Q1 21/22

Aug 6, 2021

Good day, and welcome to the Q1 FY 'twenty two Earnings Conference Call of Alcon Castello 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Mayank Vaswani. Thank you, and over to you, sir. Thank you, Aman. Good day, everyone, and thank you for joining us on Alcon Castelloy Limited's Q1 FY 'twenty two earnings conference call. We have with us on the call today Mr. Rajiv Sikhan, Group CEO Mr. Vimal Gupta, Group CFO Mr. Shekhar Dravid, COO Mr. Andreas Heine, Managing Director of Elixmann Castelloid and mister Rajiv Gupta, head of domestic business of Alicon Castelloid. Mister Vimal Gupta will cover the financial performance for the quarter, following which mister Dravid will walk us through operating highlights. In order to share a more granular view of initiatives towards both the global and domestic business, we also have mister Andreas Heine and mister Rajiv Gupta to provide insights on these areas, and they will be followed by mister Rajiv Sikhan, who will give us a brief summary of the quarter gone by. Then we will have the forum open for a q and a session. Before we begin, I would like to point out that some of the statements made in today's call may be forward looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with all of you earlier and also uploaded onto the exchanges. I would now like to hand over the floor to mister Vimal Gupta for his opening remarks. Over to you, sir. Yeah. Good afternoon to all our investors. I hope that all of you and your near and dear ones are safe and well. Thank you for taking out time to join our earning call. The quarter one, by was a challenging one on account of the second wave of the pandemic, which had the devastating impact across the country. While there was no repeat of the synchronized international lockdown, the localized lockdowns are also resulted in significant disruption to economic activity as caution prevailed. Food was also dropped. Car dealership was closed, and OEM customers cut their production schedules. Combined with challenges in logistics and constricted movement of material and manpower, there was impact on our manufacturing operation. Thus, we have witnessed a compression in production volumes and consequently revenues during the this period. Our manufacturing units in India operated at 50% average capacity utilization level, respectively. On account of this, in April and May, we reported lower volumes. Soon after, with easing of restrictions in June, we saw a hint of recovery from OEMs and reported improved sales in the month of June. However, it was a challenging quarter in light of the headwinds caused by second wave in India as well as increasing input price globally. Given that quarter one of twenty twenty one was severely impacted owing to near global lockdown during the first phase of COVIDnineteen.Com comparison with the corresponding quarter of the previous year are not meaningful. We are, therefore, giving comparisons against q four of FY twenty one, which was a fully operational quarter. This will give you an idea of the impact of lockdown in quarter one f y twenty two on account of second wave as against '4 f y '20 '1. Total income was up 294% as against quarter one of FY twenty one and thirty four percent lower against quarter four of FY twenty one. For the quarter, exports including overseas revenues contributed to 28% of the total revenues, while domestic contribute contribution was 72%. I'm happy to share our exports, including sales from equipment subsidiary, continued the momentum from the second half of last fiscal and posted growth on a sequential quarter basis too. Across verticals, the auto division contributed to 90% of the total revenue in q one FY twenty two, and non auto division was 10%. We have continued our various initiatives on our cost optimization strategy to align our expenses and optimize our working capital cycle. During the quarter, we have seen a challenging input price environment with high volatility leading to persistent pressures in raw materials such as aluminum and other input costs. This coupled with the sharp reduction in volumes on account of the lockdowns during April and May 2021 impacted Russian labor and a consequential impact on lower closing WIP and SG leading to higher metal cost. In order to efficiently manage this situation, we are speaking to our customers to increase efficiency of raw material price adjustments on a monthly basis rather than quarterly. This will slightly compress our working capital cycle due to more effective readdismant. On the profitability front, going to the muted volume increasing increased the metal cost as explained above, fixed manpower cost and other overhead. Our modules were compressed on on sequential basis. Our EBITDA margin expanded to the 6.36% in q one FY twenty two as against 14.62 in q four FY twenty one. This drop is despite our constant efforts and continued focus on efficient production and cost management, which has enabled us partially offset the impact of muted volumes and inflationary trends during the quarter. On a stand alone basis, we reported a loss before tax of rupees 9.99 crore as against profit of 19.97 crore in q four FY twenty one. Our EBITDA on a consolidated basis stood at 8.52% in quarter one FY twenty two as against 15.2% in quarter four FY twenty one. We are pleased to highlight that our European subsidiary continued to maintain steady volume on our prestigious order for battery housing for Samsung, which is used for further supplies supply to JLR. The European operations were also benefited on account of onetime billing to cooling to one of our regular customers. Supply of cooling has decent margins, which are reflected in the ramp. When compared to q one FY twenty one, our EBITDA was 18.03 crore and the case negative of 23.42 crore. The loss before tax was much lower this quarter when compared to corresponding period last year on account of the different circumstances between first wave and the second wave. On the balance sheet front, net debt has reduced after the successful QIP issue, which concluded on thirtieth June with a view of opt optimically shared asset. We continue to undertake several steps to best leverage upon our established operational structure before undertaking new capacity expansion. Even on the CapEx front, we will be investing in enhancing our capacity that will only be related to the new projects and new order wins. Our focus will essentially be on two types of CapExes in FY twenty two. '1 on one is CapEx for the new order wins, which will include enhancement of existing capacities, especially machining and for the new technologies to service new wins, and second would be maintenance CapEx, which is expected to be minimal. So for the year, we will undertake CapEx to execute our orders, but