June 16, 2026
16.06.2026 – Transcript of Investor`s Meet
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CS/SE/813 Date: 16.06.2026
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BEML Scrip Code: 500048
Dear Sir / Madam,
Sub
Transcript of Investor earnings Call- under Regulation 30 of SEBI (LODR)
Regulations 2015 – Reg.
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((i) Our letter CS/SEs/ 805 dated 04.06.2026
(ii) Our letter CS/SEs/ 810 dated 10.06.2026
(iii) Our letter CS/SE/811 dated 10.06.2026
Please find below the Transcript of Investor earnings Call hosted by M/s Elara Capital on Wednesday, the 10th June, 2026, at Mumbai. The same is also made available on the Company’s website at below mentioned link. https://www.bemlindia.in/investors/
Thanking you.
Yours faithfully
For BEML LIMITED
Urmi Chaudhury
Company Secretary & Compliance officer
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29400
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BEML Group Mee(cid:415)ng Transcript
Akhil
Quick on the disclaimer, although the presenta(cid:415)on describing the company forward looking performance, actual may vary materially depending on the market environment, economic condi(cid:415)ons and government Regula(cid:415)ons. So before I go to the number presenta(cid:415)on, let me share a flagship achievement of the BEML which made a headline for BEML and country per se. On the innova(cid:415)on proud, moment for all of us first vande Bharat Sleeper train was flagged off by our honorable Prime Minister and was put into the commercial usage. Down below, we have a rope showel, 21 cubic meter electric , which is put into the use. We have a dump truck, 35 ton, again electric version, put into the usage. On the connec(cid:415)vity, the high-speed rail facility, the new facility established in Bangalore complex inaugurated by Honorable Union Minister of Railways and produc(cid:415)on is under progress. On the capacity expansion, we have a new facility of our rolling stock at Bhopal inaugurated by Honorable Union Minister of Defence.
Quick on the BEML. It's a schedule A company established in 1964 under the Administra(cid:415)ve
Ministry of Defense with a 54.03% holding. Three Major Business ver(cid:415)cals and revenue contribu(cid:415)on for FY 2026 for D&A 35%, M&C 41% and R&M – 24%.
Skipping process change SBU forma(cid:415)on then PAN India presents and Journey of BEML.
Most Exci(cid:415)ng in , in FY 2025-26, these are the products, were developed put into the usage. So, we talked about Vande Bharat sleeper train, HMV 12x12, LAMV, 21 cubic rope showel, 550 HP motor grader, and 35 ton electric dumper.
Shantanu
Here the 12x12, just go back, the 12x12 is mainly used for strategic forces command and for all major missile systems, radar systems. We were impor(cid:415)ng the CKD and doing only the assembly.
In 2025, we rolled out our first indigenously manufactured 12x12, which has now undergone extensive tes(cid:415)ng at our works at VRDE, at DRDO, and finally cleared for bulk produc(cid:415)on. So all the future 12x12, which will be used for LRSAM, which will be used for Pinaka, any project,
Brahmos it will be given indigenously. The LAMV is a light armored mul(cid:415)purpose vehicle which is a 100 % indigenously designed, developed product. We did a lot of blast simula(cid:415)on tes(cid:415)ng for the belly protec(cid:415)on. It has standard level two protec(cid:415)on. And we have built the vehicle and it is now undergoing trials since 31st of March. It will undergo extensive trials for a year and then EMI
AMC next year around August, September. Once the price is open, then it will be decided.
Whichever party, whichever company is the L1, they will get this order.
The 21 cubic meter rope shovel, this was done in a period of three years from scratch, design development and the manufacturing started, the supply started in March 2024. This is a 750 ton machine which was sent to site in 24 consignments. It got assembled at site, commissioned at site and April 29, it was thrown open for produc(cid:415)on. And since then, it has April 29, 2025. So it is working seamlessly for more than one year now.
The 550 HP motor grader was supplied to South East Coalfields Limited, again en(cid:415)rely indigenously developed, designed product, which was earlier being imported. 35-ton electric dump truck is our effort at sustainability, providing green solu(cid:415)on. And this is the first step towards the EV conversion to EV for all our dump trucks.
So this is the first one, next in line is the 60 ton and 100 ton which we intend to do this year and
190 ton maybe a(cid:332)er a couple of years. This 190 ton product has a very good market poten(cid:415)al in overseas market like big Mining countries etc.
Akhil
So under new product development, high speed rail, so I have talked about from the BEML side.
