Ladies and gentlemen, good day, and welcome to CIE Automotive India Limited Q2 and H1 CY 2024 results conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand over the conference over to Mr. Basudeb Banerjee. Thank you, and over to you, sir.
Thanks, Amit. Good evening, good afternoon, ladies and gentlemen, as per your location. Thanks to CIE Auto India management for giving us the opportunity to host the post Q2 CY 2024 result call. We have with us the management represented by Mr. Ander Alvarez, CEO; Mr. K. Jayaprakash, CFO; Mr. Vikas Sinha, Senior VP Strategy; Mr. Oroitz Lafuente, Business Controller; and Mr. Swapnil Soudagar, DGM Strategy. Over to you, Vikas.
Yeah. Thanks, Basudeb. I welcome all of you on this call, as also Ander and Oroitz. Both of them have just experienced the effect of the global IT outage. Their connecting flight was delayed, and they barely made it on time. We sincerely thank them for making this special effort to be on the call. I will present CIE India results for Q2 C 2024 and also for H1 C 2024. Let's start with Q2 C 2024 results for the India operations on page seven. Sales in the India business was INR 14,463 million, which has grown 8% year-on-year versus Q2 C 2023 and is also marginally higher on a sequential basis. This growth is also slightly higher than the weighted average market growth. If you recall, we had said that our growth in the past quarters have been hampered by slow ramp-up of certain orders.
These orders have started ramping back, as seen in the improving growth figures over the last few quarters in the India business. If you look at the quarterly year-on-year growth in our India business, it was 1% in Q3 C 2023, 4% in Q4 C 2023, 6% in Q1 C 2024, and 8% in Q2 C 2024. While sales in India grew by 8%, EBITDA grew by 16%, EBIT by 21%, and EBT by 20%. EBITDA margin in India, without any onetime impact, has crossed 18% for the first time, and it was 18.1% in Q2 C 2024. While we had reported an EBITDA margin of 18.7% in India in Q1 C 2024, that included a one-time government grant at our aluminum business, without which the EBITDA margin was approximately 17.2%. Even on a sequential basis, there is significant improvement in EBITDA margin.
EBIT margin in Q2 C 2024 for the India business was 14.4% versus 12.8% in Q2 C 2023, and EBT margin was 13.8% versus 12.3% in the same quarter last year. The margins are thus a result of improved profitability of the Indian operations. Overall, Indian operations continue their journey to match the global standards of the CIE Group. On page eight, we have the results for the European operations of CIE India for the quarter Q2 C 2024. The slowdown in the European light vehicles market, as well as the slowdown at Metalcastello, something that we have spoken about in the past calls, has significantly impacted the results. Sales were at INR 7,604 million, which are down year-on-year by 11%.
If you compare with the light vehicles market data, which is ex of Russia, if you look at what is happening in Europe, without taking consideration of Russia, it is down by 7%, the market. Just a note here. From now on, we will present the European market data without Russia, because as we know, the commercial contact between Europe and Russia is not there and is not expected to be there for the next many quarters. EBITDA margin for the European operations in Q2 C 2024 was 17% versus 19.2% in Q2 C 2023 and 16% in Q1 C 2024. EBIT in Q1 C 2024 was 13.1% versus 12.6% in Q1 C 2024, and EBT 11.4% versus 11%. We have taken note of the sales drop in the European operations and corrective actions have already started to adjust the operations to the lower sales volume.
On page nine, we see the consolidated CIE India Q2 C 2024 results. Consolidated sales were INR 22 billion, similar to Q2 C 2023. EBITDA INR 3.9 billion at a margin of 17.7%. EBIT INR 3.1 billion at a margin of 13.9%, and EBT INR 2.8 million at a margin of 13%. The first half H1 C 2024 results for our Indian operations are on page 11. Sales increased by 7% versus H1 C 2023 to INR 27 billion. All segments showed growth except tractors, which is down 7% year-on-year. The EBITDA margin was 18.4%, EBIT 14.6%, EBT margin 14%, and PAT margin 10.4%, all of which are much higher than H1 C 2023. In fact, this is the first half-year when India PAT margin has gone beyond the 10% mark. It must be mentioned that the EBITDA includes 0.7% of one-time extra subsidy on our Aluminium business.