this will not result in higher overall capacity. We are pleased to share that our equity rate has been successfully concluded. Our QIP brings onboard my few investors who have demonstrated belief in the Elekorn equity story. Following the QIP, we are we also made a financial issue to the promoter group and to NJ. So that is this QIP, we raised the 80 crores rupees followed by the provincial issue, which where we will raise around 30 crores rupees. The additional addition of rupees hundred 10 crores of equity to the balance sheet augment our long term resources to also pursue our growth initiative. This capital raise also serves to enhance our liquidity and enable us to balance our working capital requirements. On the whole, while our results are underwhelming, we are confident that as the volumes of the auto industry grows, we would be able to record decent growth in the second half of FY twenty two. We hope that the deferred demand would enable a healthy recovery in business and economic activity and result in higher sales volumes for the auto industry. On that note, I would like now to hand over to mister Sheikhar Dravet, who will talk about operating highlights for the quarter. Thank you, Vimal. Greetings to all. I trust all of you are well and staying safe. I will share with you some of the trends witnessed in the quarter gone by. To begin with, the quarter started on a summer note on account of the lockdowns and restrictions on account of the second wave of the COVID nineteen pandemic. Across the industry, while there were concerns of the second wave in the March, we did not anticipate the impact both on the human life and the businesses to be misperformed. What we saw across the domestic market is that many OEMs, especially in the month of April, had to either completely stop manufacturing or revise their business plan. In some region and the market, the pandemic induced lockdown and restrictions extended till June, which severely disrupted the plan for some other industry participants. The quarter also saw huge inventory pileups at factories, dealers, and distributor levels. However, broadly, what we observed was that OEMs and the suppliers were better prepared to deal with this situation as compared to the previous year. Unlike last year, when there was a nationwide lockdown, this time around, lockdowns were only in a certain hotspot and micro containment zones. So we had cases wherein our customer was fully operating while Alicon's plant was in the containment zone. But we had to push ourselves and take up the challenge to meet the customer requirement. In addition, supply chain issues further impacted the processes. So while our performance was impacted due to these disturbances, especially in the April and May, the severity was managed given the established state of protocol to handle the pandemic induced disruption. As the lockdown and the restrictions eased in June 2021, What we saw across the domestic aerospace in that OEM, our OEMs reached about 60% of their earlier volumes. From July onwards, these volumes will be upward by 75%. From the consumption point of view, in June and July, passenger vehicles witnessed better recovery than the other categories, driven by the high pending booking, low channel inventory, and the strong underlying demand led by the preference for personal mobility. We have seen stock levels at OEM and the supplier level reducing significantly in the June and July, which is a positive sign. While the CV segment recovery has been slower on account of lower freight availability and seasonally weak infrastructure demand, good monsoon, hiking in MSP prices, and continued strong government support to all agri activities is aiding tractor sales. On the international front, most of the key export geographies in US and Europe reportedly healthy auto sales led by healthy demand and stable currency in key markets. Our performance is by and large in line with the trends witnessed in the automobile industry. Like previous year, I would like to discuss our five key strategy strategy growth pillars and the development within each. The first being of his auto business. This segment, while was impacted due to the second wave, witnessed a good bounce back in the demand and recovery in the month of June, resulting in the steady volumes during the quarter. Although domestic market saw an impact on account of the second wave, our export recorded continued momentum. We saw increased client engagement, especially coming in from the export markets during this period. During this period, we added 13 parts, out of which four were from the domestic market and nine parts were from the export market. In the domestic market, four parts were from the existing customer. So three were from Ghana and one was from one is from the Garrett. In the export market, three parts were from Ethan, three parts were from Male there, and two parts from Titanic. I'm also pleased to share that Andicon this quarter has recorded a new client win in the sport. After several we are now providing part for MAN AC, which is a part of the big Volkswagen Group for the truck category. On the industry front, we are seeing demand for the passenger vehicle segment both for two wheelers and four wheelers, gaining traction as a consumer for preferring personal transport or public transport. More so, with the travel and tourism stabilizing in country, cities and even the cities are seeing a strong recovery. Rural demand, although saw an impact due to the second wave, is expected to recover given timely arrival of the monsoon and a favorable agri indicator. We hope that this will further boost consumer spending. In addition, we expect the upcoming festive season to add momentum to the gradual recovery. The schedules from our customers are reflecting growth. We are also seeing some supporting reforms coming in from the center and the state governments, which will further create demand for the new vehicles, thus boding well for the Indian auto industry. Two factors which are dampener are the semiconductor shortages across the domestic as well as the global markets, as well as the inputs input cost inflation is also impacting the performance. Coming now to the second of our growth pillar, which is the electric vehicle division. In the international market, we are seeing a strong momentum. We have won orders from the repeated OEMs during the quarter, such as Ghana. Through Eligment, we are already supplying battery houses to Samsung who supply it to JLR in EV space. I'm pleased to share that we have been continuously receiving new business wins from Samsung, which has helped us improve volumes this quarter. We are now supplying battery houses across three EV model, Jela. To share the interesting answer, few years ago, when not many players were in