Q1 20/21

Jul 31, 2020

Thank you, Rajiv. Good day, everyone, and thank you for joining us on Alicon Capital Oil Limited's Q1 FY 'twenty one Earnings Call. We have with us on the call today Mr. Rajiv Sikhan, Group CEO Mr. Shekhar Dravid, Group COO and Mr. Vimal Gupta, Group CFO of the Telecom Group. Mr. Vimal Gupta will start and cover the financial performance, following which Mr. Shekhar Dravid will walk us through the operating highlights of the quarter. Mr. Sikhan will then cover business developments, following which 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 documents shared with all the speakers. I would now like to hand the floor to Mr. Vimal Gupta for his opening remarks. Over to you, sir. Thank you, Mayor. Good afternoon, everyone. On behalf of the entire management team of Elicon Cast Alloy, I would like to extend a warm welcome to all of you on the earnings conference call for the first quarter of financial year twenty one. I hope that you and your communities are safe and well. The quarter gone by was extremely challenging with an unprecedented level of disruption due to the nationwide lockdown from March 24. We began the quarter with the complete shutdown of all of our manufacturing units. This was accompanied by challenges in logistics, constricted movement of material and manpower as well as high uncertainty of demand from the OEM customers. This has negatively impacted business operations as anticipated, leading to compression in volumes and revenues during the quarter. As the first set of negotiations to the lockdown were announced at the May, we restarted our manufacturing units at Benola in Haryana and at Shikrapur in Pune on May 11, losing roughly forty one out of ninety one days during this quarter. Since our Sichuan plant was located in a containment zone, we were able to resume production at this facility only around the June 8, thereby, in loss lasting sixty nine days out of ninety one days during this quarter. So on account of this effectively in April and for a large part of May, we recorded negligible volumes and sales. Soon after, as our plants restarted production, we have been simply adhering to the regulatory guidelines and are continuing operations with only 33% of the manpower as permitted. Since we are implementing distancing norms at these facilities, the productivity level during the quarter was at 60% of the pre COVID level. Against this backdrop, we reported consolidated revenue of INR53.66 crores in Q1 of FY 'twenty one. For the quarter, exports, including overseas revenues, contributed to 40% of the total revenue, while domestic contribution was at 60%. Across verticals, the auto division contributed to 86% of the total revenues in Q1 of FY twenty twenty one and non auto division was at 14%. There has also been a concerted focus on cost management. We have instituted cost optimization initiatives and efforts towards improving process efficiencies, which resulted in an improvement in gross margins at 51.4% in Q1 FY 'twenty one compared to 48.1% in Q1 of FY 'twenty. This has also slightly improved in 56 bps from the gross margin reported in Q4 and FY 'twenty, just a quarter ago. However, due to the lower volume, lower revenue base, operating On the whole, our business fundamentals remains intact, and we are actively engaged with customers in order to be aligned to their requirements. The near term outlook is uncertain, but we are confident that our offerings are highly relevant to BS VI and electric mobility requirements. On that note, I would like to hand it over to Mr. Sheikhar Dhawid, who will talk about operating highlights for the quarter. Thank you, Rimal. Greetings to our investors. I trust all you are well and staying safe. Across the globe, economy and enterprises alike are facing disruption and volatility on account of the COVID pandemic and results and actions. In India, even before COVID-nineteen hit, the domestic auto industry, as you all are aware, was facing a slowdown as a result of weakened customer sentiment, sluggish demand, liquidity issues in the market and onetime transition impact to BS VI norms. This was then further magnified due to the adverse impact of COVID-nineteen on manufacturing operations. Supply chain and transport. This is this for the first time ever in April 2020, there were zero Atto sales registered in an entire month in India. Although manufacturing operations and business activities for most Atto companies partially resumed in May and June, the demand and sales already picked up from mid June onwards. These unprecedented circumstances in quarter one of financial year twenty twenty one severely impacted our business performance and those of our customers too. As Vimalji discussed, we lost several operational days across all our plants. And even when production was restarted, it was at a reduced scale. In addition to this, supply chain issues also delayed performance in quarter one financial year twenty twenty one. In such type of extreme ambiguity, as a company, we deployed a set of focused agendas to be able to effectively navigate through some of these operating constraints. Let me share a brief synopsis of what we have done in the course of this quarter. First and foremost, employee safety and wellness continues to be our utmost priority. And accordingly, we have deployed stringent safety norms and hygiene protocols across all our plants and offices. Currently, our units at Vinola, Shikrabur and Chinchot in Pune are operating roughly at 50% utilization level, and we are gradually ramping up production across these plants. Secondly, from a supply chain standpoint, we have undertaken quite a few strategic initiatives to restore and maintain movement of goods through dealership networks and vendors in an otherwise tough environment. In July, the supply chain has marked a slight improvement, and we are currently at about 60% to 65% of the normal level. Our inventory levels also continues to remain stable. On the international business front, we saw slight revival in the demand from May onwards as soon as the international market started reopening. So we supplied components and parts from our Elickman facility in Europe to many global clients during this period. Further, as the