The market in India is largely positive going forward. Light vehicles has grown in single digits, albeit from a high base. Two-wheeler demand seems to have recovered in the last couple of quarters, and the half-yearly growth is 20%+. Tractors are also showing signs of recovery. We expect H2 to be better than H1 in India. On page 12, we have the H1 C 2024 results for our European operations. The impact of slowing light vehicle sales and slowdown in Metalcastello's customer segment has contributed to a 9% drop in sales. The EV orders that we were executing have also seen some slowdown from the customer side. The H1 C 2024 sales are INR 16.5 million. EBITDA margin was 16.5% in H1 C 2024, EBIT margin 12.8%, EBT margin 11.2%, and PAT margin 9.9%. While making year-on-year comparisons, please note that H1 C 2023 PAT included profit from discontinued operations of CFG.
On page 13, we have the H1 C 2024 consolidated results of CIE India. Sales were INR 45.4 billion, which is a nominal growth over H1 C 2023. The EBITDA margin was 17.7% versus 17.4% in H1 C 2023, EBIT 13.9% versus 13.7%, EBT 13% versus 12.7%, and PAT 9.9% versus 12.8%. This drop in PAT margin was because of the onetime profit from discontinued operations last year. Overall, the good performance in India has been offset by the declining market in Europe. On page 15, you will see an abridged consolidated balance sheet which shows the healthy state of CIE India. Return ratios have continued to be healthy. Return on net assets has been maintained above 20%, and return on equity is at 14.4% and almost reaching the 15% mark. The cash flows are shown on page 16.
The company generated operating cash flows to the extent of 76% of consolidated EBITDA. Growth CapEx for the first half of the year was INR 1.05 billion, largely focused on projects in India. Cash outflow due to dividends was INR 1,897 million due to the doubling of dividend to INR 5 per share. If you move to page 18, where we have shown other details, there, the other operating revenue in the India operations in Q2 C 2024 is significantly lower than Q2 C 2023. This is because we have started to reuse a large chunk of scrap that is generated, and we are using it in-house. So the other operating income for India in Q2 C 2024 is significantly lower than in Q2 C 2023 because we are reusing the scrap in-house. We are confident that we can utilize opportunities that arise and face challenges that we confront.
All of this we will do with agility. With that, we proceed to Q&A. Thank you.
Thank you very much. We will now begin the question- and- answer. Anyone who wishes to ask a question, let us start and one on the question desk. If you wish to remove yourself from the question pool, you may press star and mute. Participants are requested to use hands-free while asking a question. Ladies and gentlemen, we wait for a moment while the questions are answered. The first question is from the line of [inaudible] .
Hello?
Yeah. Hi.
Yeah. Hi. Is my voice clear?
Yeah. Please go ahead.
Yeah. Hi. My first question was regarding our working capital cycle and cash flow from operations. That seems to have gone down and our receivables seems to have shot up. So what really happened there in H1?
I will take that, Vikas.
Yes.
Sorry, I did not get the name, but the working capital and especially on the receivables is because we did factoring and discounting at 31st December 2023, which we have stopped doing on 30th June. That is why the number has gone up.
Okay. So factoring and discounting has dropped off? Any particular reason for that?
No. Right now we are having enough cash, so right now we are not doing it.
Okay. What kind of margin benefits do you think we can get from this?
So, this was finance cost.
Finance. So finance cost benefit that we can get from this?
That was only done as, i n December, that was about INR 20 million, if I am not wrong. I am not.
Okay. H1 would be a good working cycle guidance that will be similar to this hence going forward?
Yes.
Okay. My second question was, H2 was supposed to be when we will get the growth in this year. Are we on path for that?
Yes, we are on track. That is why I did talk about the improvement in growth trajectory from the last few quarters. If you look at the last three quarters at 4% growth in India, 6% growth in India, and 8% growth in India. In India, very clearly you see that. Now coming back to Europe. Of course, in Europe, H2 is traditionally weaker than H1. That is the seasonality effect. You have August holidays of three weeks, and you will also have one week holiday in December. Sequentially, H2 is always weaker than H1. But we do see weakness in Europe. Very clearly the markets are down both for the off-road market as well as the light vehicles market. The off-road market is down by much larger numbers. But even the light vehicle market is down, and you can see that in our presentation.
