Ladies and gentlemen, good day and welcome to the earnings conference call of Alicon Castalloy 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. Mit Shah from CDR India. Thank you, and over to you, sir.
Thank you. Good day, everyone, and thank you for joining us on Alicon Castalloy Limited's Q2 and H1 FY 2023 earnings conference call. We have with us today Mr. Rajeev Sikand, Group CEO, Mr. Vimal Gupta, Group CFO, Mr. Shyam Agarwal, General Manager, Marketing, Mr. Andreas Heim, Managing Director at Alicon Castalloy, and Mr. Rajiv Gupta, Head of Domestic Business of Alicon Castalloy Limited. Mr. Vimal Gupta will cover the financial performance of the quarter, following which Mr. Agarwal will walk us through the operating highlights. In order to share a more granular view with the initiatives towards the global and domestic markets, we have also Mr. Andreas Heim and Mr. Rajiv Gupta to provide insights on the areas.
Following the comments from the team, our Group CEO, Mr. Rajeev Sikand will give a brief summary of the quarter gone by and encapsulate the strategic imperatives. Thereafter, we shall open the forum for a Q&A session. Before we begin, I'd like to point out that certain statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings documents shared with you earlier. I'd like to hand over the call to Mr. Vimal Gupta for his opening remarks. Thank you, and over to you, sir.
Good morning to all our investors. Thank you for taking the time out to join our earnings call. I trust that all of you have had a chance to review our earnings documents, which was shared yesterday. We are delighted to share a strong set of results for the second quarter of financial year 2022-2023. Those of you tracking the auto industry would know that 2018-2019 was the best year in the last few years for the industry. Thereafter, there have been multiple challenges which are well documented. As per our assessment, the domestic industry has reached a performance level of approximately 80% of the benchmark set in 2018-2019, while the international auto industry is at about 85% of the benchmark.
At Alicon, our revenue performance is 120% of the benchmark that we had set in 2018-2019, clearly indicating a strong outperformance when compared to global and domestic auto industry. The genesis of our current performance can be traced back to the months following the peak of 2018-2019. Industry volumes began crashing. We realized that we had to further diversify and strengthen our business by adding new components, more regions, and increasing customers. We were highly dependent on few key parts. The customer base was narrow. Further, our business growth was driven by what our customers decided to provide to us. The business transformation that we envisaged included a focus on multiple growth vectors, which have been categorized as five pillars by us.
This includes traditional ICE business, opportunity from carbon neutral technology, including battery, electric vehicles, hybrid electric vehicles, plug-in hybrid vehicles, fuel cell and hydrogen cell technologies. Third is opportunity from structural parts or technology agnostic parts which remain consistent no matter which fuel technology is used to power the vehicle. Fourth one is non-auto business encompassing opportunities from sectors such as defense, healthcare, telecom, to name a few, where our support competencies can be leveraged. Fifth one is enhanced customer wallet share through machining, finishing and combining products to offer customers a one-stop solution. Even as we began implementing this growth strategy, we were faced with the global pandemic in early 2020, which delayed the outcomes.
However, as we are seeing the effects of the pandemic fading into the background, we are witnessing recovery in economic activity and customer behavior which has enabled us to apply our growth strategies with greater vigor. In that backdrop, I will run through the financial performance. Total income in quarter two of financial 2023 stood at INR 378 crore. That is higher by 41% on a year-on-year basis, significantly outpacing industry growth, which was around 14% year-on-year. During the quarter, we witnessed some cooling off in input prices, but these remained substantially higher than the corresponding period last year. These are a pass-through for us, but with some lag.
