Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of M. M. Forgings Limited, hosted by Batlivala & Karani Securities India Pvt. Ltd. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from BNK Securities.
Thank you, and over to you, sir.
Thanks, Pooja. Welcome to M M Forgings Limited, 4Q FY25 and FY25 Results Conference Call. From M M Forgings Limited Management, we have with us today Mr. Vidyashankar Krishnan, Chairman and Managing Director, and Mr. Venkata Krishnan, Chief Financial Officer. I'll now hand over the call to Mr. Vidyashankar Krishnan for the opening remarks to be followed by question-and-answer session. Over to you, sir.
Good afternoon all. Happy to meet up with you, and thanks to BNK Securities for hosting this call for us. So, we have. I'll give you a brief financials. You've seen some on our website and also as part of the results. We have achieved a turnover of INR 1,547 crores for FY25 and an EBITDA of 19.4% without including other income. And this is comparable with INR 1,585 crores of the previous fiscal consolidated basis and an EBITDA of 18.73%. On a standalone basis, the turnover is INR 1,505 crores versus INR 1,553 of the previous year, registering a 3% drop. EBITDA at INR 323 crores, 19.91% for FY25 versus INR 315 crores, 18.9% for the previous year, so as we have been guiding, our EBITDA levels have been steadily improving and now stand at the cusp of the 20% mark. Region-wise, we see the following.
India constitutes 62% of our turnover, and Europe and U.S. together 12% and 16% separately, 28% overall, and the rest of the world about 10%. Automotive CV constitutes 81% of our sales profile, 10% on passenger car, and off-highway about 9%. With this very brief and I would say even a rapid introduction, I would throw open the floor just a few more numbers to follow. Our production stood at 82,000 tons, sorry, 70,000 tons for the previous year, and sales stood at 82,000 tons. Sorry. Domestic sales was 60% and export sales at 38%. Actually, 62 and 38. My apologies as given in the breakup earlier also. Okay. With this rapid-fire introduction, I'll be happy to take calls on our performance and future. Operator, will be opening the call.
Sure. Thank you, sir. We will 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 handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead.
Yeah. Thank you, sir, for the opportunity. And firstly, sir, I just wanted to understand, sir, in export side, there was a good positive growth in the first half. And then second half, we saw a decline. Just want to understand what led to the decline as earlier we were anticipating a double-digit growth for the exports for the full year. And so what led to the miss there and how should we look at the growth ahead, sir?
Thank you. So the second half has been a little bit tepid in terms of exports overall, but we may manage to retain the export numbers going on the year as a whole. We've seen a slight slowdown in the U.S. and European markets, and that has resulted in a reduced number.
And sir, how do you see next year, sir? Consumption. I think the European and U.S. market would remain slower next year also. So how do you see the growth for us, sir?
At this point of time, hazarding a guess on export markets is very, very fraught with risk because of the Trump administration bringing in very many changes to global trade, and therefore one does not know how all this will break, how all this will develop into. We are generally expecting that export sales could be sluggish to the tune of around 10%-15%. That is our expectation.
Got it. Got it. And anything to talk about any new orders or new businesses there which can support growth with respect to underlying industry being muted, sir?
Yes. We are discussing with several customers, and we are hoping for some customer acquisitions in the next few weeks and months. That should improve, should add in at least INR 100 crores of export sales in FY 2027 and 2028.
Got it. And just on the U.S. part, just want to understand, is there any impact on the margins as well, sir?
Right now, not. Customers and us, we are looking at. Customers are now looking at the duties as a pass-through. So it all depends on how India settles vis-à-vis China. We are cheaper. The duties on Indian goods are less than the Chinese ones. Definitely, we stand to. Our margin would stand protected. But that is a general consensus that everybody has also, that India would close out at a much, much lower level than China.
Right. And sir, has supply demand to the supply to U.S. has normalized or still there's a slower pickup currently?
There's a big since April, we've had since the 1 April, Freedom Day or Liberation Day, we've had a total knock-on inflow of export orders, and that has many schedules have been canceled. So the flow is very negative as compared to what existed before 15 April. That's to be expected, the knock-on effects of the Trump duties, as we call it. Over the next few months, we're expecting to stabilize, and some semblance of normalcy will come back.
