Azad Engineering Limited (AZAD) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Azad Engineering Limited Q2 FY '27 Earnings Conference Call. Before we begin a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rakesh Chopdar, Chairman and Chief Executive Officer from Azad Engineering. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and a very warm welcome to Azad Engineering's Earnings Conference Call for the second quarter and first half of fiscal year 2027. On behalf of the Board and the entire team result, my warm wishes to you and your family for Diwali and a festive season. Joining me today are Mr. Vishnu Malpani, our Whole-Time Director; Mr. Ronak Jajoo, our CFO; and our Investor Relationship advisers from Strategic Growth Advisers. Our stand-alone and consolidated results, along with our latest investor presentation have been uploaded to the stock exchanges and our website. In August, I began by saying that we are living through a synchronized high-growth cycle across energy and oil and gas, aerospace and defense. And that these are structural multiticket shifts, not short-term spikes. Three months on, every single we track has strengthened. In our segment, engine makers continues to raise output and precision rotating parts remain 1 of the tightest links in their supply chains. In defense, in gas push for central line in engines is moving from intent to programs. And our capability in complete assemblies is opening long-cycle domestic and international opportunities. So the backdrop I described in August is intact and stronger. For Azad, the question is not demand. It's how quickly we convert capacity into revenue, and that is a key message for this quarter. The foundation is now complete. H1 FY '27 was another period of steady progress for us. Our capital deployment plans have stayed on schedule. In September, we inaugurated 2 new dedicated lean manufacturing facilities for Genova. All 6 customer dedicated facilities are now commissioned. 44,800 square meters for 4 global OEMs, namely Mitsubishi Avi Industries, Genova, Siemens Energy and Baker use. We are also in discussions with our aerospace customers about following a similar model as we have done for our energy customers. In August, I told you that 80% of our foundational initiatives have stabilized. Today, I can tell you that the full foundation needed to convert capacity into revenue is in place. Talking on the capital deployed. Our treasury funds have now gone into CapEx and the infrastructure and plans that we have commissioned teams in place, we have hired the skill demand power needed to run the installed capacity, which we have installed recently. Production readiness, we have built up enough raw material tooling and consumables to keep every facility production ready. Customer qualifications, we are running multiple delta qualifications at our new facilities with various customers at the same time. This setup phase is mandatory in our business. We did complete our capacity is now ready to deliver the throughput. On the Q2 and H1 FY '27 financial snapshot. Our operational performance remains in line with our guidance. In Q2 FY '27, we delivered our highest ever quarterly revenue of INR 878 crores, which is up by 31.6% year-on-year and about 10% over the first quarter. EBITDA grew faster by 37.1%. And which is to INR 7.4 crores, and the EBITDA margin expanded to 37.5% from 36% a year ago. Profit tax was INR 30.8 crores, a margin of 16.4%. For the first half, revenue grew 29.3% to INR 358 crores, ahead of our 25% guidance, EBITDA grew 34.7% to INR 14.5 crores at a 37.5% margin, and profit tax grew 6.6% to INR 67.2 crores. On a consolidated basis, H1 revenue was INR 363 crores in EBITDA stood at INR 36.6 crores and a PAT of INR 66.1 crores. Growth was balanced across segments. Energy, Oil and gas grew 28.5% and to INR 290 crores over 81% of revenue. Aerospace in dividends grew 28.3% to INR 60.4 crores and a 17% of revenue. Domestic revenues grew more than 2.5x to INR 43 crores and is now 12% of our business, up from 6% helped by our intimization work with BHF. Let me speak plainly about the profit after tax because I know it matters to you all. This quarter's part reflects the expected lag between investment and revenue. Treasury income fell from INR 12.7 crores to INR 4.7 crores as our IPO and QB funds went into the plants. Depreciation doubled to INR 21.8 crores as the new facilities were capitalized. Finance cost rose to INR 12.2 crores on the working capital loans that support our growth. And we have hired ahead so employees cost INR 50.3 crores against INR 32.5 crores a year ago. All of these costs we carry before the revenue from the new capacity flows through fully. That phase is now largely behind us. Orders and milestones. HCL approved as a long-term source with a 2-year rate contract worth about INR 5.68 crores for the gas turbine efforts. This deepens our domestic energy business. Racers, our supply agreement with Norvinoni has extended up to 2030. Oil and gas, the ramp-up of our dedicated oil and gas facility tied to the customer's deliver plans adds a further growth lever from Q4 FY '27. Defense after delivering India's first indices expandable target engine. We are now positioned for end-to-end manufacturer assembly integration of complete engine assemblies of their demands. The testings are ongoing. Customer recognition this year, Vegas presented us its growth collaboration award and Goa for its delivery partnership award. Closing outlook. As we have said on earlier calls, throughput from the new capacity begins in Q3 FY '27, we expect revenue to ramp up Q4 FY '27 onwards, and all the plants will be fully ramped up by Q2 FY '28. Our current installed capacity positions us to reach an annual revenue run rate of over INR 1,300 crores by the end of FY '28. We more than double off of our FY '26 revenue. With the cost base largely in place, rising revenue should translate directly into better profitability. At Azad, we have never chased a regular scale at the expense of our margins. Every facility we have built is anchored to customers' commitment and long-term contracts. We do not engage in speculative expansion. We are at inflection point and we reiterate our long-term annual growth guidance of over 25% plus. I will thank our customers, our partners and team Azad for their relentless execution and our shareholders for their continued confidence in our journey. I'll now hand over to our CFO, Mr. Ronak Jajoo. Thank you.