In India, definitely what we have said, H2 greater than H1, we still think that is going to happen. In Europe, H2 traditionally is worse off than H1.
Even year-on-year, H2 is not looking good because of the weakness. Is that correct?
At this stage, I do not want to make any definitive, like the forecast keeps changing in Europe. But yes, the markets in Europe are weak at this point of time.
Markets in Europe are weak. Okay. Anything on getting some of our European customers, like the Volkswagen Group and others into our foray in India? Are they just too small or something?
Volkswagen is small in India. We have a very large customer base in India, including European OEMs in India. It is not that we do not have, but European OEMs in India are smaller. Our biggest customers are, of course, Mahindra in India, Bajaj, Maruti. These are the three biggest customers. Tata Motors, the four-wheeler customers. You have Hyundai, Kia, John Deere. So, we have many customers in India. If you go back to our annual report or the investor presentation that we made at the end of the year of C 2024, you will see that there are at least 20 customers in India with very significant revenue base. So we are a very well-diversified company when it comes to customer base in India.
Okay, perfect. Thank you.
Yeah, thanks.
The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead.
Yeah, hi. This is Jinesh Gandhi from Ambit Capital. A couple of questions from my side. One is, when we look at the European business, there has been clearly a slowing down of EV sales. As a company who had been slowly pivoting towards electric vehicles, what are the changes do we need to make in the business given that slowing down of EVs? That's the first question.
What changes in business? Jinesh, can you repeat that?
Given that we were also preparing for electrification in Europe, and now we are seeing EVs, we are seeing slower adoption. Do we need to make any changes in our business now or it remains status clear for us?
No. Of course, Ander will answer more, but yes, because of this whole slowdown on the EV penetration side, there is a lot of uncertainty in the minds of the European customer also. You are clearly seeing the effect on the entire market. It is not just the EV orders that are delayed. The EV orders are delayed because the customers are also a bit in wait and watch mode. But, I'll request Ander to elaborate more on that.
Yes. Vikas you are right. The reality in the European market is that now all this electrification process has been a slowdown, mainly because of the elimination of certain subsidies that certain countries were giving to the electric vehicles. This is generating certain uncertainty and volatility in the market. What we think is that all this electrification process will continue. The growth will continue in the future, but at a lower pace. Okay? We see a delay in this process, and we can expect two, three years. I mean, just rough figures, because nobody knows what will happen, but we expect two, three years of delay in all this electrification process. In the meanwhile, we continue working as usual. The internal combustion engine components will continue being supplied to the market. That is a good thing for us.
We continue working and let's say we are getting new orders from the customers in the electrification side. The reality is that all this delay will give us enough time to prepare ourselves in this transition. The transition will be softer than expected, and I think that is positive for the European companies.
Got it. The second question pertains to the M&A part of it. One is, obviously India, we have been looking for acquisitions to strengthen our presence in plastics and maybe with some other customers as well. In Europe, do we also now look at acquisitions, given that some of our competitors would be seeing some stress because of higher interest rates and leverage on balance sheet? Are we open to acquisitions in Europe as well?
Not really. Let's say that it's not our preferred route right now to invest in Europe in different countries, let's say, stressed assets. It's not the strategy. We prefer to focus our efforts on the India market, where we think there will be development in the future. Perhaps we can find any company that can be consolidated with our capacities and could make sense. But in this moment, let's say that the focus continues to be in India.
Got it. And lastly, in terms of CapEx, our guidance will remain same, like 6% of revenues, or we are increasing any of these investments in India?
Let's say that the average in the first half has been around 4% of our total turnover, so slightly less than the 5% that we have as standard. But we think that in the second half of the year, we will recuperate because there are a lot of programs and investments ongoing, and by the end of the year we will be around 5%, 5.5% of the total turnover. And main amount of this CapEx will be focused on India, of course.
Oh, got it. Great. Thanks, and all the best.
Yeah. Thanks, Jinesh. Thank you very much.
Thank you, sir. Just a reminder for the participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Nitish from ChrysCapital. Please go ahead.
Hello. Hi. My question is for Ander. I just wanted to ask, what is the plan on Roof Systems? Why has it been kept outside CIE India? We have heard three reasons in the last three years. In 2022 it used to be due to the Mahindra name. In 2023, it was because of Chinese ownership. In 2024, it was Tier 2 versus Tier 1. These kind of change in reasons is somewhat, I am not able to follow, and frankly, not expected from a group like CIE. It seems the parent is trying to keep the Roof Systems business out of the listed CIE entity, CIE India. Going forward, will the parent also enter plastics, castings, forgings on its own in India?