Right, sir. Sir, coming to domestic side, we have this new 16,500-tonner press line. I just want to understand how the orders they are shaping up and what kind of ramp-up we are seeing for this press line. And on the ABINA result, how are you seeing the traction for the motor orders and what kind of revenue do you see right now?
Abhivan, let me answer the 16,500 first. The press is expected to be commissioned by around September to December of this year in Q3 of this fiscal, Q4 of this calendar. And we'll start production from, let's say, January onwards. We are looking at shifting a couple of parts to the 16,500-ton press first. So no new orders for the 16,500 as of now. And once we've stabilized the press, I'm sure that by that time, we'll land in a few good orders. Sir, Abhivan is concerned. Right now, again, we continue to be in discussions with several customers, and none of them are, all of them are very much interested. So at the same time, we are yet to secure any order from any big OE. So Abhivan continues to be in a state of development.
Got it, sir. Sir, coming to just on CapEx side for FY26, how do you see the CapEx outlay? Last year, you mentioned about INR 350-odd crore CapEx where a lot is around machining area. Just want to understand what would be the current machining mix and how do you see ahead and the CapEx of what will be the breakup of the CapEx?
Going forward, okay, for the last year, we spent 340 crores last year. And this year, we expect to spend a total of 300 crores in terms of CapEx, and about 160 crores will fall due for repayment. As far as funding is concerned, 300 crores will come from internal approvals, and 160 crores will come from term loans, fresh term loans.
Right, sir.
So we're kind of looking at peak debt as of the balance sheet of 31 March.
Got it, sir, and what would be this 300 crores?
Sorry to interrupt you, sir, but we request you to rejoin the queue for follow-up questions.
Yeah. I'm just clearing my question. Otherwise, I'll come back, sir.
Yeah. Thank you. Thank you very much.
Thank you.
Thank you. The next question is from the line of Garvit Goyal from Nvest Analytics Advisory. Please go ahead.
Hello. Am I audible?
Yes, you are.
Good afternoon, sir. My first question is on the industry side. So typically, 80% of revenue is coming from commercial vehicles. So I want to understand from you the current sentiment of demand in this industry, particularly at the export levels or we can say international markets. And also spend a few minutes on how do you think this ongoing tariff situation is going to have an impact on our revenue, particularly from the export side. So that is my first question.
Can you repeat it, please?
I'm asking you to comment on the current sentiment of demand from the commercial vehicle side, particularly the export level of international markets. And secondly, comment on the kind of impact do you see arising from the tariff situation currently going on?
Yeah. Demand in the CV market in India has picked up considerably due to new cabin regulations that are slated to come in by sometime in Q2. It is slated for 10th of June, but I think it may be slightly postponed. Word is not yet out. So at least our customers haven't told us anything. Therefore, what the government has mandated, I'm sure you'll know about it, is that new vehicles should be trucks should be fitted with an AC in the cabin. This pushes up cost by around INR 30,000- 50,000 per vehicle. So there is a kind of a pre-buy that's going on, and that is boosting demand considerably. So the Indian truck market is pretty strong, I would say, in Q1.
What about the?
Yes, you can continue.
Yes, please continue.
Sure. The second question, I think, is about the impact of tariffs on our exports. As I said earlier, very difficult to guess because right now, export markets, particularly U.S., is in a tailspin because people have no clue of how it is going to pan out. Shipments from China have dropped by about 60%-70% into the U.S. So truckers which truck the incoming goods from ports to end users have also reduced their. They see that extent of their demand gone. Port to, let's say, business or end consumer traffic constitutes, I think, around 60% of American class 8 truck movement. That has gone down by around 60%-70%. So overall terms, if you see, American truck movement is down by about 30%-40%. So new orders for trucks have fallen to an all-time low in mid-April and onwards.
We see some normalcy coming back over here once the tariffs are restored. Tariff condition is very clearly known.
Understood, sir. And secondly.