absorbed in the EV space, Our company had there's been a huge and game changing opportunity and had embarked upon a challenge to deliver high end, technically complex, and highly competent solutions for vehicles in EV domain. I'm proud to share that we have been extremely successful in this venture. Our association with the likes of Samsung, Bosch, Dana, Danfoss, Ather, Mainland Mahindra, Eaton, among other market names, have provided us with a great visibility as a reliable and trustworthy partner and has helped us build a strong reference base in the EV domain in India as well as in the global markets. We have received several acknowledgments and awards that has enabled us to strengthen our foothold in the EV space. In one such recent recent example, Elicon received an prestigious award from Dana Corporation for the e mobility platform for the solutions end to end solutions. I'm proud to share that out of 3,000 suppliers worldwide, only 11, including Elecon, were solicited, and we are the only supplier from India. So this is a proud achievement for the team of Alcon. Coming to the domestic side, the development of e mobility here is lagging global markets. However, the tide is slowly changing for the better now. The central government is strongly supporting the absorption of a clean and green energy in the country. They have issued several initiatives providing incentive and subsidy, such as came to concessions to the manufacturer, which has boosted sentiment. Even the Maharashtra government recently has rolled out and revised EV policy in a move for cleaner environment and to support the EV program in the country. The government aims at 10% of newly registered vehicles in its major cities to be electric electric ones by 2025. It has also aimed to have around 1,500 charging stations in Mumbai itself by 2025 along with converting 15% of MSRPC buses to electric. The state government will provide incentives to generate demand and for setting up advanced chemistry cell batteries manufacturing plant. The government targets setting up one gigawatt battery manufacturing plant in Maharashtra. Similarly, in June, the good Gujarat government came out with the Gujarat state electric vehicle policy 2021, which is said would commence from 07/01/2021 for the period of four years. The government is targeting 1.1 lakh electric two wheeler, 70,000 electric three wheeler, and 20,000 electric four wheeler during the policy period. Fundamentally, what we are also seeing is that the pricing between the e mobility and IC of the vehicle is narrowing and becoming a major benefactor for EV adoption. In addition, higher fuel prices are enabling the shift for consumer from IC towards e mobility. In in the near to medium term, the focus for the Indian market will be towards two wheeler and three wheeler as the infrastructure and the consumer sentiments today are principally geared towards the smaller vehicle. In the domestic EV industry, we have seen an influx of over two different startups with meaningful plans for e mobility. Even the m three plan of Ola Electric in the Indian market will be very disruptive and will pave the way for mainstream EV usage in the country. So there is a plethora of development happening on the EV side in the country, and we believe that this will bring in solid growth opportunity for us going forward. We are seeing many e mobility players in India floating RFQs with Alicon being one of the fortune fourth runner in the EV space in the country. We look forward to capitalizing on such opportunities and building long term relations with customers in the EV space. In the longer term, our target is now to clock upwards of 25% from the electric vehicle division on the growing revenue base by twenty twenty five, twenty six. Now on to our third growth pillar being the technology agnostic platform, wherein we focus towards building niche around the existing and new products by leveraging our core competencies. This includes light weighting of the product in the auto and the EV space. We are getting increased inquiries from OEMs both in the domestic and the export markets for the development of frame and the control arm. Our successful conclusion of our order with JLR has opened many opportunities in this domain. During the quarter, I'm happy to share that we have received an RFQ from the customers, prestigious customers like JLR, Chime, Piageaux. We look forward to materialize the same in coming coming time. Our four fourth growth pillar being the non auto segment, here, we are witnessing healthy growth in demand across the sector such as defense, aerospace, agriculture, and energy, and we expect this momentum to strengthen in the part of IA. During the quarter, we have received the RFQ from Textron and Rexnord. We look forward to materialize this sale in the coming time. The fifth go growth pillar is our focus on increasing customer customer wallet share. Our long term approach is towards building wallet share and positioning ourselves as a trusted supplier for the our existing customer base. On that note, I would like now to hand it over to mister Andrea Zham to turn light on our global businesses. Thank you, Shikha. A warm welcome to all of you. I will briefly cover the developments on our international business. This quarter, Yves von Castelloy has enhanced his contribution in the group financial performance. He has reported strong volumes during the quarter, driven by healthy demand environment in European, U. S. And other international markets. In addition, incremental pricing in terms of tooling preparation, loan services and new projects have further fueled revenue growth. International business, including sales from LeaseOne, contributed to about 28% of our total revenues in quarter one. Over the last few months, we have seen increasingly focusing towards implementing technical enhancements across our sharpened focus product categories. Just to give you an example on this, in one of our collaborations with a customer in Europe through our thermal engineering solution, Via Noply improved the performance of this vehicle from 50% yield to over 90% yield, proceeding to higher volume of kits for our customer. Given this sort of traction, we are now being seen as strategic and valuable partner by several OEMs. Through these initiatives, we have also been able to command better pricing and have undertaken cyclical prices hikes that has further helped us record margin reductions. We anticipate this trend to continue going forward. Appointment of global representatives in U. S. And European market, mainly TBS in U. S. And Kefafee in Europe continue to pave the way for further growth for us. We are expanding our presence in this market through significant campaigns and we are engaging with a wider customer base. In the past