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Ladies and gentlemen, good afternoon. Welcome to Shivalik Bimetal Controls Limited's Q3 and 9 Month FY '25 Earnings Webinar produced by Eloise. I am Shankhini Saha, Director of Investor Relations from Dickenson, and I will be moderating our call today. Joining us from the Shivalik’s management team are Mr. Sumer Ghumman, whole-Time Director; and Mr. Rajeev Ranjan, CFO. Please note that this conference is being recorded and that some statements in this call may be forward-looking based on current expectations and subject to risks that could cause results to differ materially. You can download Shivalik's investor presentation and press release from the links in the community chat or from the company website or the NSE.

I now hand the conference over to Mr. Rajeev Ranjan, CFO of Shivalik, to make a few opening remarks. Over to you, Rajeev.

Thank you, Shankhini. Good afternoon, ladies and gentlemen. As CFO, I'm pleased to share an overview of Shivalik Bimetals financial performance. Our principal objective remains the creation of sustainable long-term value. As you are aware, the global economic landscape presents its share of complexities. Yet our commitment to expanding our value-added portfolio and disciplined financial management has allowed us to maintain a satisfactory level of profitability. In the third quarter of fiscal '25, our consolidated revenue from operations reached INR 123.8 crores, while this figure is just slightly below the INR 126.21 crores reported in Q3 financial year '24, it is nevertheless a good outcome given the headwinds facing our multiple end-use markets globally. Despite a flat revenue growth, our profit before tax margin increased by 159 basis points to 19.80% and our profit after tax margin similarly improved, rising by 142 basis points to 14.86%.

These figures are the result of our steady and systematic push into value-added components and our maintaining a tight lead on cost, both on raw materials and operational costs. Examining our segmental performance reveals a varied picture. Our thermostatic bimetal segment has shown resilience in the Americas. At the same time, the shunt resistor segment saw a notable growth in India and other parts of Asia. Although there was moderation in the Americas and Europe, it is worth highlighting that the Shunt segment in India grew by 34.81% in 9 months financial year '25. Given the fact that the Indian economy is expected to grow by around 7% in financial year 2026, we look forward to keeping this momentum going. Looking ahead, we are exploring opportunities in value-added component manufacturing, forward integration, potential joint ventures and strategic inorganic growth with the aim of expanding our business, diversifying our target markets and creating strong pillars for future growth.

When looking at the increase in net working capital days and inventory days, we are paying close attention to the factors driving these changes. Measures are being taken to improve working capital efficiency and sustain liquidity. A considerable proportion of our raw materials for bimetal, indeed about 75% are sourced internationally, resulting in an inventory cycle of approximately 180 to 200 days. We are working to cultivate domestic supplier relationship to streamline this process and reduce working capital. This is a long-term endeavor and will bear fruits in time. Finally, I can confirm that the Board has declared an interim dividend of 60%, that is INR 1.20 per equity share. This decision reflects our commitment to continuously reward our shareholders while we build long-term shareholder value.

I will now hand over to Sumer Ghumman, Whole-time Director, to share a few words.

Good afternoon, everybody. Looking at our position for quarter 3 financial year '25 and 9 months ended financial year '25, our focus is on growth that is both meaningful and sustainable. The results you see today reflect our vision of building a company that is capable of withstanding market challenges while also capitalizing on opportunities. Our forward integration contracts are expected to contribute to our performance in the coming 6 months with contracts signed with leading global OEMs for high-value components. Simultaneously, we are progressing with our backward integration initiatives, ensuring that we remain well positioned to meet the evolving demands of key sectors. From April 2025, we are evolving our resistor strip business with the addition of higher precision, higher value-added components, further strengthening our forward integration strategy with key customers.

This evolution will allow us to offer a more comprehensive range of high-value SKUs, strengthen our relationships with global OEMs and reinforce Shivalik's position as a trusted supplier globally. The company is focused on building strength in new niche applications and charting strategies to penetrate new geographies, further extending our reach with direct presence in new markets such as our wholly owned subsidiary, Shivalik Bimetals Europe FRL established in Italy. Looking ahead, the second generation of promoters, Kabir and I are determined to implement strategic initiatives designed to catalyze the company's growth skill sets and sustainability. This includes a focus on enhancing capabilities for manufacturing complex high-end components and exploring opportunities for inorganic growth. We are committed to delivering sustainable value for our stakeholders, scaling up operations on a global level, strategically expanding our product offerings and increasing our share of our customers' business.

