Order book has increased to around INR66 billion. If you can give some indication from which segment the order flow intake were on the higher side. And secondly, the sustainability of the high margin reported this year or this quarter with the new order flow?
So this INR6,500 crores odd of orders, which is staying in the order book, the increment has come in aerospace, industrial and automotive. And these are margin-accretive orders. I'm unable to give you exact details, but suffice it to say that the order book today contains orders which are higher margin than what we are delivering right now. Only thing to note is that this order book will get executed over 1.5-year time frame. So not all of the orders will get executed in the coming FY '26.
Sir, does that mean that the initial capacity that we had planned at Chamarajanagar for which we had raised around 1.5 billion at the time of the IPO, the current shape is much, much larger than what was initially envisaged. And does that also mean that incrementally, our asset turns are going to be lower?
So as far as the original IPO money was concerned, that part of it went into clearing debt and so on. So answering your question, yes, earlier, we were very efficiently using because we lacked the capacity. So that's why we are able to cater to larger clients, larger clients with more high tech, more long-standing businesses and better margins, too. So in the interim, maybe a couple of years, the asset turns will appear to be lower, but then that's cost of business. In fact, the order book that we have published is only 5 years order book, and we do have significant amount of orders beyond 5 years, but we don't normally publish beyond 5 years.
Recently, government ordered some fast track deployment of new satellites after the India-Pakistan conflict. So does it provide some opportunity for us because the timeline was 3 to 4 years, but now they have reduced to just 1 year?
Yes, sir. So we have, of course, formed a space tech venture, and we'll keenly look at in what way we can contribute towards nation security and abilities in that space. And we have got some very good scientists who have worked earlier in government ISRO, etcetera, to spearhead this thing. So keep yourself tuned to our announcements. I think we are working very hard to make sure that we participate in the next generation of technology development for the country.
On the cash flow from operations side, the one line item, which is other non-current assets has gone up, and that's why CFO has become negative. What's that line item dealing with specifically? And how do you plan to tackle it in next year?
So if you noticed our working capital, net working capital also has gone up despite reduction in inventory. So this is a business that we acquired in our subsidiary in the industrial area, and they had orders with pre-agreed contract conditions, which we have to honor. So this total quantum of this is not very significant. Future orders in that subsidiary are all going on a full payment basis. So this particular thing has got delayed payment. So the way we have found a way for funding this through annuity funding through some of the banks, which we'll implement in the coming quarter.
On the PCB front, we are going for the expansion on our own. Will we also participate in the component PLI of this? And the second thing, if you could sort of highlight the financials of August Electronics, what you've acquired as well as your venture into space, what is the thought process behind getting into payloads and all of those aspects?
So as far as the high-density PCB is concerned, we have applied into the ex 2.0 as it were, and we are likely to get the PLI there. But we depend more on the capital subsidy. And as far as PC board business is concerned, our profitability does not depend on the PLI, but on the kind of quality of customers that we have. As far as August Electronics is concerned, without giving you an actual breakdown, the margins are better than -- in terms of EBITDA are better than our consolidated margin. And we have a business which is quite large, say, about CAD 57 million or so is the kind of business, and we're likely to grow also very well. We are one of the premier vendors in Canada.
Just on the Kaynes space tech subsidiary.
Space. This is -- so we've been a strategic partner for ISRO for more than a decade, and we have participated in most of their prestigious missions and all that. So there are 2 parts to this. One is our ambition to really be part of the technology evolution that ISRO is bringing. Second, the space by itself offers huge opportunities in terms of satellites, which can be micro, mini or regular satellites and even launch vehicles and so on and components thereof. So our objective is to make sure that the space tech will become a premier vendor for supply of all the parts.
Given the very strong traction in the order book, would it be possible to highlight given this traction, what is the sort of numbers you are targeting now for the next 2 years for the EMS business as of now? And what segment will be the key driver?
So in terms of growth numbers for our consolidated numbers this year, we can safely say that minimum 60% growth will be there in operating revenues. And we also expect about 50 basis points expansion in our EBITDA numbers, too. Now the basic reason for this is that the orders that are coming in are in areas such as industrial, which is, of course, smart meter, then aerospace and then also areas like automotive. Especially we now have orders from some of the top 3 Tier 1 companies and a significant amount of export is also likely to happen.
