Good day, investors of Bharat Forge Q2 FY 2023 earnings conference call. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. Now for the conference, over to Mr. Amit Kalyani. Thank you, and over to you, sir.
Good afternoon, ladies and gentlemen, and thank you for attending our Q2 investor call. As is usual, I'll take you through a short introduction and then open up a Q&A. I have with me our management team heading our component business, our industrial business, and our finance investor relations teams as well. Some highlights. We had total sales of about INR 1,863 crores, which was a growth of about 6% over last quarter. We had exports of about INR 1,066 crores, which is the highest we've had so far. Our domestic revenues also grew about 13% over last quarter. We've seen overall growth in our passenger car business, our commercial vehicle business between India and Europe.
On the engine side, we have seen on the high horsepower engine side, we have seen growth, and in aerospace and defense we've seen a significant growth. Our domestic revenues on both commercial vehicles and passenger cars have grown very nicely, and our aerospace and defense business also continues to grow well. Some of the highlights are the highest export revenues this quarter. Domestic revenues include INR 80 crores of vehicle sales to the armed forces MOD.
In our domestic, in our overall business, we have an EBITDA of 24.3%, where we have some one-offs, including the LD of about INR 13 crores or INR 130 million crores charged on our defense business, which is a one-time issue, and it is being contested because this is an order we received during COVID. The original delivery period was during COVID, and it got extended because of exigencies with COVID. Therefore, that impact, if it were reversed, EBITDA margin would move up to about 25.4%. RM inflation has impacted margin by about 40 basis points-45 basis points. Rupee realization was 81 rupees to the dollar.
Passenger vehicle revenue is now at about 18% of total sales, which is about INR 340 crores, which is almost 7x of what it was in FY 2016. We write new order wins of INR 900 crores in this quarter, primarily in the export business, driven by market share gains in new business in passenger cars and in industrial sector. On the overseas business, our aluminum business has had a poor performance this quarter for the first time since its acquisition, and this is driven by many factors, primarily external and some internal.
We've had significantly lower than anticipated sales on account of issues of supply chain within the whole automotive industry, energy cost increase, which is yet to be passed on, raw material price increase and availability issues, and a higher level of staffing in anticipation of higher demand. We expect that this will get addressed and come back to steady state by first quarter of next year. The next two quarters will be quarters where we see improvements. By first quarter, we should be, you know, let's say, heading back to track. It has not changed the fundamentals of the business at all. In fact, it remains very strong with lots of new traction and new business win.
We are addressing all these issues, and we expect this to improve over the next two quarters, as I mentioned. The JS Auto acquisition has been completed. In fact, in the short period that the acquisition was done from July till end of September, we've already won INR 100 crores of new business with our customers for high value and high value-added products. Our work on cost rationalization, new product development and customer engagement remains strong. In fact, we expect to see very strong double-digit growth YOY for this company over the next two to three years. We see a lot of interest from our customers in industrial space, automotive space for a variety of reasons. Some of them are for moving production out of China into India, for India.
Some of them are moving out production from Europe into more competitive locations and so on and so forth. JS Auto being a fully integrated supplier with machining capability and product development capability is very well placed to take advantage of this new business. On the defense front, I'm very happy to report that our 100% owned subsidiary, Kalyani Strategic Systems Limited, has won an export order worth $155.5 million for the export of artillery gun systems to a non-conflict zone. These orders will be executed in a 36-month period from the time of order placement. Now, one of the reasons we're able to do this is because this is an indigenously designed, developed, and manufactured product with 100% of the IP owned by Bharat Forge or by the Kalyani Strategic Systems Limited.
BFL will supply a large number of components for this product, and the integration, testing and supply will be done by KSSL. We believe that this is the beginning of a series of new order wins for our defense vertical. I'm also happy to report that we have secured multiple orders for export of components and consumables in the defense space, both for repair and maintenance and operations, across segments in the defense space. This also will continue over the long term. All this will lead to taking our defense business from the level of INR 300 crores- INR 500 crores, we believe, to somewhere in the INR 700 crores- INR 1,000 crores per year basis without any big programs kicking in.