A pass-through effect due to higher input price increases combined with improved product mix have added to gross margins for the quarter, which stood at 49% in quarter two FY 2023 against 47% in quarter two of FY 2022. In line with our strategy, the share of business from passenger vehicles, commercial vehicles, exports, and carbon neutral technologies has grown, enabling a richer product mix. Also, the focus on machined parts has enabled us to realize better margins. To enable this, we intend to keep the share of two-wheeler business stable, given limited scope for value addition, and drive a higher proportion of incremental business from passenger vehicles, commercial vehicles, exports, and carbon neutral technologies. The initial benefit from this approach has added to the momentum this quarter. While our endeavors to improve margins through rebalancing product mix is bearing fruit, we continue to face cost inflation.
We had categorized the challenges facing us internally as a six C framework. With the COVID impact, chip shortage issues, cost of new product development, the conflict between Russia and Ukraine, global cost price inflation together with supply chain challenges. While some of these challenges are slowly getting mitigated, cost inflation continues to persist. Kaizen principle-based initiatives that we have adopted have helped us bring in optimization across all aspects of our business model, right from the inventory management, employee expense to power cost optimization, among others. We have seen a notable reduction in fixed costs as well as streamlining of overhead due to these initiatives. As a result, the EBITDA margin in quarter two of FY 2023 was 11.5%, higher by 210 basis points year-on-year basis.
In absolute terms, our EBITDA margin during the quarter came at INR 43.46 crore, higher by 72% year-on-year basis. As we have shared earlier, our three-four year target is to improve our EBITDA margin to a level of 14%-15% on the back of growth initiatives combined with cost efficiency measures. With the operating leverage provided by the growing scale of operations, as well as reduced finance expenses despite a backdrop of increasing interest rates, profit after tax was INR 15.3 crore for the quarter, higher by five times compared to INR 3 crore in quarter two of the last year. For the half year ending September 2022, revenue was INR 722 crore as against INR 480.41 crore in the corresponding period last year, growing by 50%.
The gross margins during the first half of FY 2023 stood at 48% as compared to 49% in the first half of FY 2022. EBITDA for first half of FY 2023 stood at INR 51.42 crore against INR 43.3 crore in first half of FY 2022, that is higher by 88% year-on-year basis. Profit after tax for the first half of FY 2023 stood at INR 26.11 crore against loss of INR 1.12 crore in the first half of last year. I'm very pleased to share that we have delivered a performance surpassing pre-COVID levels. More importantly, if you analyze our first half numbers, we are on course to set new benchmarks in revenue and profitability.
On the CapEx front, we have deployed INR 15 crore during the quarter and deployed a total of INR 38 crore during the first half of the current financial year. This is in line with our plan to deploy around INR 90 crore in FY 2023. This includes maintenance CapEx and new machining capacities in quarter two. Our plants in India and Europe operated at utilization level of 70%-75%. To summarize, we are continuing on the positive momentum and are confident of delivering better financial and operational performance during the financial year 2023. Our focus continues to be on improving margins, return ratios, and streamlining our working capital cycle. We are confident of delivering strong and sustained growth in the quarters ahead. On that note, I would like now to hand over to Mr. Shyam Agarwal, who will talk about operating highlights for the quarter.
Thank you, Mr. Vimal. Greetings to all of you. The domestic auto sector saw a significant recovery in demand during the quarter. We witnessed a growth of 14% in volume on a YoY basis, and within this, passenger vehicles grew 38% YoY basis. Commercial vehicles grew 36% on YoY basis, and two-wheeler volumes improved by 8% on YoY basis. The improved growth was driven by the pent-up demand, improved availability of semiconductor, festive push, new product development, and in case of commercial vehicles and heavy vehicles, factors such as increased infrastructure spending, mining activities, logistic growth, and resumptions of offices and schools added the demand. On the production front, OEMs delivered better level of production, which augurs well for the overall industry.
In the previous con call, we had indicated that we started calendar 2022 with the projection of 5% industry growth, which was subsequently raised to 7%. Based on the data up to September 2022, there is optimism that the domestic industry can achieve high single-digit and possibly double-digit growth for the full year. International trade remains favorable as global customers have adapted to challenges such as limited semiconductor availability and supply chain realignment. We are receiving healthy leads and inquiries from our international business segment and remain optimistic about future growth. Tracking this, last quarter we had indicated an increase in our internal budget to a range of 25%-28% growth on a year-on-year basis. As is evident from the numbers in H1, we have delivered 41% increase in revenue on a year-on-year basis.
