower and because all these people are under uh future trainers managers they also have a good uh what you call career path and might make them stick to us better of course we still have a nutrition at par with the industry somewhere around 40 to 15 percent that happens because this is a niche skill especially in the field of mes the simulation and robotic knowledge is very limited and there also again we started at internal training of a batch of 20 people and within a year we are seeing them able to handle at least complex projects so going forward also will be investing on at 600 to 200 resources 150 research per annum depending upon the workflow and you know lines of new lines of operations so you may see utilization of the 115 people when do you expect the full utilization what is the current utilization we are thinking of this new hiring new hired people see new hired people in the year one will hardly contribute anything because even if they are ready our people are very very careful about involving them in direct projects they will be doing mainly the uh leftover workout Corrections work which comes back from the client and they get a feel of the project they get the feel of where to interfere or where to take this help of seniors because the work what we do is very I mean important any mistake in that can result in thousands of dollars of last Fabricators and it can even come back as a back shots so we generally in the year one don't consider any output from them uh six months at least zero maybe the second half we consider around 20 25 outputs on them so that is typically the case oh okay so the next question is if you can talk about so you have talked about via shortlisted the two three companies for the acquisition and we are looking at a member design and member connection design uh these areas so these uh the the two three acquisition candidates are these small companies like maybe under 10 million dollars where we are only acquiring them so that we get uh access to customers or are they companies which are much bigger maybe of archive or maybe a little lower than R5 where we are also looking to get a lot of trained employees if you can talk about this fact now we are open but there's no need to acquire huge huge Beyond our path which will enable us to grow by creating Indian Engineers who will be able to handle that work at a much lower price so there's no point in acquiring a 100 member design company there and then uh finding what for itself might become a problem so anything between 10 to 30 employees size which will be fall in the typically five to ten million bracket is what we are aiming it and as you know we are a cash rich company completely Term Loan free working capital free and we rather have more than 30 gross uh cash on hand so that is will be used mainly to acquire the company uh company or companies whatever because most of the spectral engineering and Architectural firms are a reasonable specific like somebody in Florida will take care of companies in uh that part uh company in Atlanta would be doing most of the architectural sexual work in that uh area so by acquiring one or two companies then either we set up offices in different cities or make some Davies or uh I mean relations so that we spread across the country that is USC the other uh game plan so the equation typically can be sometimes as small as 3 million in a small City but we are acquiring a decent to be company it could be in the 5 to 10 million The Sweet Spot is five to six million uh and not one acquisition probably won't start with one and once we have a team in place and uh businesses started establishing maybe making couple of more Acquisitions in different cities make it better business sense so my that my final question is the Hindi uh press release you have talked about uh we are expected to get 20 000 kind of uh orders so uh the coming quarter so if you can just help us understand uh typically this will mean how much in say rupees crore what was the similar number last year and also if you can talk little bit about competitors may you highlighted very clearly that in civil we have a clear advantage over other players but say in NES in automotive there are a lot of players in India who are much enlisted space Also who are much bigger much more experienced than us so is there a particular soft segment like maybe Robotics and uh any other new segment where we have a significant maybe diw significant Advantage even of bigger player compared to bigger players and not comparing TCS but the mid player so these two questions if you can ask no no don't get carried about 2010 figures the 20 2010 figures jobs we have done several of them in the last few years each 20 000 pennies typically close to a million dollars so I think when this press note was made the meaning was that we are about to grab some to such projects so we have done even projects which are 20 35 000 uh thumbs also so that is uh your question one uh coming to your second question of Nish area and the competition yes there are several big players other than mold Tech in the field of mechanical engineering but in the mission area of baw and a further missionary of electrical vehicle Mission baw we are first among them and we have been compared even with the tatas uh in some of the projects which we got in Europe and Mexico we are our competitors are TCS also data technology sorry data Technologies and similarly even onward and uh all these CC CSG Technologies I don't access care but whether they are into they are more into CAD work I guess uh electronics and other CAD related work they are not into negative civil or not into uh baw so baw itself is a niche area in that there are I would say three or four major players we can be considered almost in par with them we are not uh compared to let's say data Technologies small Tech is uh very small that's not the case because we also have about 200 to 20 people probably Tata technicalities where I think 400 people uh onward might have another 200 250 people so we are at par with them in size and inability to execute and in fact we are first among them I don't know whether they had done it before but we are uh first people one of the first people to do the EV platform for Tesla baw way back in in 19th so that credentials had to our you know marketing efforts and you believe this piw itself is good enough for us to scale this year no it's not we can't imagine to reach 100 million or 50 million in BMW never it might end