Right now, America is consuming from stock. So once the stock depletes, only then we will know the exact condition. Something has to give there. I'm sure U.S. and China will come to some kind of agreement. And where that agreement will be vis-à-vis India, again, we have to see.
Got it. Got it. And you did not mention, okay, let's cover it in the next module. Okay. Right. And particularly on the revenue target for FY26, are we currently in a situation to give any numbers considering the kind of headwinds that we are currently facing?
No. I would not hazard any guess for the next year. I'm sorry that I'm not able to do that, but that is a practical situation. I'm not saying that the bottom will fall off, but we are not able to guess anything. On exports, we can broadly say we are looking at something in the region of 10%-20% down for the year as a whole.
Got it. And sir, thirdly, on the CapEx side, so we are in the phase of CapEx. And so I want to understand from you what exactly are we doing here because at one point of time, we are facing the headwind. And secondly, on the CapEx side, can you mention are we looking to diversify from the existing industries, bring in some new products, or we are deepening down in the existing industries itself? So what is our strategy here?
See, CapEx is a long-term play. We continue to look at things long-term based on customer requirements. So what's happening is the new products that we develop do come into production. But current products, their volumes may go down because of economic situations in various geographies to various levels. So we can't stop the cycle just like that. That will mean customers walking away on a permanent basis, which is not good for the organization.
That, I understand, but I'm just trying to understand the CapEx that we are doing, the product that we'll be manufacturing via this CapEx, that will go into the existing industries like commercial vehicles and passenger vehicles, or we are looking to cater to different industries as well, like railways, defense, or anything like that?
Okay. Sorry, I didn't get the thrust of your question. Now it's clear. We are largely looking at the automotive field only, either passenger car or trucks.
Got it. Got it. Okay. Thank you very much, sir, and all the best.
Some goes into agricultural equipment as well.
Okay. Okay. Understood.
Tractors and off-highway vehicles.
Thank you, sir. The next question is from the line of Pratik from InCred AMC. Please go ahead.
Yeah. Thank you for the opportunity. Sir, I would like to ask on the CapEx of 300 crores, which you mentioned that it will be coming from internal approvals. On an average, in the last four to five years, we have seen that we do around 150 to 200 crores from cash flow from operating activity. And also, you mentioned that the March 2025 is a peak date for the company. So do you expect better growth in the cash flow from operating, or do you see a reason for thinking that how this can be achieved, 300 crores of internal cash flow? Hello?
Sorry. I was on mute. One combination is from internal approvals, one source, which is the larger one. And to some extent, we would be mopping up from a little bit of working capital improvements and savings there too. So about INR 20-30 crores, I would expect at least INR 40 crores would come from that, kind of manage the whole thing without increasing debt levels.
Okay. On this working capital side, we can see that in FY25, despite decreasing the sales, your receivables as well as, absolute amount, there has been a massive increase. So what would be the major reason here?
Sorry, can you repeat the question? I can't hear you.
On the receivable side, earlier as of FY24 and FY25, there has been a huge increase in the receivable data. It went up from INR 275 crores to INR 375 crores. So what would be the major reason for this increase in receivables? But since your working capital days have gone up, so what would be the reason? Or is it any one-off, or is there any change in the agreement terms?
There is no specific change in the field in terms of receivables. So this must be due to last-minute sales going up, and therefore, the receivables have shot through because of higher sales in the fourth quarter. But that was not the case. Overall, we have sold around 380 levels only in each quarter. So there is no specific increase in credit levels or defaults from customers because they're going through the thing in a very detailed manner.
Got it. Got it. Thank you. I'll join in back in the queue.
Thank you. The next question is from the line of Aditi Loharuka from CD Equisearch. Please go ahead.
Sir, I would like to know how much capacity has been added in FY25?
FY25, we have not added any forging capacity. We remain where we are. The 16,500 tonnes is slated to come into production this year, and about 5,000 tonnes of other capacity is getting added in this year, again in Q3, Q4, so there is no addition of capacity in the previous year.
Where was the CapEx of INR 374 crores made towards?
About INR 150 crores has gone into the big press itself and its lines.
I didn't hear.
