Q1 21/22

Aug 12, 2021

Quarterly report

Ladies and gentlemen, good day and welcome to Q1 FY 'twenty two Earnings Conference Call of Bharat Forge Limited. As a reminder, all telephone lines will be in a 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 note that this conference is being recorded. I now hand the conference over to Mr. Amit Saliani from Bharat Porch Limited. Thank you and over to you, sir. Good afternoon, everyone. Thank you very much for joining us. Sorry for the slight delay. Thank you for joining us at our Q1 analyst call. I have with me members of our management from Sales and Marketing, Finance, Investor Relations. And as usual, I'll make a few highlights upfront and then we'll get to Q and A. So overall, I think on a stand alone basis, we've had a fairly decent performance despite the initial challenges with COVID and then the subsequent impact on the overall economic activity in India. I must congratulate all our team members, management and everyone in Bharat Forge and our suppliers for ensuring that we were able to meet our customer commitments despite all the significant operating challenges. Exports have been an area that have shown in this quarter. Sequential basis exports grew by almost 25 percent to INR 9.15 crores, while the domestic revenues declined by 22 percent to INR 4.42 crores, leading to an overall growth only of about 5% in sales. This decline was due to the severe lockdown that was imposed in the month of May. And in certain states, even followed on right up to June and into July, especially in Southern States. We have managed our costs fairly well. We've put in place a very strong cost reduction measure last year, which continues. And due to that, plus a good product mix and growth in overall business, We've seen a strong performance on margins where we've seen a 300 basis points growth. Our oil and gas revenue was approximately INR 150 crores for the quarter as against INR 45 crores in the last quarter. The fluctuation in interest cost is notional due to the reval of the rupee. Our PBT grew by about 12% to about INR 282 crores. We have an exceptional item of INR62 crores, which is towards the VRS of our Chakhkan plant, where we have given a VRS to over 200 people and all the unionized workforce there is completely now retired out. And all the expense towards this has been charged in this quarter. There's nothing that will continue. During the quarter, we also completed the acquisition of Sambi forging at a cost of approximately INR77 crores. This facility was operating at a very low capacity utilization and had not been, let's say, operated appropriately for the last 3, 4 years because of a cash crunch they had. We have put in place a new management team. We've put in place some measures to quickly bring this facility up to our standards in terms of operations. Of course, health, safety and environment are our first priority, and all those have been seen too. And we expect that from quarter 2, which is the current quarter, this company will get consolidated or we will report the earnings of this company, and we expect that it will breakeven this quarter and move to profitability from the next quarter itself. Basel IV continue and the reason for buying this company is that it has a capability to make products that are slightly bigger than our existing product portfolio, and it helps us expand our product offering, especially for the renewable energy and wind sector. We continue to maintain a strong balance sheet with ample liquidity, and we will look at opportunities in emerging areas and in allied areas for deploying capital, which will give us incremental growth. If you look at our international operations, I think they have performed fairly satisfactorily. We have registered an EBITDA of 11.7%, which is supported by a focus on cost optimization, product mix improvement and total focus on delivering overall performance and cash flow. We expect that the Q2 CY21 performance at EBITDA level will be slightly lower optically because of the RM inflation, but otherwise things are running quite well there. From this quarter, we have also started disclosing the international operations revenue divided between aluminum and steel. This will be helpful for you to understand the growth that we will see in the aluminum side, and I will talk a little bit more about that going forward. Our consolidated balance sheet is also very strong with a debt equity net of cash at 0.41. If you look at quarter 2, we expect the overall growth to continue being supported by recovery in the domestic medium and heavy commercial vehicle market, sustained improvement in demand levels in export market and the potential impact on end demand because of supply issues pertaining to semiconductor and sustained increase of input costs are factors to keep track of. In spite of that, we expect a fairly strong growth in quarter 2 over quarter 1. In terms of new product development, despite COVID, a highly motivated team of researchers, engineers and manufacturing teams in Bharatpur have indigenously developed in house a medical grade safety and critical product, which we developed in under 45 days, which meets all the stringent regulatory and quality requirements of the various testing and approving