As and when big programs kick in, this will obviously increase substantially as well. On e-mobility, I'm very happy to report that we have finally got a FAME II approval for Tork. We were actually waiting for this to happen, and because of a lot of technical issues and some malfeasance at some of the other two-wheeler manufacturers claiming FAME II without actually having indigenous content, the whole scrutiny process was much longer. We've successfully passed through this, and we have now covered close to almost half a million kilometers without any incident, recall or technical issues. We continue to remain positive overall on the sales growth across automotive vertical and other segments. E-mobility will start growing in terms of revenue from 2024.
Next year will be also a growth year, but it is the beginning of the growth phase. We see all our EV vertical, whether it is repowering or two-wheeler, three-wheeler or power electronics, control electronics, all beginning to start taking off by the second half of next year. In the year after next, we should see a substantial growth and accretion to both top line and bottom line. That's really all I wanted to say. I just wanted to, on my behalf and that of the management, invite everyone here to an analyst meet, where we'll talk about the next two to three years and our business strategy and goals. This will take place on the ninth of December, which I believe is a Friday in Pune at our Center for Technology Innovation.
Our IR team will send out an invite and make arrangements for all of you. We'd very much like to have this opportunity of interacting with all of you. I'd like to request you to save the date. This is ninth of December 2022 in Pune. That's all that I wanted to say, and we'll now open up for Q&A.
Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands-free while asking a question. Please bear with me a moment. We will wait for a moment while the question queue assembles. The first question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.
Hi, thanks for taking my question. Two questions from my side. Firstly, on the Class 8 truck outlook, clearly there's been a big positive surprise in terms of the order intake in the last two months, which is at a disconnect with the general, you know, industrial macro indicators. Do you have any color on this will help us understand how we should be thinking about, you know, production? Because if I annualize the order intake, then it shows a very meaningful growth. You know, maybe some color on how we should be thinking about Class 8, you know, U.S. truck production over the next 12 months or so.
Yeah. I'm gonna let my colleague Subodh answer this. Subodh, please go ahead.
Yeah. You know by now that you know, there are the orders that come in, they are for production at a later date, and this is more of a sales orders that are booked by the OEMs. We have seen ups and downs in the last, I would say 18 months. If you look at the statements that all OEMs have been making, their production slots for most of 2023 have been booked. They are all following a discipline to maintain a steady monthly build rate, which varies between somewhere in the region of 28,000-29,000 trucks. From that perspective, there should be stability for the next 12 months- 14 months.
These are the high intake of orders hopefully should continue the momentum for 2024, which in any case is supposed to be a strong year as well, is being forecasted.
Okay. 28-29. Okay, that helps. The other question was on the JS Auto Cast and Sanghvi. Is it possible to get, you know, where the revenue level right now is of these subs? You know, how should we see that ramping up, you know, maybe at 2024, as we get to the-
Sanghvi, when we bought it, was at a you know revenue of about INR 45-INR 50 crore per year. We have now doubled the revenue of that company. In terms of JS Auto, when we bought it was about 400-odd crore. This year we will see, let's say, you know, 10%-15% growth. Next year, we will see a growth upwards of, I would say, 20%. Maybe even 25%.
The margin profile on this is, you know, is it any different from standalone?
In Sanghvi, we don't do any machining, so the margins are at about 20%. In JS Auto, the margins are at the top end of the casting industry. With all the measures that we are taking jointly, our goal is to get it also to a, you know, double-digit starting with a 2 in a 2-3-year period.
Okay. Just last question, maybe clarification. In your comments, you mentioned, you know, the maybe subsidies, you know, the aluminum business heading back on track. I mean, by heading back, we mean we'll be back in green or is it, you know, we are thinking about getting back to that, you know, high single digit or, you know, the margin that we've been guiding towards. I mean how-
No, aluminum business, our margin goals are, you know, high teens, 16%, 18% or so. For a variety of reasons, we have had a significant impact, you know, in this quarter. This will take about two quarters to get cleaned up. We will expect that by the end of next year, we will get back to very close to the normal EBITDA levels that we had in this business in Europe.