up as a maximum 10 to 15 million dollars uh 10 million to 15 million per annum kind of a segment but that gives us an entry into the key area see in BMW what are you doing we are doing the fixture design the robotic designs for the manufacturing lines of the automobile companies supplier is rubbing shoulders with the automobile companies and here not only does these Robotics and features for the online manufacturing of the car but he will be involved in Interiors exteriors uh you know other aspects of design of automobile which we are not into so by working with this gear one we will be able to penetrate into those fields also because the software knowledge and domain knowledge are similar thank you thank you our next question is from The Lion of human from gen Z advisors please go ahead sir let's say hey month your line has been unmuted please go edit the questions now my questions are answered thank you thank you we'll move to the next participant our next question is from the line of pulkit single from Dallas Capital Management please go edit your questions thank you for the opportunity so the first question is yes hello so the first question is about the CES itself I mean this is a very Niche area for steel detailing detailing Market itself annually and how much of it is currently being done in-house bike Fabricators and how much is outsourced and also like within the outsourced like how many players are there typically and it is largely USB for or India is a larger chunk just try to get a sense of that place market yeah exact numbers the whole size of structural detailing in general is around three percent of the construction cost of the building so if you have the number of what are the commercial buildings or industrial buildings or even high-rise buildings schools and hospitals which would be I will try to get the information probably runs into millions of dollars so in that three to four percent would be the cost of detailing so this is a huge Market but currently us itself has majority of the chunk the outsourced by in my opinion would be less than 20 percent because uh as I explained during my almost one hour call and people go with your credentials and what have you done before so it's like chicken and egg So for anybody to establish themselves as a reliable player one is the cost Advantage you give and then try to grab some work and then uh but over a period of time you need to Showcase your abilities in designing and drafting detailing complex structures involving configuration geographical geometrical configurations and then you will be recognized as a one of the reliable detailer so that typically takes a long time and majority of the companies have operate before they reach that stage so the mom and pop companies which started by a couple of technocrats are with a few people they generally die within that phase so their leftovers or maybe eight to ten companies in India with average head count of let's say uh 200 on average whereas we have more than 500 people in level maybe for juice is another private company I know which has more than 500 located in nashik so like this uh there are only two three players in India and other countries where this detailing is done in Romania and then Indonesia and Philippines to some extent but there again the cost of Labor and uh Engineers is much higher so they are also losing the advantages for whatever Arbitrage and slowly it is becoming a few countries other than uh us but even today in my opinion 75 to 80 percent of the detailing work is still done in within USA at a higher prices because when a fabricator is using the detailing services he would be definitely interested to save cost but he will not forego quality and reliability at the cost of that savings so still majority of the work is done in US is my guess understood and majority of the growth when you look at it is it coming from market growth itself or more of increasing Outsourcing latest driving your Revenue growth yeah actually if you ask me our growth is coming through adding new clients at a better place than before uh in civil I am talking because uh our credentials are established we have been receiving Awards of excellence in detailing from several trade bodies uh on off together and uh that we are trying to advertise in the construction trade industry magazines and that is in turn giving us credentials and new business from new Fabricators or bigger business from our existing clients a bigger project so these are the ways we are growing as at present market growth I won't say it is a material but if Market also is in the positive side we would be able to get bigger projects more of them at a better price but if the market is uh dampened which is not the case as of today if the markets dampen probably we have to struggle a bit and do more of like work to grab the bigger projects So currently uh we are in the I would say tier two is not tier one in USA a tier one may be the local huge companies who have established over under I mean 30 40 50 years so going in the direction of uh high value add is through sexual designing and architecture that is our Focus now because that gives us direct contact with the GCS and when they decide they can tell the fabricator use multech for connection design use them because they are our designers they you they will provide the connection design they will provide the detailing work for you and that influences a more Fabricators to command seek our services so that way it will be a positive step an acquisition of uh structural architectural will even enhance our current line of detailing and drafting services thank you sorry to interrupt Mr pulkit may we request you to rejoin the question group of follow-up questions thank you our next question is from the line of harshit singhania from bu research please go ahead uh thanks a lot for a detailed call and on the clarification the question is on the mechanical side now the mechanical today is roughly around 20 percent of the overall high energy says that BIW would be a larger part of it but this model checks your routine that going forward uh I mean vote from three to Fourier point of view do you expect this mechanical to be a larger key given the Tailwinds in the group and the second one is that say we have done this for Tesla uh so we are also trying to do more work for Tesla in the coming years and the second part is that should be recruit this business promise perspective because your second second part of the