Thank you for your participation in today's call. Let us start with the Q&A session.

[Operator Instructions] Our first question will be the line from [Indiscernible]

Congrats on good set of numbers. Sir, my first question is on that -- if you look at the last 6 to 8 quarters, our quarterly, we have a flat run rate. We are somewhere between INR 120 crores to INR 125 crores on an average. So, sir, how are we expecting the growth momentum going into Q4 and FY '26? So that is my first question, sir.

So, at this point, dividing your question into 2 areas, as far as quarter 4 is concerned, you see we are already, as we had indicated a few quarters ago as well, we could foresee that things will start changing from this quarter onwards. As of now, it seems like that is exactly where we are, and we see good encouraging signs of recovery in all of those areas where we have been witnessing a flat situation in the last multiple quarters, as we mentioned. As far as the next financial year is concerned, some of the things that are going to contribute to growth are related towards 2 or 3 areas, which include addition of certain, as we mentioned in our opening statements, certain forward integration strategies, which are mainly related towards adding more value to our existing products and as a result of that, getting more business because a certain set of our customers are looking for those additional processes.

As of today, we have already set up some of those things, some of those thing’s sampling, et cetera, has already been done. So, some of that business is going to start, as I mentioned, April onwards. small quantities of that business have already started, but a larger portion would start April onwards. And one could say that things in those areas should be more on a full swing level in the second half of that financial year, contributing towards overall growth. And if what we are witnessing now in this quarter, if that kind of trend continues or that kind of growth trend continues, we should see that the next financial year should turn out to be fully recovered.

Sir, there are a lot of tariffs on steel and aluminum in the U.S. you can see North American markets, new tariffs have been applied. So even the automotive industry there is shaken. So, what gives you the confidence that going ahead, we are going to have a better growth? And secondly, when we are saying we are going for the forward integration for the new products. So, are we going to be competing with our clients? So that is my second question.

So as far as tariffs are concerned, as per the information that we have right now, this affects none of our products. So, we are safe in that area. How things pan out in the future, of course, I cannot comment on that. As far as forward integration goes, so no, this is not going to be direct competition. In fact, a few of our largest customers in those areas are the ones who wanted us to do this kind of forward integration. So, it is actually something that is going to bring value to the customer. Yes, there are certain forward integration activities that are already being done by some of our key customers. But a large portion of those, they want to be dependent on us to do it for them and not do it in-house because that is not their core business. So, none of these activities that we are into will result into -- none of these initiatives will result into a direct competition with any of our customers.

Our next question will be from Pratik Choudhary.

First, on this, the forward integration, which we are talking about, can you elaborate a bit more on this, what exactly it is and how big can this be for us? And also touch upon on the overall economics of this product from a margin and working capital point of view. And same is for backward integration as well. What exactly we are doing in backward integration?

Sure. So as far as forward integration, the areas where we have already proceeded and the development parts or development is already concluded. In those areas, it is mostly related to -- you see our shunts eventually go into sort of a further assembly, like a subassembly, which is directly then placed into any of these devices such as battery management systems. So, making that entire assembly is, in a way -- in a nutshell is what we mean by that kind of forward integration. Although there is another form of forward integration that I will get to after this. So, in that case, the simple way of looking at it, although it varies from certain parts to certain parts, but the simplest calculation for a vast majority, I would say that, let's say, there's a $2 component of a shunt the possibility of supplying it as the finished the subassembly can be anywhere between the $20 to $30 mark. And these are numbers that we have taken on a more conservative side, assuming that as volumes grow, maybe we'll be asked to reduce prices, et cetera.

So, at a lower level, it is almost a 10x of value in the top line. And as far as the bottom line goes, it is, in some cases, somewhat in line with our existing margins. And for certain components, it is even higher than that. So, what that basically means is that even if we target in the first year, just 20% or 25% of our business that can be converted into such assemblies, and let us say that all of the conversion takes 6 or 7 months. So even if we get in this year, just 4 or 5 months of that 20%, but it is 10x the value, so you can sort of do an estimation of where it can go. But when we look at a term of, let's say, 2 years from now where a lot of such components can be converted into that, that will translate to a very different looking number, which means that we can see a situation where our total revenue can also be about more than double of what it is right now in the shunt business as a result of this.