year, we are also working on niche business opportunities, which customers in geographies of America, Europe, South Carolina, and Middle East. We are levering our entry into the Japanese market with Selectonic. Further, our engagement with players like the mechanics and Eaton has leads to several development programs. So overall, we are seeing a strong pipeline under development, which provides healthy future visibility. In quarter one, we added nine new parts from global customers such as Eaton, Male, Pathetics and Mailbox. From a demand standpoint, we are seeing normalization in demand in the European markets. While there are fears of potential third wave, the impact of the RECINS in reducing illness is aiding in the symbols of normalcy into the broader operation environment across markets and we are seeing volumes strengthens on a month over month basis. On the operational front, our plants are now operating at 85% utilization levels and we expect this sustain at these levels going forward. In May and June, we organized vaccine trials for our employees and we are happy to share that 90% of our employee base is now fully vaccine. Subsequent vaccination types are in process and will be rolled out in June's course. On this note, I would like now to hand over to Mr. Rajiv Gupta, who will cover development in the domestic business for the quarter. Thank you, Andrea. Good day, everyone. Domestic auto industry came under pressure from the April when major states like Maharashtra, Delhi, Haryana, Karnataka, Tamil Nadu had a had to place stringent measures in place in light of rising ape volumes. Across the industry, there were reduced footfalls at the showroom and lower sales volumes forcing OEMs to curtail production in April and May. While some continue to operate with limited capacity to meet export orders, the domestic operations in the month of April and May were significantly impacted. Auto companies also faced simultaneously commodity led margin pressures in the last few months. As the effect of the pandemic eased, Indian auto demand improved in June. Based on OEM reported data, there was strong sequential recovery in in the passenger vehicle and factors in June. '2 wheeler wholesales are also seeing uptick. Currently, activity indicates that customer interest in passenger vehicles have recovered to early two thousand twenty one level. Now coming to the performance, given the macroeconomic backdrop and a lower base in q one FY twenty one on account of the first wave, Elecon was able to report steady sales in q one FY twenty two. During the quarter, we added four parts from leading existing customers at Ghana, CFO and Garrett Moshin. We are witnessing a good level of inquiries and bookings in the market post June and and our opening to improving macros will further support this momentum. On this note, I would like to re I I will now request our group CEO, mister Rajiv Sikhan, to to share with you his perspective on the Alcon performance. Thank you, Rajiv. I welcome all our investors. Thank you for joining the call. I hope you and your family members are well and safe. Before I begin to share with you the perspective on Elicom's performance, I would like to extend my heartfelt thanks to all our team members and employees for their continued efforts in driving and supporting business operations during very difficult phase in April and May. On behalf of the board, I would like to take this moment to thank all our employees, communities, customers, and partners who are demonstrating determination and perseverance every day amidst this pandemic. Coming to the recent development, I'm happy to share that we have successfully concluded our fund raise aggregating to rupees 80 crores through the QIP rule. The QIP witnessed a high level of interest and has been % allocated to market, domestic institutional investors, including Excess Mutual Fund, Aditya Birla Sun Life Mutual Fund, and IDFC Mutual Fund. I would like to thank you all and the entire investor community for their support and confidence in the company. This capital will enable us to implement our growth plan and pursue our expansion plan, enabling us to address our large pipeline. Elekron will also look to reduce debt and strengthen its balance sheet further. Now from a macro perspective, despite a loss of business volumes in the month of April and May, we were able to record good recovery in June that enabled us to recoup some part of the impact in performance in April and May. From June onwards, we have seen domestic auto space steadily gaining traction, improved recovery, and growth in the domestic economy, and sustained improvement in export markets will enable us to report a healthy growth volume and auto win as we go forward. The inquiry and the new business win across our auto, EV, non auto segments have remained healthy during the quarter. We have built up a strong order pipeline to the tune of 3,000 crore over five years, peak sales of 700 crore annual yearly average of 600 crore as of 06/30/2021. With improved concentration from high margin product categories and exports based on current visibility of our order book. The trend in order wins that we are seeing in last few months, we remain optimistic on the growth potential, especially in the near term. Health and safety of our employees are one of the key factor areas for us. Across the company, we continue to follow strict adherence to social distancing, hygiene protocols, and safety. In May and June, we have started vaccination drives for protection against COVID for all our employees, employee dependents, support staff, and business partners. Overall, we are hopeful that this new physical year, we will see normalization across from economic activities, business operations to everyday daily activities. With the economic anticipated to mark a strong recovery in the second half of financial year twenty two, we are hopeful that the pent up demand will enable us to fit robust demand in the business and economic activity. This, in turn, will drive momentum in inquiries, auto wins, and volumes for automobile and auto component players going ahead. As one of the key players in the domestic auto market, we look forward to a promising future and continue to stay focused on our objective of being future ready and being consistent, trustworthy, and reliable partner to our strong and growing customer base. On this note, we would be happy to take your question now. Thank you. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. 