Q1 21/22

Aug 12, 2021

Quarterly report

Ladies and gentlemen, good day, and welcome to Q1 FY 2022 earnings conference call of Bharat Forge Limited. As a reminder, all participant lines will be in the 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. I now hand the conference over to Mr. Amit Kalyani from Bharat Forge 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&A. Overall, I think on a standalone 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 and thank 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 shone in this quarter. Sequential basis, exports grew by almost 25% to INR 915 crores, while the domestic revenues declined by 22% to INR 442 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. Due to that, plus 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 INR 62 crores, which is towards the VRS of our Chakan plant, where we have given a VRS to over 200 people, and all the unionized workforce there is completely now retired out. 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 Sanghvi Forgings at a cost of approximately INR 77 crores. This facility was operating at a very low capacity utilization and had not been, let's say, operated appropriately for the last three, four 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 to. 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 break even this quarter and move to profitability from the next quarter itself. 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. 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. 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 two, 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 the export market, and the potential impact on end demand because of supply issues pertaining to semiconductors and sustained increase of input costs are factors to keep track of. In spite of that, we expect a fairly strong growth in quarter two over quarter one. In terms of new product development, despite COVID, a highly motivated team of researchers, engineers and manufacturing teams in Bharat Forge 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. We converted an aluminum forging production line into producing these high volume, lightweight, portable aluminum oxygen cylinders. This demonstrates the technology development capability within Bharat Forge 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 Bharat Forge, 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, Tork Motors, have achieved FAME II homologation for multiple products, both in two-wheeler and three-wheeler segment. We will talk about this a lot more in detail when we provide you a full roadmap 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 consumed upwards of 35% of our energy consumption coming from renewables. 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 is really all I have to say, and I am now happy to take your questions and provide you answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Is it working? Anyone who would like to ask a question, please press star and one at this time. The first question is from the line of Kapil Singh from Nomura. Please go ahead. Congratulations. A great set of results. I had a question on global CV business. We've seen one of the highest revenue run rates there. So far, at least in the data, we don't see truck production really picking up in a big way. Order inflows also have been a little bit soft perhaps because of the slot availability. 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 explored, as far as either electric trucks or hydrogen-based trucks. How are you thinking about addressing that opportunity? 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 lightweighting to power electronics, control electronics, motors, transmissions, and subsystems and systems. On the product categories, it goes from 2-wheeler, 3-wheeler, light commercial vehicle, ultra light commercial vehicle, light commercial vehicle, ICV and bus. Okay? 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. Now I'll transfer the call over to my colleague, Subodh, who will talk about the other question that you asked. Thank you, Anand. 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 2, 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. The commercial vehicle business is very strong. The orders are very robust. The challenge that most OEMs are having right now, which they have to adjust lots, is the semiconductor crisis problem. To that extent, there is some amount of disruption from a supply chain perspective. 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. 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 e-axles. We have driveline products. I missed it. We have confidentiality agreement, but we have products both on chassis, axle, and driveline. Okay, sir. For electric trucks. Okay, sir. Thank you. That's all from my side. Thank you. The next question is from the line of Binay 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 should be the drivers, or is it predominantly going to be India? Linked to that, we've seen very nice uptick in the oil and gas business. What's the trajectory that you're talking about that's going ahead? Similarly, if you could also comment about your aluminum forging. We are almost hitting INR 24 million per quarter run rate on that USP. What's the trajectory that we should look on that side? Thanks. 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 PACCAR, it's going to come from PACCAR 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. I would say that we would see an across the board kind of uptick. Obviously, each sector will be slightly different, but generally speaking, we will have a across the board kind of uptick taking place. Thanks. Your second question pertaining to our aluminum business. We have installed capacities in place for whatever growth we see over the next 2-3 years, and we will more than double our revenue per year from where we are over the next 2 years or 2 and a half years. 