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Millworks Technologies Ltd.: Precision Engineering for Aerospace, Defence, Railways & Semiconductor — Transcript

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0:00[music]
0:14>> Uh welcome friends. My name is Avinash
0:17Gorakshakar and I welcome all of you to
0:19another interesting episode of Connect
0:21here Highfliers. Friends, as all of you
0:23are aware in these episodes we introduce
0:25to you emerging companies from emerging
0:27sectors and we make it a point to talk
0:29to the promoters and the top managements
0:31of such companies and this helps us to
0:33get first hand information which is very
0:36helpful for all the investors in
0:37understanding the company's business
0:39model, their growth journey, their
0:41future growth plans and aspirations and
0:44this helps all our investors in a very
0:45fruitful manner. And friends, today
0:47we're going to talk about another
0:48interesting company which is going to
0:50hit the capital market very soon. The
0:52company today we are going to talk is
0:53Bilworks Technologies Limited
0:55and I have the privilege and pleasure of
0:57having the promoter and managing
0:59director Mr.
1:01Shidarji, welcome to the show. It's my
1:03pleasure to host you and thank you for
1:05your time.
1:06>> Uh thank you very much Mr. Avinash
1:10for hosting. Thank you very much.
1:13>> Yeah.
1:14So Shidarji, first question which is
1:16very elementary, if you could just
1:17explain to us in a simple way what is
1:19exactly our company's business model?
1:22What are the precision components, you
1:24know, which we develop for a host of
1:26sectors like railways, aerospace,
1:28defense, semiconductors? If you could
1:30just give us a small overview and
1:33to add it to that Shidarji, if you could
1:35tell us, you know, how did this business
1:36journey start? I presume it's a first
1:38generation company. So how did it hit
1:40upon you to get into this business? So
1:42please if you can begin.
1:44>> Perfect. So I'll start off with
1:47our journey
1:49when we started off, you know, in 2021.
1:53You know, my passion and uh partner Mr.
1:56Madhu's passion has been in CNC
1:58machining
2:00to make you know we are basically
2:01mechanical engineers and uh shop floor
2:04people. And
2:06you know with our corporate experience
2:08of more than 30 years, we thought that
2:10you know it's time that you know we do a
2:13little bit for the country in
2:15and then be on our own in the
2:17entrepreneur's spirit. And then we
2:19started growing organically over the
2:21period of years.
2:23So uh Mill Works Technologies Limited,
2:26we are very clear on our business model.
2:30Uh we have two enabled business models.
2:33One is built to print. So last 5 to 6
2:36years you know prior to Mill Works
2:39formation also
2:41built to print has been our you know
2:43basic things. The customer here gives us
2:47uh the drawings and 3D models. So we
2:51make a feasibility study of those you
2:54know how to manufacture on a three-axis,
2:56four-axis, or five-axis machine. We make
2:58a feasibility, then give a quote, and
3:00then we get an order. So this has been
3:02our basic fundamental this thing. We are
3:05very strong in you know in machining of
3:08these
3:09three type of machine machining.
3:12>> [snorts]
3:12>> Uh over the period of years we also
3:15started off with a built to spec. You
3:18know the customer gives us the
3:20specifications.
3:21So now we our engineering team gives a
3:25proposal that you know this can be made
3:27like this and this you know with these
3:28tolerances.
3:30Uh once we get the approval from the
3:32customer, we make a prototype. And the
3:35prototype we submit to them, we get it
3:38approved, and then you know we move that
3:41into the production.
3:43So a built to spec is the gestation
3:46period is slightly higher compared to
3:48the built to print. Built to spec is
3:51having higher
3:53margins and then as we move forward we
3:56want to do more of you know built to
3:59spec components rather than you know
4:02built to print. You know, built to print
4:04will be there but you know, built to
4:06spec will be [snorts] you know, our
4:08forte.
4:09Uh, so this is uh, the business models
4:13which we are presently having. And in
4:17this business model what has happened is
4:20uh, you know, post COVID we felt that
4:23you know, being in one vertical, you
4:25know,
4:26prior to or just after COVID we were
4:28predominantly working with the rail uh,
4:31business. So, uh, very little of
4:35aerospace and defense we used to do for
4:37the public sector of
4:39public sector companies in India. So, we
4:41felt that you know, we have to be in
4:43multiple areas even though geographical
4:45conditions uh, doesn't affect our
4:48business model. So, presently we work in
4:51four different verticals. And
4:54one of them is aerospace, second one is
4:57defense, the third one is rail and the
4:58fourth one is semiconductor machinery.