And also, what happens is there are certain customers or target customers or customers that we are trying to target who would not buy in any other form other than that finished assembly. That added business I have not even included into that, that as a result of creating this capability of being able to supply this and making this investment and being able to supply it, what is that added business that we'll get. So that is something that is yet to be seen as to how much more business, but there is more business that we can add as a result of that.

Just a clarification on this. For example, just from an ease of understanding point of view, if INR 100 of existing piece of business gets converted into the forward integration, existing INR 100 was making 20% margin. If it gets converted, for example, it's 10x. So, if 10 gets converted into INR 1,000, INR 1,000 would also make 20%?

Yes, on the lower side, yes. But in a lot of the components that we are working on at this point, it could be even higher than 20% in those cases.

Okay. And talk about the backward integration, then I'll come back in the queue, sir, what exactly we are doing in the backward integration?

Okay. Before going to backward integration, I'll mention another thing about forward integration. There's also a large chunk of our business that we had been working for a long time with our key customers for converting from strip to components, which they are currently making. So, we have concluded that development activity with that particular -- just 2 customers actually. So, from April onwards, we are going to be converting in a 6- to 8-month period that entire business also into components. So that is a slightly different form of forward integration. So that automatically, when we supply in just plain coil strip form versus when we supply a finished component, the value addition, as you can imagine, is extremely different between the 2 cases. So that has already been concluded. When I say concluded, means the contracts and the agreements for supply of such components has already been signed and at this point, sampling is being done. So regular business we expect should start from April onwards.

Now getting to the backward integration part, you see when at some point in his opening statement, Rajeev had mentioned that when we talk about sourcing certain raw materials, whether it is for certain alloys as well as certain materials like copper, et cetera, for both bimetal and shunt, we buy them in finished form, and we are exploring opportunities wherein we can go backward towards doing some of the processing of those materials over here. So that improves 2 things. One is it reduces cost. Second is it reduces our lead time of getting the materials because if we can get it in one standard, one type or fewer standards or fewer standard sizes and then do certain processing in-house over here. So, it just makes our entire supply chain system more efficient. Of course, for that, we will need to add certain processes, but none of that require a very significant investment. So, we are exploring those opportunities wherein we can go a step into our backward integration by processing some of our raw materials in-house rather than buying them ready to use.

Our next question will be from Kayan Irani.

Mostly on the lines of the business and why we are doing these forward and backward integrations wherein we were concentrated on like our core business. And now as the business is kind of facing these headwinds, we've decided to do these forward and backward integrations. But why haven't we done them before? And like what's the plan 3 years down the line? Because from what I understand from the earlier questions, the shunt resistor revenue will go up substantially and the Thimetals or bimetals portion of the revenue will go down. So why are we making all these changes while the overall business is facing such headwinds? So, if you could just expand on that?

So, the answer is a little different for both categories of products between the 3 verticals out of that when we talk about bimetals as one and shunts as one. So, first of all, in bimetals, we are not looking at any kind of forward integration opportunities because forward integration simply means that we'll have to go into some kind of a commoditized assembly wherein -- which will go into a circuit break or something. We don't want to go down that route. So, we want to only go down the route of forward integration in the case of shunts because there are certain value-added assemblies to be made. There is a certain technical barrier in there. We don't want to go into something which increases revenue at this point, but does not have sustainable margins over a longer time. So that is the reason we are doing that for shunt.

And why now? To answer that, we basically got the expertise of first making the strip for the shunt resistors and initial years, let's say, 2015 onwards for the first 3 or 4 years, that's all we did. We supplied it in strip form. We had to invest in a lot of capability as well as a lot of specialized equipment to be able to produce those components in-house. And that was our next step. So, the new business that we did after 2018 onwards was mostly in those component forms. So, one can say as we went down towards smaller and more value-added components in the shunt resistor space, which is in more recent years, like, let's say, last 3 or 4 years, is when we were able to create a certain credibility. And only then would it make sense for us to go one step further rather than when our components itself are not fully established to go another step forward into the chain wouldn't have made sense. So, that is one of the reasons we are looking at it now.

The other reason, part of it is something you have answered yourself. We have seen sort of a flat situation with certain markets with a considerable reduction in orders, et cetera. That gave us the ability and the time to be able to add this technology or understand this technology even more because these are not very simple processes of making these assemblies. Of course, otherwise, like I mentioned, just in the case of bimetal, we wouldn't look at getting into something like this, something commoditized like that. So, it allowed us that free time or I would say the reduced orders allowed us to be able to work more and more in this direction. And we discovered that this may be actually a very good step for the business overall. And similar thing with backward integration, why we are looking at processing some of the backward integration, which is raw material based mainly is because of the raw material cycle or the working capital cycle and the issues we face over there because of the long lead times.