Okay. All right. Thank you so much.
Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead.
Sir, good afternoon. First of all, congratulations for winning the defense artillery guns export order. It's great to see the progress. I had a few questions on defense. Are there more countries with which we are negotiating this type of orders? What is the ordering time period that we normally see? Because this has come fairly in a fairly short period, I would guess. Also, what is the asset turn in this type of business?
Yeah. That's a very very you know, your second question is actually a very good question. Because to execute this order, we don't need large investments. We need an investment in a facility which will be roughly which is already underway of about INR 30 crores- INR 40 crores because this will be an assembly facility. A large part of the high value components will be made in Baramati and be supplied and you know, designed, I mean, say, integrated in this new company. The asset turns are very very high. And the margins are good for both BFL as well as for the supplying company. That's the second question of yours.
First question is, you know, this whole Make in India, Atmanirbhar Bharat and the way the defense industry of India is being marketed by the government through its various channels has proven to be very successful. During the defense expo that took place last month in Gujarat, we had more than 16 countries visit us with fairly serious intent of pursuing some business opportunity with us. While everything will not certify, some things will take more time than the other. But it's now very apparent that the world recognizes the capability of India in defense manufacturing, just as they did 15 years, 20 years ago in auto components. We believe that the kind of growth that the auto component industry saw in supplying, you know, to the world will potentially start in this field going forward.
Because we have very good manufacturing and technology capability. For companies which have their own IP of design and product, then nobody can restrict you. If you have both those, let's say qualifications, then I think there is a huge opportunity going forward.
Okay.
To answer your question in a very simple way, yes, we are engaged with multiple customers across the world for similar programs in a variety of fields.
Okay, great. The second question is on passenger vehicle business. We have seen a good uptick this quarter. If you could just talk us through what are the product segments that are driving this and also, you know, how this will ramp up? The margin profile of this business, how does it contrast with the CV business?
A lot of these businesses are, let's say, we have planned through the pipeline, so they are actually coming. They are getting mature now, and we are implementing series production as we speak. We expect this traction to continue in the quarters coming ahead with some more new programs launching, and then we expect them to stabilize. As far as the margin profile goes, you know, it is similar to the CV business overall. The only difference is, in this case, it is more of a rough supply as compared to in CV business we tend to have more value addition in terms of machining.
At least for now, these are unmachined programs that they present opportunity for us in future to add more value, which is also being worked upon.
Okay.
We have a lot of more business that will ramp up over the next two years.
Okay, great. Sir, just one last comment on debt. Your debt has gone up. What has caused this, and how do you see this evolving from here on?
The net debt has gone basically for the new debt which we have taken of INR 400 crores in first quarter. In terms of the cash, the cash has come down marginally also because of the working capital increase because of volumes. Now, we can borrow additional money, but you know, you could just see it as a negative interest accrual. We are using optimum use of our cash and putting it into the business. Is that clear?
Just if you could just talk about how this will evolve. Is the working capital higher than normal or is it at a normal level now?
No, it's in line with the business. It's as there's inflation in the business and growth in the business, number of changes remains the same, it's just volume goes up. Also since the export proportion is growing, which is higher recovery cycle, this has more of a volume effect rather than anything. Volume plus inflation.
Okay. Thank you. Thanks, sir. I'll come back in a few.
Thank you. The next question is from the line of Pramod Kumar from UBS. Please go ahead.
Yeah. Thanks for the opportunity. Amit, on the artillery gun order, what you've been talking about. I believe you guys have made some 4 or 5 different types of artillery guns, and this one is clearly not the ATAGS, which is like the main the showpiece in terms of the technology. If you can just help us understand of what kind of potential is there in ATAGS? Because I believe probably through the Indian the Indian Defense Forces is not recognized in the quarter, in the revenue there. How should one look at the revenue potential for Bharat Forge in the domestic market and also in the international market for ATAGS?