5:01So,
5:02uh, every opportunity in defense sectors
5:05whenever we received an RFP or an RFQ or
5:08in the tenders of government of India's
5:10listing we have
5:11gone ahead and taken initial
5:15risk, you know, in getting those
5:17inquiries and converted them into uh, a
5:20successful orders. So, in last one and
5:24one and half years we have gone into
5:26every aspect of the defense projects
5:29whether
5:30the new customers coming out from Israel
5:33or
5:34from France or the government of India's
5:38you know, many MOD's uh,
5:40uh,
5:41you know, RFPs. So, we got into most of
5:44the activities in
5:46you know,
5:47in the defense sector and we have been
5:50able to successfully convert this
5:54RFPs into orders and some of them we
5:56have started delivering them.
5:58>> So
5:59>> as we move forward our focus will be
6:01more on the defense sector and it will
6:04grow at a much faster rate as we
6:07progress.
6:08>> Okay.
6:09I think she told me nicely put out by
6:11you. I just wanted to understand one
6:13answer which you gave me semiconductor
6:15machinery. So can we
6:17take it as you make the entire machinery
6:20for semiconductor or some components
6:22which are required in the semiconductor
6:24machinery if you could clarify for us.
6:26>> There are
6:28many semiconductor machinery
6:30manufacturers and in in India as well as
6:33in Europe.
6:35At this moment we are doing only
6:36components for this machinery.
6:39We supply this components to the
6:41machinery manufacturers. So this are all
6:45special purpose machines or SPMs and
6:49they are not high volume. They are one
6:51off you know the quantity is as low as
6:53one and maximum of 10 numbers. So at
6:57this moment only
6:59components we are supplying.
7:02>> I just say that you know tell me one
7:04thing just from a very layman point of
7:05view that you know you manufacture
7:07components for aerospace defense railway
7:10semiconductor as you said. So what is
7:12the total SQ capacity like how many SQ
7:14might be we having and where do we
7:16source our raw materials because I
7:17believe we use raw materials like
7:19titanium you know which is very
7:20you know precious. So how is the supply
7:23logistic you know managed as far as the
7:25raw material sourcing is concerned if
7:27you could please tell us.
7:28>> Yeah
7:30one is that
7:32we are working predominantly right now
7:35you know more than 50% is in aluminum.
7:38When we get
7:39an RFP when we make the feasibility
7:41analysis, we inform the customer on
7:44availability and non availability. Now,
7:47in the rail sector and in some of the
7:50basic
7:51machine
7:52in the machinery,
7:54there are raw materials which is
7:56available in India. So, we tell the
7:59customer that, you know, this is an
8:01equivalent which is available in India.
8:03Can we go ahead? And we take it up
8:06post their confirmation. Now, when it
8:09comes to titanium and
8:11you know, Hastelloy or you know, special
8:14plastic material, you know, all these
8:16things, you know,
8:17the customer gives us
8:19the supplier's name. You know, like
8:22approved suppliers. You know, some of
8:24the Israel customers, they give us you
8:26need to buy from this suppliers only.
8:29So,
8:31here, you know, when it is defense and
8:33aerospace, availability of
8:35material right now with this war
8:37scenario is slightly difficult and uh
8:41>> [snorts]
8:41>> uh
8:42prices keep fluctuating, you know,
8:44compared to what it was 6 or 8 months
8:47back. So, we have you know, we have a
8:50good understanding with our customers.
8:52There are two ways. One is that, you
8:54know, if we are unable to
8:57you know, source these raw materials on
8:59time,
9:01we ask the customers to leverage their
9:04connects with the customers. So, for
9:06example, very recently, we have an order
9:08wherein which the customer told us the
9:11supplier told us it takes 8 months to
9:13deliver. So, we requested our Israeli
9:16customers, why don't you you know, talk
9:18to them and then, you know, they
9:20purchased the raw material and they
9:22shipped to us within within a month. So,
9:25it was easy for me to deliver the
9:27product, you know, much faster rate. So,
9:31we have to communicate with the
9:33customers on availability, then
9:37you know, the pricing and then uh
9:40you know either we can buy or you know
9:42we I request them to supply the raw
9:44material. So we have been managing this
9:47way
9:47and we'll continue to work in this way
9:49on the supply chain.