Can I take that, Ander, before Ander comment?
Yes. Vikas you will explain much better than me. Yeah.
You talked about different reasons. They are not different reasons. If you allow me, of course, number one, we have to say that this business is CIE Spain's business, not our business. It is not our decision. It is their decision. I will explain the rationale, what this business is about and what the thinking process is. Of course, people will have different views. First let me say that they are not different reasons. Roof systems business is a Tier 1 business. Now, what is a Tier 1? As you would be aware, the component industry has two kinds of companies, largely. You have Tier 1 companies, you have Tier 2 companies. Tier 2 companies, largely of our kind, we supply parts, maybe complex parts, subsystems, but mostly this is based on the drawings provided to us either by the OEM or a Tier 1 company.
For example, crankshaft. Crankshaft goes into an engine. The engine supplier or the OEM will give me the drawing of the crankshaft and I make it. I compete on operational excellence, as I keep saying, investment discipline, diversification. Then you have a set of companies like Tier 1, like engine manufacturers, driveline manufacturers, steering system manufacturers, seating system manufacturers. They compete on customized R&D, and they work with a fewer set of customers. Their basic competitive driver is R&D. They generate the drawing and then either they make it in-house or they can take the help of Tier 2 suppliers to make it. Roof Systems is a T ier 1 business. All the other businesses are Tier 2 businesses. Okay?
Therefore when you say, will CIE also look at plastics or forgings or this separately, the answer is no, because CIE India, since the last 10 years, has focused on Tier 2 businesses. Tier 1 business would require a lot of investment in R&D. Right now, for the Roof System business, the R&D is centralized. In fact, this is a fairly large business within CIE, and India is an extremely minuscule part of that business. In fact, wherever these businesses operate in CIE worldwide, in any other geography, they operate independently. For example, even if in any country there is forgings or aluminum of CIE or machining of CIE and Roof Systems, they are managed separately. It is an independent business managed separately within CIE itself, and the main reason is Tier 1, R&D.
Now, coming back to your question that in 2021, we talked about Mahindra and there. In Tier 1 businesses, there is greater sensitivity because there is R&D sharing between OEM and the Tier 1 supplier. That is why any such name, any association with any one particular OEM creates anxiety with other OEMs, which is much lesser in the case of Tier 2 or non-existent in the case of Tier 2 companies. If you see whatever reason we are talking about, all of them pertain to this particular difference. To answer your question, will something else also not happen? Roof systems is the only Tier 1 business within CIE. Everything else is Tier 2, and that is the reason why we have always maintained that the one difference in portfolio between CIE Global and CIE India is plastics. They do plastics. We do not do plastics in India.
We do composites in India, but not plastics. That is the reason why this distinction was there, and the reasons are fairly consistent. I hope I have answered your question.
Yes. Where I am coming from is CIE Spain, both the Tier 1 and Tier 2 are in the same entity right now, and CIE India has always been our flagship entity. Now what kind of message does it send that just the Roof Systems is outside of our flagship entity in India? Because effectively, it is the same 15, 20 customers, which we will be sharing with the Roof Systems also, which CIE India has. Now that there is no Mahindra name, it is more of a reason to integrate both the company.
Again, this decision is not in our purview. Again, let me attempt the reasoning behind it. Now, it is true that customers are similar, but the number of customers a Tier 1 company services will be much lesser. Like for example, we proudly tell you that, I just told the other questioner that we have 20 customers in India with substantial revenue base. A Tier 1 company will probably not have that because they have customized R&D and they can deal with very few OEMs. Therefore, the OEM sensitivity that we are talking about. But coming back to your question, even within CIE, that is what I was trying to explain. They are handled independently of the Tier 2 business, and it is centralized R&D. Yes, they have business in India, but it is a very small part of the global business.