On the capex side, we are doing close to INR950 crores last year. So what is the capex you're looking at for this year? And within this, what will be for the EMS business and what will be for the OSAT and PCB segments?
So for EMS business, I think we will do whatever the maintenance capex that's required, and there are a few lines which have to be completed, etcetera. As far as the bulk of the capex is concerned, it is going into new projects, which is our semicon and HDI PCB. So just to remind you, the total capex for semicon is like INR3,400 crores and total capex for PC board is about INR1,400 crores. So between this year and next year and maybe some little spillover will be there. We will complete this capex. And then so that by FY '28, we can have significant capacity utilization in the newer businesses.
On the recent acquisition - can you throw some light how scalable this business is? What are you thinking about the potential of revenue and profitability from this business? And also, if you can talk about any further acquisitions.
So as far as the August Electronics acquisition is concerned, this is one of the premier vendors and quite healthy order won. EBITDA margins are numbers are better than in terms of our consolidated as of now. And we have seen their future plans for the next 5 years, and they are likely to grow at about 15%, 20% on their own. And with us taking over and putting our sight into it, we might get a spillover business from Chinese business transfer to India. So broadly, upwards of 20%, 25% of growth. You can expect 20% growth, at least you can expect in the geography there itself and another 5%, 10% of spillover effect to our business in India.
Any further acquisitions you are looking at it? And given this acquisition, you think you'll be able to fund internally? And for the further acquisitions, how are you thinking about it? And one comment on the OSAT, if you can also talk about what are the developments there?
So as far as first acquisitions are concerned, it's our stated position that we have a 3-pronged strategy. One is geography expansion with local basis of production. So this is like China plus U.S. will become India plus U.S. kind of strategy, and we will certainly acquire. As far as the OSAT business is concerned, the building construction is going on. We've got signed all the agreements with our collaborators, etcetera. And very shortly, the agreement with the government also gets signed. So we will have probably the first chip coming out sometime, if I'm not mistaken, in the second quarter or at least early third quarter. Third quarter, I think you can fairly expect the first production to happen.
My first question is on capex, wherein we have spent almost INR8 billion in the stand-alone entity itself, which compares to roughly INR1.3 billion last year. So just wanted to understand what was the nature of this investment? Where exactly was it spent?
So fundamentally, for OSAT and PCB, we basically bought the land and then some initial building work was done, land development, etcetera. As far as the existing business is concerned, we have completed our Chamarajanagar facility, which is a fairly global facility, wherein we have got a couple of exclusive zones for some large customers. So they had made some specifications because they are looking at us for $1 billion-plus kind of businesses over the next 5 to 10 years' time frame. The bulk of it has gone into basically developing customer-exclusive EMS facilities.
When you had acquired the smart metering business, you had indicated that, that should be contributing roughly 10% of revenues. And from that context, the increase in other current assets that we have seen appears to be fairly large. So how is the accounting being done?
So basically, the other current assets are those receivables, which are termed to be received later. They are not overdues, which we have agreed for a later -- so when we acquired this subsidiary company, we had two parts of business. One was the metering business, the device business, and then there was something like AMISP business, wherein the installation, etcetera. So we made a reckoning in thinking that, yes, when we acquire an order, they already -- we have to service those orders and those orders had certain clauses of money being collected over extended periods. But future orders, we are making sure that we become more device-centric and our orders will be like 90 to 120 days kind of collection period.
On the PCB and OSAT business, you talked about OSAT first in Q3. When should we see for both of this business, say, more commercial kind of revenue flowing through, if not full utilization, but say, 25%, 30% kind of utilization, when should we see that?
What we are planning to do is get all the validation that the real building start from next financial year. Why? Because for validation itself, they will take around 3 to 4 months. Our plans is to do the trials in the pilot lot building by July, August. From there, one after the other, one semiconductor at the time we wanted to do. And then this year, we are planning to take around 6 models. Towards the end of the year, there is a likely chance of some building happen. But otherwise, the next year will be a full year for building. When it comes to PCB, same problem. These boards after doing our trials and everything, this factory should be ready somewhere in November, December for full production.
What led to our shortfall of some shortfall of our previously stated revised guidance of INR2,800 crores? And are we confident of achieving INR4,500 crores in the current fiscal year? And also our other expenses in this quarter jumped up sharply.
