Sir, my first question is on guidance, sir. At the start of the year, sir, we had guided that we are looking to close the year with revenues of INR4,500 crores, which was subsequently toned down to INR4,000 crores, and we ended the year with close to INR3,600 crores of revenue, sir. Sir, how should, as investors, we look at this guidance? And what is the sanctity of the guidance that we are providing, sir? Because there is a very vast variance between what was expected versus what is delivered, sir?
Thank you very much for asking this question. We fully understand and appreciate your question. We did an aggressive top line growth in the year based on the order book and we got the electrification of the vehicle. And of course, the government projects where we are working is going to be at the faster pace. Giving a guidance of INR4,500 crores is almost 55% growth over the previous year. In the third quarter, I think we have turned out to saying about INR4,000 crores because of a few delays. And one of the largest electric vehicle OEM manufacturers has completely dropped by about 90% of the revenue, wherein we were the single supplier which has dropped our numbers. But we were quite confident in the last quarter of getting 2 government orders where the products have been done and the product testing have been approved. It is going to be done, but there is a delayed project. I think these are the 2 things that while we have delivered about 33% growth in revenue and 39% growth in the bottom line, we sincerely understand and appreciate that the guidance what we have given, we could not meet. Having said that, I think while we are looking at strengthening our execution capability, agility in manufacturing, and delivering the product on time, there are certain cases where it's beyond our situation where the customer is full and the drive makes us to hit the numbers. And that is one of the reasons that why we chose to say this time that we'll be outgrowing the market and we'll be doubling the market growth, so that our penetration is much more.
Sir, I appreciate this answer. But sir, 75 days into the quarter, we would be aware of how the quarter would be looking like. But the management comes on the television and holds on to the guidance. Additionally, even apart from the P&L side, the guidance was also that we would be just about marginal negative on the OCF side, sir. Sir, both of these guidance, 75 days into the quarter is actually a bit concerning when the actual numbers reported would be way off. Sir, how do you look at that, sir?
I think the intent behind committing those numbers in the last quarter stating that we have based on the product samples that have been approved. See, what happened is, while we have got the indication from the invoice from the customer, we started ordering the material. And in fact, if you ask us, we have started even the pre-manufacturing activities of this, which gave us the confidence that, yes, we'll be able to deliver. If you see, more than 50% of the manufacturing of those activities also has been in the pipeline. As I said, it is not a denied order, it is a delayed order. We sincerely apologize for that this has happened. But I'm sure that you would all trust me that it is beyond our control. And going forward, we will take this input in terms of committing for the future numbers. We are committing for our growth based on what market can pull in. And one of the reasons that you will see that going forward, we will be better like when our Executive Vice Chairman said, our dependency on every vertical, we are bringing it down. So, we are taking it into many other verticals, so that the impact on one business will not have an overall impact, but we will definitely keep this in mind and make sure that in future, we will be better preferred for mitigating these risks.
Sure. Sir, which is a fair enough point for the P&L side of you. But sir, OCF INR600 crores of negative, I think that is a bigger disappointment, especially when you kind of guided that you will be just about neutral or slightly negative, sir. So, you would have not guided, sir, why have we not been able to turn that around, sir?