agencies. We have received tremendous support and encouragement from various departments of the government of India, and we are glad to report that we could manufacture, secure approvals and commence delivery of these systems within a record time from engineering to supply, including 45 days of testing of less than 100 days. So we converted an aluminum forging production line into producing these high volume lightweight portable aluminum oxygen cylinders and this demonstrates the technology development capability within the Alport and the ability to work as a team and create a fully new technology, master it, productionize it, stabilize it, validate the product and put it into the market. We see this becoming a new product line for Bharatpur which we will make from India and potentially supply the world and this could be a new niche market that we occupy at a global level. On the e mobility side, we are very excited with the progress we are making on e mobility. We are very happy to report that our investee company, Top Motors, have achieved same 2 homologation for multiple products both in 2 wheeler and 3 wheeler segment, and we will talk about this a lot more in detail when we provide you a full road map for our e mobility business. In terms of sustainability, currently more than 25% of our energy requirements are sourced from renewable energy. In fact, as you know, renewable is a cyclical business. In the monsoon time, there are very high winds. And in fact, in the month of July, we have used upwards of we have consumed upwards of 35% of our energy consumption coming from renewable. So we will, as a goal, continue to increase our proportion of renewable energy and focus on reducing all the waste that we produce, reduce our CO2 and become much more environmentally conscious and reduce our water use towards neutral. I think that's really all I had to say, and I'm now happy to talk about take your questions and provide you answers. Thank you very much. We will now begin the question and answer The first question is from the line of Kapil Singh from Nomura. Please go ahead. Congratulations. Great set of results. Firstly, I had a question on global CV business. We've seen one of the highest revenue run rate there. And so far, at least in the data, we don't see truck production really picking up in a big way. So could you talk us through in terms of and order inflows also have been a little bit soft perhaps because of the slot availability. So could you talk us through whether this revenue also includes some new order wins like new products or new customers? And what is the outlook for this business? Along with that, some longer term outlook also because there are some new technologies being excluded as far as either electric trucks or hydrogen based trucks. So how are you thinking about addressing that opportunity? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So first of all, I'll address your last point first that we have a comprehensive EV strategy that covers everything from on the technology side, it goes from light weighting to power electronics, control electronics, motors, transmissions and subsystems and systems. And on the product categories, it goes from 2 wheeler, 3 wheeler, light commercial vehicle, ultralight commercial vehicle, light commercial vehicle, ICV and bus. Okay. So we have the whole product suite available and we'll probably host an analyst meet maybe sometime in October, November after the complete COVID situation is under control and show you what all we're doing in this area. And now I'll transfer the call over to my colleague, Subodh, who will talk about the other questions that you asked. Thank you, Anup. So before I come to your first question, on the second question, yes, we are winning business on EV products for commercial vehicles as well. In fact, several products are under development as we speak, And we are very strongly engaged with all our customers in this regard. As far as the first question is concerned, you should not go by the order booking that happens on a monthly basis alone. You have to look at 3 factors. The first factor is the backlog now is almost equivalent to 10 months of production. And most of the production slots for next year also have been sold if you look at that logic. So the commercial vehicle business is very strong. The orders are very robust. The challenge that most OEMs are having right now, which we may have to adjust lots, is the semiconductor crisis problem. So to that extent, there is some amount of disruption from a flight in perspective. But other than that, there is no weakness in the commercial vehicle system. In fact, with the positive news on the U. S. Stimulus, it is actually probably going to be significantly stronger coming in the next couple of months. So I think we are in good shape as far as commercial vehicles are concerned. Actually, the stimulus has not yet started hitting the ground because of COVID. And once this starts, I think you're going to see a tremendous upsurge in overall activity in the U. S. Sir, for the trucks, could you talk about what are the areas in which we have won orders? What are the products there for e mobility? We have orders on, for example, on the axles, we have driveline products. We have