Ladies and gentlemen, good afternoon. Welcome to Shivalik Bimetal Controls Limited's Q3 and 9-month FY25 earnings webinar produced by ElevEase. 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, full-time director, and Mr. Rajeev Raniwala, 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 Raniwala, 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 Bimetal's 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 123.28 crore, while this figure is just slightly below the INR 126.21 crore reported in Q3 financial year 24. It is nevertheless a good outcome given the headwinds facing our multiple end-use markets globally. Despite the 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 cost. 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 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 resistor segment in India grew by 34.81% in 9-month financial year 2025. 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 over 75%, are sourced internationally, resulting in an inventory cycle of approximately 180-200 days. We are working to cultivate domestic supplier relationships 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, Full-time Director, to share a few words.
Good afternoon, everybody. Looking at our position for Q3 financial year 25 and 9-month 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 six 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 Bimetal Controls Europe S.r.l., 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.
Thank you very much. We'll now begin with the Q&A session. As a reminder, please raise your hand to join the question queue. Here's a quick reminder on how you can raise your hand. For desktop or laptop users, look for the Reactions button at the bottom of your Zoom window. Click on it, then select Raise Hand from the options. Your name will appear on the queue, and I will call on you. For mobile or tablet users, tap on the More dot dot dot button at the bottom right of your screen, then select Raise Hand from the menu. We will wait momentarily for the question queue to form. Our first question will be the line from Nikhil Poptani. Nikhil, your line is now unmuted. Please go ahead and ask your question.
Yeah, hi. Thank you for giving me the opportunity, and congratulations on a good set of numbers. Sir, my first question is on that. If you look at the last six to eight quarters, our quarterly, we have a flat run rate. We are somewhere between INR 120-125 crores on an average. So, sir, how are we expecting the growth momentum in going into Q4 and FY26, so that is my first question, sir.
So at this point, dividing your question into two areas, as far as Q4 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 you mentioned. As far as the next financial year is concerned, some of the things that are going to contribute to growth are related towards two or three 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.
As a result of that, we are 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 things, sampling, etc., has already been done. 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. 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. If what we are witnessing now in this quarter continues, or that kind of growth trend continues, we should see that the next financial year turns out to be fully recovered.
So, sir, that's great to hear. Now, sir, I have two queries. There are a lot of tariffs on steel and aluminum in the U.S. As you can see, in North American markets, new tariffs have been applied. So even the automotive industry, they're shaken. So what gives you the confidence that going ahead, we are going to have a better growth? And secondary, when we are saying we're 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, sir.
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 if there's 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 able to, they want us, 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.
Thanks for your questions, Nikhil. You can rejoin the queue to ask any more follow-up questions. Our next question will be from Naushad Chaudhary. Naushad, you can unmute your line and please go ahead, ask your question.
Yeah, hi. Hope I'm audible.
Yes, go ahead.
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 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 are 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 sub-assembly, which is directly then placed into any of these devices, such as battery management systems. So making that entire assembly, 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 most simple 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 assembly, the sub-assembly can be anywhere between the $20-$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, etc. So at a lower level, it is almost a 10 times 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, then let us say that all of the conversion takes six or seven months. So even if we get in this year just four or five months of that 20%, but it is 10 times 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, two 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 clarification on this. For example, just ease of understanding 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 10 times. So if INR 100 gets converted into INR 1,000, INR 1,000 would also make 20% margin?
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, so what exactly we are doing in the backward integration?
Right. 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, it's just two customers, actually. So from April onwards, we are going to be converting in a six- to eight-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 two cases. So that has already been concluded.
When I say concluded, it means the contracts and the agreements for the supply of such components have 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, etc., 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 two things. One is it reduces cost.
Second, 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 requires 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.
Thanks for your questions, Naushad. You can rejoin the queue for more follow-ups. Our next question will be from Kajal Nerani. Kajal, you can now go ahead and ask your question. Your line is unmuted.
Hi, Sumer and Rajeev. So mostly on the lines of the business and why we are doing these forward and backward integrations wherein we were concentrated on 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 what's the plan three years down the line? Because from what I understand from the earlier questions, your shunt resistor revenue will go up substantially, and the trimetals 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 three 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 which will go into a circuit breaker 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 are certain technical barriers 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 shunts.
And why now? To answer that, we basically got the expertise of first making the strip for these shunt resistors. In initial years, let's say 2015 onwards, for the first three or four 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 that as we went down towards smaller and more value-added components in the shunt resistor space, which is in more recent years, let's say last three or four 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 themselves are not fully established, to go another step forward into the chain. It 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, etc. 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 that 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.
Great. Yeah. Yeah, please continue.
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. Why now for that is because the capacities were running at you may be aware that until 2021 and 2022, bimetals were running at full capacity. Then we added capacity for that.
That added capacity would help us in processing these materials is even why we are looking at it now and not earlier.
Got it. All the best for this. So 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 expectations. 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.
Thanks for your questions, Kayal. You can rejoin the queue by raising your hand for any more follow-ups. Our next question will be from Yashovardhan Agrawal. Yashovardhan, your line is unmuted. Please go ahead and ask your question.