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 Raghunandan from MK Global. Please go ahead. Good afternoon to the management team. Thank you so much for the comprehensive opening remarks. Extremely helpful. To Vimal, sir, sir, can you elaborate on reasons for increase in the RM cost to sale and other expenses to sales in this quarter and also the expectations ahead? In addition, if you can highlight, given the COVID related issues, were there any one offs in terms of COVID related expenses in the quarter? Thank you, Rahul. So first, I would just explain the impact on the margin. First, we talk about the raw materials because we see that is approximately 2% increase So that is mainly one that we have little bit sales mix change where we have high margin. So those OEMs have started their production little late. So the stake has impacted during that quarter where we had high margins. And second is that you see that in the results also, there is a decrease in the energy stock. So due to that, it has also impacted the consumption of our stock. And due to that, there is there is a little bit on the production side on the lower side. So these are the main reasons for increase in the raw material cost, but those are only a onetime impact we have seen in this quarter. Because when the productions are normal, so these things will go away. And second, we see that the manpower cost. These are not % variable cost. And in this manpower, it's I I think we have more is much better if we compare with the other OEM. Because even having this fixed cost, the manpower, still we are able to maintain and reduce it. And but and a %, we cannot make it a variable cost, so that that has impacted around 3% on the margin. And another effect is that this lockdown, it is not like that earlier, the wave one. And that was a complete lockdown. In this lockdown, it was the home of vacation. So there was a complete flexibility or fluctuation from the customer side in their order. So somebody asked the orders, then we have to fulfill. We have to start the production, then we have to close it. We don't have the orders. So this off and on situation, that has inspected our cost side. So we have to because it is this company is running process. We cannot stop and then again, naturally start. So that has there is a cost for this. So that is expected on the margin. So on this overall, that that also has impacted around 2% on the margin. So overall, we see that around seven to 8% has impact is still on the overall margin for the quarter if you compare with the q four. So I think I answered your question, Pragup. Thank you. Thank you, Vimal, sir. So to understand it correctly with normalization of operations, easing of lockdown, and pickup in scales, these things are temporary in nature and should reverse going forward. On the subsidiary part, I mean extremely strong results, but can you quantify what was the tooling revenue and related margin benefits? Also wanted to understand what should one expect as a sustainable performance going forward? Yes. So for the Elekman, one hundred percent strategic company in Europe, so one, I think, when you have heard from mister Sheikhar David, that is major impact is coming now, from the EV side. So that is the main thing that we are trying to highlight every time that how Elicon is going into this field and how and this is the first result we can see the performance from our European facility. So the margins are good there, but definitely, there is a impact of the two I think around the the sales volume value was around 4 and a half crore, and the profit margin was 2 and a half crore in that. But if we even remove them, the if you compare with the margin from the last year, that's very substantial improvement in that. And, definitely, we see a growing demand in the EU segment in the Europe and lot of new parts that has explained by mister David. So those developments are happening, and we will be able to deliver the good margins, and we will be able to sustain those ones. Great to hear that. And, Vimal, sir, one last question to you. If you can talk a little bit about the working capital reduction and debt reduction targets for FY '22 and '23, that will be useful. Yes. Definitely, are more focused than that. Adhere's cost also we are discussing about our working capital cycle as as on the debt side. So on the debt side, the first step we have taken that we have raised under 10 crores for the equity that you are getting as well as the potential issues. So that has given a major impact on the on the debt side. So when you will see the quarter two, the balance sheet is in the next quarter, then lot of things will be seen that the debt on the debt side as well as on the working capital side, still also, we have worked out that there is an approximately now reduction by ten days further we have done in this quarter. And hopefully, further improvement, we will see in the coming quarter. So we are completely focused on to improve our working capital cycle. Thank you. Thank you, Vimal, sir. To Shekhar, congratulations on the new orders. Can you indicate approximate size of the orders won in this quarter? And secondly, you know, if you can highlight the major orders like Toyota, PKC, by when are you expecting the commencement? And how do you see the ramp up in 2022 and 2023? So so basically trying to understand the major orders which will commence and ramp up in '22 and '23. Thank you so much. Raghu, I think this Raghu Gupta will answer. Yeah. Thanks, Thanks, Rado, for the question. So I'd like to share with you the the name on the new order booking. So the last quarter, we have added 13 parts, four way from the domestic customers and nine way from the export customers with around one twenty one kerala total project over a span of five years with a yearly average of 24 kerala. Oh, yes. If we talk about realization, yes, up till now, we have added two thirty eight parts, and we are aiming to realize next next year, June to around $4.80 crores. This will be around 600 crores by the year 2324, and eventually, I think around 7 and 700 crores at the peak by 2526. And which would be the major customers where the ramp up will happen? Yeah. So major So, Vamanan, this will be this will be basically, at last time, what we discussed about the Toyota and the PSA, this will take up ramp up from the next year. Toyota will take place from June 2022. The ramp up will start, and their ramp SOB will start from October as a vehicle. And PSA will start from October September 22. There, they will start from December 22 as their SUV. So these major two will give the ramp up for next year apart from the previous order bookings. Thank you. Thank you, Shekhar, sir, and thank you, Rajiv, sir. I'll come back in the queue for more questions. Thank you. The next question is from the line of Saurabh Jain from Shashid Finance. Please go ahead. Yes. Hello. Good afternoon, everyone. Hope everyone at Alicon family is safe and healthy. Sir, my first question is, in one of the previous calls, you had mentioned that new product contribution would be