Okay. I think it's a fair question. The operational cash flow, I think there was a little maybe misunderstanding. I was also in the call during that time. The 2 cash flows that we are talking, as a stand-alone EMS business, I wanted to bring it to all your notice that as a stand-alone EMS business, our cash flow was INR250 crores positive when compared to INR65 crores last year. However, as a consolidation entry, see 65% of our revenue today comes from EMS business where we are cash flow positive. The metering business, which is a specific model, this is the first full year we have taken and we are getting matured into this business. One of the things that happens is, this business model is a strategic acquisition for Kaynes in order to make ourselves getting matured towards a product-based company rather than an EMS assembly company. I just want to bring it to all your notice that prior to acquiring metering company, we have been supplying them the EMS business. So the entire revenue is not new to us. At least 50% of the revenue as an EMS business we have been supplying there. But this is a unique acquisition where it is not only making the meter but also installing the meter and also maintaining the operation and maintenance of providing the software. We are the only company which has got a unique combination of all the 3, and that's the reason for why Kaynes has committed and moved into this acquisition, which has definitely brought back the good amount of insights on product development, converting ourselves, Kaynes, into a product company and maturing into launching more new products in that segment like whether it be a water meter or gas meter, we are on the pipeline. Having said that, we should have anticipated this well. There were a lot of government delays, and the payment comes based on the installation. With various activities of the various state governments releasing the tender for supplying the meter, installing the meter, going to those houses and installing, there was a little delay. I would request you all to appreciate that as a stand-alone Kaynes EMS business, our net working capital days has come from 64 days to 54 days. However, the total number has gone up because of this. 65% of our revenue comes from EMS business where our receivables is only 35%, whereas 25% of the business comes from EMS where the receivables is 67%. We have worked out the strategy with the management team on how to mitigate this. We've been working with various organizations to see that how this business model can be mitigated. Rest assured, ladies and gentlemen, we'll be able to bring it back at least to a level of reduction. I think the inflection point has stopped and will come into the reduction, and we will come back in 3 quarters with positive results on specifically this entity. But on EMS business, we have demonstrated our ability of how to bring back both by working on supplier side and also on the customer side and brought it back. Ladies and gentlemen, trust us, in the years to come, we will manage the metering business and demonstrate our ability to manage the product development, which is going to be a strategic shift in the Kaynes organization from moving an EMS provider to a product provider, and at the same time, manage this working capital cash flow efficiently.
Just, I think the call is all over the place. So going forward, I think we are not giving guidance in the same business when you articulated it's a customer-driven business. And when you're saying demand is very good, what is stopping you off giving you the guidance? I mean, is it you see more deterioration in working capital, which will erode the revenue growth from here on also? So we are very confused if you can throw some light how the direction of revenue and working capital improvement will happen, because it has not happened so far. And you're not giving any guidance. So it's very confusing for the investors. If you can throw some light on aspects of both revenue and working capital?
Okay. And thanks for asking this and giving us an opportunity to explain our position. It is not that we are not giving a guidance for the revenue. We are not only giving guidance for the revenue numbers. When we are saying that the industry in India, the GDP growth is at 8%, the EMS space where we are playing has grown at about 18% last year or is expected to grow in this year 16% to 18%. We say we'll outgrow the market, we'll penetrate into each and every segment, and we'll double the growth of market growth is what the commitment that we have done. I'm sure that we'll be able to do that. But exactly, we don't want to put the number because you see, for example, the December projection of automotive industry was a mid-double-digit growth for this year, whereas the latest prediction phase, it will be a single-digit higher or lower double digits, which may impact on the offtake of the product. While we are trying to mitigate it by getting into the various verticals like, in fact, we are going to be getting into defense and training and, of course, space business and other things. But at the same time, we want to be a little cautious because the market is in a highly volatile condition. Nothing to do with our ability to deliver. Our capacity and capabilities is always available. So we are committing at doubling the growth of market growth, which we will be definitely coming back in every quarter to say that how the market has grown and how we have grown. In terms of working capital management, we will continue to be efficient in this area. You can rest assured that Kaynes stand-alone, the EMS business will continue to be cash positive, and we'll be improving it at least by about 8 to 10 days in the years to come in this segment. Having said that, the metering business, which is complete for the full year, we started with the receivables of INR521 crores to INR1,300 crores, we are putting our execution team to go and install it in every area. We will reverse the trend. That's what we can say. But we have a very clear road map of bringing it back in 3 quarters to track in this metering business also. Our order book continues to be stronger at INR9,000 crores plus. What we have been talking about and executing the new product in 12 months to 18 months, today, our ability to launch the product in 9 months, the full product has come because of the acquisition of new technology and new teams that we have got a product technology team. Our idea was not to give a guidance. What we are trying to tell is, we will better our growth of this year next year. We do not want to attach a number to that.