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 outside of India in multiple geographies. Not much CapEx. With not the same amount of CapEx that we've done now. This is including North Carolina and the Germany facility, right? Yes, this is including both. We see tremendous demand in both areas. We are already now commissioned the line in the U.S. We have now made more than half a dozen platform prototypes and sent them for approval. By the end of this year, we will get the approval, and early next year, we will start ramp-up. On major OEMs. All of the current major OEMs are covered, including Which OEMs? EV OEMs, pure EV OEMs, traditional OEMs, which are the big European OEMs, all the big U.S. OEMs, and Japanese OEMs. 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. has the cost of production of shale. The production costs vary anywhere from $25 a barrel-$55 a barrel. 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 Sarda from Systematix. Please go ahead. Yeah. Hi. Thanks for the opportunity, and congrats on a very strong set of numbers. The first question was on the e-mobility side. The last time we had met, you had showed the products, but any signs of order booking now, given the inflection we are seeing in the two-wheeler and three-wheeler segment in India? This goes from the domestic space. We have received orders and are executing orders right now across some very interesting sectors. We're not in any really commodity product. Give us 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. 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. Fine. Sure. The other question I had was more on the profitability side. As assuming in Q2, in the second half, the export mix comes down and domestic engines are again back to such a 60-40 or 55-45 kind of a ratio. However, the operating wage also kicks in. Please remember we're one month done in the quarter, maybe 1.6 weeks into the quarter. Let's wait till the quarter is done. 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 mix normalizes? Exactly. Sure. The final question on the export CV, given how strong the performance has been, is there a play of inventory here? 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 CVs 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 Equirus. Please go ahead. Yeah. Hi, sir. Firstly, on the European sales, I think we already have reached the peak that we have done in FY 2019 quarters. What is driving this growth and how do you see the outlook going ahead over there? I think European. Our European subsidiaries, the growth- Hello? Members of the management, we cannot hear you at the moment. Sorry. Yes. 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. Aluminum has grown to a higher level than previous. We have received businesses for hybrid and electric, which we have started executing. This has also tripled over the last 2 years in Germany from our German plant. These are contributing to this factor. This is a large chunk is passenger vehicle which is driving this growth? What is driving this growth? Yeah. Basically, the growth is being driven by passenger. Okay. On India. Passenger and hybrid. Okay. On India side, despite this lockdown and impact, if I look at the India industrial revenue is only down 10% quarter-on-quarter. In what sectors you are seeing more pickup now versus earlier versus last three, four years? What is the outlook over here going ahead for next two, three years? See, as far as India industrials are concerned, it is largely driven by the growth in the construction segment in India. With all the efforts of the government to continue boosting infrastructure, we expect this to remain on a strong trajectory. Largely the construction driven only in India? 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. There is a wide range of products involved here. We have also entered into some new areas of industrial products, which are new segments for us. As a combination, we see a strong trajectory in our industrials business. Lastly, on the oil and gas side exports, you mentioned that you did a pretty good revenue. When you talk to different companies across sectors, I think all of them are seeing very good traction oil and gas and talking about more orders going ahead. Can this $20 million in revenue that you did in last quarter, can it further increase going ahead 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 still linked to the revitalizing of current assets. We expect this to remain stable for the next couple of quarters. Growth, we are not exactly sure as yet. 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. Please understand, we don't make commodity products like Sanghvi, okay? There is a huge requirement for those kind of products, but they are at very low margin, and they're extremely commoditized products. We are only focusing on high-value, highly differentiated products in this sector. Okay, got it. Okay, thanks a lot. Yeah. Thank you. The next question is from the line of Pramod Amthe from InCred Capital. Please go ahead. Yeah, hi. This is with regard to the Sanghvi Engineering. Looking at the capacity, it looks pretty small compared to the size which you have. Can you explain what type of capacity it brings in? Is there more scope to expand capacity or shift your products there? Basically, they have the same capacity in terms of tonnage that we have in Bharat Forge in our open die forging facilities. The issue is that they have a lot of bottlenecks in their plant and in their facilities. They have set up a very good press line, but not everything that goes before it and after it. The de-bottlenecking will end up costing us somewhere in the region of, I would say, INR 20 crores-INR 25 crores, but with that we can, I would say, almost triple the capacity there. Honestly, with a press 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 crore-INR 600 crore business, if not more. Is there a further scope to expand this in terms of brownfield? They have 15 acres of land, out of which I think they've only used about five acres or so. There is scope to expand in terms of machining, heat treatment, et cetera. Second one is, you were talking about new order wins in the electric space. When you expect these to kick off in terms of sales? Any timelines you are looking from the customer? 