Given the orders in our book and the anticipated start of production, we can now expect to close the year with growth of 30%-35% on year-on-year basis. Let me take you through the key factors contributing to the improved outlook. First, against the initial expectation of flat industry performance, this year we are witnessing domestic industry volume improving with the expectation of high single-digit growth this year. Second, the new parts and orders added over the last two-three years have entered SOP and are contributing to incremental revenues in financial year 2022-2023. Overall, there are multiple levers which are offering a high visibility of growth. As Mr. Vimal has already covered the key focus areas for us, which are contributing to our outperformance.
The overarching approach across all of these areas is to sharpen the focus for us, which means greater emphasis on value addition. In the auto business, we are seeking critical parts like Cylinder Head. To underline our commitment, we came up with the automation cell to drive the differentiation in our offerings. We have automated one Cylinder Head line for a global customer. Since Cylinder Head is a critical part and we see a strong opportunity for some customers, we have made investments in automation technology in order to showcase our readiness and know-how of technology for this critical part. In carbon neutral technology, our focus is on passenger vehicles, commercial vehicles and export opportunities as we see a greater scope for value addition in these areas.
We have already built up a portfolio of over 93 parts catering to EV and are progressing well on our target for scaling up revenues from carbon neutral technologies. While we have shared that on initial target, which is to bring our wallet share from carbon neutral technologies to 25% of our overall revenue by financial year 2025-2026, based on new order wins, we see accelerating momentum for the share of revenue from carbon neutral technologies. Based on the order received, we have already achieved 22% from carbon neutral technologies by financial year 2025-2026. There are certain ongoing discussions with global customers which hold potential to drive these targets higher. We have already achieved 22% share on the back of several exciting order wins.
In end September, we announced a large multi-year order from Jaguar Land Rover for their e-mobility platform, which was the largest ever order win in Alicon's history from a single customer for a single project. We will supply the E-Axle Housing, which is a critical product for the e-mobility platform. The component entails supply of an integrated eMotor and Transmission Housing. This order is for the delivery over seven years, which major supply will happen over five years. The product will be manufactured at our facility in Pune. This business award clearly illustrates our improved standing in the global industry, the improving salience of our brand, our expertise in manufacturing critical and complex components, as well as the competitiveness on the global stage, where we have pitted against suppliers from all corners of the globe.
To win this order showcases our capability as well as opens the gate for us for other major global OEMs as well as the new entrants in the e-mobility. In the carbon neutral segment, we have host of parts which are set to go. Our supplies to Dana have commenced with the start of production and will gradually build up in the coming quarters. As many of you would know, Dana is well-regarded Tier 1 supplier to many global OEMs and is a key supplier to Switch Mobility, which offers electrical buses in India. We have successfully developed samples for a recent order win from Tata Motors for their EV platforms through TACO. The components will enter mass production in this current quarter. In our global business. Increases volume being supplied to Beinbauer and our order win from Rimac last quarter has opened up five new parts this quarter.
This will allow us to demonstrate the wider portfolio to existing and potential customers. Andreas Heim will walk you through greater detail for the order win. A key development we had spoken about was the supplies to the Toyota hybrid vehicle called Hyryder. It enjoys highest ever mileage in its class of 27 km per liter for a four-wheeler, and the customer response to the product has been fantastic. It has a waiting period of five-six months. As we have shared last quarter, we will be supplying Cylinder Heads for this vehicle, and given the favorable response to the vehicle, we can count on some exciting volume growth from here. On that note, I would like now hand it over to Mr. Andreas Heim to throw light on our global business.