A few questions from my side. First, if you can help quantify what was the share of leasing-related revenues in our consol revenues for fiscal '26 versus '25. And how does the growth look ex metering portfolio? That's first question. How are we scaling up in terms of new applications on the power supplies and other aspects, including EV within the industrial business? Third is if you can share updates in terms of ramp-up of the rail portfolio with respect to Kavach solution. And do we see any headwinds on government offtake given that government finances this year are likely to be under stress?
Thank you very much for listing it out. I will answer the first 2 questions. One is on the metering business. The metering business contribution to our total revenue is around 20% to 25%, okay? Having said that, it is not that the entire 25% of the revenue has come because of the metering business. I'm sure that you will all be able to recollect that we have been supplying the components and the PCB for this metering business, which is around 60% of the revenue has already been coming. That's why when people say, oh, your growth, is it only because of metering business, 60% of this is our EMS business, which we have done, and we have added the box-build, software, and O&M business on to this. So the growth is like that in that business. The second question which you asked is, yes, the company is now launching the product for EV segment. And you can see our growth in the EV segment this year is about 28% growth despite the fact that one of our largest customers in 2-wheelers has dropped the production significantly by about 90%. That means, had that been in full, our penetration would have been much higher. This is one segment which is growing, which has continued to grow. And rather than supplying only PCB, we'll start working on the assemblies and products, which will make our value additions much higher. Every segment, as we said, we are going to diversify to make sure that our impact because of one business will not be there.
Sir, just a clarification on this. If I'm correct, last quarter con call, you mentioned that metering subsidiary receivable was somewhere around INR1,100-odd crores, and you were supposed to receive INR250-odd crores by securitization itself, whereas when we are seeing now, it has gone up. So if you can help me understand, was there any securitization done? If not, why not? Because we have committed that it is almost done during the last con call. And secondly, what has led to this kind of increase in receivables on the metering business?
See, this securitization, we have just started with one bank. And the first block where the installation is completed, bank has started accepting it. Bank would like to have the first month complete billing and realization. So we have the sanctions everything, but we have only discounted to around INR40 crores or so. Apart from last time, this quarter, again, we have discounted some INR40 crores extra. See, the installation and all reports, after that securitization takes place, and they are willing to disburse the money. Our key challenge is on the installation now, which is what we are working with the various organizations, public sector enterprises, and the end customers, and the respective GENCO or DISCOM to see how we can speed it up.
Sorry to harp on it again and again on smart meter business, but the communication from your side seems to be very off since last 2, 3 quarters on smart meter business and has created a lot of confusion. And if you see, your commentary has been that this year, smart meter business, FY '26 would be INR800 crores, but it has come at almost INR1,000 crores. And going forward, you will not be taking AMISP business and hence, the receivables, which is current, but not due, spending in other current assets or noncurrent assets, which is around INR250 crores, will come down. So that was not also done. In fact, revenue has increased, receivables have increased. And in FY '27, I would like to know that from AMISP model, how much will be revenue, and incremental other current assets, but not due incremental, what will be the situation there?
Okay. Sir, I just wanted to let you know, while we were at INR800 crores, when we got an opportunity to grab to offset some of the business that there was a delay in automotive business or there is delay in something, we grabbed every opportunity, and that is why we have grown in this. For the next year, while the INR971 crores of sales, what we did this year, in absolute numbers, we may remain same or slightly up or down, that's not a question, but almost 50% of the business will be in the old model and the rest will come in the new model. As Executive Vice Chairman said, we have to finish some more, and there is a contract that if the government is going to ask for more, we may have to continue to supply. So we will be definitely taking prudence. But rest assured, we have worked out the business model for this year. In next investor call, we will just make sure that we start a presentation with this for first 5 minutes or something and giving these numbers to make sure that we completely keep you all in transparency on how the business is going and how we are going to collect it.