9:51>> Understood.
9:52So now Shiral ji just tell us something
9:55on the macro opportunity. We all know
9:57that defense and aerospace are the
9:58fastest growing sectors today
10:00considering that government of India
10:01wants to also promote the Make in India
10:03philosophy. So according to you next
10:06three to five years what is the kind of
10:08opportunity, you know, from the defense
10:10market which you have been very
10:11aggressive on? How fast and how big is
10:14the opportunity available for Milworks
10:16going forward? If you could just give us
10:17a bird's-eye view that would be helpful.
10:20>> Yeah. So
10:21as part of our strategic plan and you
10:24know how we are you know right now we
10:26are focused on the Israel market. So we
10:31based on our own
10:34you know communications and
10:36understanding with the 12 customers whom
10:38we work in Israel,
10:41we feel that
10:42you know the defense market in
10:46in Israel is growing and the RFPs which
10:50we are receiving is
10:52sufficient for our three to five years
10:54expansion plans and the growth plans. So
10:58Israel market has grown substantially.
11:01Then the second one is Make in India's
11:03aspect which you mentioned you know as
11:06part of our thing. The seven public
11:09sector companies
11:11which are which we have been working. So
11:13it is part of an indigenization project
11:16which we are working with these
11:18companies. So we are participating in
11:22this
11:23you know in this RFPs or RFQs with
11:26the government of India's
11:28and we will continue to you know grow in
11:31this sector also.
11:33So, if you see our strat plan,
11:36international customers, we we will
11:38continue to grow at a, you know,
11:4160% of our business will come from
11:43international and 40% will we will try
11:46to focus on our Indian opportunities.
11:50>> [snorts]
11:50>> Okay. Understood. Shridharji, now you
11:52mentioned about the Israel orders. I
11:54just wanted to understand that how this
11:56relationship got developed. Like, was it
11:58a normal RHP RFQ or basically, you know,
12:01you got some business contacts which
12:03helped you get business from Israel? How
12:05did the business journey from Israel
12:06start? And, you know, what kind of
12:08components are we making here? Are these
12:10built to spec or built to print? If you
12:12could give us give us an idea.
12:14>> Yeah, there are two
12:16both the,
12:17you know, built to print and built to
12:19spec we are working with the Israeli
12:22customers. One of the customer
12:24is very predominant in Israel, which is
12:27making
12:28who is refurbishing the engines for all
12:31the F-16 and F-35 planes. So, the NATO
12:35countries are sending all these planes
12:39to Tel Aviv to refurbish
12:42those engines. And, we are part of this,
12:46you know, component supplier. We supply
12:49specific components which goes into
12:52these engines. You know, as part of
12:56the spare, you know, requirement.
12:59So, this is a very niche area which we
13:01are working. This is again built to
13:05print. You know, the customer gives us a
13:08print. The volumes are very small,
13:11but high precision titanium
13:14stainless steel parts and a high level
13:16of accuracy is required. So, this is for
13:19the engine. The second customer which we
13:21are working, these are all the
13:22accessories used for holding the
13:25missiles on an aircraft or on a navy.
13:28So, these
13:30we are presently working with the
13:32Israeli customers. The relationship how
13:35we built is, you know,
13:37when the first RFP came, you know, we
13:39gave a quality and on-time
13:42Repeat orders kept coming in, you know,
13:44and then there's a relationship you
13:45build. So, it has taken 4 to 5 years to
13:48build this relation. Now, you know, from
13:50organic growth it's up to us how we take
13:54these projects and scale it
13:56up exponentially. So, we are taking this
13:58opportunity here to grow.
14:02>> And I think very nicely put out by you,
14:03Shridharji.
14:04Sir, and now tell me that typically, you
14:07know, when the order comes in,
14:08Shridharji, what's the kind of speed to
14:10market? Like you get an order from an
14:12Israeli customer, right?
14:13If it's a build-to-print kind of order,
14:15how much time does it take from getting
14:17the order to the execution and
14:19commissioning of that order? Roughly,
14:21what could be the timeline?
14:23>> So,
14:24when it is when we get an RFP, we are
14:28supposed to send a detailed quotation
14:31and
14:32execution plan within four working days
14:35of the RFP.