Thank you, Shyam. A warm welcome to all of you. I will briefly cover the development on our international business. We delivered a consistent performance in Illichmann during the quarter, owing to a robust demand environment in the global markets of the United States, China and Indonesia. While we saw early evidence that supply chain concerns were lessening across markets, the prolonged conflict has extended inflationary pressure on some essential inputs. Prices for major raw materials began to stabilize at slightly lower levels. The rising prices of inputs are passed through to customers, and we are working with them to arrive at the formula for higher energy costs too. We have noticed some pass-through, and we are working towards addressing the remaining inflation in the cost basket. The EBITDA margin we have delivered is despite absorbing some proportion of the higher costs too.
Last quarter, we had talked about the assured gas availability. It is now well known that alternative gas supplies to Europe have resulted in higher gas reserves, albeit at higher cost than before. We are in discussions with our suppliers to work out assured supply of power while exploring any scope of cost reduction. Further, we are in the process of installing solar panels to diversify our energy mix. The global business has contributed to 6% of the total revenue during the quarter and first half year in this financial year, respectively. Of the 10 parts we added in this quarter, eight new parts from global customers. Last quarter, we mentioned that we delivered a motor housing product for Rimac, an associated company with Porsche, which holds 45% ownership.
Rimac is perceived as the Tesla of Europe, and our suppliers to Rimac also are very helpful to opening the doors with other European customers. Based on our supplies last quarter, we are now working on additional projects for Rimac, comprising five parts, and this will mark an expansion in our relationship with them. From last quarter's discussion, you may recall that Rimac also has an engineering division which supplies to large global OEMs, including its parent company, Porsche. We undertook a thermal engineering project for Rimac, which is working on developing EV parts for other OEMs. There is a huge potential to build on this new supply arrangements. We are working with KTM on developing a new swing arm, following our sourcing with Ducati in the prior quarter.
To remind all of you, given ongoing projects with KTM, BMW and Ducati, all three of the largest European two-wheeler OEMs are part of our customer list. On this note, I would like now to hand over to Mr. Rajiv Gupta, who will cover the development in the domestic business for the quarter.
Thank you, Andreas. Good day, everyone. The Indian automotive sector grew strongly in the second quarter, with the passenger and commercial vehicle categories leading the way and two-wheeler seeing a gradual recovery in demand. Furthermore, the freight availability remains high. Following a brief slowdown during the monsoon, the CV sector sales during festivals recovered in retail. In India, we have seen improved traction in the auto sales, particularly in the passenger vehicle and medium and heavy commercial segments. For two-wheelers, after initial expectation of flat volumes, we witnessed high single-digit growth this quarter. We saw a significant boost in volume performance throughout the festive season because this was the first normal festive season after two years of the COVID-led disruption. In the quarter, we have delivered a strong performance. Total contribution from our domestic segment stood at 79%.
Overall, we recorded good growth in the domestic auto industry throughout the quarter, driven by the shifting trends of the shift push and a greater preference of personal mobility. We are seeing high volume of inquiries in the market of the new technology and are optimistic that strengthening macroeconomic conditions will help us sustain this momentum. More importantly, domestic customers are evaluating suppliers based on capabilities and track record in the EV offering. Alicon is well-placed in this regard with rich experience in this space and a comparable track record of 93 parts with 16 customers. Our European subsidiary, Illichmann, which has been supplying EV components since 2017, has been a key contributor to our global competitiveness in this space. In the non-auto business, we have been awarded an order for a prestigious telecom project under Atmanirbhar Bharat.
This is for a large order for implementation of a 4G, 5G network. Alicon will be a single-source supplier to this large project for the parts it is supplying. All other technology for current 4G and 5G networks have been imported, and the project aims to indigenously developing this technology as a part of Atmanirbhar Bharat. We are proud to be a key supplier to this project. In the non-auto business, there is further traction as we are in discussion with Department of Defense for supply of further products catering to defense requirements. Lastly, we have developed a Cylinder Head for a leading manufacturer for all-terrain vehicles. This will be supplied to a U.S. market. This order win is important as we have traditionally supplied partially finished Cylinder Heads to customers.