Thank you, Chairman, sir, and good afternoon to everyone. I will now take you through a review of our financial performance, capital restructure and operating efficiency for the second quarter and the half year ended September 30, 2026. As the Chairman has summarized, this quarter completed our set of each our front-end investment in capacity, PL and production readiness is now in place, and the numbers show our operating performance tracking our guidance even while we carry the cost of that investment. Unless I mention otherwise, the figures are stand-alone and growth. Let me take you through the financial highlights and the top line growth first. For the first half year, revenue grew at 29.3% to INR 58.3 crores ahead of our guidance of over 25%. Our stand-alone revenue from operations reached INR 187.8 crores in quarter 2 FY '27, our highest ever quarterly dining. This is a growth of 21.6% year-on-year basis, over INR 42.7 crores in quarter 2 FY '26. On a sequential basis, revenue grew 10.1% in over the INR 170.5 crores reported in quarter 1 FY '27. Our focus as a company remains on exports. Export contributed 88% of revenue this quarter and we expect them to remain about 85% of our sales as we serve the world-leading OEMs in energy, oil and gas and aerospace segment. Energy and Oil & Gas grew at 30.02% year-on-year basis to INR 152 crores, and Aerospace and Defense grew at 21.6% to INR 317 crores both the segment has witnessed the growth over and above our guidance of 25% given to the market consistently over the few quarters. Let me now take you through the gross margin to EBITDA, how operating leverage is playing a role in our business. Let me explain our margin the way we track internally starting from the gross margin. gross margin before depreciation, which is a revenue less material and all direct cost was INR 84.9 crores in quarter 2 or 45.2% of revenue. That is an extension of 150 basis points over the 43.7% of quarter 2 FY '26 and up from 45% in quarter 1. This came from operating leverage, local sourcing, before integration into a special process to name the few of the initiatives, which we have taken in the past. We achieved it while observing the running cost of new facilities, which are not yet building at a full rig and the plants are at different stage of ramp-up. Our indirect costs, the corporate and additive overheads were around approximately INR 14.4 crores or 7.7% of revenue the same share as a year ago, even though the business is a third larger. As a result, our reported EBITDA grew 37% year-on-year basis to INR 7.4 crores and 9.9% over quarter 1. The EBITDA margin was 37.5%, an expansion of 150 basis points, as I explained earlier, over 36% of quarter 2 at which is in line with the 37.6% in quarter 1. There is the operating leverage has worked, and we are confident of meeting our long-term margin guidance in the coming quarter or so. For the first half, gross margin before depreciation was 45.1%, and 44.1% in H1 FY and indirect costs fell to 7.6% of revenue from 8.1%. EBITDA grew at 34.7% to INR 14.5 crores a margin of 27.5% and rest 36 in the same period year in Q4. Let me now take you through the walk from EBITDA to pay and try to explain the PET margins. To evaluate our core performance activity, it is important to look at it EBITDA. Other income was INR 4.7 crores against INR 12.7 crores in quarter 2 FY '26 and INR 4 crores in quarter 1. As I mentioned in last call, credit income is moderating as we deploy our cash results into factory infrastructures and machines. Interest on fixed deposit was INR 1.7 crores, as INR 6.8 crores and the foreign exchange gain was INR 2.4 crores ages INR 5.4 crores, which is a macro and not in control of the business. The depreciation was INR 21.8 crores on which INR 10.9 crores a year ago and INR 17.9 crores in quarter 1 as we capitalized INR 251 crores of new assets during the actuary. Quarter 3 and quarter 4, we carry a full quarter of 2G on over facility innovated in September. So depreciation step up once more before it stabilized. Finance costs were INR 12.2 crores against INR 6.4 crores a year ago and INR 10.1 crores in quarter 1, reflecting the term loan for our CapEx and the working capital loan that support our growth. finance cost to 5.8x, which is a very healthy metric from the risk