14:37So, many times the customer takes based
14:39on his their urgency, sometimes within
14:4210 days we get a purchase order or a
14:44negotiated
14:45price. Within 10 days we normally get
14:48it. When it is at the component level,
14:51the delivery times are somewhere between
14:5360 to 90 days based on the raw material
14:56availability. So, we are supposed to
14:58deliver the components within 90 days.
15:02The first article samples and then move
15:04into the production. When it is an
15:07assembly or a sub-assembly, these are
15:09all projects, you know, and then
15:12this takes a slightly higher time. The
15:15quotation itself it will take around 2
15:17weeks for us to submit where in which
15:20there are more than 100 components which
15:22comes as an assembly. And uh
15:25for us to deliver the first samples, it
15:27normally takes between 6 to 8 months.
15:30So, and then it is it moves once the
15:33prototypes are approved or the samples
15:35are approved, then it's only a matter of
15:37lead time and the staggered deliveries
15:39of the quantities which we agree upon
15:42during the final stages of negotiation.
15:46>> Okay. I just want to tell you one thing
15:48from a financial point of view, normally
15:50for your export orders, do you get any
15:52advance of 20 25% or is it entirely
15:54payable once the product is delivered to
15:56the customer?
15:58>> We had this issue prior to our
16:03you know, prior to February
16:06earlier this year before this war
16:07started. We normally used because of the
16:10relationship which we built over the
16:12period of years.
16:13We used to get 100% payment on 60 days
16:16credit
16:17once it is invoiced at our factory.
16:21Having seen this you know, difficulty
16:24for us on the working capital
16:25requirements, we changed this. We tried
16:28to inform you know, communicate to the
16:30customers that you know, because these
16:32are all large projects which we cannot
16:35handle without an advance payment. So,
16:38post February every order we are taking
16:4030% advance
16:42for the customers from all the 12
16:44customers in Israel or even in Europe.
16:47These customers have obliged and then
16:50they are giving us 30% advance and
16:54the remaining amount is normally 60 days
16:58from the date of invoicing from us.
17:01>> Okay.
17:02Sir, now one important question is that
17:05you know, typically you know, for our
17:07kind of products which are customized
17:09for the customer, are there any
17:11comparable peers you know, globally whom
17:13we compete or these are genuinely
17:15products which are designed completely
17:17as per the customer requirements and you
17:18are one of the few vendors. I just want
17:20to understand are there any comparable,
17:23you know, global companies or maybe
17:24Indian companies which are into the
17:26similar product lines?
17:28>> So, globally, you know,
17:31there are many peers and
17:34these Israeli customers, you know,
17:36they have been working specifically with
17:40uh
17:41other European suppliers.
17:43So, because of some of the geopolitical
17:47reasons,
17:49uh these customers have been moved most
17:51of them to Indian suppliers.
17:54And then when they start working with
17:56Indian suppliers on specific projects,
17:59they don't go
18:01they don't
18:02go with any other
18:05uh suppliers. So, if a project I'm
18:07working, so there is a contractual
18:10obligation. If this product they are
18:13working with us, they will go for with
18:15us for the next 5 years.
18:17So, we agree on a contractual
18:20obligation, a minimum for 5 years. It
18:22can be It can extend up to 15 years. So,
18:25this is the contractual obligations
18:26which we have right now.
18:28>> Okay, so one thing is very clear, the
18:30runway for growth is pretty large
18:32because the stickiness with the customer
18:34is for a large
18:36number of years. So, my thinking is
18:37right. So, it's going to be at least
18:39minimum 5 years and above. Sir, tell us
18:41one thing like now,
18:42you know, we have spoken so much about
18:44the product uh you know,
18:46skill set about our company. Sir, what
18:48is it that, you know, is our USP? Like,
18:50you know, you said there are global
18:52competitors, but if you know, business
18:54comes from Israel, business comes from
18:55the domestic market, what are the key
18:58qualitative aspects of the business
18:59which, you know, we have built because
19:01of your intrinsic kind of skill sets,
19:04your team skill sets? Two, three points
19:06which you can highlight that, you know,
19:07we are doing
19:08our job slightly better than what
19:10competitors and customers are liking our
19:12products, our execution, our service.
19:14So, if you could just add two, three
19:15points for us.