You see some of our suppliers, they take a longer time to process these materials, not because it takes them that long to make the alloy itself, but to finish the alloys in those sizes because of their own restrictions and capacities. If we are able to do that in-house or a part of that process in-house, that can reduce this to a significant extent. And why now for that is because the capacities were running at -- you may be aware that until 2021 and '22, bimetals were running at full capacity, then we added capacity for that. That added capacity would help us in processing these materials is the reason why we are looking at it now and not earlier.

Got it. All the best for this. So, like I just have one more question. With regards to your geographic profile, right? I think we've seen a lot of volatility, and it's kind of good also that we have differentiated across geographies and diversified so that different geographies kind of help us retain that revenue and volume numbers. But going forward, and as I can see, India portion is really going up. And I think you all had predicted that as well as smart meters and everything come into play. But going forward, how do you see this entire picture turning out? There's a lot of talk on the street about how CapEx is actually going down in India. It's not up to the expectation. So, going forward, how do you see this geographic profile turning out?

We feel that there's a possibility, things in India could also turn volatile. But since we are seeing a positive improvement in other markets, we are hoping now that -- and to be honest, those markets have a deeper effect because we are primarily export business. And if those recover and India sort of slows down just a tiny bit also, even then in that case, overall, the growth will look very positive.

Our next question will be from [indiscernible].

[Indiscernible] Would you like to elaborate on that?

I’ll answer that. In fact, the reason why you see this, we have actually -- when it comes to the shunt resistor for the smart meters, I would say that any of the relays that are produced. Now just going back to basics for a second, the shunt for the smart meters goes into a relay. Now most of those relays are imported from China as we speak now also, but a lot has been converted now from import towards domestic manufacturing. And in fact, about 2 years ago, 95% plus of these relays were being imported from China. Now a certain percentage, a larger percentage, I would say, about more than 30% or close to 30% is being made over here. Even then in that case, a lot of those are still importing assemblies or initial components are still coming from China. So, the number that you see where it should have been INR 25 crores, but it's INR 10 crores is because of that reason.

Now as more and more of these relays are produced in India, we will get that entire share for it unless, of course, certain components still continue to get imported, which is highly unlikely because in order to have that Make in India fulfillment of the percentage of components, it would only make sense for the relay manufacturer if they're making the relay in India to buy the Shunt resistor from Shivalik.

Got it, sir. And so, in fact, electrical contracts that we make, there was also an opportunity to cross-sell it to the relay manufacturers, right? And the blended value that we provide to the manufacturers were around INR 100. So, are there any cross-selling that we are currently seeing? And how is this segment going right now?

Yes. So, we are seeing that. And that also has the same issue. If the relay is not manufactured here, then the ability to supply there is less. But then also when we say that because we are not going to have the 100% market share in those silver contacts, the reason being because in silver contacts, there are other suppliers in India as well. So, we get a smaller percentage of business share for those components. So, I would say that when we look at a INR 10 crore supply of suns into the smart meters, we are looking at about roughly about 70% or 65% or 70% of that value of silver contacts going into the relays for smart meters.

Our next question will be from the line of Akash Vora.

I have actually one question for each segment of our business, for shunt and bimetals each. To start bimetals has been pretty much a bread butter business for us since many years. And I think we have a decent amount of global market share there. You are expected to increase our market share in the coming years reason being the bigger players are exiting from the market, but that does not reflect in the numbers. I see that we are struggling in pretty much most of the economies and even in America, we are just around 3% kind of a growth. So would like to know your comments there.

Right. So, what happens is that when we start developing a new account, even with our existing customer, let's say, for a new geographic region, you see oftentimes, it takes a certain amount of time for first the development to take place and then for the quantities to continuously increase to a certain level. So, for example, if there's a 50 metric ton opportunity, let's say, somewhere in the U.S. geographic region, and the buyer or the business would initially start maybe after a year or so of development towards first 5% and then 10% and then 20% and so on. So, it's not something that translates immediately into all of that into business. So, what we look at as a positive sign is that those developments are taking place or have taken place and certain amount of business has started. Now how long it takes for the buyer also to switch most of it, you see it depends on certain factors.