question I could not hear foreign yeah see as I mentioned in our restaurant itself our invoicing cycle starts typically in the q1 but Peaks up in Q3 Q4 because the completion of the project and benchmarks is essential for us to do the invoicing some of the clients also in turn invoice to date automobile uh vendors uh tier one customers I mean vendors built to automobile companies in a periodic manner once they reach a benchmark so our benchmarking starts initially the projects are decided in 5th March once the new year is over a new budgets are created and they get the design they get the orders in FIB March and they in turn take a month or two to do their basic design layout and then they will be seeking Partners like us to executively designing 2D 3D and simulation so that happens sometime in April May so we get Awards of projects in the month of April May and actually they have to be executed over the next six to eight months so uh whatever happens in April May will be executed by 5th March or maximum sometimes they are completed by December some of them is overshoot into first quarter of the area their financially so that is why our invoicing picks up from Q2 so it Peaks up in Q3 and Q4 in especially in Mechanicals in civil also majority of the decision during the year-end or postponed they are taken in the end of January kind of time frame so those projects which come to the an architect and structural designer they need to complete that structural designing part architectural part create the drawings and then send over for uh quotation purpose from the detailers happens in March so April May onwards we get Awards again they're billing majority start happening in the other quarters so that is why cyclically even if you look at the last year our lowest turnover lowest profits were in the q1 so on that we have achieved 100 growth this year is uh I mean for me it's a great saying uh yeah if we continue to speak on only to detailing uh mechanical will catch up in terms of percentage of our revenues from currently 25 percent uh to maybe 30 40 also but I also have a very clear cut idea to make this acquisition to move into structural designing and architectural services in which case even civil might but at least from next one to two year point of view or basically the contracts we are winning is it fair to assume that the market demand Supply is that 30 percent margin is something which is maintainable as I said in my previous questions uh this 30 person can even be improved as we progress into higher value headlines uh certainly 30 now will become our Benchmark we wish to improve that this year by moving more into connection design and moving executing more projects in mes but acquisition probably even if it happened this year uh probably it can only add members next year onwards so once that happens we move into architecture and structural uh the numbers could be still better got it got it thanks a lot uh and uh thank you Lord thank you thank you I'll ask question for the question answer session comes from the line of Mr kosher Mohan from ashika institutional equities please go ahead uh can you just give me some light on what segment will be leaving you with this bro both the segments civil is growing at at least 20 25 and um in a maze we are anticipating the growth also in the similar 13 range if some of our plans happen so when the Top Line grows at the base of 25 to 30 percent uh achieving uh you know 40 35 to 40 percent beta is still possible because uh better capacity utilization happens as I was telling last year trainees this year trainees there must have improved accountability and they will also be contributing a bit of their productivity in this year so capacity utilization per person per month uh numbers hours per month effective hours are also improving now gradually so with that there will be differential increase in cost of Manpower but the pace at which the Top Line growth may happen can improve the ebitda Intel okay so I have a last question uh I just wanted to understand uh the recent team that you have recruited it will be taking around one year of the training I think I hope that there are already six months for four to six months old so the output will start off from the team uh next year is what my assumptions are right you see we are continuously taking people it's not that this year the number has increased last year also we took around 75 80 people and they said it's 115 so the last year 1890 people would become fully productive more or less fully productive this year and the guys who joined three four months ago probably they will start contributing from third quarter onwards uh in a bit uh in a you know 20 25 of their output and then probably they will pick up face from next financial year so like this is a psychic earlier our input used to be 40 to 60 Max and during covet actually we stopped also we didn't even take a single batch in 2020 I think 19 20 uh 2021 and maybe a little bit in 2122 for 22 23 we have taken considerable people and 23 24 batch also now currently we are taking 115. so last two years we are ramping up in anticipation of uh our growth in both the segments which is coming true coated and the last and final question sir any inorganic growth that you are looking into sorry any inorganic growth that you are looking into any of course that's what I've been talking to you uh that we are in the search for a proper fit in sectional designing and Architectural form in USA where it talks with uh two three of them but we are very clear what we want and how the synergies will establish so our city is still on and definitely hope I sincerely hope in this year we will finalize on at least one target so this will be funded through the cash that we have at your balance yeah yeah we have enough cash and no working capital no Term Loan so it's easy to raise the money for any required funds foreign thank you thank you due to time constraint that was the last question of our question answer session I would now like to hand the conference over to the management for closing comments uh I sincerely thank all the participants who have taken their time to understand our company's prospects and future and I also thank antique for giving this opportunity and to the moderator Mr Davis sorry moderator support from Jewish romantic I thank you all and have a nice day thank you on behalf of antique stock broking that concludes this conference thank you for joining us and you may now disconnect
2023-08-08