So apart from the smart metering business, I think everyone is trying to get their arms around guidance. Mr. Muthukumar, you were on TV talking about this 2x growth. I wanted to get a sense of when do you expect to get to that double the market rate? Is it from starting now? Or is it going to be the third quarter is what you're referring to? And would that include OSAT and PCB as well to get to that sort of double rate? Or is that just the pure EMS business? And then I have a follow-up.
Okay. Sir, in the 2 x growth, I think we have launched 3 products and which is already in production now, SOP started. So we will continue to penetrate into every customer. And when the automotive business is growing at around 30%, share of business is a key driver for this business, and we'll continue to focus on not only introducing the new product, but also expanding our share in the business. And that is why we are confidently telling we are getting into this. The aerospace business is another one where we are substantially growing last year, and we continue to grow in this year. Like Executive Vice Chairman said, railways is another core. So see, as I said in the earlier or to some of you when we were talking, the industry is growing at 6.5% to 7% in India, our market space is growing at around 15% to 16%, and we'll be doubling the growth. Being in the Middle East war, even in the last quarter, we have performed much, much better and our supply chain agility was good. Our strategic stocking has really helped us in this. So we will be doing the 2x growth from the start. When I say 2x growth, it's not the 2x growth of our last quarter comparison, but on the market growth and our growth. I just want to make myself clear. And the market is going to grow at 15%, and we are doubling until we are there at the numbers. On OSAT and PCB, ours is a very, very strategic product. We are also evaluating how much of that is going to be consumed internally and how much we are going to give it outside. At the same time, we'll continue to focus on the end customer. There is a pipeline of customers that's coming in. And you know the OSAT ecosystems and PCB systems. We are strategizing it out. But at the end of the year, yes, the overall growth from those segments, we can see that either it will expand in bottom line or on the top line, depending on how we strategically use the product, through our own product by expanding the margin or selling it to other customers.
Sir, I don't want a number. The question was more what will change suddenly which will get your INR600 crores negative cash to breakeven? Our business remains the same. Even Iskraemeco, you moved out, which I think you have 2 more quarters to go. Correct me if I'm wrong. The rest of the business is your negative working capital. So what will take this INR600 crores was the question?
Sir, the INR600 crores by end of the third quarter will come to around we will try to work on the positive, but at least 70% to 80% of this will come down for sure. And by end of the year, we'll be positive. We have a very clear strategy quarter-on-quarter. I'm sure that the next earnings call, when we are going to be together, because it's almost 40 days have gone in this quarter, and the team is working on to put this into effect. We took a little time on this business because more of a product is what we were focusing, and we didn't anticipate this much of delay in the execution of the erection and commissioning.
Kavach solution update and government offtake headwinds.
Regarding the rail business, our Kavach product has received the initial approval, and we have got the trial orders. We are in the execution stage. We have done field survey and everything. We are expecting this year in the first half to complete all approvals and the second half to get a large portion of orders. Execution-wise, yes, we will have opening order in a big number, but a small portion will be out of that completed. So this is the status as far as Kavach is concerned. We are developing another 2 more products for the global requirement for one of the OEMs in the rail sector, that also. So rail business, I'm expecting this year to grow by around 20%, 25% because of these coming in. And the margins are going to be north of current 30% plus.
First thing is if you can share details about your metering subsidiary, what was the revenue for the full year EBITDA and what is the total receivable in this subsidiary?
Sir, as far as the metering subsidiary is concerned, out of the total INR3,626 crores, it's a subsidiary, coming in, about INR971 crores is the metering subsidiary's revenue, which is 24%, 25%. On the receivables of the metering business, it's about INR1,365 crores, including the -- in the total revenue, the receivables on this business. It is more than that because the first 2 quarters of this year, we could not execute while the metering we have supplied, the installation got hugely delayed, particularly in the rural towns where the government has given business. Our pickup has happened only in the last quarter where our installation is going. It's going to take about 1 or 2 quarters for us to complete the installation. That is why I have committed that it will take up to the third quarter for us to complete this.