We are now moving up the value chain by supplying fully finished Cylinder Head in this case. On this note, I would like now to request Group CEO, Mr. Rajeev Sikand, to share with you his perspective on Alicon performance.
Thank you. Good day, everyone. We have reported strong results during the first half of this fiscal. We have marked an uptick in client engagement and have demonstrated strong progress against new orders. We have chalked out a focus on global customers and invested significantly into human resources and R&D in order to enhance our global competitiveness. We challenge ourselves to develop a greater proportion of critical and complex parts. We have pushed our teams to think of providing solutions to customers rather than focusing on parts or components, enabling us to transform the business model. If you look across the customer base, we are now working with Maruti for Cylinder Heads, which is the largest OEM in India. We are well-placed with Toyota, which is a global leader in technology. Customers like PSA offer us greater visibility in domestic and global markets alike.
We are now supplying EV parts to Tata Motors, which is fastest growing OEM and dominating the EV market in India. Another element of our strategy that I have shared was to increase the footprint of passenger vehicle and CV in our value addition mix from 50% in FY 2022 to 70% in next five years. Further, we aim to increase the share of global business from 37% in FY 2022 to over 45% in next five years. The focus is clearly on higher value addition, and as a team, we are obsessively monitoring the value addition per kg. We also aim to increase our sales per machine by enhancing the proportion of machine parts in comparison to raw castings at present. I'm pleased to share that this starting to reflect in our performance.
With the industry growing at 13% on year-on-year basis, we have outperformed in a meaningful way, reported a revenue growth of 41% year-on-year in Q2 FY 2023. Further, we have rebranded our focus from EV to carbon neutral technologies, which mirrors the wider focus by our team. This is reflective of the potential technology mix that we foresee in the mobility sector over the rest of the decade and beyond. We also seek to build out our contribution from structural parts which are equally important.
Currently, the contribution of carbon neutral and structural power is 14%, and we aim to take this over 45% in five years' time. On operational efficiencies, we have optimized costs across our business model and brought in higher efficiencies that enable us to restrict the impact of costs on our margin profile during the quarter. We are actively working towards increasing our sustainability footprint and ensuring commissioning of our captive solar plant, which will give a full transfer to our energy mix. We would once again reiterate that we are future-ready. As an organization, we enjoy a favorable outlook on the back of global recovery. We see strong demand trends. Our total order booking for auto business now stands at around INR 3,400 crore to March 2026, with the average annual value of INR 700 crores.
We look to build on this further with deep engagement with existing and potential customers. On this note, I will now request the moderator to open the forum for any questions or suggestions that you may have. Thank you.
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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Umesh from Sushil Finance. Please go ahead.
Yeah, sir. Thank you for the opportunity and thank you for detailed explanation on technology and also an exciting future business outlook. We can see that Alicon is moving into a global supply chain. There are certain questions I had, like what is the current contribution of two-wheelers as of now, and going forward, what it will be in next three years? Also on machine components, how much is the contribution right now and how much it will be in future?
Okay, now, thanks again for your continuous support and your questions. Currently, this year we're aiming to bring our two-wheeler contribution to 37% and eventually to take this to 17% by 2025, 2026. On the machining front, this year we will be closing roughly around 70%-74%. This, we are aiming to increase it to 80%-85% by 2025, 2026.
Okay. Two-wheelers, I missed, sir. It was from 37% to?
To 17%.
17%. Okay. All right. Also, you mentioned in your comments that value addition you're doing. How much will it result in an increase in content per vehicle?