LRSAM long range surface to air missile on the pla(cid:414)orm of HMV 12 x 12, 8 x 8 and 6 x 6. Sir just now talked about 60 ton and 100 ton electric version of dump truck and 8T of tyre handler.
Quick on the fleet size at present in the field. This gives you a li(cid:425)le bandwidth on our spares and service businesses, which has a poten(cid:415)ally high margin, high growth, and which actually trigger a hub and spoke warehouse model which we are rolling it out in Bilaspur.
On the global reach, we have a popula(cid:415)on of 1400 plus equipment to 73 countries. If you look at the fleet size, Africa is the largest market, Middle East followed by. Then SAARC being a preferred partner . CIS we have entered and progressing quite well.
We talked about the major achievement, the highest ever order book. We are closing with 15,900 crores, including highest ever export order of $107 million. Product we have already talked. The below last below two lines may be interest for all of you. BEML rolls out the prototype of New driverless metro trainset for BMRCL’s phase2 network.
One of the big milestones in the BEML export, have got the metro rolling stock from the overseas market. On the external awards and accolades that recognizes our leadership, leadership in engineering, leadership in innova(cid:415)on, and the leadership in process improvement and the leadership in governance and the brand. So last year we have a accolades in almost all the ver(cid:415)cal well appreciated by the third party.
Quick on the shareholding, the government of India with the major stake holding of 54.3 %, MFs and resident individuals almost at par 17.5%
The shareholder returns, although the market cap as on 31-3-26 it was 11,400 crores but today it is around 14,700 crores. So like BEML efforts are always to be consistent giving the return back to the shareholder. So Company is con(cid:415)nuously paying the dividend and of course the addi(cid:415)on in the value. Last year on major ac(cid:415)vity we had in like we have split the equity shares this year of Rs
10 face value into 2 equity shares of Rs 5 face value which has given a good leverage to the small buyer.
On the financials highlights, so revenue is up, improved net worth, improved capital employed., the management is con(cid:415)nuing watchful on the performance and trying to leverage the growth and margin expansion. So the year 25-26 if you look at, it's one side there is a growth in the revenue and there is a dip on the margin. Mainly because of the one(cid:415)me adjustment, the legacy adjustment we have corrected in the balance sheet. But the underlying opera(cid:415)on, the matrix shows the posi(cid:415)ve growth. So, networth high, the revenue from opera(cid:415)on is all (cid:415)me high, the capital employed is high, working capital is stable. The capex is all-(cid:415)me high, the R &D expenditure is all-(cid:415)me high.
In year 2025-26 we had mixed reac(cid:415)on on financials a clear split between strong revenue growth and margin pressure due to one(cid:415)me legacy correc(cid:415)on. Just a breakup of the business group by revenue. So M&C, Defense and Rail and Metro. If you see the defense ver(cid:415)cal, there is a growth of 1000 crores to 1500 crores. Which shows that there is quite a good opportunity in the defense segment. And of course, the rails and metro with the kind of order we are having, this year big revenue jump in the Rail and Metro and the mining construc(cid:415)on being a core for BEML so consistent on the performance side.
The quarter-on-quarter revenue, FY26, we see the quarter fourth is the major jump. A(cid:332)er five years we touched around 1800 crores.
Quick on the VOP which is aligned with the sales growth of almost 9 % with respect to previous year. On the profitability, the PBT is around 200 crores which is 51 % down. The PAT is around 148 crores, 50 % down. Of course, the impact of one-(cid:415)me the legacy correc(cid:415)on in the balance sheet.
EBITDA margin of 328 crores, which is down with 38 % with respect to the previous year.
As I referred, capex and R &D expenditure is all (cid:415)me high which will give a major advantage in coming years to the BEML.
We have closed with the 15,900 crores orderbook. This is the all-(cid:415)me high.
The major excitement for the companies that we had got USD 107 million export order bookings.
On the le(cid:332) hand side top you see the break up of the order book which has one of the major order book from West Asia on the mining equipment side and 60-million-dollar order from the rolling stock from the Africa region. CIS con(cid:415)nues to be growing with the 10-million-dollar order book in hand.
Even the future pipeline is exci(cid:415)ng, West Asia program will be a repeated on almost the same number. And the growth what we see in the export, the rail metro product side, we have MOU in place with SMH rail, which we see probably a good business opportunity from the Malaysia. Tel
Aviv Metro, we are going with DMRC, very good opportunity size, around $250 million. Then
Dublin Metrolink with size of around 90 million dollars of Business opportuni(cid:415)es.