Yeah. Hi, team. Good evening. Am I audible?
Yes, please go ahead.
Yeah. Thanks. So I just have a couple of questions. So out of 16 rows of shunt resistor series in Q3 in Indian market, what portion of that has gone towards smart meter?
It's around INR 10 crore out of INR 16 crore goes into the smart meter.
10 crore. Oh, so that's nice. So out of, let's say, 50 lakh meters have been installed in India in the last three months. And so assuming ₹50 per shunt value, that translates to 25 crores of, let's say, shunt resistor sales. And if 10 crores of sales have gone towards smart meters, so that is around 40% market share in that. So have we seen relay manufacturing going up in India, or is there any other reason why the sales have picked up? Would you like to elaborate on that?
Yeah, 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 two 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 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. So, in fact, electrical contacts that we make, there was also an opportunity to cross-sell it to the relay manufacturers, right? And the blended value that we could provide to the relay manufacturers was 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 something, when we look at a INR 10 crore supply of shunts into the smart meters, we are looking at roughly about 70% or 65% or 70% of that value of silver contacts going into the relays for smart meters.
Thanks for your questions, Yashovardhan. You can raise your hand again to ask more follow-ups. Our next question will be from the line of Akash Vora. Akash, your line is unmuted. Please go ahead with your questions.
Yeah.
Yes, please go ahead.
Yeah. So, hi, Sumer. Hi, Rajeev. So I have actually one question for each segment of our business, shunt, bimetal, and contacts each. To start with, bimetals has been pretty much a bread-and-butter business for us since many years. And I think we have a decent amount of global market share there. We were expected to increase our market share in the coming years, the reason being, I think, the bigger players are exiting from the market. But that just somehow does not reflect in the numbers. I see that we are struggling in pretty much most of the economies. And here in Americas, we are just around 3% kind of a growth. So we 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 so 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 a 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 geographical regions across the world in recent, let's say, four to six quarters, you see, these kind of development activities also tend to take a bit of a backseat. 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, one could say that has 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 we see we are looking at a revenue going from INR 126 crore, let's say, to 123, maybe in those cases, that would have been another INR 8-INR 10 crore shortfall. So I would say that we are closer to a flat level mainly because of that. Because when a 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 as flat because some added business is coming from such developments.
Understood, sir. So finally, what would be your growth measures on bimetal segment for the FY26, FY27?
Sorry, could you just say that again? The first part got cut off.
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 Legrand, and they're talking a very similar language about an expected growth in their business. They expect that they're looking at a 20%-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 two, three years for those kind of growth numbers.
When it comes to the U.S., 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 two-year period anything between 18%-25% kind of a level. That's something that we believe or we safely feel on the basis of the data information from customers. Surely, of course, I just imagine that such information is on the basis of forecast, and there have been times in the past such information as the reality has been different from it.
But as of now, we have no choice but to work on that.
Yes. Got it. So now coming to shunts business. So on shunts, I just have a follow-up question on what you explained earlier to a participant. So I just wanted to understand where we are going to add. So in that forward integration, we are going to add value add by 10x, I think almost 10 times. So our capacities are fungible for this kind of forward integration? I mean, 100% of our current shunt facility we can use for that kind of forward integration if need be in the next couple of years?
Yes. It's not 10 times of value addition, but 10 times of top line. 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 yeah, so we can say that we have sort of the capacity as well as the capability available for it.
Thanks for your questions, Akash. You can raise your hand again to ask more follow-ups. Our next question will be from Prateek Jain. Prateek, your line is unmuted. Go ahead and ask your questions, please.
Hello. Hello. Am I on?
Yes. Please go ahead. Yes.
Yeah. Hi, sir. Thanks for the opportunity. So while you explain that the slowdown in bimetals is more in India, India business is more related to the macroeconomic factors, my question is more to understand that this bimetals end application is switchgear, and that depends on the infra cycle, right? So based on 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, sir.
You 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. The government, it seems like the government is more oriented towards development projects.
Of course, a lot of our switchgear business or a lot of our when we supply into switchgear is related to that. 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, it is also maybe a factor wherein they want spending to increase. They want people to spend more as well as they are spending on infrastructure projects. We feel that the current situation may be different from a historical trend. At least, again, this is, and these guys, our large customers, obviously have a more in-depth research on these things. 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. 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 realizations from our customers.
Got it. Got it. And so 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 three, four 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 going into others. 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 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 four-wheeler EV market is EV two-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 two-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 four-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.
Thanks for your questions, Prateek. You can raise your hand again to ask any more follow-ups. Our next question will be from Shikhar Mehta. Shikhar, your line is unmuted. Please go ahead and ask your questions. We'll proceed with the next question. So our next question will be from Aniket Mittal. Aniket, your line is unmuted. Please go ahead and ask your question.
Thank you. Am I audible?
A little soft. Is it possible to be a little louder, please?
Okay. Is this better?
Perfect. Please go ahead.