ports reopened in India, we also reported resumption of export sales from the month of June onwards. Across domestic and international markets, our client engagement remains solid, and our customers are committed to continue with development programs once the broader and macro situation stabilizes. During the quarter, we have continued to engage with all our customers through frequent virtual interactions and have, therefore, been able to maintain continuity in delivery to the existing customer and make progress against new leads even in this challenging environment. Overall, we have made ourselves agile as an organization to efficiently adapt to any change in the operating environment and ordering patterns in these uncertain times. I'm happy to share that in Ator, we have had two prestigious orders in this quarter, mainly from Toyota globally and other one is from PSA globally. In Toyota, I would like to mention one thing. Since the inception of Toyota, this is the first time ever Toyota has decided to go for the outsourcing of a cylinder head like a business. And Alicon has got this opportunity in India to grab this opportunity. Also during this period of last quarter and pandemic situation, we have constantly worked with our customers, and I'm further glad to inform all that we could able to increase our share of business with the customers as compared to our share of business during BS IV transition. This will help us in coming quarters as well as for the years to come as the increase of business in the ATO sector due to increase of SOV. On the e mobility and non auto business front, we are seeing an uptick coming in from international markets, and we will continue to monitor these developments closely through the course of quarter two FY 'twenty one. Here, I would like to mention that Helicon has added three new logos in e mobility like Danfoss, Dana Group Ashwood and Flexonics, which is a group company of Honeywell Garrett, previously Honeywell. So these are the three new logos that have been added along with the existing customers like Eaton and Red Hat, who have got their e mobility wing. From there also, we have backed the orders for e mobility. In case of non atom, we have already shared that further few components we added from ABB. And with existing customers like Siemens and GE Energy, we could able to back further orders into our kitty. Operationally as well, we optimized the cost across our business model and brought in higher efficiencies that enabled us to report improvement in the gross margin profile during the quarter. Looking ahead, we are hopeful that the demand scenario across the country will stabilize in the months ahead. In the month of July itself, we have seen a good amount of uptick in demand and consumption in the domestic market With improved response emanating from rural and semi urban regions, there is a positive sign that this momentum will also strengthen in the coming months, and we are hopeful of a solid revival in sales on quarter to quarter basis in this quarter's ahead. In addition, a gradual recovery in economy led by normal monsoons in India, a good roughy season and correct crops soaring should further add growth in domestic market going forward. As far as international business is concerned, we are now seeing some initial levels of activity returning, especially across the international divisions with U. S. And Europe economics, making efforts to reopen and restart the heightened precautions in place. Our discussions with several domestic and global customers are at advanced stages, and we believe that once the macro situation normalizes, we should be able to deliver healthy growth from the international divisions in the quarter and the years ahead. I would now request our Group CEO, Mr. Raju Sikhin, to share with you in perspective on the way forward. Thank you, Sr. David. I welcome all our investors. Thank you for joining this call. I hope you and your family members are well and safe. My colleagues have shared with you the details of our performance and covered few pointers on the steps we have taken to counter the impact of COVID-nineteen. I would just like to add here that we are very confident of our growth potential and opportunities across auto and non auto and e mobility space in the medium term. In the near term, against the challenging context, our business fundamentals remain intact, and we are engaging with the customer to ensure we revise economic activity as fast as possible. We have undertaken several measures to make our manufacturing and value chain more resilient in these times, and our teams have done a fantastic job in quickly adapting to the next normal. We have also directed improved focus towards cost effectiveness to boost our financial strength. However, our financial position and cash flows remain robust. We feel that are likely to engage as a result of this pandemic that would be of immense benefit are we foresee a shift towards personal mobility. Even as interactions have shifted to virtual mode, we expect the movement of individual rooms, there will be a clear shift towards personal mobility. Cost cutting and focus on higher efficiency will be big agenda for global OEMs. They will need to protect margins due to increase in costs everywhere elsewhere throughout their operations and in order to enhance value proposition in the post COVID world, which is likely to withstand soundtrading by customers. Lastly, a focus on light weighting of the components, which will enable reduction in input costs as well as fuel efficiency is a trend that we expect to accelerate. Flycasting as a process will stand out due to inherent sense and becoming increasingly viable and relevant solutions, not just to automotive, but across the multiple sectors. I would like to reiterate that we are future ready as our organization and as the domestic and international operating environment gradually improves, we are positive that our product segments will record a strong recovery in months ahead. We would be happy to take your questions now. Thank you. you very much. We will now begin the question and answer session. You. The first question is from the line of Saurabh Jain from Sushil Finance. Please go ahead. Saurabh Jain from