Look, ATAGS was developed as the mainline gun for the Indian armed forces. There is a requirement of something like 1,500 guns of ATAGS, of that category, to replace all the other guns which are of various vintages, starting from, you know, sixties onwards. The revenue potential is tremendous. I mean, 1,500 guns is a very large amount, and we also have the opportunity to export the same product. This is a tremendous long-term opportunity. This is not an opportunity which has, you know, which is yet subsidized or is in our order book in any way.
Besides that, we have five other guns. There are discussions happening with multiple users for multiple different platforms. For example, the order that we have received is also for a non-ATAGS gun.
Yeah, yeah.
-which is developed by us, as you know, from scratch.
I have a second follow-up. There was a rumor that in addition to ATAGS, the government has also considered an import option. I believe in recent years the expectation is that they may not actually go for that and rather focus on the ATAGS kind of a product, right? Are you also pushing up because that will significantly upsize the potential for Bharat Forge, right? Because earlier it could have been split between.
You know, with the clear focus on Make in India.
Yeah.
IDDM.
Mm-hmm.
Within Make in India, IDDM is the highest category, which is Indian designed, developed and manufactured.
Absolutely.
Indigenously designed, developed and manufactured. The advantage of that is that, you know, there is no potential for anyone to hold you ransom for technology.
Absolutely.
It's 100% indigenous product. All the subsystems, electronics, everything has been localized or is local. It's very clear that in a scenario where you may have technology denial, you know, nobody wants to rely on someone else's technology, especially if you have that with you. Now, if you talk about aircraft and you talk about, you know, advanced, super advanced technologies like that, yes, that is a choice one has to make. In areas where you already have your technology, why would you go anywhere else? That is what the MOD has decided. In fact, they have come up with a negative list last year. The negative list clearly says that products of this, these categories which are enumerated in that list may not be imported.
In a way, ATAGS is like the prime candidate for the 1,500 guns order over a period of time, right?
Anybody who can design, develop and manufacture a product in India that meets the criteria and is competitive is, you know, in that frame.
Absolutely. The expectation was that this year, we should see the revenue recognition for ATAGS. Are we still on course for that?
You know, unfortunately, that is not in my hands. I think, you know, we just have to wait and watch. Everybody is working hard towards it, but you know, it's, as I said, not in my hands. You know, sooner than later things have to happen. I think, there are a lot of people waiting in the line, so maybe we'll move on to the next question, please.
Next one, last question from my end is on the export industrial. Given the macro uncertainties, if you can just help us understand how do you see this business evolving and whether one should worry too much about the overall macro or Bharat Forge's footprint is not that large enough, which gives you the headroom to keep gaining market share? How should one look at the export industrial piece, Amit?
We see a lot of opportunity for exporting industrial components, especially to Europe and to some parts North America as well, and other parts of the world. You know, till now, we were only supplying forgings. Now we also have castings as a large growth opportunity. In fact, we see the casting exports is as big an opportunity, if not bigger than forging. I think both of these combined will provide a tremendous growth for our industrial business going forward and allow us to, you know, grow our industrial business very significantly by 2025, 2026.
This comment would include even the near-term million ton order?
Gentlemen and ladies, a lot of the questions that you're asking right now will be addressed at our analyst meet on the ninth of December. If I answer everything now, none of you will want to come there. Let's save some
No, no. We get to drive the armored vehicle, right?
Yes, we will have one available for you all to drive.
That's good. Thanks a lot. Thank you. See you.
Take care.
Thank you. Next question is from the line of Pramod Amthe from InCred Capital. Please go ahead.
Yeah, Amit, thanks for this opportunity and congrats for winning the first defense order. Some more details for the same is what is the rule of thumb in terms of value add for these guns? How much roughly will be adding the value versus the assuming the 100% share value?