approximately $3.50 crores for this fiscal, and next year, it would it may go up to, you know, 500 odd crores. So would like to know what kind of top line we are aiming it at for this fiscal and next fiscal. Before that, if you could, you know, please let us know about the top line recorded during the month of June because April and May were broadly affected by the pandemic led restrictions. So it would be, you know, easier for us to understand the monthly run rate. Thank you, Saurabh. So first is the the addition of the new businesses that I already Rajiv has explained. And when you're talking about the complete the top line for the full year, so what we have estimated approximately 1,100 growth for this year. So we are still confident confident that we will be able to deliver that one. Yeah. And, sir, anything for the next year? Yeah. And anything for the next fiscal? Just rough estimation if you can provide. Maybe we can add up from 300 to 400 crores further into that. So that is our just estimation. So the it is please also note that it is a forward looking statement, so we cannot give so much commitment on this. Sure. And, sir, June top line, if you can you know, if it is possible for you to share? Yeah. For the month of June, as you know, I mean, exactly set by you, April and May was due to the second wave of lockdown. And June, we noticed the industry have taken up 71% of the production figures of March. So with that, we have done quite well in the month of June. Okay. Okay. Sir, my second question is on Elichmann. Since we acquired this probably in 02/2010, we always mentioned Elichmann as a base in your Europe. And for years, the revenue was stagnating around 90 and hundred crore. Now since last couple of quarters, the revenue have started, you know, picking up. Last quarter, we did $44.45 odd crores. And this quarter, we did $34.35 crores. And, yeah, I believe roughly 40% of it is from EV segment. So, sir, this quarter, we were actually positively surprised to see Richmond doing EBITDA margin of 20% and net margin of around 17%. So the previous participant has already asked this question, but if you can, you know, just share a bit about the numbers. How do we see Lichtman going forward? What kind of EBITDA margins are, you know, sustainable for next few years? Thank you. This is Rajiv here. You know, Lichtman is, as I have explained earlier, it plays a leading technical role in for our group. You know, it's like a synergy. On one side, we have the Japanese know how, the quality, the Enkei behind us. And second side, we have a Leishman in Europe, which is a historic company which came to us having all the global customers. So when we we have focused on two very key areas, and, our focus has been to focus on technology agnostic parts. Regardless whether IC, whether anything else, EV, these parts are what we want to make in Eliximan. The second part which we came over was the development of EV parts. And, you know, the customer cycle in Europe of the all these developments has significantly increased. At Tesla doing the bulwark worldwide. So we see that jump has come, and these models which we are servicing just now have shown a robust growth. And our team has done a very good job on the cost side, maintaining all that what they need to maintain. And you are seeing these results, and this will continue. And sometimes the tooling will not be there, but, otherwise, as I hear till yesterday, the volumes are going even higher because the customers are now changing their markets more swiftly than we would have anticipated. But, LH one is on a strong strong growth with this these two focus areas, technology agnostic and EV. Thank you. I hope that answers your question. Yes, sir. Thank you. So roughly $15.20 crores kind of turnover we are seeing in Richmond from the EV segment and which I believe is the primary contributor to the profitability. So this may, you know, go up substantially up going forward? No. These will be nearly you know, as I said, we have maintained them, and a little bit it'll go up. But as the new model, what is happening, the the whole industry in Europe is going through a shift suddenly, with Tesla doing very well, the new norms being announced. In Stuttgart, in some areas, they're questioning the traditional fuel in Germany. So all these are leading to a EV. And here, we are able to offer a very competitive solution from last five years. So this is what will help us. The the fallout of that is in India. The EV part which is coming in India to us is because of Elishman driving it and the know how which we have got there. Otherwise, it could have been a very difficult journey for Alicon alone, to go into EV space. Of course, these are all costing. But, when you show them the parts which we are developing are so critical in nature. This all helps, you know, to build up the customer confidence. And especially the global I mean, within EV, also, are three segments, the low voltage, the mid voltage, and the high voltage. And the high voltage parts are always and the mid voltage parts are always larger by size, maybe lower than the value addition is also better. So that is where our perspective is, and that is how we are moving forward. Got it, sir. That was really helpful. One last bookkeeping question. So the investor presentation says the proceeds from the QIP would also be used for, you know, some debt repayment besides the besides executing the huge order. So what kind of debt repayment are we looking at? And just to end it, if you can, you know, throw some more colors on the orders, which Rajeev, sir, had mentioned in his opening remarks, the 3,000 crore order book and execution. So Yeah. That's it from my side. Yeah. So on the utilization of the QRP proceeds, that will be definitely, we are going to utilize for the debt reduction, and we are estimating approximately 60 to 70 crores debt reduction by the end of the year because some proceeds will be utilized for the CapExes also. So that is the estimation we are having. And about another question, I think Rajiv will answer for the order book. Yeah. On the order booking, yes, we have been quite doing quite well. And at this moment, the two thirty eight pass, the total total booking is roughly around 3,000. It's an explain year on year how much we are going to accumulate in the from this part. Okay, sir. Thank you. That's all from my side. Thank you. The next question is from the line of Deepak Podhar from Safia Capital. Please go ahead. Yeah. Well, thank you very much, sir. Sanjay, I just wanted to understand on the margins, and you did kind of indicated that the impact of 7% on the margins, it's temporary in nature on account of RM costs and other costs. So going forward, do you expect the margins to normalize to 15% that we have been doing or we