confidentiality agreement, but we have products both on chassis, axel and driveline for electric trucks. Okay, sir. Thank you. That's all for myself. Thank you. The next question is from the line of Vinay Singh from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. In your opening comments, you talked about Q2 being stronger than Q1. Could you talk a little bit about what would be the drivers or is it predominantly going to be India? And linked to that, we've seen the nice uptick in the oil and gas business. What's the trajectory that you're talking about that's going ahead? And similarly, if you could also comment about your aluminum forging, we are almost hitting 24,000,000 per quarter run rate on that USD. So what's the trajectory that we should look on that side? Thanks. So our growth in Q2 over Q1 is going to come from all sectors. It's going to come from commercial vehicle, it's going to come from PASCAR, it's going to come from PASCAR India and from commercial vehicle India and industrial India. Industrial exports will also increase. In addition to that, we see a little bit of increased demand coming from certain sectors where there is some pent up demand because of long periods of no purchases in India and in certain other markets. So I would say that you will see across the board kind of uptick. Obviously, each sector will be slightly different. But generally speaking, we will have an across the board kind of uptake taking place. And your second question pertaining to our aluminum business, we have installed capacities in place for whatever growth we see over the next 2 to 3 years. And we will more than double our revenue per year from where we are over the next 2 years or 2.5 years. And we have capacity for more than that amount of business already in hand. In fact, we have more orders than capacity today, and we will very soon look at how to expand our facilities in outside of India, in multiple geographies and with not the same amount of CapEx that we've done now. Hansu, this is all. So this is including North Carolina and the Germany facility, right? This is including both, and we see tremendous demand in both areas. And we are already now commissioned the line in the U. S. We have now made more than half a dozen platform prototypes and set them for approval. And by the end of this year, we will get the approval. And early next year, we will start ramp up. And all the current major OEMs are covered, including EV OEMs, pure EV OEMs, traditional OEMs, which are the big European OEMs, also big U. S. OEMs and Japanese OEMs. Right, right. That is encouraging to know. Lastly, could you comment about the future trajectory of oil and gas revenues? Oil and gas, you must understand, is now moving towards a very dynamic business where it depends on the oil prices and which location in the U. S. Production of shale. The production costs vary anywhere from $25 a barrel to $55 a barrel. So obviously, the ones which are at $55 will only start if the oil prices are high, the ones which are 25, 30 will keep running throughout no matter what the oil prices are. Okay. Thanks for that. Sure. Thank you. The next question is from the line of Ronak Sarzak from Systematic. Please go ahead. Hi. Thanks for the opportunity and congrats on a very strong set of numbers. The first question was on the e mobility side. I mean, the last time we had met with showed products, but any signs of order booking now given the inflection we are seeing in the 2 wheeler and 3 wheeler segment in India? This goes on the domestic side. We have received orders and are This goes on the domestic. We have received orders and are executing orders right now across some very interesting sectors. We're not in any really commodity products. Give up till next quarter when we'll probably be able to show you more and tell you more than what we're able to right now. But very clear that e mobility is going to become a very large part of our business both in India and then gradually outside as well. Great. Thanks. Sure. And the other question I had was on more on the profitability side. As assuming in Q2 in the second half, the export mix comes down and domestically, it gives us again back to say 6040 or 5545 kind of a ratio. However, the operating ratio also kicks in given we would be at 5 years. Remember, we are 1 month done in the quarter, maybe 1.6 weeks into the year into the quarter. Let's wait till the quarter is done, but I don't think we have any concerns or apprehensions about our performance for next quarter. No. What I meant was, how does the product mix and operating leverage play out? Do you see margins stabilizing at current levels given the cost measures we have taken? Margins will remain stable at this level, currently. Right. Even as the product gets normalized, right? Exactly. Sure. Sure. And the final question on the export CV, right? I mean, given how strong the performance has been, is there a play of inventory here? I mean, or do we feel as the production ramps up, we will see similar growth in our top line or our exports as well. How should we look at any inventory adjustment happening in the export series especially? I don't think there will be any adjustment for inventory. I think it is fairly real. Sure. Great. Thanks a lot and