From evolving railway specifications to new product launches and capacity upgrades, the discussion highlighted how Ameenji Rubber Limited is aligning with India’s expanding infrastructure needs. The leadership outlined its margins, technical capabilities and plans for future growth.
Mubina Kapasi: And correct me if I understood this wrong, but you’re the only approved supplier by the MORTH for the two products that you mentioned.
Mustafa Lokhandwala: No, we aren’t the only approved supplier. We are one of the approved suppliers.
So what used to happen before is MORTH used to give source approvals, blanket approvals for projects. And that time Ameenji was one of few, I wouldn’t say many vendors. But now that approval stands.
But apart from that, now each project has separate approvals to be given. So Ameenji is approved from many of them. And in our industry, it’s a fragmented industry.
There are small and big players, but Ameenji is one of the big ones. So that’s how we, we’re not the only ones, but we are one of the good ones.
Mubina Kapasi: And you’re constantly adding to the product portfolio.
So could you give us a bit of flavor over there? Because as I understand, there are several segments you’re catering to. Railway definitely is your biggest. But could you give us a flavor of what kind of products you’re adding? I come from it also from the POV of margins, because I was looking at your numbers and you’re netting somewhere around 8 to 9 odd crores in the first half of FY26.
So I’d like to also understand your product portfolio from the point of view of the margins you’re enjoying.
Mustafa Lokhandwala: So in terms of our railway products, margins, the EBIT margins range across 20 to 25 percent. Railway products consist of, as I said, vestibules and the rubber pads.
Those are the major products. Those are also going, the specifications are changing. And Ameenji has a big role to play in that because what had happened in our industry, sadly, was that the RDSO gave too many approvals.
Because of that, we suffered in terms of rates. The rates we used to get before, we didn’t get those. So now the RDSO and the railway board have realized that having too many supplies is also not a good thing.
So the specifications are changing. They’re becoming more strict. So we expect that the rates will go up in the future and that will have a direct impact on our margins as well.
In infrastructure, we range between 30 to 35 percent, depending on the project and the kind of bearings we give, because those are custom-made products. They depend on each project. Each bridge has a separate design for the bearing for the expansion joint.
So basis the design, we are able to then quote a lower or higher rate. And so that was where the margins vary over there. In terms of conveyor belts, now that is the new product that we are going to, we’ve already started capex on that.
And we hope that the first plant will be operational by starting of FY26-27. Initially, we expect lower margins because we’re just starting out. So to get more business, we might focus on volumes initially.
So that margin will be around 10 to 15 percent. But then over time, when the business grows, we expect that also to reach 20 to 30 percent level of margins. And in terms of the defense wheel business, we enjoy very good margins in that.
Although it is in the trial phase, but once we are approved and orders flow in, I can probably give you a better idea of margins at that time.
Mubina Kapasi: So right now, railways is the biggest, roughly 70 odd percent?
Mustafa Lokhandwala: Fifty-five percent. Fifty-five percent.
Mubina Kapasi: Okay. All right. You know, you mentioned that RDSO was also not giving blanket approvals.
The number of vendors who they okay have, you know, lowered in number. But at the same time, you have massive railway budgets. I think the last couple of years, we’ve seen the government allocate record high numbers to railway capex.
So I’m assuming you guys are directly correlated to what happens in the budget and how much the government is spending on railways. Do you have now the capacity to be able to meet the constantly increasing railway budgets?
Mustafa Lokhandwala: So if you take all the vendors, currently our capacity is railways in terms of rubber pads, they require around 8 crore rubber pads yearly as procurement, 8 to 10 crores depending on the demand. Today, we are at a position that we can supply at least 50 percent of that demand.
So we are at 50 percent capacity already. And going forward, we are continuously increasing. We are modernizing our machines as well.
So in terms of our capacities, we are, I wouldn’t want to say biggest, because I don’t have any data to back it. But in whatever I’ve seen, our size in terms of capacity is one of the biggest in railways at the moment. So we are very well positioned to capitalize on the demand surge that will come in the next few years.
Mubina Kapasi: And you mentioned there is a capex plan as well in place, but that is to expand it to new products as opposed to increase the current capacities. Am I right?
Mustafa Lokhandwala: There are two parts to it. One is the conveyor belt, which is the new product.
Second is that we are modernizing existing machineries. So we’ve identified hydraulic presses which are very old, which are not giving us the desired output. So we are enhancing those machines as well and bringing it bigger, better machines.
So, yes, there is a capacity expansion happening in our existing segments as well.
Mubina Kapasi: You know, you just listed and I’m sure that entire listing journey entails a whole new set of professionalism, compliance costs, etc. I want to know that who is in the core team? I know you gave us a brief introduction of the promoter family, but I’d also like to know who is in the core team, who’s helping the management reach the goals that you’ve set for Ameenji Rubber, whether it’s product expansion or, you know, expanding into new markets or penetrating those new international markets.
Could you share a bit about the strength?
Mustafa Lokhandwala: So in terms of employees on roll, we are about 50. And then at the factory, we have contractual employees at the strength of 450 to 500. The leadership team consists of, obviously, Ameenji sir. The vision flows from him. I am the execution part. Amrish Patil and Zahra are more on the HR side of things.
And in terms of our, we are very strong technically. We have around three highly qualified rubber technologists at our factory. So if I may, rubber is a game of formulations.
So the better your formulation, the better your quality of the product. And you can play around with the margin as well. So that is why our technical team is so strong, that even when we face the challenge of the rate suddenly going down in the railway sector, because we had a strong technical team, we were still able to survive.
We were still able to get the margins we were getting, although our revenues dropped. But we were able to maintain that. In terms of sales, we have a very seasoned four-member sales team for HR structure.
Railways is mostly tender based, so I don’t require a sales team for that, but I do require people to, for the lack of a better term, client servicing in terms of railways. So that is the strength and we are building on that. The logo that you just saw, we didn’t have that two years ago.
So a lot of work is being done on branding and creating the story, the image. And also in terms of exports, we have a US subsidiary as well. We incorporated, we’ve kept it.
We’ve not started sending material as of now because of all the tariffs, etc. It was very unclear as to what rates apply to us. But in the next financial year, we’ll focus on that as well.
And so that is the team. It is growing. And as you said, compliance and everything, it is very new.
But to be honest, when the IPO listed, that is when I said, OK, now I can focus on the business because this process itself takes a lot mentally. So that is how we are going about our business at the moment.
Mubina Kapasi: Well, great. I think this was great. Thank you so much for giving us a glimpse into the business, into such interesting parts. Like you mentioned, sometimes what goes, you know, construction together is the most unseen things.
And you’re supplying one of those unseen things. Thank you very much once again. Thank you.
Mustafa Lokhandwala: Thank you.