19:17>> Yeah. So, one is that we started moving
19:21from a component supplier to an assembly
19:24or a sub-assembly. So, one is that
19:26machine component, there is a sheet
19:28metal, then there is a bought out items
19:30like fasteners and other things. And
19:32then, you know, as a sub-assembly and an
19:35assembly, you know, we are making this
19:38USB, you know, the customer is coming
19:40back with a project rather than a
19:42component. So, we are very good in
19:45project execution. We work on a Gantt
19:49chart, you know, with a timely delivery
19:51of a component or a listing. When a
19:54project is assigned to us, we normally
19:57work on very clear project management
20:01schedule. And
20:03this is very important for us on
20:07you know, work with a very clear
20:11project management execution plan.
20:14Right [snorts]
20:14from the purchase of the raw material or
20:18to the delivery or giving a quality
20:20related one. So, this is one which we
20:23map very clearly and give the expected
20:26timelines for the delivery. The other
20:29thing is we have
20:31put in for every customer
20:33a POC or a point of contact. Every
20:36[snorts] communication right from
20:39technical
20:41review,
20:42product costing, quality. So, this
20:44person
20:46is the front face to the customer. So,
20:48internally he will work with the
20:50different teams in the operations or in
20:53quality or any
20:55you know, any things. So, he will work
20:57with them and
20:59you know,
21:00give the information to the customer.
21:02Also, the review mechanisms which we
21:04have, most of the customers will get an
21:06updated review every week
21:09on the status of the project. So, this
21:11is one thing, you know, the customer is
21:14you know, quite happy with the progress
21:16and you know, they intend to work with
21:19us in this way.
21:21>> Okay. I think nicely put out by you,
21:24sir.
21:24Now, let's talk about the financials. I
21:26think financials undoubtedly have been
21:28very strong. I think I was just seeing
21:30the latest RHP. Sir, top line of 148
21:33crores, bottom line of 57 crores. Sir,
21:36just tell us what exactly were the key
21:38drivers for this performance? Was it a
21:40volume and value push combination which
21:42helped you to improve your top line,
21:44your profitability and of course your
21:47you know, absolute profit number. Sir,
21:49one or two reasons why this significant
21:51jump has happened in the last 12 months.
21:53Could you please tell us?
21:55>> Yeah, Avinash ji, what happened over the
21:57period of time, you know, there were
21:59exact there there were a lot of
22:01opportunities, you know, which we
22:03received
22:05either from the Israel customers or from
22:08our own QuickPay company which is
22:10manufacturing of drones. There are
22:13significant amount of skill set which
22:15Milworks has and
22:18you know, QuickPay has separately their
22:21own skill sets. Like you know, we have
22:23we work on our 3D printers, machining, a
22:27very small integration of boards, you
22:29know, like battery management systems
22:31and all we have that skill set at
22:33Milworks. So, what we did is we
22:36we took a calculated risk. Let's do it
22:39together, you know,
22:40to deliver a product which is a
22:42world-class facility, a loitering
22:45munition drone in a you know, working
22:47for QuickPay. So, this added you know,
22:51to the top line as well as bottom line.
22:53So, we helped QuickPay to take up this
22:58project, you know, right from
23:01advanced bank guarantee or you know any
23:04any of those financial requirements and
23:06then
23:07we handheld during the you know
23:11development of this product you know in
23:13last 8 months and this was a successful
23:17effort by both of us together to deliver
23:20a loitering munition drone. So to answer
23:22your question you know you know
23:25we did take a lot of risk and
23:29any opportunities it came you know in
23:31last one year we took it as a challenge
23:35and try to deliver that in time and the
23:38numbers just followed behind us. So this
23:41is the same way we are going to work any
23:43opportunities which comes we evaluate
23:45clearly whether it is part of our own
23:48forte or whether it is you know we take
23:51a calculated risk and then move forward.
23:53Sometimes most of the times you know
23:55when we take risk you know it really
23:57works out very well. So that's how the
23:59numbers are much better to our previous
24:02years in this
24:03you know what you have seen in the RHP.
24:07>> Okay. Sir now one question I wanted to
24:09ask you which got left out earlier. Sir
24:11I believe you know you all are doing a
24:13saddle project specifically for F-16.