perspective. Together, these -- the items move our PBT margin from 32.8% to 21.9%, 6.4 percentage points from the other income, 4 percentage from depreciation and 2% from finance costs none of its operational and the cost structures are now fleet for our growth as Chairman has told that by FY '28, we will be at INR 138 crores ER. And I am quite confident that we will reach to the same margins or same cost structure percentage as it was there in FY '24. Together, these 3 items move PBT -- yes, sorry. Net profit metrics. Profit before tax was INR 41.1 crores tax was INR 10.3 crores, an effective rate. The half year rate was 17.2% because Q1 included a deferred tax credit of INR 4.3 crores as a onetime adjustment from moving from all region to the new regions. Our normal rate is about 25% external on profit after tax was INR 30.8 crores, a care margin of 16.4%. For the first half, profit grew at 6.6% to INR 672 crores, a margin of 18.7%. Our consolidated performance. On consolidated basis, revenue from operations grew at 31.1% year-on-year basis to INR 190 crores. Consolidated EBITDA was margin of -- sorry, 37.9% and consolidated debt of INR 3.9 crores. For half year, our consolidated revenue was INR 33.5 crores of INR 16.6 crores at 37.6% and debt of INR 66.4 crores. Let me take you through the capital structures of the company. Our network is stand at INR 1,619.6 crores. bank borrowing at the end of September was INR 36.4 crores INR 34.6 crores of term loan and INR 195.8 crores of basical facility with cash and then deposit of INR 12.6 crores, net debt stood at INR 423.8 crores. That is 0.26x of equity and 1.6x of annualized EBITDA within a quite healthy metrics to cap from the debt risk perspective. Of the INR 700 crore rate through the QIP INR 21.8 crores has been used and the remaining INR 78.2 crores is held in fixed deposits for balance of RPC. In first half, we spent INR 13.3 crores on CapEx funded by INR 8.8 crores of QIP money and INR 28.6 crores of term loan and internal funds. Ares assets, including capital work in progress now stand at INR 1,269 crores. The Chairman spoke about an annual revenue run rate of INR 1,300 crores by end of FY '28 on these assets, please. Let me now take you through the working capital and the cash flow. Inventory rose by INR 98 crores in half year to INR 425 crores. INR 72 crores of debt increase is work in progress on the new lines, including part in data qualification or ramp-up stage that we can invoice only after customer approval. We see the production readiness the Chairman described, and 72% of our 72% of our agile inventory is less than 6 months old. Trade receivable goes by INR 92 crores to INR 402 crores, in line with higher revenue. 69% of regular receivables are not yet due, and dosed more than a year old are only INR 7 crores. Operating profit before working capital change grew at 29% to INR 30.6 million Working capital at INR 57.5 crores, almost the same at INR 153 crores of last year first half on a business of 29% larger. After tax, operating cash flow was negative at INR 45.8 crores a year improvement of negative INR 76.5 crores in H1 FY '26. As throughput converting to revenue from quarter 4, they will be turned into receivables and then into the cash, and that's what we are expecting our working datecycle to be stabilized. An important update for you that we started conversation with a few of our OEMs to give the advance on which the so that it will help us to establish our working capital requirement and we are portion that 1 of the OEM has agreed to be 50% advance on this Pan we are expecting USD 4.5 million from that particular update. And now based on this temperate, we are trying to talk with all other OEMs and try to see what best we can do on this particular front. To summarize, Revenue grew ahead of guidance led by export gross margin expand while overhead steady, which lifted EBITDA margin by 150 basis points. The cost below EBITDA reflects the investment fees, and they are now largely in our base. Our balance sheet remains conservative from quarter 4 from Q4 rising revenue on base should flow through to profit and cash. I now hand over the call to Mr. Vishnu Malpani, our Whole-Time Director, to take us through the operating metrics from here. Thank you, and wish you a very healthy Diwali.