2024. The series orders will start from 2023 and 2024. Okay, sure. Thanks, Amit. All the best. Thank you. The next question is from the line of Amit Mahawar from Edelweiss. Please go ahead. Yeah. 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 N.C. will be very small. It will be somewhere in the region of $8 million-$10 million, because that will be our first year, and that is where we have to get all our approvals, and even the customers have to start doing their own pre-production, lots, et cetera. 2023 onwards, we will see a very steep ramp-up, and by 2024, we should be at full capacity. From the capacities in India, especially in Nellore? Nellore also, by 2023, we should be at almost full capacity. Fair point. Second question is on 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. You spoke about renewables, Amit, but that plant is, please correct me if I'm wrong, it's far beyond renewables. More about quality of business that you can tap from there. You spoke about INR 500 crore revenue, but the quality of business from this plant can be far different, right? I know Bharat Forge has 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. Fact is that they were in the dire straits that they are in because of the overall management that they had. I know that that is a good plant, it is well set up, and we can maximize its potential, if anyone can. We will leverage our relationships and our capability and our integrated approach to definitely maximize the output value and value addition from that facility. Okay. Thank you, Amit, 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 Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead. Hi. Congrats to the team for excellent results. First question pertains to the margin sustainability. Given that in a quarter where we are almost 30% lower volumes than the peak volumes, our margins are comparable to those of performance. From here on, should we expect on a steady state, maybe say in FY 2023, where we utilize more capacity, margins to go back to previous peaks of 30%, 32%, or there are changes in the underlying business as a The company is very different than what it is in the past. I think we are spending a lot more on R&D right now. Honestly, between 28%-29%, I think is a very good number for margins. More than margins, we will focus on capacity utilization, we will focus on capital output, and overall sales and cash flow. Growth, of course. Okay. Understood. Secondly, can you share data on what was the VBNR realization in this quarter, and what was the steel price pass-through benefit? It was ₹75 this quarter. Okay. steel price pass-through? Steel price pass-through was about INR 30 crores. Okay. Got it. Lastly, with respect to the EV portfolio, we are doing so many different products across different categories. If we take a bird's-eye view, and based on the order wins which we'll be having, would you be able to share the magnitude of revenues or orders coming from new component space and electric vehicle side? Yeah. As I mentioned earlier, we'll do this in more detail next quarter, because I think we'll have a lot more to share with you. Sure. That will be very helpful. Thanks, and all the best. Yeah. Thank you. The next question is from the line of Nishit Jalan from Axis Capital. Please go ahead. Hi, sir. Thank you for the opportunity and congratulations on very, very strong set of numbers. Sir, I have two questions. Firstly, you mentioned that the U.S. business will reach a peak, it's likely in FY 2024. 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? Right now, based on the product mix we have, it will be somewhere in the region of INR 80 million-INR 85 million. We continue to receive new orders which are above and beyond what our capacity is. We are currently 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 a 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 2 quarters, the inventory levels are normalized and the growth will be more linked to the retail sales that happen in these segments? Inventory levels right now are pretty low, I would say. They are not as robust as they should be. It's also very mixed, so by quarters. It's quite stable from a demand point of view. Sir, any numbers would you be able to share, especially on CVs and non-autos? Maybe, I don't know if auto is possible or not because it's across many segments. At least in CVs, what kind of inventory levels used to be, how low it came down, and where are we today? I think it will be difficult to answer that. Okay, sir. No problem. Thank you so much. Thank you. The next question from the line of Nurmukh Nandlesha from Emkay 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. Yeah. We have orders in the aerospace sector, and we are well positioned to take our aerospace business, which was at the INR 5 million, INR 6 million, INR 7 million to about INR 20 million in the next 2 years. We have already received orders and capacities are being set up. These will be forged and machined high-value product for jet engines. Sir, for railways, sir? Sorry? Railways. Outlook for railway segment. Yeah. See, in railways, we have, I would say, a decent order book from outside India. As far as India is concerned, we have the order book from Indian Railways relative to turbos and so on and so forth. It's an ongoing process. Sir, just what would be the current revenue from the CLWT plant, Nellore plant, sir? It's very small. It's in INR 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 much more is there? Just started. It's going on. Just started. Okay. Yeah, that's all, sir. Thank you. Thank you. The next question is from the line of Nishant Vass from ICICI Securities. Please go ahead. Hi, sir. Thanks for the opportunity. First, for the quarter, can you just shed some light in terms of the results? We see a much higher swing in finished goods inventory at the consolidated level vis-à-vis standalone. Why is that so? This is mainly because of the inventory adjustment between Bharat Forge 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. You're filling the pipeline. Okay. We should look at that roughly INR 190 crores and that then roughly, which is the difference between the standalone and the consolidated level. This would be the phenomenon for maybe current quarter and next quarter. Otherwise, we should see a normalized level. Fair enough. My second question is on the steel price contracts and from a competitive dynamic, whether that makes an effect in terms of vis-à-vis global competition. First is the steel price pass-throughs both in domestic and exports completely happen on an index level, indexation basis? 