Collec(cid:415)on and the employee cost. Collec(cid:415)on in FY26 there is a reduc(cid:415)on as compared to previous year. Previous year we had an advance which was a kind of a major gap. And also in Current year is the last quarter’s sales and the delay in the collec(cid:415)on from the MOD which we have collected in the month of April-May. So April-May collec(cid:415)on is the actually compensa(cid:415)ng of what we have shor(cid:414)all for in previous year. The employee cost is showing li(cid:425)le high as compared to previous year. But actually, wage cost has come down impact of Gratuity has one (cid:415)me provision led to increase.
Quick on the working capital, debtors and inventory. Debtors, as I men(cid:415)oned, the quarter 4 sales, blocked the money. And inventory, there is a reduc(cid:415)on in the inventory and there is a con(cid:415)nuous efforts of the management on the inventory. So, there is a check on the inventory.
That's all.
Shantanu
The floor is open for discussion.
Analyst
So, just to understand what went wrong in Q4. Because we were of the understanding that the
Q4 close with an Order Book would be Rs20000 crores? On the margin front, do you foresee any further one-(cid:415)me adjustments that may come in our books in the futures? This year how would you think? The execu(cid:415)on mostly is the cri(cid:415)cal. With respect to capacity, we have a good order book now we are also having export order for rolling stock, which is also picking up, so how we are planning to execute? Because our Bhopal facility is coming next year. So how are we planning on that?
Shantanu
First let me talk about the order book. We ended the year with the order book of
15,896 crores. There was a good executable order spillover to April because of the certain reasons. One was an export order, the other from MOD. In fact, one of the order which we have got was signed on 27th of March.. Then there were some projects in the heavy earth moving machinery. There the ordering got delayed. Although we became L1 in some projects in the month of February and March. Those orders are s(cid:415)ll to be finalized.. So, these were the two major reasons.
Third we were expec(cid:415)ng, you’re expec(cid:415)ng more than 20 in fact. The high speed train orders, 16 more. which was definitely tendered out in March, end of February, March. Already everything is completed. So now final formali(cid:415)es are going on. So these were the three major reasons. If I would say that, yes, we expected to reach 20,000, but we fell short by almost 4,000 crores. That is number one.
Number two, as far as the top line is concerned. So top line, If you look at the performance ver(cid:415)cal wise, mining ver(cid:415)cal which is the heavy moving machinery as I men(cid:415)oned, generally what happens is the order comes in third quarter, fourth quarter. So last year was extremely difficult, extremely difficult because of the unusually long and shi(cid:332)ed monsoons because of which Coal
India ordering did not happen, the revenue also not converted and that had a cascading impact on the overall working capital. Working capital was more impacted because of the record sales in the last quarter. Because of the skewed sales in the last quarter, there is always a pressure on the working capital, the debtor goes up. Even though inventory has gone down, but the debtor has gone up . So these were the three reasons. Now as far as the bo(cid:425)om line is concerned, There was a direct impact of around Rs. 250 crores on account of the one (cid:415)me correc(cid:415)on in two projects plus there was a one (cid:415)me impact of provision which had to be created for the gratuity because of the new labor codes and all. So because of these one (cid:415)me challenges the desired result could not come.
Otherwise, we would have last year's number by quite a significant margin. Nevertheless, the silver lining is that the two projects where we have one (cid:415)me correc(cid:415)on, one (cid:415)me cleaning of the books, they are in foreign currency. And just to highlight , one order we took in 2018, when the dollar was 60, the euro was 65, now the dollar is past 95, euros is more than 105 or so. So as per the accoun(cid:415)ng policy, when we start realizing the sales, then only we can take the benefit of the exchange rate varia(cid:415)on. And this coupled with the PVC clause that one of the projects has, it will mi(cid:415)gate the total hit by at least to the extent of 30%. That is my views.
And in the mean(cid:415)me, if the dollar con(cid:415)nues to rise, this gap, this mi(cid:415)ga(cid:415)on will be further taken care of by at least 10 to 15%. So that is how it is. The current year, we started with the 5,500 crore order book executable order for the year. First (cid:415)me in the history of the company, we are at this situa(cid:415)on.
Now, if you look at the performance, generally first quarter 10%, second quarter 20%, third quarter 30%, fourth quarter 40%, even 45% in some cases. This is mainly because of our over- dependence on mining, the heavy earth moving machinery, because the ordering itself takes place in the third quarter andfourth quarter. So year a(cid:332)er year, that is the cycle.