Now when demand is increasing, businesses are growing, certain activities like these tend to speed up. And when things are slowing down and when things generally business is slow as we have seen in many geographic regions across the world in recent, let's say, 4 to 6 quarters, you see these kind of development activities also tend to take a bit of a bad seat. So, I would say that it's very positive the developments that have taken place. And in fact, I would say that some of our business in the bimetal area would -- one could say that we have been resulting in this flat or lesser fall in business mainly because some of this added business has come from those developments. If that business had not come from those developments, I would say that the downside would be more than what we are seeing. If you see, we are looking at our revenue going from INR 126 crores, let's say, to INR 123 crores, maybe in those cases, that would have been another INR 8 crores, INR 10 crores shortfall.

So, I would say that we are closer to a flat level mainly because of that because when the U.S. market is at a 15% decline or 20% reduced orders in the European market, then those numbers are still showing up as overall is flat because some added business is coming from such developments.

Understood, sir. Sir, finally, what would be our growth guidance on bimetal segment for, let's say, FY '26, FY '27?

Sorry, could you just say that again, the first part got...

What would be your growth guidance in the bimetal segment for the next two years?

See, the information we have from our largest customers, when I say largest means customers such as Schneider or ABB and Ligra, and they are talking a very similar language about an expected growth in their business. They expect that they're looking at a 20% to 25% growth. Now of course, where is that coming from? I think they are attributing it more towards the development work that is happening in India or maybe it's related to infrastructure highways or whatever they feel or they feel that the real estate markets are looking positive. For whatever reason, this is the information that they have given us that they expect that the Indian market should have that kind of a growth. So, they have asked us to remain prepared in these years, in the coming 2, 3 years for those kind of growth numbers. When it comes to the U.S. and which is a very major contributor towards what things look like overall, we have not this kind of a growth number, but we have been asked to come back to the kind of quantities we were supplying to. So, supplying maybe a year ago or so.

So, I would say that we are expecting with our new developments and added business coming from there, we are expecting that we should see in the 2-year period, anything between like 18% to 25% kind of a level. That's something that we believe or we safely feel as on the basis of the data information from customers. Surely, of course, I imagine that such information is on basis of forecast and have been times in the past, such information has, like the reality has been different from it. But as of now, we have no choice but to work on that.

Got it. So, now coming to shunt business, [Technical Difficulty].

It’s not 10x the value, and as far as the capabilities and the capacities are concerned, so we have already partially invested in those capacities or the capabilities to be able to manage this forward integration. Some part of that development is already done. Some part is in progress. But we have a brand-new dedicated manufacturing facility for this purpose. And a certain portion of that facility has already been established for this. So yes, so we can say that we have sort of the capacity as well as the capability available for it.

Our next question will be from Pratik Shende.

You explained that the slowdown in bimetals in India is more related to the macroeconomic factors. My question is more to understand that through these bimetals and application and that depends on the infra cycle, right? So, basis your past experience, what is your sense that are these cycles typically long cycles or shallow cycles? And whenever these cycles turn, what is the delta you have in your realizations? That is my first question...

See, these cycles, actually, the thing is that these cycles are a little bit -- probably a little bit different at this point from historical cycles. It seems like the government is more oriented towards development projects. And of course, a lot of our switchgear business or a lot of our -- when we supply to switchgear is related to that. And I think at this point, with the reason behind why the government is also keen on having more liquidity in the market, allowing more money in the hands of people spending money is also may be a factor wherein they want spending to increase. They want people to spend more as well as they are spending on infrastructure projects. So, we feel that the current situation may be different from a historical trend. At least, again, this is again, and these guys, our large customers obviously have more in-depth research on these things. And this is the kind of information that we have received from them. So, I think that to compare it with anything from what's happened in the past would not be correct.

Got it. And sir, when we are seeing a volume degrowth, are you facing the impact on your realizations too right now?

No. As far as realization is concerned, it's a set methodology with our customer, which is related to the LME and the cost-plus method. So that is continuing. Even the delta, as you said, in the cyclical business nature, it is never going to impact our margin and even the overall realization from our customers.

Got it. And sir, my second question is on the Shunt side. So, for a moment, let's take a scenario that the EV penetration in North America and Europe and maybe in India stays where it is over the next 3, 4 years. So, if that's the case, how do you see the ramp-up of your shunt business?