Thank you, Ronak, and good afternoon, everyone. The Chairman has spoken about the macro tailwinds and the foundation that we've completed, and our CFO has taken you through the numbers. Let me give you an operational and strategic where our build-out cans, how the capacity is turning into revenue and cash and where a goes next. The ramp-up that we started at the time of IPO was now at its final stage with 2 additional G1 gas facilities that we inaugurated in September, 6 customer dedicated facilities into untigolarama now commissioned. 4,800 square meters in total for Mitsubishi Heavy Industries, G1 Nova, Siemens Energy and Baker Huge. G11 now has 3 dedicated facilities with us. The capital has been deployed, the teams are hired and trained and the lines are production ready. Each facility followed the same model, a customer commits to the volume we built to their specification and build capacity ahead of the schedule. We qualify the line to their standard. And it is important to understand that no capacity that is either deployed or commissioned is built speculatively. We build it on the basis of the guidance that we received from the customers in the form of contracts. Let me explain why revenue follows the commissioning by a few quarters. When a part that is already qualified, moves to a newer facility or a new machine, the customer requires us to do a delta qualification. This qualification process is shorter than qualifying a newer part a new part can take anywhere up to 30 to 48 months. But our delta qualification is still not as lend but is a rigorous process. It goes through inspection process validation, customers own audit and we are running several of these delta qualifications at the same time across all our customer lines. The throughput for the business begins improving in H2 FY '27. The revenue starts ramping up from Q4 as parts that we are quantifying clear customer acceptance, and we expect all plants to be fully ramped up in the H1 of FY '28. Each facility that we are building dedicatedly product clients is in line with the customer's delivery plans. Once a global OEM has qualified a dedicated facility into its primary supply chain, moving that business carries a very high switching cost. And this is what gives us a multiyear visibility with all of our customers across each of our segments. I know that working capital has been on your minds. And so let me tell you that what is already in motion, Mr. Chopdar and Mr. Jajoo also covered briefly how the attempts that we have done and the results and outcome of some of them. Let me take you through the 3 aspects from a macro perspective. Inventory is moving through the pipeline. It is worth noting that the raw material that we built earlier in the quarter has moved up into work in progress on the new lines. As the ramp-up continues to progress, this work in progress converts into finished products and then receivables and then into cash. So that is point number one. The second one, which Mr. Jajoo briefly touched upon. Our attempts to reach out to our customer has now given a positive result. One of our OEMs have agreed to give us a 50% advance against purchase orders, and we expect to receive close to about $4.5 million under this arrangement. This reflects the strength of our customer relationships and directly [indiscernible] ramp-up, $4.5 million on the customer account is a good start for our business and is in line with the commitment that we had given to all our shareholders that we will bring working capital in check through various things. The third point that we're now doing is the bill discounting line, which are intron. So far as a business, we had not used [indiscernible] counting aggressively because we have surplus treasury funds and drawing on those lines would have added finance costs further. We now have these lines in place with ICICI Bank and DP World which can be used from Q4 FY '27 onwards. This will reduce our debtor days directly with a modest addition to our finance cost, which the business can take. Our business model remains export-led with more than 85% of our revenue coming out of exports. So the first half, energy and oil and gas grew significantly to 28.5% and INR 29.5 crores. This was supported by a strong global demand for power generation and our dedicated facilities moving to qualification. Our dedicated oil and gas facility for Baker shoes also added a growth level will also add a growth over from Q4 FY '27. Our agreement with papers company has been extended to 2030. Aerospace and Defense grew at 28.3% and delivered INR 6.4 crores. This vertical now contributes to about 16.8% of our revenue. In India, we also received long-term source contract with BHEL for gas turbine base under a 2-year rate contract, which was close to about INR 268 crores, a strong start for indigenization in the power sector in the country. With the IPO buildout now complete, it is now time to move to the next stage of growth for Azad. Azad's already started working on the programs that will drive our growth beyond FY '30. To name a few, we started working on hot section parts, Northern Wan segments from Mitsubishi Industries under our 8-year single contract. This is the next step in our complexity and our value chains that we're moving up for Azad. Aero engine air foils with Rollers and pattern with Safran, extending our airfoil expertise from power turbines and aircraft engines, we are now going to be starting to delivering this from the next fiscal onwards. The developments that we did on air engines for GTRE building on a delivery for India first indigenous expandable turbo jet engine with end-to-end manufacturing and integration complete, Azad has demonstrated that we have the capability to manufacture engines in India and to help India's objective on indigenizing most of FM systems. The capability that we built for aero engines and for GTR around aero engines is also being discussed in advanced discussion with other OEMs who want to use as a for the capability building in this front. Along these programs, we will keep gaining wallet share with our existing customers on approval capabilities to serve new global OEMs look at selective acquisitions or large competence, full stack production in colocated with key OEMs. The 4 stage of Azad's growth as a listed company in the buildout that we started is now in its final stage. Our capacity is now ready in the next 6 quarters are about to convert this revenue into cash. We've already built. We've already begun building the growth engines for the decade and beyond. With that, we are happy to take your questions. Thank you very much, and happy Diwali to everyone.