About INR 150 crores has so far gone approximately into the large press, its foundations, associated equipment, the line. It's all in capital WIP, right? And about INR 100 crores has gone into direct machining investments and about INR 50 crores into other forging equipment.
Okay, sir. I'll get back in the queue. Thank you.
Thank you. Participants who wish to ask questions may press star and one. I repeat, to ask a question, you may press star and one. The next question is from the line of Pratik Jain from Solidarity Investment Managers. Please go ahead.
Hey. Am I audible?
Yes.
Hello. Yes. Thanks, sir. Thanks for the opportunity. Sir, my first question is, in terms of your product mix, can you help me understand what is the percentage of machining mix in your overall sales?
One second. I can give it to you. About 54% is machined.
Okay. And so, from the qualitative perspective, I wanted to understand that in the last five.
Sorry. I'm sorry. I read the figure from the wrong column. 58% is machined.
Sorry?
58% is machined.
Okay. 58. Okay. Got it.
42% is as-forged.
Yeah. And sir, just from the qualitative perspective, I wanted to understand that in the last five, ten years, how many logos have we added for the company to step up the level of growth? So you might have some number of logos in 2014, and right now, you might have some number of logos. So just wanted to understand that number.
What do you mean? Logo?
Logo. Yeah.
New customer acquisitions.
Yes.
Very nice question. We haven't looked at it from that point of view. I can revert back to you at a later time. Or if you can leave an email ID with Jayaraj, we'll be happy to.
Got it. Got it. And one more thing, sir. So what I have seen is that Europe is facing issues, right, for the forging because of the power cost and labor, right? And that is acting as a tailwind for many of our Indian peers also in terms of forging and machining. Are we gaining any traction from the European side?
So far, Europe has not fallen like America, and Europe has been holding its ground also. So we don't expect Europe to fall off the charts. As of now, we would say that the bulk thing would be challenge would come from USA, if at all. Again, if the tariffs work out as what broad market expectations are, India should be priced lower on the tariff side as compared to China.
Okay. Got it.
That would be auguring well for the organization.
Got it. And just, sir, last question from my end. In terms of revenue mix, in terms of revenue contribution, can you just highlight your top five products and their percentage in your overall revenue mix?
The top five products would be front axle beams, knuckles or axle arms, crankshafts, and a few other truck parts.
Their respective revenue share?
Recall, as our HF production today constitutes 36% of our sales. It was 44% in FY24, dropped down marginally to 36%.
This is front axle, right? If I heard you right.
Yeah. Front axle beams and knuckles and crankshafts.
Okay, so cumulatively, all these?
These three parts alone constitute roughly 40% of our sales.
Okay. Got it, sir. Thank you. Thank you so much.
Thank you. We'll take our next question from the line of Sonal Gupta from HSBC Asset Management. Please go ahead.
Yeah. Good afternoon, sir. Thanks for taking the question. Sorry, just how much is heavy forgings of your sales that you mentioned? Sorry, I missed that number.
36%.
And this has dropped from last year?
44.
And this decline is mainly because in India, we have not seen major issues in the CV market. So this decline is mainly coming because of exports or?
This decline is largely in the domestic market only.
Okay. And sir, the only question I had was, I mean, what is our net debt level now, and how do we see? I mean, given the CapEx plans, I mean, and you said that 2026 could see them peak CapEx, peak debt. So where do you expect to end 2026?
Yeah. Go on, sir.
Net debt stands at INR 970 crores in 2025. I would say we would expect that to remain almost at those levels, maybe come down to around INR 30-40 crores in the next year.
So you're not expecting this to go up from here?
Yeah. Under normal circumstances, we don't want this to go up.
All right. And despite the CapEx, I mean, if the, like you're already pointing out, that export environment is challenging. So I mean, if the environment remains challenging, is there some room for us to slow down this CapEx as well?
Yeah. Yeah. 100%. We will not go hammer and tongs on the CapEx side. We will slow down.
Okay. Got it. Great. Thank you so much.
Thank you. The next question is from the line of Deepak Malhotra from CapGrow Capital Advisors. Please go ahead.
Hello. Mr. Krishnan, am I audible?
Yes.
Hello?