have done in the last quarter? Yes, sir. Definitely. Because with the last quarter, Concol also been that we discussed in. Now how the shipping happening in telecom on the margin side? Because one example already that we have discussed this now about the element and same things we are seeing that's changing the changeover is happening in the element in the domestic market also. So on that front, we are confident that we will be able to deliver the margins that and we will be able to maintain that. No. So your voice got cut, sir. I I I could not hear the last thing you said. Wow. I'm saying that we will be able to definitely deliver the margins, what we have promised, and you will see that the improvements quarter on quarter in the margin side. Mhmm. So, like like, what we have promised in the sense, like, 15% is what the benchmark we are looking at? Yes. That's the benchmark we are having. Mhmm. Yeah. Okay. Fair enough. And and going forward into next year, now now you did say about a higher share of, like, in 3,000 crores order pipeline, there's a good share of higher margin business, and the new new business also contribution will increase, which typically has a higher margin profile. So going forward into FY 2324, you expect your margin profile overall as a company to improve significantly or or some sense on that? Yes. That's why I think that the improvements will be there, and maybe first is that quarter on quarter, we will see and then year on year also. Because whatever the new orders are coming on coming, those are first is that the IC side is Mhmm. At this point and maybe when how when we are seeing that the technology change and moving to EV segment also. So EV is definitely going to give us good margins Mhmm. Plus technology agnostic cost. Mhmm. Under okay. Yeah. I think that's it from my side. Thank you very much. Thank you. Thank you. The next question is from the line of Aditya Makaria from HDFC. Please go ahead. Yes, sir. Just wanted to check. You said that EVs is how much of our overall sales right now? Is it 208% at this moment. India. In in India? It is currently 8%. Oh, 8%. Okay. And and where do you but the overseas arm is is higher. Right? So at blended level, it would be how much? Yeah. If I plus that, it would it's around 12% currently. Okay. And in India, I believe you're supplying EV components mainly for the electric two wheelers. Would that be correct? No. We have told in India, we are supplying to Ghana in commercial segment. I'm happy to share near about seven, eight different variety of parts we have developed for Ghana, which will help us to create a good fit with other OEM in that state. Then was a two in passenger vehicle with Mahindra and Mahindra, the battery housing, which we have developed from them. Then there's Acer, which you have mentioned, and also Torch Motorcycle, this order which we have gotten last last year. Okay. So this 8% includes exports also means you're exporting out of India as well. So Dana, when you say, it's basically what you're exporting to them. Yeah. Dana is a mix of domestic and export both. Right. Okay. Second question, sir, what is exports out of India currently for us? Export is 28%. Okay. So for I I believe steady state or last year, we were around 18 or 20%, if I'm right. Yeah. If you're talking about just like four, it's around 18%. If I club it with Elixman, the European sub subsidiary, then it comes to 28, sir. There's another deemed export of 4% which we are not. There's another deemed export of 4%, which we are not considering here because these are routed through our OEM. Okay. So how much would exports for you go up? Because I believe you're winning a lot of new orders with the foreign clients. Right? And especially with the capacity expansion, I if I if I'm right, you want to focus more on exports. Yes. That's correct. But yeah. Right. Could this could this go up to half of your sales at the console level? Yeah. We we have a defined a clear target to achieve near about 38% of my export in next two, three years. We are aiming to add lot of global customers in both with your notice because I entered to Volkswagen, which will give me a platform to enter now to Kenya, Volvo, and many others. So we are aiming we have noticed because because the market with the pandemic, we noticed there's a lot of fluctuation in the domestic market. And, also, they noticed that that that much fluctuation was not in export market. And that is the reason, strategically, we have no plan to increase our presence in export so that this pandemic won't affect us. Okay. Great. And last question, sir, what is machining for us right now, and where do you see this going maybe in the next two, three years? From the machining side, approximately 40% components we are doing without machining and definitely because whatever the new business are coming up, that is hundred percent machining. So that's the the pie will shrink in the coming years, and maybe it will go down to around 20%. Not not more than that. One one thing you have to take care is the whole business of the automotive OEMs, like Honda two wheeler four wheeler two wheeler typically, is to machine in house. The change the shift is done by Bajaj, and now by TVS, we are seeing. Bajaj is the leader in this shift, but these other companies are still doing in house. So as they will ship, because they have made huge investments, but we have taken over the Jaj machine. So it's not that so this is something that our trend we have set set, And we have also offered to Eero and HMSI that we can take over their machine. Got you. So machining, you said, is 35 percent of your sales mix right now. Did I get the number right? No. No. No. What I think that approximately machine part at this moment is approximately 60% of our total sales. So machine is 60% of total sales. That I will for the same incoming year. Like, think that they explained he well, where wherever we are supplying the unmachined part, those also we are converting to machine. Got it. So which is why you you believe your margin will now go up to 15%. Yes. That that that is the main reason then that we are saying that how the margin will improve in the coming year. But these OEMs will not suddenly give you, you know, that you have to also yes. New customers, definitely, we are pitching like that and new businesses. But the the old business, suddenly, you know, they have also blue collar and a very strong union. So you you have to treat this very carefully. Of course. Got it. Got it. Great, sir. Thanks, and wish you all the best. Thank you. Thank you. Our next question is from the line of Shiraq Shah from Eterwise. Please go ahead. Thanks for the opportunity. Sir, I have a question on this new order booked of 3,000 crores. So one, is it largely export oriented? What will be the mix between domestic and export over there? This is 60% is domestic and 40 is export. 