Order book on Rail, metro and defense, Rail metro currently accounts for around 65 percent of the order book. Defense currently accounts for 25 percent of the outer book, 4 percent is from
M&C and 6 percent is from exports. With this kind of order pipeline, where the major commuter rail projects, now Vande Bharat, once it was inaugurated for commercial service in January. And the proto was cleared, the design was cleared. And now there is a con(cid:415)nuous supply of the balance Racks
Number two, the LHB, the LHB orders 600 coaches Again, we have to take a design clearance for the first two trains. Now we have got the clearance for dispatching the trains and this month the dispatch will start. Third is the high speed train. High speed train as you all know, it's a very, very complex clean sheet design and we have commenced the produc(cid:415)on of the train star(cid:415)ng with the underframe components and as I talked to you the sidewall is under manufacturing.
We expected that the first car body will be out by August, the car body shell and we are trying to get the first train at the beginning of the next year, next calendar year. So that it will then go to the Surat Depot and a(cid:332)er that it will undergo extensive tes(cid:415)ng. Before going there itself, will undergo extensive tes(cid:415)ng at our works and then Depot tes(cid:415)ng at Surat and then tes(cid:415)ng on the main line. So that it wil go for four, five, six months. All the tests are already iden(cid:415)fied.
One train we have to give in the current financial year. So when we calculated 5500 crores order book, all these orders were in place and all are executable. . That in the heavy moving machinery, currently we have a sure shot order of around 350 crores that has come from the export order. the contract has a provision of repeat order of 100 percent plus the spares. The sustenance is not yet covered in that. There is a five percent mandatory spares which can increase up to 12 percent. that order is already there. Plus we have emerged L1 in three big opportuni(cid:415)es which valued at around Rs. 600 crores.
. So as of now, we have a visibility of around 950 crores from the HMV at the beginning of the year. So that has never happened. I've never seen that. So this is over and above because it's 350 crores also export already came in April. So it is not accounted in current year 15,896 crore order book
Plus the 16 train of high speed it isyet to be finalized. So that will further add to our ki(cid:425)y. If you look at the orderbook pipeline, this year we have an opportunity size of, I mean, minus this high speed and other things, we have opportunity size of around 40,000 crore, which mainly consists of 70% from the rail and metro, 20% from the defense, 5% from mining, 5% from exports.
In the rail and metro there are six tenders currently which have been floated. Six different tenders totaling around 554 cars and we also have the MRVC tender, 2856 cars. The total opportunity size is roughly around 35,000 to 40,000 crores and we also have several defence orders in the pipeline.
For example, the Armoured Recovery Vehicle overall 230 numbers already DAC has cleared. Self- propelled mine burier we are the sole bidder and another 2-3 months we should have the order.
The Sarvatra bridging system 47 bridges which should be roughly around 1500 crores.
The AoN is already there and you have to give a proto because there is a change in the material.
Apart from that the MMME which will be comple(cid:415)ng the current order There is an order pipeline of 120 numbers roughly around 600. So several orders are in the pipeline plus of course the
QRSAM. The QRSAM around 500-600 HMVs. We should be ge(cid:427)ng this here LRSAM. If you have seen, we have emerged L1 for the ground support system. So three types of HMVs we have and to be required. And once the proto is established, there is asure sort order of around 900 HMVs.
So that is the kind of pipeline we are looking at. Also, we have been, we are one of the three shortlisted bidders for the AMCA project. As you all know, we have partnered Bharat Forge and
Data Pa(cid:425)erns and we have to bid for it. Maybe another two, three months it will be decided what they'll want. And it's the (cid:415)cket size is 15,000 crores, the five proto we have to build and give.
And the facility of ADA will be used and the tes(cid:415)ng facility is being created at Pu(cid:425)uparthi. So where the extensive tes(cid:415)ng will take place. So no CAPEX is involved there. It's only OPEX on our part. So that is a flavor of the en(cid:415)re thing. In the mean(cid:415)me, I would like to have a look at the export slide. So in the export slide, it was a very, very long aspira(cid:415)on that we should have at least one order the rolling stock which we have got. Now we are targe(cid:415)ng two more rolling stock metro opportuni(cid:415)es, one in Tel Aviv and the other is in Dublin. And we have a very potent combina(cid:415)on with Delhi Metro. In fact, Delhi Metro has a fully owned subsidiary of Interna(cid:415)onal Business that is DMIL. So we have entered into an agreement with them. They will do the opera(cid:415)on and maintenance and we do the rolling stock supply.