Yes.
Thank you. Yeah. So my question first is on the machined components to your revenue contribution, as you mentioned, is 58%. So my question was how it has behaved in the past, and how does it compare to the other competitors, where the numbers which I have are fairly higher?
Can you please repeat?
Okay. You mentioned that your machining components to your total revenue contribution is about 58%.
Correct.
Now, how has that number behaved in the past, and how do you want to take it in the future? And the other part of the question is how does it compare to your other competitors? Because from what I have at my end, that number is higher for some of them.
For some of them. Okay. Yeah. I'll give you some numbers.
Yeah. Sorry?
About FY16, machined sales was around 20% or so of sales. From there on, it has steadily increased to the 40% level. From FY23 onwards, it has stabilized at about 58%. Give or take a 1-2% jump or drop every quarter. We came from 20% a few years back, and over the last 7-8 years, we have transformed the organization, and more than three times the percentage of machined products has gone up. I would see this number at around 65% in the next fiscal or in the next one. New order acquisitions are all largely machined. Hardly 10% is as forged. The rest of it is all machined only. With the thrust on machined components, focus is more on as machined turnover will go up in percentage terms. I would say between 65% and 70% will be our medium-term goal.
Yeah. Because why I ask that is when we look at you mentioned that we are now reaching the curve of 20% EBITDA margins, and if we look at some of the, again, other competitors, then again, for some of them, that number is higher. And so how would you marry the two in terms of your product mix and increasing the same over the medium to long term, sir?
Sorry. Can you please repeat?
I was saying that, I mean.
To state that we have increased the machining component to revenue contribution, but you also mentioned that you are now at the cusp of 20% EBITDA margin overall, and when we see, again, vis-à-vis from the other competitors, that EBITDA margin number is a higher number. Okay. So how do you see marrying your product mix and increasing the EBITDA margin going forward?
See, we have said that a few quarters back that we would be taking our EBITDA margins to the 20% mark, and we'll do so by end of Q3, Q4 of this fiscal, and by the work of the team and God's grace, that has happened. By the work of the team, effort of the team, and God's grace, that has happened. We are at 19.91%, effectively 20%.
Going forward, we continue to work on higher value-add and pushing this EBITDA up into more and more value-added parts. Today, MM Forgings has very clearly transitioned from being a forging and forged parts supplier to a component supplier. Most of our new business, 90%-95% plus of the new business coming in, is only in machined parts, which is also a reason why we are a bit more CapEx heavy. This foray into or this ascent and focus on machined products will definitely mean positive on the EBITDA side. I'm not able to give you any numbers, but the sense is that it should improve EBITDA levels, or worst case, at least counter the inflationary levels and add to stability of EBITDA.
Okay. You also mentioned on the CapEx part of the business. Now, considering the challenging environment which you already talked about, so how do you see because some of the other competitors have also kind of added capacity? And so how do you foresee this really turning out to be in terms of the cycle? I mean, will it take another now three years for the cycle to turn around or something if you can give a color on that?
It's tough to say, but overall, we have not seen competitors adding capacity in the heavy forging side. So, okay, one or two have done, no doubt. And they are coming into other parts where their focus might be on. So we see ourselves only improving our heavy forging focus in the months to come.
Okay. One more question which you mentioned. You mentioned that China's shipments have dropped by 60%-70%. So that was in an overall context or specific to our industry?
Overall context, not specific to the forging industry. I have no data for that.
Okay. And on the tariff side, what would be a good tariff for you, I mean, in terms of expectations vis-à-vis China?
The broad expectation, see, there is no ideal condition. The broad expectation in the market is that India would probably end up with a free trade agreement or close to that with the US. We'd be very surprised if that didn't happen. And China's tariff would be in the region of 20%-30%. So, if that happened, that would be quite beneficial to the overall Indian industry and specifically MM Forgings as well.
Okay. Thank you so much and wish you all the very best.
Thank you.
Thank you. The next question is from the line of Rajesh Jain from NB Investments. Please go ahead.