24:16Just if you could briefly tell us you
24:17know what is the scope of activity for
24:19us there and secondly sir this quick pay
24:21drone company you know which you
24:23mentioned that you know you are in the
24:25process of also helping them you know
24:27manufacture those loitering drones.
24:30Is this company quick pay drone already
24:32empaneled by the defense ministry to get
24:34this order? I mean just wanted to
24:36understand this very clearly because not
24:38much information is known about this
24:39company.
24:40>> So I will first talk about the quick
24:43pay.
24:44Quick pay drones has been in
24:46in this drone development way back in
24:502019
24:52when they changed their own
24:55product line
24:57to drones. So now uh uh, it took many
25:01years for them to develop a loitering
25:03munition drone, uh, get it approved from
25:06MOD. It took, you know, they have built
25:08more than 40 drones themselves.
25:11Took trials at, uh, the northern sector
25:13and eastern sector, and then approved,
25:17you know, they they proved it that, you
25:19know, they really can make a good
25:21loitering munition drone.
25:23So, based on all these trials, they have
25:26been approved by MOD, uh, the artillery
25:29and the northern division. And, uh,
25:32after these approvals, their factory,
25:35which is based out of Noida, this is
25:37also, uh, defense license is, uh, you
25:40know, is given to them for to
25:42manufacture the, uh, loitering munition
25:44drones. And, uh, also,
25:48uh, the skill set which they have, they
25:49have slightly more than 60 employees.
25:52Uh, amazing people,
25:55uh, which they have, uh, in the, uh, in
25:57the company, you know, where they design
26:00the firmware and, you know, all the
26:02electronic boards, you know,
26:04you know, they have complete set of, uh,
26:07the skill set to build the uh, entire
26:10drones. So, uh, you know, we made our
26:14own due diligence well before we
26:16invested, and then, you know, it cost
26:18some time, and, uh, then we decided, uh,
26:21then we decided to, you know, take up
26:24the projects along with them. And, what
26:27happens is when you hold hands together,
26:29it give you you can normally give a
26:31really good product. So, we complement
26:34each other. They're they're very good in
26:36software development, and, you know,
26:39uh, electronic integration, and front
26:41ending in the MOD, you know,
26:43Ministry of Defense. So, we are good at
26:45the back end, you know, so, it really
26:48helped us during our, uh, uh, know,
26:50journey.
26:52Now, coming back to the uh, your first
26:54question on the saddle project. So, the
26:57saddle project is uh,
26:59it is it's like a fixture.
27:02Uh, it goes into an aircraft, you know,
27:05where it holds the missile systems. It
27:08is basically called as a carrier, you
27:11know, a c a r r i e r, you know, to hold
27:14a missile.
27:16Uh, it gets released, you know, when a
27:18missile is released, this saddle also
27:20get released.
27:22So, there's a high volume requirement of
27:24this
27:25uh,
27:26saddle or what they call this
27:28carrier for the
27:30um,
27:32missile systems. So, we have been
27:34entrusted on the development of this
27:36project. And
27:38at this moment, we have completed all
27:40our design and
27:42prototyping of all these
27:45projects. And this is under the approval
27:48stage right now. So, once this is
27:51approved, this is going to be a really
27:54good
27:55uh, a project for Milworks to move
27:57forward. Um, this project has machine
28:00component. There's a sheet metal
28:03component. Um, there is a riveting,
28:05welding, you know, integrating the
28:07complete assembly, and then testing it,
28:11you know, with a a prototype which we
28:13have prototype of a missile. And then
28:17validating for the you know, for the
28:20quality of the system. So,
28:22this is a very important project and
28:25we are seriously working with a strong
28:27dedicated team put on this. Uh, there
28:30are critical requirements in terms of
28:32raw material sourcing as well as the
28:35requirement on the quality side on in
28:37dimensions
28:38um, for this project.
28:41>> Okay. So, now just wanted to understand
28:44that in our business, is there any
28:46concept like L1 orders or confirmed
28:48orders? You know, because typically the
28:50way you are speaking, we would not like
28:52to get the number from you, but
28:53typically, you know, how do you plan
28:55your production? Like typically, do you
28:57have customers who give you repeat
28:59business? Or typically, you know their
29:00projects, you know their schedules, and
29:02accordingly, production is synchronized.
29:04So, if you could tell us something on
29:06this.