Yes, at this moment we are looking to add, I mean, enter different segments where I can give solutions to our customer. If we see a scenario of playing in a IC segment versus playing in a EV segment, my opportunity in a two-wheeler space is almost the same. See how the industry has come up with a model of lucrative solutions in the two-wheeler space. Yes, the opportunity has increased a lot when we talk about segments like passenger and commercial. If I see for passenger, the opportunity lies somewhere around 15%-20% in IC segment. It's 80% - 40%- 50% in an EV platform. Also in commercial, from around 10-20 AD per vehicle, the opportunity is increasing to 50%-80%.
Okay. That's good to hear. Sir, Alicon has visibility till 2025. Can you throw some light on developments, and order pipeline beyond FY 2025?
Yeah, definitely. We have done a good progress talking about adding businesses from 2018- 2019, where we were very clear which segments, which parts to focus. Today we are very proud to share with you, we are moving ahead with our strategy. The total order booking stands at around INR 7,200 crores when we talk about a period, say till 2028- 2029, with a yearly average booking of INR 1,000 crores. In this portion, our order booking is majorly, I mean, it's a good number with EV and carbon neutral parts, roughly around 32%, with technology parts roughly around 6%. More important here is we have added more of our exports part roughly around 50% and also in this journey we've added new logos roughly around 30%-35%.
Okay, thank you very much and wish you all the best, sir.
Thank you.
Thank you. The next question is from the line of Raghunandhan NL from Emkay Global. Please go ahead.
Congratulations, sir, on stellar performance, and thank you so much for the detailed opening remarks. It is very helpful. Sir, my first question is, the new order bookings in Q2, can you indicate what was the value of the order bookings? Also, can you indicate, approximately, what is the new order contribution in revenue for FY 2023 and FY 2024?
Yes. In quarter two, we have added 10 parts from four customers with a yearly average sale of roughly around INR 190 crores, with a peak sale of around INR 250 crores. The total project value is roughly around INR 1,200 crores for a span of five years. In the new order booking, the good thing is 71% in EV, the carbon neutral segment which I am aiming, followed by 19% in ICE with again a critical Cylinder Head part. We also made good numbers with technology agnostic, which we were eyeing. Out of this order booking, 81% contributes towards exports.
Thank you, sir. Can you indicate, FY 2023/2024, how much would be the addition to revenue because of new orders? Would it broadly be in the range of INR 600-700 crore?
Around INR 700 crore we are going to book with these new businesses in next year, 2023/2024.
Got it, sir. I mean, the recent prestigious order on E-Axle from Jaguar Land Rover and this E-Axle Housing being important product which can reduce weight, can you indicate what can be the potential for this product and in terms of getting orders from more customers?
Yes. Again, that's one of the great achievement Alicon have bagged. This is one of the highest order booking in the history of Alicon. Alicon were able to convince or grab this opportunity from a global customer like Jaguar with the know-how what we have shared with them. Also, we have given them unique solutions which they have really appreciated. This is one of the critical part when we talk about parts for the electric mobility, because it's a combination of a motor housing and a transmission housing. This development will help us to showcase our existing customers and potential customers who are actively working on such projects. We are already in discussion with other players also. We are quite confident on a immediate development. We will get immediate inquiries of such developments going forward.
Sir, the important is to understand in this, like when we got this order from the Jaguar Land Rover, so it is not like that they have given to India. There were the global competitor from China, from Europe, and we have shown our capability of the technology. That was very much appreciated that at global level, the kind of technology Alicon is having. On that basis, almost all global players, this OEMs, they have approached us. That has opened the door for Alicon at global front.
Got it, sir. That is heartening to hear. Sir, on the export side, I understand that we have strong order bookings, and we will continue to see a strong growth. I was trying to understand the industry situation. Any concerns you foresee in future because of the recessionary concerns for U.S. and Europe? Also, because of this power availability issues, is there any production impact expected for the Europe subsidiary? Also, in terms of these rising energy cost, in terms of passthrough of inflation, you know, gradually it should happen. Any timeline by when you expect passthrough to happen, whether it will be, you know, over the next two, three quarters?