Thank you for the opportunity. Sir, I had two questions. One is regarding the machining where you said it would reach around 65%-70% in a year or two. Now, whatever the CapEx you have done in FY25 and what you are intend to do for the machining, would that be sufficient to push it to that level, 65%-70% level?
It should at least go into the early 60s.
Early 60s. Okay. So if you want to reach 70 or 75, you need some more investment to be done.
Correct.
Okay. Fair enough. Second, pardon me for my ignorance.
Or I would. In the mid 60s based on the parts that we have on the new businesses that have been acquired.
Okay. Sir, if there is any ballpark figure, like if you want to increase the machining by 5%, what would be the CapEx amount required?
We haven't worked out any.
Acha. Okay. Fair enough. Sir, second thing.
Sorry to use this, but as in the mutual fund industry, past data is no guarantee of future performance because we don't know what new products will come in. Sorry to turn it off.
No, no. That's why I'm saying the next question.
What I really track, our expectations will be based on a particular set of parts. But what comes in could be highly value-add, in which case CapEx will go up. Or it could be less value-add, in which case CapEx will go down. But you're right. We could evolve a metric for that and at least use it internally.
But the intention of the management is to take it to the whatever the maximum permissible limit so that we would be making higher margins for whatever the products that they make. That would be the intention of the management?
Yes. You're absolutely right. Our goal, I would like to redefine it slightly better. Rather than target a 75% or a 70%, our goal is to work with customers closely, and if customer wants a machined product, we give them a machined product. Customer wants a forged product, we give them a forged product. That is our strategy over the past few years. You can't go and thrust a machined part onto a customer who wants only forgings. It won't work, but from our point of view, yes, what you said is absolutely right. We prefer machined parts.
But if one of your competitors, let's say they are going up to 88% or 90% level of machining, so is there a possibility for our company also to go to that level? Maybe the timing may be a little bit different, but that is a possible?
I think that is the direction in which it would naturally follow. Because increasingly today, more and more parts are getting machined.
Okay.
So as I said, 90% of our order wins and incoming new business is only machined, possibly even more. So you add that for a few years, then the as forged incremental business would go up by 5% or 10% every year. And of the overall increase, let's say we increase it some quick number, let's say 10% per annum, very, very within quote Hindu rate of growth. So 1% of the 10% will be forged. 9% will be machined.
Okay. Got it.
So virtually, virtually the forging base will remain static, whereas the machined product base will go up.
Go. Okay. Fair enough. Sir, the second is, pardon my ignorance, is you guys are actually this. Now, the company that we had acquired for the EV components, so there we haven't started making any revenues till date?
No. No revenues so far.
Okay. Based on whatever the current indications or whatever you call it, then can we expect something from that company?
And the guidance earlier, I said FY25. Now we are already in FY26, and I have none to show. So I would have said something by Q4 of this year or FY27.
Sir, is it because our products are not up to their satisfaction, or is it that the customer products haven't moved in the market? What could be the reason for this delay?
Both. Customers are expecting a pedigree.
Okay.
And they can't do it. Everybody loves to talk about startups, but nobody wants to buy from them.
Fair enough. Okay.
Okay.
That's the ground reality.
They don't want to run the risk. Some of it is that reality is also justified. They don't want to end up with a product recall or anything that could happen by going ahead with the startup. So they want to go largely. If you look at the EV space today, there is no experience in the Indian market. There is no Indian EV powertrain manufacturer as such.
Okay.
All the powertrains come from MNCs or imported.
Okay.
So this is what customers are wanting to do at this point of time. And second, EV aspirations also haven't taken off.
Okay. Okay. Sir, my last question is regarding the sector-wise sales where we are heavy towards CV and automobiles in general. So just wanted to know why there is no thinking on the part of the management to diversify this so that these type of headwinds, the effect of these headwinds would be relatively smaller to the company's revenues and the profits?
Very good incisive question. I must say, not that we are not looking at the non-auto space.
Okay.
We are. We are continuously looking at the non-auto space and I would say it takes some time because non-auto customers are smaller in size.
Okay.
And the quick gain in sales is to be had from auto. I've said this across several years. So looking at non-auto customers and earning them and bringing them into the fold has started in full swing or is going on in full swing, but it will take time.