Sir, just wanted a better clarity in this business. Going forward, are we going to continue to execute this kind of revenue with this kind of working capital? If not, then what is the factors which are giving you confidence that you will be able to reduce this working capital in this business? And if you can quantify something with concrete steps, it will be helpful for us to understand.
No, no, no. In the past, we have already agreed we are not going to take any orders like this. We are only going to take meter orders, and we will be supplying to the project teams who are taking up orders for the entire execution, like that. So further, it will be our EMS component only we'll be taking orders.
I have 2 questions. Firstly, this 35 lakh odd meters is broadly a INR1,400-odd crores order. So how many meters or if you can give some quantum in terms of how many meters are pending from this order? And secondly, like you highlighted, the smart meter business this year did roughly INR971-odd crores of top line. That implies that still there is another contribution of INR740-odd crores from subsidiaries. What is the breakup of that, if you can help us understand?
Okay. Sir, in terms of the metering, we will take another 2 to 3 months to complete the entire pending order of this, and which is what we are also putting in our calculations. On the other subsidiary, which is very prominent is the KEMPL, which is exactly the EMS business only. And we are continuing the EMS business and there almost, if you see our EMS receivables, the start of the year, we started with INR379 crores. The EMS revenue, I'll just talk about it. The EMS revenue is about INR2,655 crores with INR442 crores in the quarter 1, INR683 crores in quarter 2, INR667 crores in quarter 3, and INR862 crores in quarter 4. We started the year with INR379 crores of receivables, and we ended up the year with INR399 crores in the quarter 4, which sees that we have exceeded only by INR20 crores for a revenue growth of about 26%, which means our prudent management of receivables and our shorter lead time. Out of the INR2,655 crores, for your other question, one is Executive Vice Chairman answered KEMPL. There are 2 foreign entities, which put together on an average about INR300 crores revenue.
Yes. Just one more thing on receivables. You mentioned that subsidiary is INR1,365 crores. So how much will be this long term and short term?
I think you only estimated, about INR250 crores is noncurrent assets. I think that will be there. Rest will be current. I think our ability to now do the installation is going to be the key. There are 4 states where our team is working, and it is taking extremely high time for more than 6 zones. We are working on this. But we have put enough infrastructure and team to do this. And we now got a clearance from them to do -- almost from morning 6 to night 12, I think our team is putting efforts, and we'll speed up this process.
In balance sheet, the intangible asset in FY '25 was INR238 crores. And in FY '26, it is INR536 crores. So what was the INR300 crores increase? What was the key reason for that?
I think if you go back to the 2 quarters before, we did 2 acquisitions. One is in Iskraemeco, and second is August Electronics, which is in Canada and supplying in the EMS space to the big players in the North America. The intangible asset that has been capitalized on these 2 is about INR320 crores, and there was a clear thing on what is the order book and it's based on the current accounting standards, and we did INR320 crores. For all of your information, even though you've not asked this question now, I think we have committed that how we are going to do the amortization of this, our policy was once in a year. So in the last quarter, we amortized these intangible assets and that has added to our depreciation and amortization to a level of about INR32 crores. That is why the PAT in the last quarter has come down PBT, but we believe that the full year was around 10%. Going forward, I think we'll be doing this amortization on every quarter.
Sir, just to expand the previous question, if you could talk from a production value perspective, the earlier guidance of INR1,000 crores for OSAT, INR500 crores for PCB. Does that stay intact? Or is there any risk to that number? That's my first question.
We have not given any guidance like this. This is our first year. I'm sure and certain we will do a good number of PCB of around INR300 crores to INR400 crores, and OSAT of around INR250 crores to INR300 crores. But OSAT business and all, locally, there will be nothing to start with. It will be always in export mode only.