Apart from that, there are several MMME opportuni(cid:415)es in the pipeline for us. So in totality, we will look at adding the numbers in the order book, the numbers at which we ended last year. We ended at 15,900 order book, so the same number we would like to add in the current year as well. and if you are able to execute maybe some 6000 crore then we end up the year at around
24000 crore. Why this is important is that for us to have a executable order pipeline year on year.
Then only we will be able to open the year with executable orderbook of say 7000-8000 crore then we can aspire to at least achieve that much revenue from day one and we can do it equitably across all the quarters. That is the idea. So year on year if you are able to add 10,000, 12,000 cores in the order book, it will keep on adding. And as a thumb rule, whatever is the order book size, one third of it generally is executable So following that thumb rule, important thing is to book the orders also, execute also, develop the capability and the capacity. So we are doing in all front.
Analyst
How are going to execute? Last (cid:415)me we discussed our current capacity for rolling coaches was around 250 so…
Shantanu
So with Aditya being commissioned, I would say, if it is high speed train only, so we can do 6 to 8 coaches per month for high speed. If it is metro, we can do more. We can do probably 12 coaches per month. So it adds to our capacity by at least 100. 100 for metro if it is high speed it will be around 50 to 70 per year. Now coming to other facility that is the BRAHMA the investment that we have envisaged there once the plant is fully opera(cid:415)onal there the capacity will be further 300-
350 coaches per annum, but that is going to take (cid:415)me. another two and a half years, three years it may take. And for example, the MRVC project, it will take another six months for it to be finalized. That is a very op(cid:415)mis(cid:415)c (cid:415)meline I'm giving. A(cid:332)er that, it has a (cid:415)me cycle of around
Two and a half years to three years for the proto, and then the bulk produc(cid:415)on. So we will have ample (cid:415)me.
By that (cid:415)me the Bhopal facility will be in place. In the mean(cid:415)me, if we are able to get some more metro orders also. So first it will start to take care of metro for the western part of the country, northern part of the country. For example, two tenders project for DMRC, one tender for
Mumbai. So we will shi(cid:332) to Bhopal because that is the (cid:415)me which will be required for the project to start. And we can keep on doing the LHB, if not the LHB, then uh the track machines at
Bangalore. Any further Vande Bharat sleeper order, maybe two, three more trains can come.
Amrit Bharat version four, MEMU. MEMU is something which is very much required in the country. So we'll try to get some Memo orders. So all these will keep the order of pipeline also healthy and also ensure that capacity is u(cid:415)lized. Plus the high speed train, if these two trains, two proto plus 16 more which is in the pipeline, plus the seven corridors which have been announced.
So seven corridors, it will all be 350 KMph aluminum. So we have already started preparing for aluminum almost for a year we are preparing for it. And that will give us a poten(cid:415)al. That is a huge poten(cid:415)al for us. That is how, you know, we are quite a beat on the transporta(cid:415)on business, the diversifica(cid:415)on to aerospace. In the heavy earth moving machinery, the major strategy is to go for more and more exports and to diversify into surface minor and new product development.
For example, the EV trucks, they will open a big market for us in the exports, the dump trucks.
And foreign to new products like the tunnel boring machine and the ship to shore cranes.
That is how the outlook is. That is how the study and the vision is.
Analyst
Sir is the revenue mix will undergo change this year because the order mix has changed?
Shantanu
revenue mix has already undergone a change last year. If you see, mining has come down to 40-
41%. Defence and Rail and Metro have contributed around to 59%. So my guess is this tyear, defence and Rail and Metro should again be in that range, 57-58%. So I guess in M&Cyhis year, is expected to do phenomenally well as compared to last year. But that is again cyclical. So if we look at the medium to long term perspec(cid:415)ve, rail metro and defense put together, would say rail metro should account for very shortly 40%, 45%. Once we start firing all cylinders. And rail metro and defense put together should do somewhere around 65 to 70%. It should contribute. Mining, obviously, it will provide us a baseline maybe 30-35%. Mining is, I mean, they're very dis(cid:415)nct. All three are very dis(cid:415)nct. Mining is a fast turnaround product and gives us quick cash. Whereas defense, it's a long gesta(cid:415)on period. Time cycles are very long from the Design in the stage to finally clearance from the FOPM. It takes three to four years minimum. But that way faster is
R&M. But there again there is a gesta(cid:415)on period of the proto. Proto is usually takes two years to two and a half years. So there has to be con(cid:415)nuous order book of rail and metro and defense to give us the numbers, the big numbers and for the baseline mining construc(cid:415)on with focus on exports.
Analyst
Sir, when will the mining orders start coming?