Okay.
As I said, earlier question was about an export customer. What are you looking at on exports in terms of expanding the sales there? So I had mentioned that they're looking at about INR 100 crores of sales, and probably a customer in the set of customers in the non-auto space.
Okay.
I remember that about 15 years back, our non-auto sales stood at about 30%-35%.
Correct.
Today, they've slid to around 10%.
Correct.
They have not lost any customer or any product, but what has happened is auto sales have zoomed.
Oh, okay.
That segment has exploded as far as we are concerned.
Oh, okay. Sir, just to add as an information, you say the industrials, either the number or the weightage may be relatively smaller compared to the automotive segment. One of the competitors is focusing on windmill as well as the industrial segment in the export markets, and they are putting up high-weight forging machines. So those are all, I believe, each part weight is more than one ton or so. So do we have expertise in that, and can we focus or target those segments also?
Very good question. Yes. We are looking at those sectors. At this point of time, I would say that we will be capital constrained to set up capacities immediately.
Okay.
But we'll be working on that. And should opportunities come, we have not let go of any single opportunity for want of capital or otherwise. So should opportunities come, we'll definitely latch onto those. But are we going to set up the capacity and wait? At this point of time, one year we may have to bide our patience and get into the engineering space over time.
So, from what you are saying, I get a feeling that maybe after two or three years' time, maybe our non-automotive segment would at least come back to 20%-25% level of our total sales.
That would be indeed a fantastic milestone achievement if we were able to wrangle it through. But you can say definitely that that is a target. If not over a two-year time frame, at least over a three to five-year time frame.
Okay. But that doesn't require any additional, any specific expertise or no? Maybe only the forging, you may need to have a higher-weight machines or something like that, right?
Yeah, yeah. It doesn't require any specific expertise other than the expertise of being able to handle heavy parts, which we have already demonstrated by going in from small forgings to heavy forgings.
Okay. Fair enough.
So now we have to go from heavy forgings to heavier forgings. From 100 kg weight, we'll have to look at 600 to 1,000, 1,500, 2,000 kg weights. So it's only the engineering involved in handling the weight and, of course, pulling everything together in terms of capacity, quality, markets, etc. I sincerely believe that we have the expertise as we stand.
Only thing is our major, the automotive segment was giving us the better growth or higher sales. So we did not have time to focus on into all these sectors. Correct?
Yes. You put it really well.
Okay. Fair enough.
Thank you very much for patiently answering all my questions, sir. And we wish you all the best for FI26 and thereafter.
Thank you so much.
Thank you. The next question is from the line of Sai Ganesh from Square 64 Capital Advisors. Please go ahead.
Thank you for the opportunity, sir. Could you please share the current order book size and expected execution timeline?
We have a funny saying in Tamil, okay?
Okay.
I'm sure there's one in Hindi also. It goes by the name [Foreign Language] . I hope you understand that. Every day there's a Ganda, but that guy lives for 100 years. So our order book at any point of time is about five months deep. That is the order that they have on hand. But those are schedules. You have to understand how the industry operates. So those are schedules, and those are businesses that have been won over hard work over lots of years. So these businesses and volumes will fluctuate with end customer demand. The thing to be seen here is, have we lost any current customers? Are we losing any current product? Are we in the likelihood of losing current products? That is our trust. The rest of it, market takes care. Second, this is on the defensive side.
On the offensive side, what new products are we launching? What is our target? What is our time? What part of the time are we addressing now? Are we hoping to address now? What are we expecting to address in the next cycle? And so on. So to gauge our position with no orders in hand, I would say would be a very simplistic way of looking at the business.
Okay. Understood, sir.
Answer your question from a reassuring or a positive point of view. No orders have been lost as of yet, as of now, and none are expected to be lost in the ensuing weeks and months.
Okay, sir. One more question from my side. We have planned CapEx. We have done a CapEx of INR 400 crores in FY25, and we have planned for 300 additional CapEx for FY26. What would be the asset turn, sir, on this?
Sorry, what would be the?
Asset turnover. What is the potential revenue of the CapEx we have done of INR 700 crores?