Sushil Finance, you may go ahead with the question. Hello? Yeah. Yeah. Am I audible now? Yes. Yes. Yeah. Good afternoon, Hope all of you are doing well and safe. I have a couple of questions, sir. First is, things here in the domestic market seems to be improving somewhat improving looking at the latest numbers, but would like to know how is the scenario in the international market? Is the momentum resuming? Which are the top four, five countries to which we export? Basically, yes, international market started opening in the month of May itself. But looking at the economies taking in U. S, as you know, still the COVID cases are going up, but they are going with the stringent norms and productions are coming to the normal one now. We are looking for that and also the schedules which have become more stable. I will not say that there is a hike, but there are stable schedules which have gone down as far as international market is concerned. In domestic market, the volumes what we are looking at right now, are really increasing, and we are keeping our watch on that going forward. Sir, if you can mention in top few countries which we where we export? Are exporting to U. S, then in Brazil, then we are exporting it to Austria, we are exporting it to Germany. Okay. Okay. So that's that's okay. And my second question is about the receivables. Of course, you have mentioned in the previous calls that with the rising share of exports, our working capital requirements will keep on rising because of a higher number of debtors in the exports order. So how do we plan to tackle that situation? And do you see any risk to receivables in that case? Yes, Saurabh. We are mainly focused on that, how to because with the payment terms with the overseas customers, it is really a challenge for us also. But we are in negotiations with the customers when we are making the settlements, how we can record the money early. So hopefully, we will be able to maybe, I think, in the coming time, you will see the improvement on that side also. Sir, what would be the peak level of debt that we can expect over the next two to three years considering the rising share of exports, which will stretch our working capital requirement as well? And although for the time being, we have kept the CapEx plan on back burner, sir. So I assume that over the next one or two years, we are not looking at expanding. So considering these two things, what would be the peak test level that we can expect? You're talking about the peak that's that's why you're talking about? Yeah. Yeah. So firstly, Saurabh, I think we should divide into the two parties. One is the working capital side and other is the CapEx side. So when we focus our working capital side that I explained to you, we are more focused to bring it down because maybe that when we are going to increase the exports, so that will be a challenge for us, as I explained earlier also. But now we are in negotiation with the customers as well as some other solutions we are trying to find out with the customers, see how to reduce this credit period. So hopefully, my idea is that maybe as a number of days, you will find in the coming period that as a number of days going down instead of increasing, in spite of when you will see that there is an increase in the share of exports. That is one part. So that I think I've answered your question for the tech side of working capital. And second is the CapEx. So CapEx, yes, Mr. David has explained to you that, okay, we are having the new projects, so CapEx requirement will be there. And this year is challenging that we will not be able to generate cash flows for funding the CapEx side. So that maybe some little money. Now we are in discussions, see how to fund that part. So maybe little increase you can find on the long term debt for the short period to overcome this critical situation of this year. Sir, what would be that amount, CapEx amount that you have budgeted for next one, one point five year? So this year, we are estimating approximately 40 to 45 crores. Okay. Yeah. So that has not changed. This is as you had mentioned in the last one follow-up. Regular business. These are for the new projects. So new projects are on time. So then we need that. So that doesn't include the maintenance CapEx? Yes. Everything. Maintenance CapEx is including and the orders we have mister has explained about Toyota, PSA. So those are the very big orders. So for that, we need to build up the capacity for those particular projects. Okay. Fine, sir. Can you just quantify the order size of Toyota Global approximately? This is roughly around 80 crores per annum. Okay. Thanks, sir. Thank you. My answer my my questions have been answered. I'll get back in the queue if I have more. Thank you, sir. Thank you. The next question is from the line of Saurabh Shroff from QRC Investments. Please go ahead. Hi, good afternoon, everyone. So just a couple of questions. First, on the cost front, what measures have we taken, and what is what is the cost level that you will be comfortable at or this current level of expense? Where are we? I'm just trying to get a sense for when the business breaks even and what measures that we are taking. Mister Sof, on the cost side, you know that it is a big challenge because when we go to on the cost, so either one is variable and on the fixed cost. So major challenge comes for the fixed cost side. So we are taking many measures to control, especially big challenge in the fixed cost always like in the foundries, manpower and energy. So many measures to reduce the manpower cost, especially by improving the efficiencies, the outputs that we are more focused how to increase that. So that is the main criteria to reduce the cost of the manpower. As well as that, if we improve all these things, output from each machine and overall, so then we can save manpower as well as on the energy side. And many other things, commercial side negotiations are with like some captive powers or some power trading. Other many areas we are finding out the solutions to reduce our cost. So and on the operational side, when we come to the variable cost. So when we come to the variable cost side, so we then we have to reimagine all of our thinking. So like major