Shantanu
No, no, mining this year fortunately we have already a visibility. Pipeline also is there, visibility is also there. . It should pick up from the second quarter itself rather than going to the last quarter.
But that cannot be guaranteed every year. So we have to focus more and more on exports. So this year itself we have to book more orders for mining for next year. Or next to next year.
Analyst
Sir what is the orderbook now
Shantanu
Order book is 16700 crores currently.
Analyst
Can you give some colour on the provisions? That we made in last 2 quarters? Are they going to recur in future?
Shantanu
No, the three major points that I have explained that I have communicated, they are one (cid:415)me.
Apart from that, you know, there may be some provisions being created for regular accruals on account of the gratuity. regular provision will always be there. will not be one (cid:415)me. It will be recurring. Not which comes to my mind, at this moment we will need to see but it should not have that big impact. We need to see the provision which has been created. Not in the current projects that we are doing for metro or for rail. Even the current defense projects are all going on
(cid:415)me. We will work it out.
Analyst
As company has projec(cid:415)on of 5000 crore revenue in now mari(cid:415)me cranes and ship to building crane, so at what (cid:415)me it will contribute to your topline?
Shantanu
As I men(cid:415)oned, we are at a very nascent stage of the product development. It will be at least 5 years before a tunnel boring machine and STS crane, it starts giving revenue. Because that is the development period.
Analyst
Once the capacity is ramped up, will it contribute 5,000 crores per annum.
Shantanu
It should,because the tunnel boring machine requirement is huge. We are currently going only with a 6.5 meter. And later on, we will gradually move towards a 13 meter, 15 meter dia . There is a challenge in the country for machining of any tunnel boring machine beyond 12 meter. That is number one. Theshi(cid:332) to shore crane, manufactures in the country. So once it stabilizes, the port operators, we are banking on the mari(cid:415)me vision as per the mari(cid:415)me vision of India, 12 mega ports and 200 minor ports. So every one of these ports will require a ship to shore crane.
And average, what we looking at is around 80 to 100 ship to shore cranes. And plus for big ship building, Goliath cranes ranging from 400 tons to 1,200 tons also. Goliath Crane will come in the next phase but first phase will be ship to shore.
Analyst
We understand that this year we had some because of couple of one-off we had margin impacted but going forward what kind of sustainable margins we can expect given that our mix is also being changed and how sensi(cid:415)ve is your margin because of raw material prices?
Shantanu
So I will take your second ques(cid:415)on first. So RM prices, we will feel the pinch maybe in some (cid:415)me because the effects of this conflict yet to sync in totally. That is definitely going to impact us. Only thing is that since the contracts that we are doing especially for metro and the commuter rail also, there is a price varia(cid:415)on clause so it will be taken care to some extent. That is number one.
Number two is If you look at the sustainable margins, in my opinion, anything around 16 % of
EBITDA should be sustainable. We should be able to sustain. Because what happens is that we have a certain threshold number. Any sales revenue we do above that number, it results in exponen(cid:415)al contribu(cid:415)on to the bo(cid:425)om line.
Analyst
What is that number sir?
Shantanu
Break even now it's somewhere near Rs. 4000 crores. Based on considering all increase in price and other thing above that contribu(cid:415)on will increase.
Anil Jerath
So with this increase in turnover and contribu(cid:415)on definitely it will have marked. So that's why what CMD said around 16 % EBITDA.
Analyst
Despite of your saying margins will impact because of prominent prices. Can you give the break up in each of these segments?
Shantanu
It is very difficult to give. Depends on the product mix. I'll give you a sense of that. Exports will be the best for us and we can only hope that the US dollar will grow further stronger. Number two is the sustenance. And don't ask me how much margin, okay? I cannot tell you. Then it is followed by the high-end heavy earth moving machinery and the commuter rail. So these three are the margin drivers.
Analyst
Also can you please speak on the working capital as it has been impacted in last 2 quarters. What is the sustainable working capital that we can expect.
Shantanu
We are looking at reduc(cid:415)on in working capital by at least 20 % this year. That is what we are trying. And for that, inventory is one part. Second is the debtor and collec(cid:415)on and followed by cash flow. And if we are able to deliver in every quarter, then definitely the cash flow will improve.
Rather than skewing it up in the last two quarters.
Analyst
How to start to bring.. (inaudible) because our revenue is skewed towards Q4 and same scenario may….
Shantanu
So is what we are trying. With the order book, executable order book of a certain number at the beginning of the year, we stand a be(cid:425)er chance to improve it. So maybe instead of only 15-20 percent in the first half, if you're able to ramp it up to 30-35 percent in the first half.