29:07>> Uh
29:08All my international customers, we work
29:12it's a very
29:14it's it's normally
29:16it's a contractual project management
29:18tool wherein which
29:20once the prototype is approved or the
29:23products are approved,
29:25this goes on a schedule basis for, you
29:27know, every month, you know, so much
29:29quantity is required over the period of
29:315 years.
29:33Uh sometimes
29:34the purchase orders are released you
29:36know, on a monthly basis on a bigger
29:39contractual arrangement, you know, like
29:42they require 2,500 pieces per annum, and
29:46you're supposed to ship them 250 per per
29:50month. So, 250 per month can become 280
29:53or 220, you know, those quantity can
29:56vary, but you know, the annual volumes
29:57are fixed. And then this
30:00uh is based on a schedule. So, this is
30:02one way of working. All my international
30:04customers, we don't work on L1 basis. We
30:08work on the
30:09uh
30:10you know, a quotation which we give and
30:12the quality which we give, the service,
30:14and on-time delivery. So, we work with
30:16in this way.
30:18But we are working with the seven
30:20divisions of the public sector
30:21undertaking in India, some large
30:23projects which we are now become L1, and
30:26this will get converted into an order
30:28over the period of time, next 2-3
30:30months. Uh in the drone sector and all
30:33the Ministry of Defense projects which
30:36we are working either in BrahMos or in
30:38most of them work on the L1
30:41aspect. So, sometimes it is a pain. Uh
30:45if you ask me a hit rate a hit rate of
30:48uh uh the L1, we lose 90% of
30:52uh the orders. We won't get it because
30:54either we are expensive or, you know,
30:57feasibility. So, only 10% is our hit
31:00rate, but we are happy in executing
31:03those 10 uh 10%.
31:05And uh we will continue to be in this
31:07segment, also.
31:09>> Okay.
31:10Okay, fine. So, now uh let's come to the
31:12most important question. Uh sir, we are
31:14going public, so it's a big credible
31:16achievement to you and your team. Sir,
31:18tell us uh sir, what is the size of the
31:21capital market offer? How much capital
31:23are we raising from the market? And what
31:24is the broad objective of using this
31:26money?
31:27>> Uh we are raising around 160 crore from
31:31the market. Uh mainly the objective of
31:34this uh out of this 60 crore, we are
31:37trying to uh spend uh it mainly for our
31:42capex. So, we intend to put up a
31:45world-class facility uh with best
31:48machines uh
31:49uh from India and abroad. Uh you know,
31:52presently we are lacking a controlled
31:55atmosphere facility.
31:57So, to give a high-end product in
31:59aerospace and defense, we require a
32:02class 10,000 or a air-conditioned
32:04factory, which we do not have. So, we
32:07are going to put up in next 6 months a
32:09world-class facility on
32:12uh you know, a controlled atmosphere
32:15this thing. We are also adding 31 new
32:18CNC machines from India and abroad.
32:21So, in the next 6 to uh 8 months. So, we
32:24are going to increase our capability and
32:27capacity.
32:28So, we are going to spend a lot of money
32:31on on the uh world-class facility. Now,
32:36the remaining
32:37uh amount, which is
32:39uh we are using it for our working
32:40capital purpose because as we have been
32:43working a lot with
32:45the government of India's a public
32:47sector projects, we require a lot of
32:49money for the working capital
32:52requirement. So, we continue to you to
32:55use this
32:56funds for our working capital
32:58requirement.
33:00>> Okay. Sir, just wanted to understand
33:02this CAPEX which you mentioned. This is
33:04going to come at the existing facility
33:06itself.
33:07>> Uh we have one facility unit four. The
33:11unit four is having additional 20,000 sq
33:15ft space available right now. So, as
33:17part of our
33:19expansion plans, these all these
33:20machines will come into the unit four
33:22facility and
33:25you know, for it will be utilized in
33:27next 6 to 8 months, this facility will
33:29have uh most of the machines.
33:31>> Okay.
33:32So, hopefully
33:34sir, I think probably 27,
33:3628 could be a year where you could see
33:39complete execution from these machines,
33:41right?
33:42>> Right. Correct, sir. So, 27 January
33:45onwards, you will be seeing all the
33:47uh all the machines getting
33:50you know, running in full
33:52>> Okay.
33:53>> full capacity.