cost when we talk about is the raw material, aluminum. So what are the different options we have in the chemistry or some other solutions? So how even you know that even we grew by 1%, it has a major impact. So those things we are doing on. Then process cost, the process efficiencies. So in every area, we are focused to improve. And because now coming to the size, what we are talking about that. So first is when this the top line goes down. So that becomes a challenge and to maintain the call cost as a percentage to the sales. So our major focus is how to maintain our cost as a percentage to sales for this year particularly. So even even after having a reduction in the top line. So this is the way we are working. So, sir, if I may prove a little bit more. So this quarter, you have an employee cost of about INR 30 crores, which is down from some $37.38 crores previous year and previous quarter. This is this a base that we should work with, or is there room for this to go down further? Similarly, on other expenses side, I guess a lot of the variables are down. But what I want to understand is that what is your per quarter, let us say, minimum fixed cost, or what is your target to reduce fixed costs so that the business bounces back faster when as and when the recovery comes from the So on the fixed cost, first is that when we are talking about the manpower. So first of all, like when we go because you are talking about INR20 crore for the consolidated basis. When you say because there was no lockdown in our European facilities, so that cost will remain for the Europe. And for the India, then our fixed cost, this for the employees around INR22.5 crore. So earlier, we used to be approximately 28 crores, 20 9 crores for this on a stand alone basis. So then when we go for the manpower cost, there are two challenges. One is that you know that in India, always minimum wages increase every year from the government side. And second is some increments or other things we have to take care. Maybe it is challenging in the current year, it's a challenging year. So maybe we will not go for this increment. But going forward, we have to take care of all these things. But our on the when we improve on the operations and the productivity improvements are there, so then we can see the effect on this. And we are targeting at least to not to cross whatever manpower cost we are having in the previous quarters in spite of increase in the volumes. Like when we take March when we had a sale of around crores we had a cost of INR 28 crores of the manpower. So maybe when we cross this top line, but of course, we are targeting to remain up to INR 28 crores or below that. That is our target we are keeping, Right? Okay. Okay. Fine. And and on the second, how much visibility do we have in terms of sorry. Two questions, actually. Two parts to this question. One is how much near term visibility do you have? Like, you mentioned this Toyota order, if you could quantify the PSA order and the regular business. Because I think in the presentation, you've mentioned the Jaguar and the other orders, which will sort of kick in in '23. But between FY 2122, how much visibility do you have on the current order book and where these stand? Yes. Specifically on PSA, the start of a production will be in 'twenty one, 'twenty two last quarter. And for Toyota, we are the start of the production will be second quarter of 'twenty two. So these are the businesses what we are talking of, which will be ramped up in 'twenty two, 'twenty three, where the value, as I already said for PSA, it will be around INR120 crores per annum and for Toyota, it is around INR80 crores per annum with the peak volumes what has been shared by the customer with us. So definitely, we are looking for this gradual growth next year for these businesses. Jaguar has already been acquired and the sample submission and everything has been completed. And the ramp up will start from the end of twenty twenty one. So that is the fourth quarter. So it will give us the ramp up business for the next year as far as Jaguar is concerned, which is already initiated in twenty eighteen-twenty nineteen. Have I answered your question? For FY 'twenty one, I guess, let's say if we were to assume an eighty percent, '70 '5 percent utilization, let's say, for the entire industry, I'm just trying to understand that do we have any additional kicker that we could outperform the domestic auto industry Like, if the industry was down 25, could we be down maybe 15 or 18? Do we have some visibility either from some orders which are starting or some export opportunity or whatever may be the case? And I think linked to that is also you mentioned that in BS VI, we have a bigger role to play. So I just wanted to understand how much does the content per car increase for us in the new BS VI environment and regime. Yeah. This is Rajiv here. I think there is a we are seeing a very good market in the two wheeler and in the small, you know, car and and the small SUV where we have also shared. There are two factors to this. I think right now, the supply side factors are working, let's say, till September. And the demand side incentives should hopefully kick in from October. Otherwise, you may actually see a downturn after the festival season. So because all of that current purchase by the OEMs is also one is going towards their direct sales and slowly building for the festival season, which they normally build much earlier. So these are two factors on one side. The other side is the story of the COVID itself. How does it play? How does the lockdown play? What happens on the other side? And we have made internally our projections and we see that we are in that line with our projections for the year for at least this quarter going forward. And what we have projected in May and for this quarter, we are in line. And I think lot is going to evolve. So this is going to be a very challenging and evolving year. And it is best to utilize your nobody projected a demand to come back so quickly. So there is a shortage of assets in all companies. And every effort is being made to get them back. And also, you're right, we are taking all the opportunity which we can grab from the other sources who are not able