All this goes into production.
Into capacity.
I know. All this goes into,
yeah, thank you for helping me on that.
All this goes into production at customer project anticipated capacity. That should give rise to a production of around INR 600-700 crores.
Okay, sir. Asset turnover of one. Okay, understood.
Asset turnover of one. Key number, asset turnover, delta asset turnover of one.
Yeah. Thank you, sir.
Delta because some of the product could come out of existing forging units. Machining plants may be separate, but forging units could come out of existing forging.
What is the CapEx you have done on the machining side amount and the capacity?
You know, the machining side is very, very, very, very specific to answer. I wouldn't categorize the capacity in terms of specific numbers. I can only say so much numbers, but I know that it makes very little sense. Last year, we have invested INR 150 crores in forgings and INR 150 crores in—sorry, INR 170 crores in forgings and INR 155 crores in machining.
Okay, sir. Can you quantify in capacity? What will be the capacity around 10,000 metric tons or 20,000? What can we?
The forging capacity is all in CWIP, Capital Work in Progress.
Okay.
Around the 16,500-ton press.
Okay. And for machining capacity?
Machining capacity, I don't have a number. Again, it should be sold. Can I have your name? I can reply back to you.
Okay, sir. I will send you a follow-up mail for that. Okay, sir? Thank you. Thank you, sir.
Yep.
Thank you. Ladies and gentlemen, in the interest of time, we'll take our last question from the line of Pratik from InCred AMC. Please go ahead.
Yeah. Thank you for the follow-up question. I would like to ask on the customer, if you can mention your top five customer and their revenue contribution for financial 25.
Please excuse me. We don't give out customer names at the request of us and on agreements signed with them.
Okay, okay. My other question would be, what are your main focus products going forward for next two years, and what would be the growth drivers in the same?
Please repeat your question.
What are your main focus products? Like you mentioned, three or four product names which contribute around 35%-36% of your overall business. What are the main focus products where you see that there would be a decent growth in coming two years?
Largely related to the CV market and, to some extent, the passenger car market. We are in discussions with several customers for products related to EVs as well, with the different applications from what we have seen earlier. And all this has to work out. So we are seeing a broad sense of whatever we have been doing so far, more of that than any brand new products that are coming in.
Okay. Got it. One last question from my side. What would be your current total capacity of forging? It is one. If I'm not wrong, it is 126,000, right?
Correct.
Yeah. So now you have mentioned that there was 82,000 tons saved in the current year, which says that the realization per ton has, your realization per ton has decreased by 8% for financial year 2025. But what would be the main reason behind this drop in the realization?
Largely related to the.
Oh.
The fact is. One second. Just hold on. The heavy tonnage parts have come down in the last one year. So that is one cause for drop in realization per ton. Plus, raw material prices have softened in the last one year, steel prices. That also results in reduced.
Can you repeat, sir? I lost you.
Yeah. Two causes. One is primarily raw material prices are soft.
Okay.
The other is that there has been a slight drop in heavy forging sales. That also results in a slightly lower sales per ton.
Okay. So what do you expect in coming year? Is there one-off or situational concern, or do you see it as a long-term trend?
See, raw material is a pass-through. So any change that takes place on account of steel will be a pass-through. We can't do anything on it.
Okay.
Thank you.
However, we can look at other things and push sales on more value-added parts. So I would say sales per ton around the previous year's levels should be retainable.
Thank you, sir. Ladies and gentlemen, we'll take this as our last question. I now hand the conference over to the management for closing comments.
Thank you all for your valuable time and presence here, and especially the very insightful questions. Every time I find that when I come to the meeting with the next level of preparation, I find that the questions asked are X plus Delta. And many times the Delta is pretty strong. And even that has been no surprise, no different this time also. So thanks for the insightful questions. Many of those also help us to look at the business in different ways than what we are doing right now. Overall, summing up, MM Forgings lost about 3% of sales last year. And we expect to regain that in the ensuing months with the investments that we have made and we are making. Hopefully, market conditions will hold and become slightly positive. And that should be more than enough for us to move forward.
Thank you. On behalf of Batlivala & Karani Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.