In this first sticky question about the challenges in the coming period, that is definitely everybody is worried about that, U.S. recession. That is maybe we can say the post-recession because the Fed is now increasing the interest rates that is impacting, and we see that a lot of attrition is happening in the industry there. Definitely we are also taking that into our consideration and more focused on the orders we are having from the U.S. and, so we are keeping the guard on that, how they are moving, how they are performing, and definitely we are taking our internal actions.
How to now focus, maybe to compensate this, if this slowdown happens, so how to compensate from other customers that is to achieve and deliver our targets as well as more focus on the cost reduction if something goes wrong. These already initiatives we have started taking in Alicon that is on the part of the recession, what we are talking about the, we see these forces, the challenges. On the energy cost, especially in Europe, definitely it is a concern. At this moment, we are able to negotiate almost with all customers, and to pass through that cost to the all OEMs. It is a challenge, and now we are seeing some availability has increased in Europe for the energy.
Now we are seeing that maybe the customers they will shift in future from Europe to India. It may be opening up further opportunities for Alicon for the new businesses. When we talk about the energy cost in India, so on that, definitely we are, one is that initially we were also not focused to pass through because it is not so much fluctuation in this cost. Now we have started negotiation and discussions with the customers to pass through like the other we are doing for the aluminum to consider as a completely variable cost. On the other side for the reduction, as explained in the speech also, that now we have already tied up for the solar energy, so that we will start getting the benefit from the next quarter, in quarter four.
That will also impact on our reduction in the energy cost. I hope I have answered all your questions, sir.
Thank you. Thank you, Vimal, sir. One last question before I fall back to the queue. One clarification also. On export side, broadly, sir, what would be the mix between Americas and Europe and rest of the world? Would it be 40$- 20%?
Yeah. U.S., 40%. Yeah. Europe also roughly 40%, and 20% rest of the countries.
Thank you. My last question was on the margin trajectory, our medium-term target is to go back to the 14%-15% margin level. Approximately or broadly, how do you see the margin range for FY 2023 and FY 2024? Just trying to understand your thoughts.
The target is at least to improve at least around 0.75%-1% we are targeting in the next year.
Got it, sir. Thank you. Very helpful. I'll come back in the queue.
Thank you. The next question is from the line of Aman Agrawal from Carnelian Capital. Please go ahead.
Hello, sir, and thank you for the opportunity. I had a few questions. First was on our process of manufacturing, like we use low pressure die casting method for manufacturing our casting process. Like, compared, as far as I understand, and please correct me if I'm wrong, it is slightly expensive compared to high pressure and slightly complex compared to high pressure process of die casting. There is around a 25%-30% kind of differential in cost for low pressure casting versus high pressure casting. Like on our EV orders, like given they are on low volumes right now and we are getting these orders on low pressure casting.
Do we see a risk in future like when the volumes basically ramp up this EV related volumes which we are getting, they might shift to high pressure casting in future, sir?
Thank you. This is a phenomenon which is even going on right now, you know, in our current business. Again, it depends on our OEM strategy. Right now, if you see the Maruti which they are bringing the new EV car, they have gone the high pressure route. It's an OEM to OEM preference. It's got nothing to do with the criticality of the component which determines the process and not the volumes only. Like a cylinder cannot be made in a high pressure either. It's because of the certain mechanical properties which cannot be achieved in high pressure. It's either gravity or low pressure.
Yes. Understood, sir. We do not see a risk on the EV order book which we have that in future, there might be a move to high pressure and we might lose this business, right?
No, not only future, they're already there. It's a part of the journey. Some will move. Some OEMs will like to go that route, some will like to go this route. Even now when we are doing our current production, there in the areas we are more or less matching the high pressure cost of production. It's not that we are out. That is not the ability we have developed at the back end.
Understood, sir. That is really interesting to hear. My second question was on this order book, sir. Like, if you can basically touch upon how we calculate the order book. Like, how do we calculate the quantity for a particular product? Relating to that, like, in future, in EV, like, since it will be a developing technology, so if we see much iteration in the models, introduced by OEMs, like once the new model comes through, if the life of that model is not enough, so could that impact the overall order value for us then?