to supply. So let's ship it. So that's what we are doing at this moment. Okay. And on the VSP part, how much is the increase per vehicle for us, the content per vehicle, because of this? It will be around, at this moment, 18% to 20% is per vehicle increase. Because if you see this increase is some of the components which were not there in BS IV, we are adding to our QT for all this. So this will have per vehicle increase also with the customer as well as the share of business. Existing share of business has been increased with a very strategic and specific customers. Thank you. The next question is from the line of Bharat Gyanani from Sharecon. Please go ahead. Yes, sir. Thank you for the opportunity. And just continuing on the earlier question, in the quarter four call, you highlighted that in FY '20 '20 '1, we might see a decline of about 20 in the overall revenues. So what is the feedback that you're getting on ground from the customers both in the domestic and the export market? Will you are you still maintaining that projection? Or do you feel that the revenue potential drop could be higher than what you had guided for in the earlier call? That would be my first question. So this if you see the performance from June onwards, as the ramp up has started, we are seeing a very bullish sales in the rural and small towns. It's not only agriculture, it's the whole industry, rural industry, which has seems to have picked up and is a place for everybody in this business. On the other side, the COVID cases are going up and you're seeing the whole story on that side. As we are seeing now in this quarter going forward, we still stick to that, our original what we have answered in the last meeting. And hopefully, we can try to maintain that. Things are looking positive as of today. But as I said, this quarter is also a lot of supply side incentives are working as we see it. And hopefully, demand side incentives should come in and from October onwards, that is something because this is a festival season, of course. And hopefully, that can also feed through to get us some additional sales. Okay. Fair enough. And thanks for the answer, sir. And one more thing is that what is the order book for I mean, the export orders that you pointed out for INR800 crore, that order book that we had, that would be that would start execution from FY 'twenty three, is it? Or like what is the exact time line when that orders will start getting reflected in our revenues? INR800 crores? Which one you are referring to? Yes. The INR800 crores order book that we pointed out earlier that we had secured in the flexible order book that we had from the major automotive. Yes. This will come into production from FY 'twenty two and ramp up will be in FY 'twenty three. So it is already up as per the target, and it is online. There was some disruption due to this pandemic, but we are catching up with that, and there will be no change in the final time lines for that. And if I may ask, this INR800 crores is executable over what time frame, the order book? Five years. Five years. Okay. Fair enough. Thanks, I'll join back in the queue. Thank you. Thank you. The next question is from the line of Dheeraj Shah from PhillipCapital. Please go ahead. Yeah. Good afternoon, sir. Sir, my question is, again, maybe repetitive with nature. So this Toyota order, this is for how much year, sir? How many year? This is for, again, five years, and that is amounting to hundred and 20 crores per year. Okay. And, sir, you just mentioned that in BS VI, your content per vehicle will go up by 18 to 20%. Don't you think this will, you know, drive the overall 'twenty one itself? No. It will come in FY 'twenty two because these are all new developed plants. And basically, these are the suspension parts where we will not increase in the domestic business initially. Now with year six, we have started entering into that. So this increase will come in year 'twenty two. Okay. So does this have any positive impact on margin or margin will be seen, sir? Can you come again? I just missed your word. Sir, this BS VI content, which can do supply, this are these, you know, products are high margin in nature or margins would remain same? It will be slightly, but it will be average out to the other business in auto sectors. Okay. Okay. So, sir, in FY twenty two, we have a good visibility of Toyota plus. Right? Yes. Okay. So FY twenty one, there could be a decline. But, again, FY twenty two, we have a good order book for that. Perfect. Let me tell you. Yes. And, sir, lastly, on a non auto business, what is the current scenario, sir? You must understand that, you know, Toyota order which started to explain. This is one time in the history it has been done. Okay. We have never outsourced this cylinder head. Yes. This is the first time a very small foundry in India got this order. And this is because Toyota, we have supplied one part for four years, very high quality. And the Japanese entire technical team has been working with us from August. And when I met them initially in August 6 in Japan, they said the possibility was virtually zero. And then we convinced them over with the samples and visits. More than 80 people from Toyota have visited us. Oh, okay. So this is not an opportunity which happens every time. This is a leapfrogging. You can understand when you add a batch of Toyota. So it's a lot of responsibility also on us and our partners have supported us, MK. So all this culminates into this kind of thing. And if we do well, it doesn't stop us to get more business from Toyota in future for their other localization programs. And PSA is not that also I'd like to explain that PSA, normally, they follow their global source. So they have their global source in India, Two of them. But because earlier of our work with Renault and our exports to Renault, Brazil, these guys have seen because buyers shift. As you know, in automotive industry, people shift from one company to the other. The technology and the proven engineering solution which we have given to PSA has made us breakthrough, plus we had appointed a French office, a French marketing office last year. So these all factors put together has brought us to PSA. So and the other part of the story maybe