You know, I'm not going to get into that because, you know, there's too much competitive knowledge and information in that. You know, whoever supplies things, it will be supplied on an arm's length basis with the right returns that it takes for both the entities. Please remember that KSSL is 100% subsidiary of BFL. Everything will come under BFL in one way or the other.
Okay. Second one related to the same is, considering these are like, government orders, how are the payment terms for them? Will there be a long receivable cycle or how are you dealing with them?
No, it's actually quite clear and simple, and there are no such issues. You know, we today can't talk about that, but it's not an issue at all.
Considering that these might be a make or custom orders, some of them, so will there be a scale benefit from them or these are like, day one will be a relatively a superior margin products for you in that sense?
We'll make profit from day one.
Second one is, this is more for disclosure point of view, considering that defense is a completely new sector and it's very difficult to get a handle on what you guys are negotiating or in the order size and all. Is there a scope to give once you announce the orders? That's one. Second, in terms of testing, in terms of the negotiations, how much you are giving the book size or any of that would be able to give us some color to look forward to. It's more from disclosure perspective.
Nothing as of now. I'd like to make one very clear statement on ESG with regards to defense.
Sure.
We will never make any banned weapon systems or subsystems as per the various UN conventions. Nothing to do with chemical, biological or weapons of mass destruction. We will only sell to entities that are approved by the Government of India. As a company that is in the good graces of the government. We will never supply to anyone who is outside of these parameters. We will never produce, design or supply anything that is banned or comes under those categories of BCD, biological, chemical and weapons of mass destruction.
Sure. Thanks a lot.
Thank you. The next question is from the line of Mumuksh Mandlesha from JM Financial. Please go ahead.
Thank you so much for the opportunity, sir. Can you share any demand outlook for CVs in Europe market, sir? Also, can you talk about the opportunity that's happening because shift towards India, due to energy crisis in Europe and also some changing needs for China as well?
Oh, sorry. Shift of demand to India from Europe because of energy crisis in which area?
Basically the shift happening, it's been mentioned in the commentary, initial commentary. The shift happening from Europe and China towards India. Can you talk about the opportunity, sir, of that, sir?
Of supply chain? Yes. Okay.
Subodh?
So, uh-
Europe demand.
The demand in Europe is at least on commercial vehicles back as compared to last year. Even for next year it is expected to remain at similar levels. We are of course monitoring that because there is a lot of talk in Europe about the challenges. As far as supply chain goes, there are some small opportunities coming about, but please consider that in the industries that we serve and the products we make, you know, making change at short notice is not easy. It requires a lot of testing and validation and all that. So basically there are some longer plays that are, you know, underway here. It is too early to talk about that in a call like this.
Right, sir. Sir, can you also talk about the Harbinger Motors JV, which we have formed, for the motors? Can you just give me something on the opportunities in India and overseas markets?
Yeah. Harbinger is an EV startup that is founded by three extremely smart guys who have worked in a number of EV startups. They have more than, you know, 15 years of experience in the EV domain and electronic domain. They have been funded by, you know, private equity, some very prominent private equity players. They were looking for someone who can be a supplier partner and a manufacturing partner. What they realized is that someone like us can help them bring their product to market easily because of our engineering and manufacturing capability. We are their exclusive manufacturing partners for their powertrain, which is the EDU, electronic drive unit for Class 4 through Class 6/7 commercial vehicles.
Their first product that they're coming out with is a 350 KW EDU with something like 1,500 Newton-meter native torque and actual torque of something on the order of about 16,000 Newton-meters. This is something that will be a very good application for all kinds of delivery vehicles in North America, especially for last mile delivery and hub-and-spoke, from you know, taking it to airports and air cargo facilities, et cetera. In fact, they have already tied up with one of the largest recreational vehicle manufacturers in the world to apply their electrification needs for their new vehicles going forward. We believe we are planning for a FY 2024/2025 start to our production for them.