60% is domestic. And I preview, this represents new business and not replacement of existing business. Right? So suppose if a if a model is getting upgraded, say, for example, it will not get counted in this, or it also get counted in this? No. No. It's totally a new business, a new platform. Typically, these models get, you know, the the place in India. We have a follow these OEMs have a sourcing policy, and we have we we get a preference from them. So we have not lost any business, to answer your question, back, as a, you know, new partner or a to anybody else. So this continues. This is a journey, you know, because there are limited players to give, and we are the largest independent player within the domestic market. I was not listening to that, sir. What I was trying to understand is because if I look at your revenue expiration for the year of 1,100 of crores and $3.50 crore contribution from new product, So I was referring to that data. So when you say new order of book of 3,000, of that, this $3.50 crore will flow. Right? So of the balance, $7.50 crore is something like an old business which keeps on moving as per the expectation. Or because OEMs keep on replacing their platform. Correct. This is what has continued is upon 04/01/2221. Okay. And can I presume even in the export order book that you have, raw materials would be a pass through arrangement? Right? In domestic, you have that arrangement. As a policy, our group does not deal with any OEM worldwide or anybody where it is not a part. As a policy, we don't take those orders. This is very helpful. And lastly, sir, of this this 40% export order book, is it possible to indicate how much would be easy in that, broadly? Yeah. Give us a minute. We'll come back to you. We we'll come back to you. Give us a minute, and we can go to the next question in the meanwhile. Yeah. And so I'm done. This is largely what I wanted to understand. Yeah. That will get to you. Thank you. Next question is from the line of Rohit Ovi from Progressive shares. Please go ahead. Hi, sir. Two questions, which are related to Elishman. Now when we talk about Elishman, are we talking about the Austrian operations or the Slovakian operations? See, we for us, it's the one entity. And Okay. Basically, the Austrian operation couple of years back, the hardcore operations, we put it in in the Slovakian unit because that was what was draining the company. And we took that decision. Our head office is there. Our marketing office is there. Our technical team sits there and moves. Because from Vienna, it is only one hour forty minutes. So, you know, it's truly EU. It's EU nation now. So it doesn't matter whether Austria or Slovakia. It's a EU entity combined. So the production happens in Slovakia right now? Yes. All operations, the hardcore manufacturing happens in Slovakia. Okay. And we are machining partners in Europe. Okay. So what would be the capacity which is in Slovakia, and what would be the peak revenues in terms of So the peak capacity is because in the Indian rupees, we can convert we can achieve approximately €18,000,000 sales from there with the existing capacities. So that we can convert to maybe approximately Eighteen nine knots. Approximately, under under 50 odd crores a year. Okay. And and and if I'm not wrong, I heard Andrea saying that the capacity utilization is currently at around 85%. So will you all be looking at any expansion plans over there in Slovakia, or is it that this is the peak of €18,000,000? You see, we always believe in with our MK, Japanese partner right behind us, we believe in sweating and creating through this every year some capacities through the existing we have do improvements in processes and things like that. Mostly, we would like that to shift whatever business we are developing into India. But we are open. If there is a good opportunity, why not? We are open to putting in since the time we have taken over, we have not had given any further debt. Whatever we there is that that remains in the company, we have not pumped in any equity. We made a restructuring plan, and that has worked for us. So we have stuck to our core plan that it is our technical center primarily and adds strategic manufacturing of strategic components. So we remain want to remain though the area is pretty large, which is on rent there, and we can add capacities easily. But these properties are not burning cash, is it? These are not burning cash. Certainly not. Okay. Second question is related to the Indian operations. In your opening remarks, you mentioned that there are new products and there is growth CapEx and then there is maintenance. So can you give a split between the numbers as to what exactly is growth CapEx and maintenance CapEx for the next two years if you can share? Okay. So, ultimately, for the two years, we we include the FY '22 and then the '23 approximately. We are estimating around the hundred 50 crores for the total CapEx. Out of this, we can estimate approximately around the 35 to 40 crores will be will go for our maintenance CapEx. Okay. Okay, sir. So in the presentation, you also mentioned that apart from EVs, there are certain more emerging opportunities and growth areas that you are talking about. So if you can just take us through that that apart from EVs, which are the other domains that you're looking at? Yeah. Apart from EV, we are aiming to apart from EV, we are aiming to technology agnostic part. And this certainly will give us a cushion on volume because for technology agnostic, we will remain common. We we are IC, we are EV, or we are hybrid. The numbers won't won't go down. And we get these are critical high critical parts in terms of technical requirement, and just help us to get more VA from our customers. And the previous question also. And I would like to answer the previous question which was left on you were interested to understand how much was the EV, how much was domestic and export. Out of total auto width, 12% was from the total EV. And if we talk about a mix, 50% was from the domestic and 50% from the export. Okay, sir. Thank you for answering my question. Thank you. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for their closing comments. Thank you, and over to you. Thank you. I hope we have been able to answer all your questions at this factory. Should you need any further clarification or would like to know more about the company, please feel free to contact our team or TDR India. Thank you once again for taking the time to join us on this call, and we look forward to interesting next quarter. Thank you very much. Thank you very much. Ladies and gentlemen, on behalf of Alcon Castrol Oil Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.