was missed the EV components for especially these companies like Dana in various branches of their landfills. So there is another huge development of more than 30 parts in the EV, which we have now going ahead. So that is something which David has not developed very deeply, but it's something which is also very exciting with the time as it may come. Good to hear that, sir. And I'm sorry, in your opening statement, you were talking about Honeywell. So I I missed that, sir. What was that? Honeywell also Honeywell has got now taken over by Garrett worldwide. And Garrett has got their e mobility for division separately. On them, we have just now got one component, and we are working on that to expand our business and basket with Garrett. Okay. And what would what would be that size, sir, if if if you know, if you want that order? Basically, this is right now is under development right now in auto. And so previous start is $55.22. Okay. Okay. Okay. Got it. Thank you, sir. All the best. That's it from my side. Thank you. The next question is from the line of Sharan Sudarangani from Longview Finance. Please go ahead. Hi. Am I audible? Yes. Yes. Thanks for taking my question. I just if you could just talk a little bit about your raw material cost. How do you see that? And where do you procure the aluminum from? If you could just comment a little bit on that environment. So the raw material aluminum, maximum part is the domestic. So many suppliers are there. So they import the scrap and produce the ingots and supply to us. So very little amount of import is there. There is a very specific type of alloy that is not available in India. The chemistry is very critical chemistry is there. So maximum is the local buying we are having. And mainly that it is because customers, they control the raw materials. So maximum customers they finalize the supplies and we have to buy from them. Okay. Okay. Thanks. And secondly, in terms of this EV vertical, like what percent of sales do you think in the future it could contribute going down? Basically by '24 Hello? Yes, yes. Basically, 'twenty four, 'twenty five, the share of business of our EV vertical will be around 6% of our total turnout. Okay, okay. Thank you. That's all from my side. Thank you. Thank you. Next question is from the line of Divesh Shah, who is an individual investor. Hello? Hello? Sir, my question is regarding our partner, Enkei Corporation, who is holding roughly 15% stake in our company. Yes. And they are the they are aluminum giants of the world. So, sir, can you explain what is the role of, Enkei Japan to our company? MK, you know that they are the worldwide leader in the aluminum alloy wheels, and they are the first engine for their foundry other foundry products. So they are very good in the technology and the technical support they are giving. So whenever we need so they send their Japanese people to support us for the development side and the owner of that NK, Mr. Jay Shoujuki, he always visits minimum two times a year to Elicon and spends at least two to three days in every visit. And he audits our plant and give many ideas for the improvement, process improvement, cost reduction because you know that Japanese people, they are more focused on the cost side. And Ipsa Suzuki is well known in the Japan for cost controls. So we get a lot of ideas on the cost side, for the technology side. And they also give us the opportunity for Alicon team to visit their plants. So our team, our technical people, our other managers, many of them, they visit their plants in Japan, in Thailand, in Indonesia, many locations we go, U. S. And understand the processes whenever we have issues or some other operations we need from the technology side, so they provide. So we are like we have very good partnership and understanding with the NK. And the other critical element is that the relationship with the Japanese OEMs continuously gets announced with us. And lastly, we get to see the global plants out there, benchmarking what is happening in U. S, what is happening in China, how they're dealing besides Asia and Japan. And our people are continuously provided the knowledge and the wherewithal. So it's an excellent relationship, which we are handling all the while. And it will help us in total order also. But, sir, with due respect to your capacity and just to tell you that I am watching this company, and I have invested in this company from last about minimum fourteen years. And I am closely watching this company, and I am a very long term investor. And my only purpose to invest in your company was because of the technology provided by Japan, NK. But looking at last fourteen years, looking at the potentiality or and the potentiality of your management and Japanese technology and the potentiality of a Indian market and export market, I think somewhere we are missing that we have not performed as per the expectations of the shareholders. Because this is I am hearing from last many years that Japanese are the world best. But still, I think we have yet to exploit the technology of the NK. So I don't know. Just this is my only feeling that last from fourteen years, I am still this company, I thought that by 2020, this company can be a 2,000 crore company, but we are missing this target by big margin. So I I just wanted to convey my concern that as far as our capacity is concerned, your we have no doubt about your management, but something there is some missing link between the potentiality of a Japanese technology, Indian production facility, and the market. We are missing something, sir. This is only my concern. And, sir, my second question to mister Raju Sikand regarding our European manufacturing. Sir, this is a strategic question, sir. Is it economical viable to have a manufacturing facility in Europe? Does it make as profitable sense at the bottom line? Thank you so much for both your questions, and I do understand your concern. You rightly said, you have to see the market as it evolves from a Japanese sense. Japanese are doing in house foundry. Maruti Suzuki has in house foundry, Honda car has in house foundry, except the two wheeler, has a worldwide in house foundry. So they don't do all night things. So as first time we have told you