This is open for everybody, right? This is not unique for any car or any. It's open for every supplier. It's even now. First you take the current models of, you know, ICE, take it for example, Indian market only. This is applicable, some models will do well, some models will not do well. Suddenly Toyota has launched this 1.5 liter hybrid. If you guys ever go to the showroom, you will find a different Toyota showroom it is. Why? There's no car in hybrid in that, you know, maybe SUV. Having those kind of features, a 17-inch wheel, extra. It could come, Toyota is the leader now. How long it remains?
Toyota is not doing a very big production of this right now because, you know, their chips or high-end chips are not very easily available. They have already around 500,000 cars are going to be lost this year. It's also a chip issue for them. Other three things maybe. Market will determine how these kind of changes, because this is a great change which the market has brought about of a new car at a higher price being launched and now the waiting period is five-six months.
Right, sir. Understood. Thank you for the answers.
Continuous, you know, change. Some models will click, some will fall down. You have to be on your toes. All your back end of your investment is, you know, unique, it's common. Front end always we take from the, you know, if there's a unique size, fixture, we always take from our customers.
Understood, sir. That was really helpful. I'll call back in that case. Thank you.
Thank you.
Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead.
Yeah, thanks for the opportunity. Couple of questions. Firstly, as you have mentioned that we are upping our guidance of now we are targeting 30%-35% growth this year. Now looking at the order book and also the, you know, the commodity prices are coming down. How do you see the growth in FY 2024?
In FY 2024, we see that definitely we can touch roughly around 14%-15% for that growth. This is the initial, very initial, numbers. We are in discussion with all customers. Definitely there will be a revision in the coming period. At this moment, around 14%-15% we see the growth in the next year for us.
Another factor is, you know, right now the segment which we are supplying globally, their order book is still strong. Because every month we are verifying with them and they are still launching all that. How long that remains with this recession, that's another critical. Every quarter there will be a new update because there is a weightage of maybe 30% of the exports coming in. That will also be very important. Because if the recession does hit in a big way or this may have a little knock-down effect.
Okay. Because, if the commodity prices, you know, falls, then, we may have to pass on that benefit also. So even after considering you feel that we can do good double-digit growth?
Yes. Right.
Okay. Now, my second question was, actually I couldn't understand the part where in the opening speech you mentioned that we will be doing something in 4G, 5G products. If you can just repeat that.
This is a project for the telecom sector. The BSNL have planned to indigenize this process. Like other OEM, other players like Airtel and Vodafone, Jio, they are buying these products from China. As a government initiative, the BSNL has taken that initiative to indigenize. We got that opportunity as this is one of the most, again, a very critical component, a unique solution what we have offered. Successfully last month we have submitted some, I mean, last quarter we have submitted samples, and now this has come into SOP. With the success story, we see a good growth, good volumes going forward.
Okay. How big it could be annually?
I'll come back on that.
Oh. Okay, fine. That's it from my side. Thank you.
Thank you. Next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Yeah, thank you for the opportunity. Congratulations on the good set of numbers in Q2, sir. Sir, my question on the growth side, how much percentage we are expecting for FY 2023 and FY 2024, if you can guide on that?
We have already explained that, at this moment, we are expecting 14%-15% in the next year based on the current information we are having. It is a continuous process that quarter-on-quarter we will review and then we will have the right numbers. At this moment this is the status.
Okay. Sir, earlier in last quarter we have guided around 18%-20% growth.
That is for the current year 2022-2023 we were talking about. And 2023-2024. 2023-2024 is at around 14%-15%. These numbers are little bit coming down due to the further increase in the numbers of the current year. Base has increased.
Okay, okay. Thank you, sir.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call, and we look forward to interacting next quarter. Thank you very much.
Thank you. On behalf of Alicon Castalloy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.