Analyst
Out of this 15000cr orderbook, you men(cid:415)oned that 65% is from R&M. So last year we executed around 1000cr. So how are we looking at execu(cid:415)on this year?
Shantanu
So this year we are expec(cid:415)ng an execu(cid:415)on from Rail Metro of at least 2000 crores and as I said if you look at order inflow of around 15,000 crore in 26-27 Rail and Metro should be around 70 % of that so it should be roughly again 10,000 crore.
Analyst
So you are saying that we will end up with around 18,000 crore stand up closing order book from
Railway this year?
Shantanu
Yes.
Analyst
And the major orders would be from the metro itself or railways, would you approach it?
Shantanu
I would say both.
Analyst
And for defense, I think we are not seeing that kind of momentum this year.
Shantanu
No, defense we are definitely, as I men(cid:415)oned, mean, some orders are sure shot, like the QRSAM, the self-propelled mine barrier. Then we have this ARV armoured ar(cid:415)llery vehicle overhauling l, of them. These are short orders for us.
Analyst
So roughly we are having roughly 3,000 crore of orderbook from the defence? And how much execu(cid:415)on are we expec(cid:415)ng in that segment?
Shantanu
We are expec(cid:415)ng somewhere between 1500-2000 crore execu(cid:415)on.
Analyst
In railway we are s(cid:415)ll sure that we will be making margins. Is there any clause to pass on any commodity price? Because these orders were taken two years back and we have these orders.
And then we have seen the commodity infla(cid:415)on. So…
Shantanu
Basically you see whatever orders we have currently, whether it's a LHB or whether it's a high speed, whether it's the Vande Bharat sleeper, ordering is already done. Those kinds of commodity pressure will not be there The pressure will be on the future orders that we get either for Metro or for Rail. So there the pressure will be there. But at the same (cid:415)me, these days all Metro projects have the PVC clause. So it will mi(cid:415)gate to a certain extent. Earlier order you know Bangalore star(cid:415)ng only with the Mumbai one which was a very old order that doesn't have a PVC every other project has a PVC.
Analyst
So out of the 9-10 thousand crore metro backlog, how much will be Mumbai?
Shantanu
Mumbai is 2000.
Analyst
And the execu(cid:415)on will also be done this year?
Shantanu
No, it will start this year, provided Mandali Depot is ready.
Analyst
And next year, orders, you men(cid:415)oned, 10,000 to 12,000 crores from the railway, this will be largely from which side?
Shantanu
Currently we have 6 tenders and the value is roughly around 8000 crores. The commuter rail tenders that are expected this year should be somewhere around 35-40 thousand crore. 60-40 if it is given so our share will be accordingly divided since the propulsion supplier is the lead bidder so if we consider 10,000 crore, so 10,000 should have 70 % coming from commuter rail and 30 % from the metro.
Analyst
In terms of exports, Africa, historically we have seen that country is exposed to payment delays, execu(cid:415)on challenges, poli(cid:415)cal challenges. How do you see that? Do you see any risk related to that?
Shantanu
There is always a risk in interna(cid:415)onal market, in interna(cid:415)onal business. Whether it is Africa, whether it is Far East, whether it is CIS, Middle East, everywhere it's a risk. You see, before
February of this year, who would have never thought that the GCC region will be exposed to so much risk? No one could have imagined, right? We had just executed a contract in Oman, and I was expec(cid:415)ng a repeat order from Oman, but that is on hold now, right? So risk is always there more in the interna(cid:415)onal business as compared to the domes(cid:415)c.
Analyst
Who are the key clients in exports?
Shantanu
Key clients for my export market are, you know, one metro corpora(cid:415)on in Africa. I won't name them. Then there is the government in one country in the West Asia from where we have got the major order.
As far as CIS is concerned, there is a big industrial house, mining house in Goldmines who have already taken 10 bulldozers from us. They have been recently commissioned. Apart from that, there is another big corpora(cid:415)on in the CIS region who have already purchased our bulldozers. For the goldmine, we expect that we'll have more orders. Then in the North Africa region, there is a government en(cid:415)ty with whom they have been doing business for the last 30, 40 odd years. And we have supplied a lot of Mining equipment. There is already a tender The total value of the tender is around 110 million euros, out of which the equipment that we are looking for is in the range of 20, 25 million euros. So in a nutshell, This is what we are looking at.
Analyst
What extent is funded by mul(cid:415)lateral agencies?