that Toyota has given an order, so it must be a big change. Right? Right. So that is the your question number one. The when you are Mister Raju Raju, eighty eighty per order order for a company like us and with the support, it's too small after four years. Yeah. Your you know, this one order, then multiplication happens in the automotive market. Traditionally, this is the secret foundry in the Indian is something which they do in house. The Germans have outsourced over the years. The French have outsourcing, but the Japanese do in house. And this is a key component for them. So really, in the real world, we can challenge all those components, which they do in house on the cost side and technology wise. And hopefully, we will have some news on the other OEMs because with Toyota, we can now look at knocking the door of Malte Suzuki also. So this is another it helps us there. Coming to the European plant. As far as European plant goes, it is a I we use this as a technology center. We have not found anything from India to the European plant from a cash out. It is completely like a technology center where we develop the parts for all the big OEMs and then create that opportunity for us in India. Our Daimler parts Daimler orders came because of that. So JLR orders have come because they have seen that facility which we have and that type of casting. This would have never happened. So that INR800 crore order, Rabid was some of your colleagues was talking, was something which has happened because of this technology center, which we have. And our pure play is technology center because we want to bring the things to India as soon as they develop. And also the technology is evolving. What comes to Europe today, I'm not at liberty, but one two wheeler major in India has brought offices in Europe. He has gone straight to our plant there, and he has seen what we are doing. And in next two years, they want to come with that kind of a motorcycle with those kind of parts. So we are way ahead of the curve. So this helps us in the second way. I hope this answers your question. Yes, mister Rajiv. Thanks for your answer. But is European plant self sufficient to take care of its own? We are not burning yeah. Because my concern is that it it may happen that sometimes, they it happens to many auto ancillary company in India that they burn money for their external plant outside the India. So I just wanted to warn you that in future, we don't burn our money, hard earned money after the European plant. So that's not make a eco economical sense. So absolutely correct. And, you know, we have not found in anything. So we made the plant run and get the orders for us. And I understand where you are coming from. It happens in some cases. And earlier only, we had made sure that when the plant was running in Austria, we moved from high cost to Slovakia. And we changed our strategy over a period of time to these EV pomperers which David has spoken about, this has purely, purely happened because of Slovakian plant of our office in Vienna and our Slovakian plant, where we have developed parts for Bosch and for Samsung and another bus maker. So it is not that suddenly you go through OEM because he wants to see what is behind you. So that is helping our EV journey in India. And, of course, a lot of these EV components which you are going to be producing here is for global exports. Yes, sir. Mister Raju, one simple suggestion that when NK took investment in our company up to 14%, that time the rule was that you can buy only up to 14%, fifteen %. Otherwise, you have to give an open offer, buyout. So now we that limit is going to 25%. So can we make an this is my simple suggestions. Can we make an effort for NK to increase their stake from 15% to 25% to get a commitment from NK? That can be a win win position for you as a promoter or you as a company and me as a minority shareholder. Absolutely right. You know, right now, they have already invested around two years back, if you if you are aware. Yeah. Right. If you are aware, they've already done that. So we are It is more than two years. I think it is four or five years that they have invested. No. No. No. Two years. Okay. Okay. Okay. For two years, they have done that peak, and Yeah. They have come into the long term intention. So it's step by step, and it it moves to that direction. No. Only my intention is it gives a commitment to the management that Enkei is behind us. So it gives more confidence to the investor as a whole. Yeah. Again, they have invested two years ago, and they are very much part of us. So it's a step by step process. Okay, Raju. Thank you very much and wish you all the best, sir. Thanks, thanks. Thank you. The next question is from the line of Ankit Jain, who is a shareholder. Please go ahead. Am I audible? Yes, yes. Afternoon, gentlemen. I have two, three questions. One is, you have mentioned about those INR800 odd crores order, which is there for the next five years, which is on track. But during Q3 FY twenty twenty con call, it was mentioned that we have our own, you know, new orders. The order for the new projects were to the tune of $1.63 crores for FY '21, and then it was supposed to be INR $2.00 7 crores for next year and INR $2.85 crores for the third year. What I just wanted to know was, instead of pointing out particularly to that INR800 crores, in totality, all these new orders which were won during last year, are they all on track? You mean to say other than 800 crores? Yeah. Whatever the new orders you have won is the product development or the approvals. Whatever the they they are there in the different stages of, you know, development, approval, then they are supplying. Are they are in the you know, are they as going as per the plan so that you would make approximately this is what was given an indication during the Q3 FY twenty twenty Concur. From the new projects, we will make INR163 crores during the current year. The Corona thing has developed subsequently. So are we on track to make at least INR150 crores or something during this current year from the new projects? Basically, first question that we are on track for this project, as I told you, some projects what we got it, the engineering, our engineers have worked