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? Whether that has any bearing on from your relative competitive dynamics because your global competitors might be at a much higher steel price level. Can you shed some thoughts on that? 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. As far as competitiveness goes, the steel market escalation has been pretty much standard across the globe. We are seeing the same in India as well. 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. Is it a meaningful benefit in terms of for the customers who will 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. The important thing here is that in overseas markets right now, the lead times to procure steel are very high for various reasons. For us, that is a big advantage right now. Okay. Fair enough. Thank you. I'll come back if needed. Thank you. The next question is from the line of Aditya Marfatia from HDFC. Please go ahead. Yeah. Hi. Just 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? Secondly, on the defense side, 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. In that light, there has been some amount of ordering which is happening in the sector now, which we had not seen earlier. Is there anything which we could give some color as to how we are looking at our potential order book or, you know. I'm sorry, I have no more comments to make on the defense side, on the gun side at this point in time. Okay. Fair point. 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? Yeah, it's somewhere between INR 290,000-300,000. Okay, got it. Thanks. Thank you. The next question is from the line of Sonal Gupta from L&T Mutual Fund. Please go ahead. Hi, good afternoon, thanks for taking the questions. First wanted to understand, like you mentioned in your opening comments, that the margins in Q2 would look optically lower. Just wanted to understand that and also the steel price pass-through amount of INR 30 crores. If you could just sort of explain that. Yeah. Your voice is not coming through. You're not close enough to the mic. We are not able to hear you. I'm sorry. Hello, can you hear me? Yeah. Yeah. Go ahead. Yeah, thanks. Sorry. Just wanted to understand, one, like your opening comments, that there could be some RM related margin impact in Q2. That was only in our subsidiaries because they operate at 11%, 12% EBITDA margins. If the sale price gets inflated by 5% or 10%, that optically reduces the margins. Right. Okay. That's not for the. That was only for the subsidiaries. Okay. This amount of INR 30 crores for the steel price pass-through, could you sort of explain that? Is that pertaining to this quarter or is it? Quarter 1 for Bharat Forge India. Right. This is a normal course of business, right? Yeah. This is the inflationary impact of the steel price increase, which has been passed through to us by the customer, which has been reimbursed. Sure. Got that. Just lastly, could you talk about what are the CapEx plans for this year and next year? Anything. I think total CapEx this year will be in the region of INR 200-250 crores. Right. In India. Consolidated? Well, our consolidated CapEx is done now. It is what we did in the U.S. for our last CapEx, about $75 million. That is about it. Just last question on the Sanghvi Forgings. If you had to replicate this capacity, I just want to understand what sort of cost would it have cost you? Land, building, and plant and equipment, it would take about, I would say, close to INR 300 crores and about maybe two and a half years. Okay. Sure. Great. Thank you so much for answering my question. Thank you. The next question is from the line of Vasudev Bamzi from Ambit Capital. Please go ahead. Yes, sir. In your initial comments, you mentioned that during the course of the call, you will highlight how e-two-wheeler business of Tork is progressing, launch pipeline, et cetera. I mentioned that I will do that in probably November. Okay? Any launch plans in the near term? Yeah, absolutely. I don't want to steal the thunder now, but yes, definitely. That's it. Second thing, sir, as it was discussed in the call earlier also, if I look at gross profit per ton, that number has shot up significantly, I suppose due to oil and gas revenue reviving back this quarter on a sequential basis. How to look at the sustainability of gross profit per ton number or it's just a temporary number, I suppose. It will be sustainable number. ±5% on a per ton basis, that is our goal to maintain it at this level. That's good, sir. Okay, thanks. Thank you. The next question is from the line of Mukesh Saraf from Spark Capital. Please go ahead. Mukesh Saraf, your line is in the talk mode. Please go ahead with your question. Am I audible now? Yes. Yeah. You are. My question is regarding this comment that you had mentioned 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. Just wanted to get some more color on that. Yeah, that will get fulfilled. That is the current order that I talked about the aluminum cylinder. That will get completed by October. Okay. 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. 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 yet. 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. 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 you have asked, and I really acutely feel that we have not been able to interact in person. 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. If you have any suggestions, recommendations for us, please do reach out to me or to any of my team members. If you do visit Pune sometime, please look us up. We're happy to meet you. Wish you all the best and good health and have a nice week. Thank you. Bye-bye. Thank you. On behalf of Bharat Forge Limited, that concludes this conference. Thank you for joining us, you may now disconnect your line.