Okay. So I have three questions. Firstly, just on the bimetal piece once again, if I look at the past three quarters, there's been weakness in both Europe and Asia regions. I just wanted to understand those reasons 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 in 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 three quarters or so is the only thing we can attribute it towards is just general reduction in demand.
Okay. Fair. 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, 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 along with a PCB module, and which can be straight away 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 carts 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 a Continental will do all of those things in-house. So to 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 to 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 instead of supplying a component to a large player, you're basically manufacturing these as for the next level of integration, the forward integration.
Thank you for your questions. You can raise your hand again for any more follow-ups. Our next question will be from the line of Richa Agarwal. Richa, your line is unmuted. Please go ahead and ask your questions.
Yeah. Am I audible?
Yes. Please go ahead.
Yeah. Hi. Thank you for the opportunity. So 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.
So 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 market, such as the Indian market, wherein we should be able to do business and get additional business in these two segments from within our markets as well, irrespective of what happens in the U.S.
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, for 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 inventory correction situation? I mean, is that part over? 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. 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 shunt resistor component to China? Because I think maybe a lot of at least EV development focus is happening more there when it comes to the electric.
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 supply 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.
Thanks for your questions, Richa. You can raise your hand again to ask more follow-ups. Our next question will be from Aagam Shah. Aagam, your line is unmuted. Please go ahead and ask your question.
Am I audible?
Yes. Please go ahead.
Yeah. 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?
You see, for shunts, we are seeing the trend normalizing coming from our U.S.-based customers. For bimetal, we don't have that strong a 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. So we expect, and we actually, when we look at our orders, we actually see that that trend is. It was not just a forecast. It's actually going in that direction.
Broadly, if I take it this way, maybe this year we might end it flattish or whatever. The 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 have been directly, indirectly speaking of such initiatives for the last two 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 two 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 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 the 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, one could say it's more like 50/50 because there's a gray area in 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 two-wheeler EV business that we have in India, which is where we expect to see a large amount of growth for obvious reasons.
Thanks for your questions, Aagam. You can raise your hand again to ask any more follow-ups. Our next question will be from Rohan Vora. Rohan, your line is unmuted. Please go ahead and ask your questions.
Hello. Thank you for the opportunity. Am I audible?
Yes. Please go ahead.
Yes. 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 player, 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 when $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 two-wheeler shunt market, and what is the market share today? Thank you.
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 shunt 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 two devices. And so the value changes so much in those that even if this particular component was bought from us directly, it 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 on them.
However, their efficiency improvement in supply chain as a result of this and their 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%-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-generating business opportunity.
Thanks for your question, Rohan. You can raise your hand again to rejoin the queue. Our next question will be from the line of Jay Prakash. Jay, your line is unmuted. Please go ahead and ask your question. We'll move on to the next participant asking a question. Our next question will be from the line of Prakash Gaurav Goel. Prakash, your line is unmuted. Please go ahead and ask your question.
Thank you so much for the opportunity. It's me, Prakash here.
Yeah. Hi, Prakash.
Hi. I just want to understand, in the context of what we are seeing around us, how would you like to guide? Earlier, when you were meeting investors, you were guiding for FY27 ballpark number for the turnover for both the segments. How would things pan out now? Because you made a very interesting observation. While the near term is very uncertain, you have a good visibility of the future, so I just want to understand in that context, how should we revise the top-line guidance for the next two years?
We split this into two 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 looking at a couple of 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 two years, with just our existing business, if we can just come back to that 15%-20%, 15%-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 two-year period," we feel that we feel very confident that we should be able to have in a two-year period, I think we have the maximum level of confidence in getting to a, if not higher than that, but at least to a 20%-25% level of growth.
Thanks for your question, Prakash. Our next question will be from the line of Prateek Choudhary. Prateek, your line is unmuted. Please go ahead and ask your question.
Sir, you mentioned about the value addition from the component to a sub-assembly. 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?
Yeah, we haven't spoken much about it except for that one time, so it's a good observation. Actually, you see, we do only 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 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 already being done. So we expect that could convert into a 2X of its current revenue. And the value addition could be at least three times.
For example, if you look at, let's say, a 60-crore business, for example, that could, in component form, that same strip business becomes about 120 crores. And the value addition in that. Basically, the approximate EBITDA margins go from like a 22%-23% levels towards about 27%-28%. That should be in line with what we have calculated, right, Rajeev?
Yeah. Sorry, I didn't hear 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%-5% increase in EBITDA margins is what we expect, factoring in the increase in the top line as well.
Yeah, of course. Actually, you see, the cumulative business, in fact, whatever contract we have signed till now would be in and around 100 crore plus. And even that, we can count those 100 crore, at least we will make in between 25%-27% of the margin, which is much higher than whatever we are making right now, which is in the range of 18%-22%. So 4%-6% range is compared to the current margin higher.
Thanks for your questions, Prateek. I see there are a few more follow-ups. Seeing as we're nearing a time constraint, please feel free to write to us at Dickenson, and I'll ensure your questions get answered to your satisfaction. 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.
Thanks, Anthony. Thank you for your participation in today's call and for being part of Shivalik's 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.