33:55>> Sir, now the most important question
33:57which is very important you know, which
33:59a lot of analysts and you know, myself
34:01would also look to know. We have been
34:02doing very well on the top line, on the
34:04profitability, on the margin sir, but as
34:07you all aware, you know, defense is a
34:09very you know, long payable business.
34:11So, you know, our cash flows have not
34:12been positive. Sir, I just want to
34:15understand now since you're going to get
34:16a lot of money from working capital, you
34:18know, from the public issue. Can we
34:19expect that this high dependence of you
34:22know,
34:23cash flows not getting impacted
34:25positively because of slow payments
34:27because money will surely come. I'm sure
34:29your defense customers will pay you, but
34:31obviously with a elongated period, but
34:32can this period be shortened going
34:34forward in the next say a couple of
34:35years?
34:36>> So, see this is why we know we want to
34:39you know balance between our
34:41international and the local
34:44customers. So, you know as I mentioned
34:47to you earlier, so we this advanced
34:49payments with all my international
34:51customers will add into my you know the
34:54problems which I'm having on the
34:57you know cash flows. Till 1 30% of that
35:00problem is solved. But, the bigger
35:02problem which I have on the L1 business
35:05either in the drone business, this is a
35:07policy which the government of India is
35:10is doing, but it is a problem for every
35:13you know
35:14every MSME or a growing company that you
35:17have to pay 10% of the you know
35:20bank guarantee and you get paid only
35:22after the delivery. So, we have to live
35:25with that policy and then you know this
35:28this is something you know it is very
35:31difficult for me to handle. So, the
35:33project managements when I'm working on
35:36the L1 this thing we have to live with
35:38that this thing and balance. So, this is
35:40why you know we are trying to do 70 30
35:44you know try to business get more
35:46projects from international customers
35:47where you get advanced payments.
35:50I will not get any advanced payments
35:53from any of the MOD or the public sector
35:56orders. So, I have to live with this
35:58scenario.
36:00>> All right. I think understood very well
36:01sir. Sir, last question now
36:04we are in a very high growth you know
36:06serving industry like defense,
36:07aerospace, railways. Sir, tell us you
36:10know now what is the challenge for you?
36:12Like is it exhibition or is it basically
36:15maintaining your quality standard for
36:16your products? What could be the key
36:18risk in our business according to you?
36:20>> According to me there there are you know
36:23three to four a important risk which
36:26presently I'm going through. One is
36:28that, you know, Bangalore being such a
36:31cosmopolitan
36:32area, hiring a really good talented
36:36person right there in engineering or
36:39in the quality or in operations or
36:42programmers for all my CNC machines is a
36:44big challenge. So, uh
36:47you know, I think
36:49you know, post our IPO our
36:52you know, this challenge may get
36:54mitigated.
36:55Uh
36:56you know, with the name Milworks getting
36:58in into the market. So,
37:01uh people will be willing to work with
37:03us. You know, you know, this is one, you
37:06know, the people's management is going
37:08to be a you know, uh a bigger risk.
37:11Second thing is uh
37:12uh
37:14you know, the execution challenges which
37:16we you know, which we have is the raw
37:19material availability over the period of
37:21time. You know, so the gestation period
37:24of this raw material is very high in
37:26some of the areas. So, the project gets
37:28postponed or moved. Uh
37:31you know, towards you know, whether it
37:33when it has to be in months, it will go
37:35you know, you know, from 1 or 2 months
37:37to 4 to 4 to 5 months. So, that is going
37:40to be also be a challenge on the supply
37:42chain aspect. But otherwise, you know,
37:45uh a quality of the product or the
37:48on-time delivery of any of those
37:50projects is not a challenge, not a risk.
37:52We are good at it in executing that on
37:54time and giving a quality required by
37:58the customer. So,
38:00uh
38:01you know, this the two risks which we
38:03right now foresee is on the you know,
38:06skilled labor and the second thing is on
38:10the supply chain of the raw material.
38:13>> And I think it was my pleasure
38:15Shridharji to talk to you and I think
38:16please accept my best wishes to you,
38:18your entire management team and sir,
38:20wishes for your
38:21public issue also. Thank you very much.
38:22>> Thank you, sir. Thank you very much,
38:24sir. Thank you very much for your time.
38:25>> Thank you.
38:27>> Yeah. Thank you, sir.
38:29>> Yeah.
38:31>> [music]

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