Obviously it will be a soft launch in 2024/2025 and then scale up in 2025/2026. We have tremendous opportunity to supply high value products to them across forging, machining and of course EV systems, which means electronics, motors, drivetrain, et cetera, all fully manufactured, assembled and tested. It's a significant step forward that will take us from a tier two into a tier one kind of situation.
Thank you so much for the opportunity, sir.
Thank you. The next question is from the line of Aman Vij from Astute Investment. Please go ahead.
Hello? Hello?
Hello? Aman Vij, your line is in talk mode. Please proceed.
Please go ahead, yeah.
My question is on the defense side. Last call you had given some rough guideline in terms of how we see the business scale from INR 500 crores- INR 1,000 crores, and then eventually INR 1,800 crores kind of number we had talked about. Even export for around INR 300 crores-INR 400 crore. Sir, given the order we have already got. Do you think we can cross that number much sooner in export side?
You know, obviously as of now, we have seen tremendous growth in our addressable market because of this order that we have received. I expect that we will continue to receive orders going forward. You know, I would like to be a little cautious.
Good day, ladies and gentlemen, and welcome.
I prefer to be a little cautious when talking about such things because it takes a lot of time and effort before these things are realized. You know, let's say that, you know, that was the baselining and hopefully this baseline will provide some headroom for growth with these kind of developments.
Sure, sir. On the domestic side, because we have been doing trials for a long time now, does this export order in a way helps us or maybe convinces the government to fast-forward the process for approval in domestic because that in a way is a mark of approval and a seal of excellence for us?
You know, I haven't thought of it that way, but, you know, obviously it's a validation of our product and our capability. You know, it shows recognition from outside. Obviously, you know, there is merit to what we do and the products that we produce. It makes it harder to ignore, let me put it that way.
Sure, sir. Final question from my side. You had explained that the main portion of defense business is capital items like vehicle, which we are currently doing, artillery guns, and then there are consumables. In the presentation you have mentioned because of more orders from the vehicle side, the margin was impacted. Does it mean that defense business has a lower margin potential? If you can talk further.
No. That was because of the LD that we had which we are challenging. Okay?
Okay.
It is for that reason.
Okay.
If you want to ride that back, then it will be the same.
Okay.
It will be very similar.
In terms of order, is it safe to assume that the highest will be impact funds followed by the consumable and then defense business?
No, it's really different. It's not a, you know, Maruti's S-Presso that you are selling. Each vehicle that you sell to each customer may have a lot of customization. Okay? It really depends on what you are doing and how much specialization, customization, engineering and application engineering you are doing.
Okay. In terms of-
More than EBITDA, you should look at the ROC in this business. EBITDA will be good. EBITDA will be strong, no doubt.
Okay.
This will also be good. What it does is, it will provide a long tail to the business because you will also have an owner, element to this for a long period of time.
Mm-hmm. Mm-hmm. Is there any order in terms of ROC in these three sub-segments which we talked about?
Sorry.
Is there any order in terms of ROCs, the return profiles?
ROC will be significantly higher than the standard ROC.
If you can give a range, sir.
As I said, higher than our existing ROC.
Okay.
Business is still in take-off mode.
Sure, sir. That is it from my side. Thank you.
Thank you.
Thank you. Before we take the next question, a reminder to the participants, please limit your questions to two per participant. For any follow-up, you may request to rejoin the queue. The next question is from the line of Chirag Shah from Nuvama. Please go ahead.
Hello. Yeah. Good morning, Amit Kalyani. Sir, my first question is a slightly different one. Now that we have lot of businesses originating from India, whether for international markets or domestic markets, is there a thought process of restructuring the way or restructuring this? I know most of them are 100% subsidiaries. Are you looking to consolidate them so that we have a different reporting structure?
Yeah. It's a good point you make because we have many different verticals and business areas under the same company. Right now, we are looking at this. First we will do it internally, and then we look at it externally.