all the best. Thank you. The next question is from the line of Ashutosh Tiwari from Equinor. Please go ahead. Yes. Hi, sir. So firstly, on the European stage, I think we already have reached the peak that we have done in FY 2019 quarters. So what is driving this growth and how do you see the outlook going head over there? I think you're referring. You're referring? So our European subsidiary, the growth Hello? Members of the management, we cannot hear you at the moment. Sorry. So on the European subsidiaries, the overall performance has been peak compared to previous because the non aluminum business is operating at a fairly high level driven by the underlying demand of passenger cars and commercial vehicles and aluminum has grown to a higher level than previous. And we have received businesses for hybrid which we have also hybrid and electric, which we have started executing. This has also tripled over the last 2 years in Germany from our German plant. We are contributing to this factor. So this is a large passenger vehicle which is driving this growth? I mean, what is driving this growth? Yes. Basically, the growth is being driven by faster. Okay. Okay. And on India Yes, we have hybrid and faster. Okay. And on India side, despite this lockdown and impact, if I look at the Indian industrial revenue, it's only down 10% quarter on quarter. So and so in what sectors you are seeing more pickup now versus earlier versus last 3, 4 years? And what is the outlook over here going ahead for next 2, 3 years? See, as far as India industries are concerned, it is largely driven by the growth in the construction segment in India. And with all the efforts of the government to continue boosting infrastructure, we expect this to remain on a strong trajectory. So largely the construction driven only in India? New business. So these are construction equipment as such. These are engines that are used as prime movers, which are also off highway applications. These are tractors and so on. So there is a wide range of products involved here. And we have also entered into some new areas of industrial products, which are new segments for us. So as a combination, we see a strong trajectory in our industrials business. And lastly, on the oil and gas side exports, you mentioned that you did the ticket revenue. Now when you talk to different companies across sectors, I think all of them are seeing very good traction in oil and gas and talking about more orders going ahead. So again, this $20,000,000 revenue that we did in last quarter, Can it further increase going there from here for the coming quarters? Well, currently, we are not seeing new activity in the fracking area in the U. S. A lot of activity is largely linked to the revitalizing of current assets. So we expect this to remain stable for the next couple of quarters. Growth, we are not exactly sure as yet, but We will only grow from new products that we launch into these sectors, which we are working on from a product development point of view. So please understand we don't make commodity products like Sanjeet, okay? And there is a huge requirement for those kind of products but they are at very low margin and they're extremely commoditized products. So we are only focusing on high value, highly differentiated products in this sector. Okay, got it. Okay, thanks a lot. Thank you. The next question is from the line of Pramod Amze from INTRED Capital. Please go ahead. Yes, hi. This is with regards to the Sangria Engineering. Looking at the capacity, it looks pretty small compared to the size which you have. So can you explain what type of capability it brings in? Or is there a more scope to expand capacity or shift your products there? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So look, basically, they have the same capacity in terms of tonnage that we have in Barastore in our open die forging facilities. The issue is that they have a lot of bottlenecks in their plant and in their facility. They have set up a very good press line but not everything that goes before it and after it. So the debottlenecking will end up costing us somewhere in the region of I would say INR 20 to INR 25 crores. But with that we can I would say almost triple the capacity there? And honestly with a price like this and if we are able to do high value or even let's say medium value products we can make this into a INR 500 crores, INR 600 crores business, if not more. And is there a further scope to expand there in terms of brownfield or you think? They have 15 acres of land, out of which I think they've only used about 5 acres or so. So there is scope to expand in terms of machining, equipment, etcetera. And second one is you are talking about new order wins in the CV electric space. When you expect these to kick off in terms of sales? Any timelines you are looking from the customer? The CV's orders will start from 2023 and 2024. Okay, sure. Thanks, Amit. All the best. Thank you. The next question is from the line of Sumit Mahawad from EDELWEISS. Please go ahead. Yes. Hi, Amit. Congratulations on great set of numbers. My first question is on all the new plants, especially the India locations and North Carolina. What is the contribution of revenue we are targeting by the end of FY 2022? FY 2022 revenue from North Carolina will be very small. It will be somewhere in the region of $8,000,000 to $10,000,000 because that will be our 1st year and that is where we have to get all our approvals and even the customers have to start doing their own preproduction lots etcetera. 