[Operator Instructions] The first question is from the line of Amit Dixit from Goldman Sachs.

Yes, congratulations for the great performance and for a good set of numbers. I have a couple of questions. The first 1 is essentially on the building blocks that are ready now we have now 6 facilities in the new facility. So I just wanted to understand the next phase of development more I mean how are these contracts, particularly in is going to move from development to production stage. And just wanted to understand that the kind of revenue growth will accelerate from here. That is the first question, sir.

Okay. Thanks for the question. Last quarter also, I had a similar question. And we were telling that we are setting up things. We are the buildings were almost down the machines movements were ongoing last quarter. And this is the main thing which we were trying to give a message. But now, as mentioned, we are ready with that. The buildings are ready. The CapEx is deployed, major of the machines are inside the foundation is completed. The singles are now running and we are seeing the throughput, which we plan. Of course, we saw some 2, 3 weeks delay, and that's, I think, quite normal to see in this large scale. But beyond that, today, we can say that we have done that piece of what which is going to really see the revenues coming up, and we just stack it already. Right. Now we talk about the growth factors or we talk about when it is visible. I think I've been very consistent in giving a guidance that what was the status of the factory. Now the machines are up and running, and this is now we see from Q3 onwards we ourselves have started seeing the throughput. So that's the situation right now, Mr. Amit. And if you talk about capacity wise, we -- you can see an ARR, the capacity, which is now installed, we should see an ARR from FY '28 of roughly more than around INR 1,300 crores or so. So that's the capacity right now term advance and we are going to do bill discounting.