So, you see a lot of our shunt business, even today, what we do specifically for the automotive market, more than 50%, I would say, in fact, closer to 60% of that we know is not related to EVs. It's either generic or it's going into specifically ICE or hybrid cars. So even if EVs fail to take off, we feel that we have ample opportunity within the rest of the automotive sector. Now another factor, of course, EVs give us more business overall because the value of the product as well as the value add may be higher in some cases. Again, it's not something I can generalize. But it's definitely a higher impact on the top line because the components are more expensive in nature. Now where we feel that we can get a lot of growth irrespective of the 4-wheeler EV market is EV 2-wheelers, which is bound to happen one way or another in specifically a market like India.

And we can all see things going in that direction as people get over these safety issues related to fires and all, which will happen eventually because as you can see, that happened in China as well. And China is the best example to compare with where we feel that there's a possibility that the growth coming from 2-wheelers for the next few years may be able to give us a lot more EV-related business than anything else. And of course, if over time, EV 4-wheelers will also come in. And so even if it stays flat for some time, we still have a positive outlook for those in the future.

We will proceed with the next question. So, our next question will be from [indiscernible].

So, I have 3 questions. Firstly, just on the bimetal piece once again, if I look at the past 3 quarters, there's been weakness in both Europe and Asia regions. I just wanted to understand those regions a bit better. According to you, what's led to the slowdown in both Europe and Asia? And specifically in these geographies, how do you look at things moving in the bimetal front over the next few years?

You see our analysis or whatever we have been able to gather is it's mainly because of reduced demand. And where things would be -- I mean, now, as I mentioned earlier, answering somebody else's question a couple of times was we have a good forecast for the future. But what happened in the last 3 quarters or so is the only thing we can attribute it towards is just general reduction in demand.

Okay. The other thing was in the press release, you mentioned the introduction of a smart DC current sensor. Could you talk about that? How does this product work differently? And what are the benefits that it gives the customer as well as us.

So, in very basic simple terms, what initially when we were talking about forward integration initiatives, this is one of the primary examples of that. So, what that is, is that we've launched a new product. Now these are like, as of now, what we manufacture are shunts that are custom-made for a particular customer and then they do all the processing after that, and they make certain other components, add certain other components to it, make a certain device and install it wherever it needs to be installed, whichever application it may be. So, what we do is we manufacture that particular component as per the design of the customer. Now other than that, there is a pretty substantial market for a finished assembly, which means that this mounted on along with a PCB module and which can be straightaway placed into the device it is meant to go into without any other manufacturer involved in between.

So, a lot of, let's say, a smaller volume BMS manufacturers would like to buy it as it is. Even a lot of smaller number of, let's say, many other types of regular EVs like, let's say, golf parts or electric wheelchairs. There are so many other electric vehicle applications, which are smaller in volume per customer, 10,000 units, 15,000 units, 5,000 units. None of those people, obviously, you can imagine, are going to have like an in-house facility to manufacture all of these things. Now a customer like a Vishay or a HELLA or Continental will do all of those things in-house. So, to our target, those cataloged finished assembly, PCB module assembly components is why we have come out with this launch product. And this is basically a product that we will be selling a majority of distributors, distributors who are stockists or distributors of many different types of resistors or resistor type products or related products like these, we will be supplying to them these kind of standard catalog products. So that's what it basically is. So, what you're doing is you are instead of supplying a component to a large player, you're basically manufacturing these as -- for the next level of integration, the forward integration.

Our next question will be from the line of Richa Agrawal.

Sir, my question is on the North American market, which remains a key market for us. So, under Trump administration, it seems that the kind of focus that was there on green energy transition or even EV is likely to take a hit. So, are you sensing that kind of slowdown or nervousness from your clients that the growth may not be not just in EVs, but also in energy storage applications, there could be a hit long cycle?

As of now, our components, a very, very negligible percentage of our total existing business fell into the energy storage. So, whatever we were expecting out of energy storage was more related towards future business. So as far as existing business is concerned, such policies, we don't expect for us to be taking a hit on that. Maybe it might have an impact at some point for future business. But we also feel that such opportunities are plenty within our own markets such as the Indian market, wherein we should be able to do business and get additional business in these 2 segments from within our markets as well, irrespective of what happens in the U.S. And again, when it comes to automotive, like I mentioned before, that a lot of our existing business as well as a lot of our new developments that are going on are actually not just restricted to EVs. There are a lot of components that go into both segments of vehicles. And then there are certain generic types of shunt resistors that go into power window assemblies and tailgate assemblies, which are applicable to whichever type of automobile it may be. So, to answer your question, as of now, our existing business, we don't expect to take any kind of a hit at that point. But maybe for how things would have been in the future, we can't say.