during this COVID pandemic, working from home, making those facilities available to them. So from our side, we have taken this opportunity and engineering work of these projects, we have done it. But as the customers for whom we were making this time period, we have utilized for this period, but it has been shifted as far as the customer is concerned. The total span is shifted by three months as the total was down at their end. So basically, we are on track and we will have some of this process as customer is also interested into and we try to cope up with whatever is needed as per the market. If you were to assume that Just to add that there is a lot of things to be done in their testing facilities. So from our side, we ensure the view of our working throughout and our engineers work throughout this lockdown. However, in their case, it is not so easy to assess their testing facilities. So that has put in some cases fifty days, sixty days, some seventy days to that kind of extent delay. But overall, direction is same. Okay. So is it fair to assume that whatever this $1.63 crores we had estimated, there there may be some spillover to next year? Yes. It is a buyer quarter. It's only a quarterly shift. As you know, the lockdown and if there is a if this market continues, then it's only it's also back to the numbers. So it's a good as of now, we can only say maybe maximum fifty, sixty days in next financial year. Correct. But as and date, whatever the estimate for FY 'twenty two and 'twenty three will remain hold as and date? Yes. Sir, my second question is, who are our major customers, major competitors for aluminum castings in India? In India, if you name it, it is first is First is the foundry in house of Maruti Suzuki Honda. You know, they are in house foundries are the ones which are then this is called the group company Okay. Of OEMs. You will have Sunbeam, which was also referred to us, Rockman from Hero. And then you will have companies like Endurance. So these would be and then PVS has their own company in house. So this would be the biggest competition. But if you look at our let's say, for a low pressure, we would have around 100 machines, and our nearest competitor would have maximum of 25, 20 four machines. Okay. Sir, this I was asking about the big companies which are in aluminum casting. But if I have to compare with the casting companies in general, foundries and, you know, the casting company, what is the difference the aluminum casting has with other castings of different metal? All right. Can you just elaborate on your question? Yes, please. You just Sir, what I'm trying to sir, what I'm asking is what is the difference between aluminum casting or casting of other metals, like steel and other things? If you see basic aluminum, the aluminum is the material cost, the raw material cost is between around 60% to 65% as compared to ferrous. So value added in the total of top line, if you see, the value added is to the tune of around 30% to 35%, which is exactly different in the case of ferrous material. That is the biggest difference as far as the industry is concerned. So you mean to say in ferrous that is a steel casting, the cost of the material would be only 30 to 35 whereas in aluminum it is 60 to 65. Yes. Thanks, Also, it is an application where the world is moving. So on this, we have very little to value add because it's a global decision of the OEMs keeping the environmental norm because the weight of aluminum is much lower than for a certain application do require like in tractors, in other industry, it may require iron castings, ferrous casting. But slowly, the world has moved into aluminum. So in India, also, the movement is coming to a very large extent. Sir, as for a nontechnical person, I'm asking, is it possible for this steel or ferrous casting companies to convert into aluminum casting company? No. Basically, the infrastructure requirement for steel and ferrous components is totally different Yes. Enable can convert. You're right. Conversion, then we were within last fifteen years, we have not seen anybody converting into that. We have seen very small incremental growth as the customer is growing, and they want to keep the share of business of their renowned companies, that kind of growth is coming. Sir, we hear in the EV, electric vehicle segment, because of the increase in their weight of the vehicle due to factory, they are shifting to lot of aluminum components. But in the existing vehicle types, is there any initiative or any companies have taken any methods to convert their existing components to aluminum components? Yes, there are not many. Basically the suspension components, which were traditionally in ferrous or forged parts, which has been converted to aluminum, there are the parts. Yes. As you know that whatever the JLR component, what we back it, which we call it a technology agnostic part. These parts are basically not goes into the powertrain, but other parts like the chassis or suspension or the building of a vehicle for other things. So these are the components basically which are traditionally been used in forged or the casting in steel has been converted to aluminum now for the reduction of the weight of the vehicle. Okay. Now for example, in an existing vehicle, what is the composition of aluminum components, sir? At present, if you see the IC vehicle, a normal vehicle, weighs around fourteen thirty two kilograms is the weight of the vehicle. In this, there is if you see today's contribution is around 127 kilograms is the weight of aluminum, all parts together. Okay. So this, with the way you are saying, you know, so many different parts, you getting converted into aluminum, going ahead, maybe we don't know, five years or ten years down the line, this quantity can go up. That is what the your assessment? Yes, absolutely. Okay, sir. Thank you very much and all the best. Thank you very much. We'll have to take that as the last question. I would now like to hand the conference back to the management team for closing comments. Thank you. I hope we have all been able to answer all your questions satisfactorily. Should we need any further clarification 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. Thank you. Thank you.