So I just wanted to understand we may see the peak cash burn now considering that the fixed cost is all there. It is now going to be advertised. The fixed cost base is not there. Maybe working capital will also kind of plateau from here. So just wanted to understand the cash when will we see become more sanguine and when you see the free cash flow generation by the [indiscernible].

I believe we can see that, as I mentioned, we are in Q3, right? So the Q3 as the throughput is now started coming out, it's not that it's going to come. It started and the supplies will start from the end of Q3 and Q4. As we mentioned, we started the bill discounting. We started taking things. So I think by Q3, I in Q4 -- sorry, Q4 and Q4 is where we can see the cash throwing out of the company. That is a period we see that coming in. And consistently, if you talk Q1 of next year would be perfectly tail, but we can see something in Q4 as well, the cash coming out of the company.

The next question is from the line of Gaurav Nagori from Avendus Capital Private Limited.

I want some more color on this capacity that -- now that you are fully commissioned with 6 lines. So correct me if I'm wrong, if I'm right, that the existing capacity, excluding tonic Golar has a potential of about INR 500 crore odd. And this new facility would have a potential of about another INR 1,200 crores, INR 300 crores odd revenue, which means in totality of the total CapEx or all the capacities put together, you have a potential of INR 800 crores, INR 1,900 crores. Of that, you are saying that you would reach INR 1,300 crores by next state itself. Is that understanding correct?

Yes. So you see the ARR, what we start seeing is 1,300 plus, okay? And how we move ahead, definitely we cross more than that, right? And we've been always conservative in giving any kind of guidance. We are very, very conservative in giving the guidance. So this is the bare minimum we have said, okay, this will cross definitely it will grow to the levels, but I don't think -- maybe next quarter, I can update you exactly what would be the range, but what capacity we see now and what throughput we are seeing now has gone beyond 1,300 plus.

Understood. Understood. And second question is for the discussions that you're having with the nuclear with your aerospace client. So given that [indiscernible] is now fully leased out with these 6 clients, what about the additional contracts that you win, would you have to buy a separate land or where those capacities would come in?

No. We have left 1 or 2 buildings, which is still in Tunki, as I mentioned in my call, as we are dedicating facilities for the energy, oil and gas, now aerospace also has come forward. So a few of the customers are our named now. And we are going in a similar model of dedicating FSL there and they want to book us for next whatever years they want to book, and that's ongoing right now. So very soon, we'll inform you on that, and that capacity is also well taken care.

Understood. Understood. And as Rich mentioned that you would be -- start delivering the Aero Engine AeroForce from next year. so have you have few the qualifications or you are expecting that to come [indiscernible].

That's exactly to mention. We'll give you very good news very soon, right? So after rigorous qualification, which we completed, almost completed when we start saying Finally, we could -- we are the last leg of things. And very soon, you will have an information that we have delivered our first qualification batch. And that's the start. Once that colocation batch is done, and this is how we really will show that, yes, the past an now in production.

Understood. And just last question.

It's a progress very, very good progress. And things went flawless in the qualification period.

Understood. But I'm assuming that, let's say, to get the qualification, you have to incur a new CapEx for the commercial line, that probably you would [indiscernible].

No, no. Sorry. It's only done. The CapEx is done. The production -- we have production ready now.

All right. Okay. Got it. Got it. And just last bookkeeping question for Ronak. Just 1 on when you said that you already had a discussion with clients for the advances. Did this discussion also about, let's say, the margins because I'm assuming that clients would not be paying you the same margins and yet giving you the advances also.

No, we have not given any material discount. It's hardly 1% or so. So that is not something we have given very large discount for this advance and decision in line with our discussions because we are incurring KP and also investing into the working capital all the time. question why don't you support us for the working capital at least so that it would keep the ballot the site.