Okay. And sir, what about the inventory correction situation? I mean, is that part over like demand -- fresh demand is one aspect of it, but is the inventory oversupply taken care of?

Yes. As of now, we feel this quarter onwards, we are seeing a good trend towards things going back to normal more. I wouldn't say it would go back to those times where customers were building that excess inventory. But I would say that this quarter, as we had expected, this quarter onwards, January onwards, we have been getting good business as well as we foresee from the forecast that we have that the trend should continue.

Okay. And sir, do we also supply this [indiscernible] company into China? Because I think maybe a lot of at least EV development focus is happening more there when it comes to the...

That's right. So, one of our key customers actually is based in China. It's not a Chinese company, but they buy their requirement for these shunts. That's only one major supplier that we have in China. We do also supply a lot of different types of shunt resistors to small size to certain customers in Taiwan. And some of those directly, indirectly would end up in China. But the only direct sales business that we have with a large customer is a customer of ours who insisted that we supply that component even though they are based in China.

Our next question will be from Agam Shah.

Sorry, I joined in late. So, I missed your opening remarks. You might have answered, but I just wanted more clarity. So, as you said, the inventory correction is over and we are seeing growth. So, is it fair to assume that we'll be resuming the growth trend for both the business verticals for Shunt and bimetals?

See, for Shunt, we are seeing the trend normalizing coming from our U.S.-based customers. For bimetal, we don't have that strong forecast from the U.S. markets at this point, but we have a more than usual positive forecast, growth forecast from our Indian business, which is a fairly large chunk of the total bimetal business. And when we look at our orders, we're actually seeing that, that trend it was not just a forecast, it's actually going in that direction.

So broadly, if I take it this way, so maybe this year, we might end flattish or whatever. So next couple of years, we should be resuming maybe high double-digit growth with new products coming in for forward integration and all?

Yes, I would be confident about that because of all of these initiatives that we have worked on and a lot of these materializing as we speak because we've been directly, indirectly speaking of such initiatives for the last 2 quarters. And now, of course, you can imagine that some of these technical things take time to develop. And now with a lot of those initiatives actually materializing and converting slowly and steadily into business, and they're not just on drawing boards. So, we feel that, yes, combine that with, let's say, even a slight improvement in all those areas, then the 2 things are combined, we feel that, yes, we should have a strong growth in the next year.

Okay. And on the Shunt side, so the INR 200 crores, INR 250 crores, so is the entire -- can you just give a broad idea? So, on the Shunt side, how much is being contributed by EV vehicle on automotive side? -- including all the regions? And what would be non-EV or other areas?

If we just look at the automotive business, which is roughly about 25% of our total revenue, I would say more than 60% of that is non-EV. Actually, that one could say it's more like 50-50 because there's a gray area between wherein it's probably even, we can't say whether these components were utilized in EVs or non-EVs. But I think to safely put it, one would say that roughly half of that business is linked to EVs. So, I would say that, let's say, 11%, 12% of our total business at the most is directly related to EVs. And that, by the way, also includes some of the 2-wheeler EV business that we have in India, which is where we expect to see a large amount of growth for obvious reasons.

Our next question will be from Rohan Vora.

So, the first question was on the forward integration that we spoke about. So, what is the competitive landscape in that? I mean I wanted to understand we will be taking away market share from some other players, right? So, what is the kind of competitive advantage that we have to take that market share? And also, what would be the bought-out component, say, $1 of application goes to $10 per unit. So, what would be the bought-out component in that? And how ready are we with the capabilities? So that was one. And the second was how big is the India 2-wheeler Shunt market? And what is the market share today?

So yes, it's a pretty valid question whose business would we be taking away by doing this. But you see a large portion of what we are planning to do is coming from as a request of our existing customers. A lot of them are doing that process in-house. Now what happens is that they centralize the production of that, whereas components are required in different parts of the world. So, it is actually when you look at their entire supply chain, that particular component, fine, that particular value add goes away from them and comes to us. Maybe in the process, they might make some savings as well to offset for whatever they have lost. But it's not their core business that they're losing in any way. They're losing a very, very small part of the overall chain. But for us, this being a core business, it is showing up as a large portion, large opportunity.