23 onwards, we will see a very steep ramp up and by 24, we should be at full capacity. And from the capacities in India, especially in Nellore? Nellore also by 23, we should be at almost full capacity. Fair point. 2nd question is on the Sanghvi again. I'm sorry to harp on Sanghvi again. But this is a plant which also had some qualifications from some of the global OEMs like Rolls Royce. So you spoke about renewables, Amit, but that plant is please correct me if I'm wrong, it's far beyond renewables or so more about quality of business that you can tap from there. You spoke about INR 500 crores revenue, but the quality of business from this plant can be far different, right? So and then I know Bharat, we have a solid qualification list from the Western OEMs, but anything specific that you would want to add on this plant? I'll tell you one thing. I honestly don't know what they have communicated to the outside world in terms of qualifications. But fact is that they were in the dire states that they are in because of the overall management that they had. But I know that, that is a good plant. It is well set up, and we can maximize its potential, if anyone can. And we will leverage our relationships and our capability and our integrated approach to definitely maximize the output value and value addition from that facility. Maximize the output value and value addition from that facility. Okay. Thank you. And good luck. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants, we would request you to please submit your question to 2 at a time. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Ganesh Gandhi from Motorola Louthful Financial Services. Please go ahead. Hi. Congrats to the team for excellent results. So first question, according to the margin sustainability, I mean, given that in a quarter where we are almost 20 percent lower volumes than the peak volumes, our margins are comparable to those of performance. So from here on, should we expect on a steady state, maybe say in FY 'twenty three, where we utilize more capacity margins to go back to previous weeks of 13%, 32% or there are changes in the underlying business level? P. Vijay Kumar:] The company is very different than what it is in the past. I think we are spending a lot more on R and D right now. And honestly, between 28%, 29%, I think is a very good number for margin. More than margins, we will focus on capacity utilization, we will focus on capital output and overall sales and cash flow and growth, of course. Okay, okay. Understood. Sikini, can you share, Dizon, what was the USD INR in addition in this quarter and what was the steel price pass through benefit? It was INR 75 this quarter. Okay. And steel price pass through? Steel price pass through is about INR 30 crores. Okay. Got it. Got it. And lastly, with respect to the EV portfolio, I mean, we are doing so many different products across different categories. But if you take a birthday view and based on the order win which we'll be having, would you be able to share magnitude of revenues or orders coming from new components based in electric vehicle sites? Yes. I think as I mentioned, we'll hold we'll do this in more detail next quarter because I think we'll have a lot more to share with you. The next question is from the line of Nishith Gillan from Axis Capital. Please go ahead. Hi, sir. Thank you for the opportunity and for the questions on very well response to that number. So I have two questions. Firstly, you mentioned that the U. S. Business will reach a peak installation in FY 'twenty four. Just I wanted to understand what is the peak revenue potential from the kind of CapEx that you have incurred in the U. S. Business? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So right now, based on the product mix we have, it will be commenced in region of RMB80 1,000,000 to RMB85 1,000,000. But we continue to receive new orders which are above and beyond what our capacity is. And we are currently in the process of setting up a second phase in the same plant with an incremental CapEx. Obviously, it will not be directly proportional to the initial CapEx. It will be significantly lower. My second question is whenever we see downturn across segments, whether especially in the export market, we see a sharp reduction in inventory. And I think inventory levels were sharply lower at your customer end across segments a couple of quarters back. Do you think they are still below normal levels? Or do you think now with strong revenues in the last quarters, the inventory levels have normalized and the growth will be more linked to the retail sales that happened in these segments? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Inventory levels right now are pretty low, I would say. They are not as robust as they should be. But it's also very mixed, so quite but it's quite stable from a demand point of view. So any numbers would you be able to share especially on TVs and non autos? Maybe I don't know non auto is possible or not because it's across many segments. But at least in TVs, what kind of inventory levels it used to be? How low it came down? And where are we today? I think it will be difficult to answer that. The next question is from the line of Nomuksha from MK Global. Please go ahead. Thank you so much for the opportunity. Just want to ask on the outlook on the Aerospace and Railway segment, sir. Yes. So we have orders in the Aerospace sector, and we are well, let's say, positioned to take our Aerospace business, which was at €5,000,000, €6,000,000, €7,000,000 to about €20,000,000 in the next 2 years. And we have already received orders and capacities are being set up. So these will be forged and machined high value products for jet engines. And sir, for railways, sir? Sorry? Railways outlook for railways, I mean? Yes. 63, in railways, in Railways, we have, I would say, a decent order book from outside India. And as far as India is concerned, we have the order book from Indian Railways relative to turbos and so on and so forth. So it's an ongoing process. Sir, and just what will be the current revenue from the CNW plant, Melu plant, sir? It's very small. It's in single digit crores. Okay. Thank you so much, sir, for the opportunity. Thank you. Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Sir, can you talk about the update if it's there on defense guns? In what time frame can we expect to hear about the testing being complete and the orders? Can't talk about that right now. Okay. Can you update us on the testing at least how small is that? Just started, so it's going on. Just started. Okay, okay. Yes, that's helpful. Thank you. Thank you. The next question is from the line of Nishant Bhat from ICICI Securities. Please go ahead. Yes. Hi, sir. Thanks for the opportunity. First, for the quarter, you can just shed light in terms of the results. We see a much higher swing in finished goods inventory at the consolidated level visavis stand alone. Why is that so? This is mainly because of the inventory adjustment between Bharatpur and its trading entity since the exports are growing. That is the reason the inventory levels are also increasing. Although in terms of number of days, it is coming down, But since it's a volume increase, it is impacting that. So you're filling the pipeline. Okay. So we should look at that roughly INR 190 crores in that then roughly which is the difference between the standalone and the consolidated level. So this would be the phenomenon or maybe current quarter and next quarter, otherwise it should be a normalized level. Fair enough. My second question is on the steel price contracts and from a competitive dynamic, whether that makes the effect in terms of visavis global competition. So firstly, is the steel price pass throughs both in domestic and exports completely happened on an index level indexation basis? And is the indexation for most of your customers on a domestic pricing or at a global pricing level? Can you shed some light on that? And whether that has any bearing on from your relative competitive dynamics because your global competitors might be at a much higher steel price level? So can you shed some thoughts on that? The we have steel pass through agreements both for domestic and exports, and they are indexed to the respective markets. In some cases, there are mixes because everybody is now present in India as well. And as far as competitiveness goes, the steel market escalation has been pretty much standard across the globe. So we are seeing the same in India as well. So the big factor that is positive for us is steel availability is much better for us as compared to our competition. So it helps in overall scheme of things. So is it a meaningful benefit in terms of for the customers who would potentially be indexed to a global benchmark because obviously domestic prices is much lower to global? Well, it depends on domestic pricing being much lower. I don't think it is not that lower. But the important thing here is that in overseas markets right now, the lead times to Tokyo Steel are very high for various reasons. For us, that is a big advantage right now. Okay. Fair enough. Thanks. I'll come back in queue. Thank you. The next The next question is from the line of Aditya Marthakya from HDFC. Sorry to go on about the question for defense. There was an article in the paper suggesting that one of the gun trials had failed. At least can you throw some light on that? And secondly, on the defense side, is are there any timelines we can throw now? Because a lot of programs have been awarded to various entities, be it the Tejas plane, be it this carrier which has been commissioned recently for trials. So in that light, there has been some amount of ordering which is happening in the sector now, which we had not seen earlier. So is there anything which we could give some color as to how we are looking at our potential audible call? I'm sorry, I have no more comments to make on the defense side on the gun side at this point. Okay. Fair point. And just on the commercial vehicle U. S. Class 8, this year, what kind of production are we looking for in U. S? Would it be 300,000 for the Class 8 trucks? Yes, it's somewhere between 290,000 to 300,000. Okay, got it. Thanks. Thank you. The next