Shantanu
None of these projects are funded. Only one project is funded by the mul(cid:415)lateral agency. That is
North Africa. North Africa project is funded by mul(cid:415)lateral agency. Otherwise, every other project is being funded from their own resources.
Analyst
Sustainable number for R &D spend is % of sales and also FY expenses.
Shantanu
Sustainable number for R &D spend should be around 7%., we already reached 6.25 % of the revenue in last year. Even if the revenue goes up, we'll keep it at around 7%. We have already some 40 odd products lined up in coming year.
Employee expense, you know, has gone down as a percentage of revenue this year, slightly. But we have to, you know, the catch is to maintain the absolute number in the expenditure or maybe it can marginally go up but the top line has to go up substan(cid:415)ally. Then the employee cost as a percentage of revenue should come down to around 17% which is again not an easy task. It's not an easy task considering that now the floor wages and other things which have come up so definitely it will be a challenge.
The new labor codes that has come into picture, that will have li(cid:425)le bit changes in the payout for the outspost employees. That will be one of the concerns. But same thing, but we are mindful of hiring people, we are trying to minimize the number of laborers engaged and trying to prune down wherever it is not required. So these are the exercises on. We try to improve our top line.
So the top line, it goes up automa(cid:415)cally, it should come down to 17.
Analyst
How much is the difference in exports and domes(cid:415)c in terms of EBITDA? In terms of revenue, what will be the mix of exports in the next 2 years in the revenue?
Shantanu
To be honest, we have not done a specific analysis. But again, you know, it all depends. Suppose we plan for a EBITDA of around 20 % for exports, but if the dollar further goes up, it will go up to
25 % also. At the (cid:415)me of bidding, generally we have an EBITDA in higher double digits.
Analyst
As compared to domes(cid:415)c markets, if the bidding at 15%, how will that difference be?
Shantanu
You see, it all depends on the strategy, on the compe(cid:415)(cid:415)on. It all depends on the compe(cid:415)(cid:415)on. But in exports, we definitely ensure that adequate margins are there. I cannot give a number because it's a part of the strategy. So finally, what result comes out, that is important for us. Cost is reality pricing is strategy.
Analyst
In these three segments, where do we see actual improvement in terms of working capital and receivables is coming down? what in these three segments, where are we actually seeing improvement?
Shantanu
Receivables will come down dras(cid:415)cally to start with in the M&C segment because generally IN is the last quarter is from the M&C s of now. So that is the first correc(cid:415)on that will happen. Second is the rail, commuter rail and metro, Suppose we do a sale in the month of June, I dispatch a train for example. So generally the cycle is around two months, right? So if I am able to do majority of the work in the first three quarters, my chances of ge(cid:427)ng the cash by the end of the last quarter are much, much higher. Third in defense, some(cid:415)mes things are beyond our control.
Last (cid:415)me even though we had supplied and our bills were also submi(cid:425)ed. Normally in defence we don't face this kind of problem. the last two months there is a huge monitoring on defence expenditure and everything is cleared. But this (cid:415)me because of certain reasons it could not happen. Maybe because we had done more than what we had projected earlier. That may have been one of the reasons. Some(cid:415)mes it is not good to do more also. So we realized that so now the projec(cid:415)on that we give is a bit on the higher side, be(cid:425)er to give on the higher side so that then we improve upon our performance. Like we improved by almost 40 % in the last year. So there are no challenges as far as the fund availability is concerned. But anyhow, whatever we could not get by end of March, we have already got in the first two months.
Analyst
Is it fair to say that from the current order book of say Rs. 2000 crores, only 2000 crores of Mumbai
Metro is a fixed cost order book. Rest of the en(cid:415)re order book can have the price varia(cid:415)on clause?
Shantanu
No, no. I didn't say. I only said that amongst the Metro orders currently, only Mumbai has a fixed cost. It's a fixed cost contract. The other two Metro projects have a PVC.
Analyst
Out of the total orderbook, how much (cid:415)me is fixed order book? How much is PVC?
Shantanu
You see it is important when we got a project. If it's a product like mining, it's not important because the turnaround (cid:415)me is very fast. So, there cannot be any PVC in that. So every mining project is a fixed cost contract. And the sustenance part which is a 9 year or 12 year there again there is a escala(cid:415)on and every year basically what happens is Coal India and we sit together and we decide on the escala(cid:415)on in the spare parts prices right for the cost cap contracts for the mark contracts and also the escala(cid:415)on in built so only the sustenance is part there is a escala(cid:415)on but not in the product part.