Understood. And what has caused this sharp increase in the other operating income in first half?

Other operating income decrease [indiscernible], that I mentioned because of the tragedy because we have a treasury, which was we laid in Q3, which was there in the...

No, it is other operating income that I'm talking about, not other income.

Other operating income, I don't see borrow, which number you were talking, right?

I'll take it separately, Ronak. Thanks for the answer and wishing the team happy Diwali.

The next question is from the line of Vikash Singh from ICICI Securities.

Thank you for the opportunity. Good afternoon, everyone, and happy Diwali to everyone as well. Sir, my first question that now that we have a revenue target set for FY '28 and probably the growth would come from the existing facility in FY '29. Beyond that, the growth factor, basically, because we haven't had any new investment plans from you beyond FY '29 because I believe that still the -- we are very little on a wallet share of the customers and there's a ramp-up growth with the existing customer as well beyond 29. So could you just give us a road path beyond '29 if you have...

Good question Vikash. So as Gaurav asked this same question on the road say, this is an example of what we are going to talk about. So Ross, we invested '24. A large portion of CapEx has gone in that. And you do the qualification cycle. You thought that you can't go for production more. So now there is certain 2 Indian programs which are going on right now. And we have finished -- almost finished the qualification line. And the production starts for these 2 lines. So CapEx, what we have done, what was visible to us. So the visibility, a customer, what it does is, say example, it has got 10 engine or 20 engine programs. But they will not open up everything. They'll say, okay, this is what we have. these 2 engines we are offering you and you finish this qualification. So basis 2 engine, what is visible, we invested the CapEx. As we deliver the confidence is up, as the qualification is through, then the open up right? So we will know this, as I mentioned, Gaurav as well that I will be able to give you more color maybe next quarter, same thing I'm informing you as well. But what happens is the next phase of CapEx is once we qualify this -- and once we go to the next page, then they open up, like the -- and then we will plan our CapEx for FY '29 and onwards. So that's what we are trying to figure out. And we -- as we see the growth definitely we'll go for a QIP or maybe when it's required. We will go in that section. But today, as we speak, what we have invested, what we have done, that has now moved up to the next phase.

Noted, sir. And sir, just regarding this new facility which you have commissioned especially the recent 21, had the associated order was already received and it was a part of the INR 6,500 crores or there is a chances that these facilities getting booked for next 5 years and the order book would increase only in next few weeks [indiscernible]?

So these contract requirements are rolling, okay? And we have really have the visibility. We already have the contracts. We already have the visibility. But how long, what beyond it is going to go, and it is we cannot say something which is a bit forward-looking. We definitely have a visibility on that for sure.

Noted, sir. Sir, just 1 last question, if I can -- any update on the Indian side, basically?

I am also eagerly waiting for the testings are ongoing right now, and they are quite respective in giving the information out. But we are just waiting for the testings are ongoing that I know, all right. We are about to deliver the second Indian as well. When this engine flies on the weapon, that's where they are really going to open up, and we are 100% sure it's going to be a big 1 for sure, right? So we just wait -- we all have to have, especially me, I'm super excited for the results of the engine coming out. So once it comes out, maybe the second in and third even for engine whichever which are flies the weapon. That means we are very close to have going in the production mode. And which is very -- it's not far away. I have very limited information on this.

Yes. That's great to hear, sir.

The next question is from the line of [indiscernible].

Sir, can you help understand like what is the current order backlog and across segments and what was that in the previous quarter?

So thank you for your question. So our current order book is close to over INR 6,500 crores. And like Mr. Chopdar mentioned, this is a rolling order book. So across each of the segments today is our outlook, and there are contracts that are under discussion. Yes. If you look at our projections with a 25% growth over the next few years, you will be able to see that this order book over time will -- one, it will keep getting consumed from it's a rolling order book, right? These are not project-based demands. These are annual demand set up our across these product lines. But you will also see that new parts, newer contracts are added to this over time. So this is how the order book will grow.