So fundamentally, I think in our Q3 call also we had explained that there was a delay in execution of our smart meter business because we had a large number of orders, and this is a new facility in Hyderabad. Now we have overcome that, and we are quite confident. What we are saying is 60% minimum. So 60% minimum growth will take us to about INR4,350 crores or so. And if everything goes well, we'll certainly exceed that number with a much expanded at least 50 basis point expansion in our EBITDA numbers. So some of the other expenses could be due to reclassification of certain consumables and so on. More detailed one, I can probably ask somebody from finance to share with you because it has more to do with reclassification than to increase in cost.
My question is regarding your margins. So what would be our core EMS margin, let's say, for Q4 FY '25 and for the whole year FY '25? Because if my understanding is correct, there would be some employee expense and other expenses, which will be related to OSAT and base PCB business as we're expanding that too.
So our core margins are reflected in our consol only. See, the expenses which are incurred in development of the project, etcetera, pre-op etcetera, they get capitalized actually. So this year, FY '26, we are saying that core business will yield another 50 basis points, so about 15.6% EBITDA. So maybe the seat number is somewhere there, maybe another 40, 50 basis points over time. But I'm afraid that we'll keep building capacities and incurring slightly higher expenditure for future growth of business. So you can take around 15.5% to 16% as the kind of number in the core business.
Assuming current scenario, global scenario, can you talk on export opportunities? How is the inquiries currently?
So fundamentally, the aerospace business and some of the automotive, etcetera, now we've got global clients. So they do not only take requirements for the Indian requirements, but also requirements for production outside of that. So we think that we have now three businesses fired up. One is EMS, the other one is OSAT and PCB. So OSAT and PCB, significant amount of business will be in export. Maybe from FY '27, we'll start seeing its impact. FY '26 primarily these 3 sectors like automotive, aerospace and some portion of industrial would see some increase in exports. So maybe out of the total of, let's say, INR4,350 crores, maybe you can expect at least 15%, roughly, if I hazard a guess at this point in time of exports.
Current scenario is the tariff war, we are getting some inquiries and more engagement with the client, I'm asking.
Yes, sir. No, no, Sumantji, actually, what we are getting is a lot of big OEMs are seriously considering alternative to China. In the sense, they may not replace the entire thing. Obviously, that's a little difficult. But all the new products, etcetera, they will bring to places like India because I think U.S. is very much cautious in providing new technology to Chinese vendors. So I think we can look forward. See, tariff war will also kind of cool off at some point in time. And India has played that middle part very well. So I think tariff war will benefit our company.
I just wanted to understand the rationale of the Canadian acquisition more better. And is it also having some ODM capability? Or is it more just a geographical and business diversification.
So like in answer to the previous question, I had mentioned that it's margin accretive, the EBITDA numbers are higher than what we have at consol level at this point in time. The rationale for acquisition was that they have global customers, which we don't have access to right now. They do somewhat larger electronics in the area of instrumentation, in the area of energy, energy means petroleum sector, then, of course, medical and then IT, etcetera. So we will benefit, and we have looked at their business plan, 20% growth organically is feasible. So that is the rationale, to put it plainly, new customers, new geography and new business areas.
We have seen an increasing flow of our ODM business and the mix has increased significantly to almost 18%, including the product engineering business. And that also resulted in a better margin. So can you throw some light on which kind of products are we manufacturing in that on which segment?
In terms of ODM, our ability is in the area of industrial, is in the area of railways, with Kavach program and other things. And of course, IT IoT is another area where we have significant amount of ODM activity. So that is definitely going to go up going into the future. As far as the IT, IoT is concerned, because of server production taking off. So that's why we don't do commercial laptops, etcetera, but we do high-performance computing servers. And we have a few more clients in the pipeline. So that business will also increase.
Of the capex that you announced or highlighted for OSAT and PCB, INR3,400 crores and INR1,400 crores, how much will come from the government? And what will be the timeline of receipt of that amount?
So the policy is anyway published by government. So in case of OSAT Indian Semiconductor Mission, which has published this policy, 50% of eligible capex, which is excluding land and some parts of buildings. So in INR3,400 crores, about INR2,700 crores, we will get 50% from central government and another 20%, 25% from state government. As far as PC Board is concerned, we get significant amount, about 40% plus 25% roughly. So about 65% capital subsidy. These all come after the machines come here and we start up the operations. So out of INR1,400 crores, roughly 65% is something which is capital subsidy.