But if you see what that person is, let's say, he buys that chunk component from us and then converts it into this smart sensor that we are talking about and then places it into a device and then that device goes into -- sometimes there are 2 devices. And so, the value changes so much in those that even if this particular component was bought from us directly is not going to -- and they lost certain revenue because of that or certain income because of that. It does not have an overall very significant impact from them. However, their efficiency improvement in supply chain as a result of this and the convenience of being able to get parts whichever location they want, those benefits, they look at more than this particular loss. When it comes to the bought-out components part of these devices or these assemblies, we can estimate that it's roughly about 50% to 60%, something similar to what our existing raw material cost for our existing part.

By the way, that is exactly the reason why we chose this set of our business. And I had mentioned before at some point that there are many similar forward integration opportunities all across our different types of products, but we wouldn't go for those because a lot of them are commoditized. A lot of them don't have the very technical nature of those assembly manufacturing processes. We wanted to only select and go for something that not only gives us -- which is not only of strategic importance, but also is a sustainable value addition value-generating business opportunity.

Our next question will be from the line of Prakash Gaurav Goel.

I just want to understand in the context of what we are seeing around us, how would you like to guide like earlier when you were meeting investors, you were guiding for FY '27 ballpark number for the turnover for both the segments. How would things pan out now? Because you made a very interesting observation like while the near term is very uncertain, you have a good visibility of future. So, I just want to understand in that context, how should we visit the top line guidance for next 2 years?

See, we split this into 2 areas. One is what growth we will get from our existing business without looking at any of these new developments, any of these -- by the way, we are materializing a couple of new product verticals, but those are still a little bit far away for us to speak about. But let us keep aside all of these developments, including forward integration. We feel that in the next 2 years with just our existing business, if we can just come back to that 15% to 20%, 15% to 18% kind of a growth level also, which we feel is doable, it's possible. And if the markets sort of go along with that in that direction, then maybe it's there. It could be there. But the moment we add these new opportunities and we take a certain percentage of them and say that, okay, this much will materialize in just a 2-year period, we feel very confident that we should be able to have in a 2-year period, I think we have the maximum level of confidence in getting to, if not higher than that, but at least to a 20% to 25% level of growth.

Our next question will be from the line of Pratik Choudhary.

Sir, you mentioned about the value addition from the component to a subassembly. But you also mentioned that for the strips that you're supplying, you will start to convert that into component supply. So, what's the value addition over there?

Yes, we haven't spoken much about it except for that one time. So, it's a good observation. Actually, we do a certain amount of our resistor business even now in strip form. And that is the only business that we do in strip form because after that business was developed, all of it was always developed in component form. So that business today, as we speak, stands at about roughly almost 17%, 18% of our total revenue. And basically, at this stage, it's all finalized. It's all done. The process is already in place. Sampling is more or less for more than half of those components has already been done. So, we expect that, that could convert into 2x of its current revenue. And the value addition could be at least 3x. So, for example, if you look at, let's say, INR 60 crore business, for example, in component form, that same strip business becomes about INR 120 crores. And the value addition in that, basically, the approximate EBITDA margins go from like a 23%, 22% levels towards about 27%, 28%. That should be in line with what we have calculated, right, Rajeev?

Yes. Sorry, I didn't get you.

I was talking about the section of business that we are converting from strip to components. 2x of top line with about a 4% to 5% increase in EBITDA margins is what we expect factoring in the increase in the top line as well.

Yes, of course. Actually, you see the cumulative business, in fact, whatever contract we have signed till now would be in and around INR 100 crores plus. And even that we can count those INR 100 crores, at least we will make in between 25% to 27% of the margin, which is much higher than whatever we are making right now, which is in the range of 15% to 22%. So, 4% to 6% range is compared to the current margin higher.

[Operator Instructions] That concludes our Q&A session. Also, as soon as this call finishes, all participants will receive a survey for your feedback. Kindly take a few short moments to participate in this quick survey.

I'll now hand over to Rajeev for closing comments. Over to you, Rajeev.

Thank you for your participation in today's call and for being part of Shivalik growth journey. For any further questions, please feel free to contact Dickenson, our Investor Relations partner. Thank you all, and wishing you a very pleasant evening.

Thank you, Rajeev. Thank you, Sumer, and thank you all participants for attending our call today. On behalf of Shivalik, please have a pleasant evening. You may now disconnect your lines. Thank you.

Thank you, Rajeev. Thank you, Sumer, and thank you all participants for attending our call today. On behalf of Shivalik, please have a pleasant evening. You may now disconnect your lines. Thank you.