question is from the line of Sonal Gupta from L&T Mutual Fund. Please go ahead. Yes. Hi, good afternoon and thanks for taking my questions. Just first, I wanted to understand, like you mentioned in your opening comments that the margins in Q2 would look optically lower. So just wanted to understand that. And also the steel price pass through amount of INR 30 crores, is it just sort of explained back? Yes. Your voice is not coming through. You are not close enough to the mic. We are not able to hear you. I'm sorry. Hello. Can you hear me? Yes. Yes. Go ahead. Yes. Thanks. Sorry. So just wanted to understand, 1, the like your opening comments that there could be some RM related margin impact in Q2. So if you could Not only in our subsidiaries because they operate at 11%, 12% EBITDA margin. So if the sale price gets inflated by 5% or 10%, that optically reduces the margins. Right. Okay. So that's not for the That is only for the subsidies. Okay. Okay. And this amount of INR 30 crores for the steel price pass through, could you sort of explain that? Is that for relating pertaining to this quarter? Or is it good? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Also one for Bharatpur, India. Right. But this is not I mean like this is a normal course of business, right? This is not a Yes. This is the inflation impact of the steel price increase, which has been passed through to us by the customer, which has been reimbursed. Sure, sure. Got that. And just lastly, could you talk about what are the CapEx plans for this year and next year? I think total CapEx this year will be in the region of INR 200 crores to INR 250 crores in India. Right. And consolidated? Well, our consolidated CapEx is done now. It's what we did in the U. S. Was our last CapEx, about $75,000,000 That's about it. And just last question on the Sangri forgings. Just I mean, if you were to replicate this capacity, I mean, like just want to understand what sort of cost wouldn't have cost you? Land, building and plant and equipment, it would take about, I would say, close to INR 300 crores and about maybe 2.5 years. Okay, okay. Sure. Great. Thank you so much for answering the question. Thank you. The next question is from the line of Vasudev Banerjee from Amtech Capital. Please go ahead. Yes sir, in usual comments you mentioned that during course of the call you will highlight how e2 wheeler business of torque is progressing, launch pipeline, etcetera, going by the kind of 2 wheeler launches. We will do that in probably November, okay? But any launch plans in the near term? Yes, absolutely. I don't want to seal the thunder now, but yes, definitely. Got it. And second thing, sir, as it was discussed in the call earlier, as you can look at gross profit per tonne, that number has shot up significantly, I suppose, due to AlumGas revenue reviving back this quarter on a sequential basis. But how to look at the sustainability of gross profit per ton number or is this a temporary number of stocks? It will be substantial number. Plus minus 5% on a per ton basis, we will that is our goal to maintain it at this level. That's good, sir. Thanks. Thank you. The next question is from the line of Mukesh Sarraf from SPARC Capital. Please go ahead. Mukesh Saraf, your line is in the top mode. Please go ahead with your question. We would request you to Hi, Abil now. Yes. So my question is regarding this comment that you have mentioned in the previous quarter on a one time government order. And I think it was mentioned that it will be kind of fulfilled sometime around September. So just wanted to get some more color on that. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. That will get fulfilled. That is the current order that I talked about, about the aluminum cylinders. That will get completed by October. I think I would say by Q3 it will get fully completed because the testing and trial process took 45 days because of the required testing that they asked for later on. So everything got pushed out by about 45 to 50 days. Any ballpark number that you'd want to mention on the size of this order? I don't want to talk about a number, but we will give you all the details in a very short period of time because we are not yet allowed to officially mention those numbers here. Sure. Sure. That's it from my side. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Amit Kalyani for closing comments. So ladies and gentlemen, thank you very much for attending our conference and your continued encouragement and interest in our company. I am very enthused by all the questions we have asked, and I really feel the acutely feel that we have not been able to interact in person. And I think I will request my colleagues here to figure out a way that in November, we will find a way to do an Analyst Meet in Pune where we can show you and talk to you about what all we are doing and bring you up to speed with where we are. And if you have any suggestions, recommendations for us, please do reach out to me or to any of my team members. And if you do visit Pune sometime, please look us up. We're happy to meet you. And wish you all the best and good health and have a nice week. Thank you. Bye bye. Thank you. On behalf of Parrot Watch Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.