Okay. This is helpful, sir. Second question would have been again coming back to defense. Apologies for hopping on. Just kind of a purpose, between KSSL and Bharat Forge, how should we look at the overall capital investment in defense? I know you indicate KSSL is more of an assembly business, and the large thing would be done, a lot of things would be done by Bharat Forge. How should we look at the overall capital investment? You are leveraging on the existing investment in GSL, so even their incremental capital requirement is very less.
The core manufacturing which involves forging, machining, heat treatment of the main artillery products, the artillery gun, the barrel, you know, those kind of things will happen in Bharat Forge. Then, let's say, what do you call it, the finished product assembly, integration and testing will happen in the dedicated entity which serves this. This will happen in the different entity.
Okay. This is also for export order also, right? The same process will be followed for the export order also.
Yes, yes.
Yeah. In that case, just to understand how I like it to report this, where would this be reported in Bharat Forge? It could be a part of defense standalone, part of industrial.
Reported in KSSL, but the components supplied from KSSL, from BFL to KSSL, we count in BFL.
Between, would it be classified as a separate defense or is it part of industry?
No, it's all consolidated. No, it will be one entity.
Okay. Got it.
From BFL, it will be part of industry.
It will be part of industry. BFL will be part of industry in our disclosures.
Yes.
Okay. That was the question. This is helpful. Lastly, outlook on the India capex, if you can share what you are gathering from your customers from near-term perspective and over next 12 months perspective also.
I think you are better placed to tell us that because you talk to a wider section of the population.
No, but you have a much better handle on, and experience of so many campaigns. It is. It's large. We look up to your view actually. How do you look at it?
Yeah, at this point, you know, overall the big picture for India looks positive, but as compared to Q2, we are seeing, you know, a sort of a slightly depressed Q3, that's based on, you know, lesser than expected sales in the festive season and all of those kind of things. But the broader expectation is at least for the year and going forward, the segment should continue doing well. That is the expectation we have as well.
Okay. Thank you.
Line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead.
Hi. My first question pertains to the European aluminum forging business. In the first half, any indication of what utilization you would have operated 30,000-ton capacity?
About 50%-55%.
Okay. The large part of impact on margin is also because of energy costs there or largely because of the utilization?
All the inflationary impact.
Okay.
Energy, materials, everything.
Okay.
increased manpower.
Thank you.
Because of large absenteeism, et cetera, that we had larger number of manpower.
Got you. Would it be fair to say at least from energy and trade perspective, we have seen the peak and could you expect some savings from Q1?
Well, it's not going up anymore as of now at least. You know, there are lots of very complicated things taking place right now in Europe.
Right.
I don't think we can, you know. Winter is coming. Although it's been a very mild winter so far, if it gets worse then, you know, obviously there'll be some psychological impact as well. We have to wait and watch.
Right. Right. Secondly with respect to the guns order which we have got, so that would be, how many guns and by when we would start selling?
I cannot share that information. All I said is it will be over a period of three years where we will finish the delivery.
Okay.
For sovereign nation, we are unable to provide any more information.
Sure. The Air Force vehicle supply chain is being done or we'll see some more revenues coming in?
We have, I mean, large orders still remaining to be executed.
Last question on the broader Aruncos situation on the standalone entity, on the steel price side particularly. There, do you expect some bit of reversal coming in Q1 from the steel price correction?
Yeah. As and when the steel price gets corrected, obviously things will improve. It is still, you know, still flat. It is going up slow because we've not wound down substantially.
Got it. Thanks. I'll come back. Thank you.
Thank you.
Thank you. Ladies and gentlemen, we think that was the last question for today. I now hand the conference over to Mr. Amit Kalyani for closing comments. Over to you, sir.
Ladies and gentlemen, thank you very much for all your questions and your interest. I would be very happy to answer your questions even more during our investor conference or analyst meet, which we will have in person on December ninth in Pune. Thank you for your interest in our company and please do continue you know remaining in touch and we look forward to seeing you in Pune very soon. Thank you. Bye.
Thank you. Ladies and gentlemen, on behalf of Bharat Forge Limited and Prabhudas Lilladher, we thank you all for joining us and we may now disconnect your lines.