And two, let me also say this, that this was a business that has come to CIE via acquisitions made in 2009 and 2018 or 2019. Exact date I will have to check. And they have been doing business in India predating CIE India. CIE Automotive India was formed in the year 2013. And they have been predating that. They have been doing that business separately, maybe, out of China or whatever. Therefore, China was also mentioned in your question. But it is largely a global business run out of the centralized R&D is in Europe. China is just one geography that is serviced by CIE Golde, as this business is called. That is why this decision has been taken. As I said, people can have different opinions. I am just trying to give you the business logic that has been used by the CIE Group.
Again, let me reiterate, it is not my business logic. Frankly, the decision is not in the perimeter of CIE India. It is a decision which has been taken by CIE Spain because it is a business owned by CIE Spain.
Got it. Thank you so much.
Yeah. Thanks.
Sir, the next question is from the line of Jyoti Singh from Arihant Capital Markets Limited. Please go ahead.
Thank you for the opportunity. Sir, my question is on the order book side, if you can give us some visibility. Earlier, the new order book consists 40% of EV. Things are not really that good as earlier. Just wanted the visibility on the order book side and EV versus ICE.
Okay. Thank you. I will take that, Vikas. In India, we have had, in the first half of the year, a total new order book of about INR 5 billion per year of, let's say, new projects. Out of them, 30% approximately are for electric vehicles. That means that in the near future, our share of electric vehicles components will continue growing. This is 30% in India. In Europe, where we have a slightly lower amount of new businesses or new orders nominations, we had about INR 2.2 billion of new orders, and we have 55% of them are pure electric vehicles. That means that the speed of the electrification in Europe, as we all know, is much faster than in India. The trend is consistent with our strategy, where we will be slowly changing and making the transition from internal combustion to electrification.
We can say that these 55% of electric vehicles, new orders in Europe, and 30% of electric vehicles new orders in India are in line or aligned with our strategy for the electrification in the future.
Okay. Thank you so much.
Thanks to you. Thank you.
Thank you, ma'am. The next question is from the line of Nemish Shah from Emkay Investment Managers Limited. Please go ahead.
Yeah. Thanks for this opportunity. I had a few questions on our Europe business. If you could just highlight on the passenger vehicle segment of the European business, what would have been the decline there, or would that been in line with the market decline? Or will it be lower or higher, some sense on that?
Nemish, you are saying our PV segment revenues, are they in line with the market drop?
Yeah. That was a Europe business.
If you look at, we have said our European, in the European market, has dropped by about, is about—
7%.
7%.
—7%. It has dropped 7%. There is, of course, a larger Metalcastello drop. If you put those together, you will be able to explain the revenue dropping in Europe.
Yes. We have to clarify, our Passenger Car Forging business in the Q2 dropped 6% compared to the 7% of the drop of the market. But due to the Metalcastello's 30% drop approximately, gives us this -11% that we drop in the Q2 in Europe. That is the explanation. 6% in Passenger Cars, 30% in Metalcastello. Average, the mean of these two figures is -11%.
Got it. What would be the monthly run rate for us in Metalcastello now? I believe last quarter it was around EUR 5 billion something.
EUR 5 billion, yeah. Yes. I can tell you in Europe , we are now monthly selling about EUR 4 million. EUR 4.5 million, that is, yes, around INR 5 billion here. Yeah. Mm-hmm.
Right. Do you expect this to stabilize, or do you see some more pain for Metalcastello and probably stabilize by the year-end? Some sense on Metalcastello.
We can say that Metalcastello's evolution will be similar in the next quarters. That is what we see in the forecast from our customers. We see this stable turnover level till the end of the year, more or less. There is no further drop. That is also the positive yield. We'll take that we are already in the bottom of the cycle. Now, we think that we need to wait until the U.S. elections, and after that, probably in Q1 2025, we will see the revamp of the market again. Okay? That is our expectation.
Got it. Just one last question. You mentioned in your opening remarks that you are now taking some corrective actions for the European operations based on the revised demand outlook. If you could just give some more color on that. Do we anticipate our margins to inch back to those long-term averages?
No.
Just some color on that.
No. The actions are mainly cost-cutting actions, in order to align the general costs of the factory or the companies to the reality of our turnover. You can imagine we are eliminating all the temporary workers. We are eliminating all the extra hours that we sometimes have in our factories. Let us say extra shifts and all these kind of things has been fully eliminated. Also, we are also reviewing our general structural costs in order to keep them at a minimum level. Then we are also, let us say, advancing certain holidays so we can balance our order work with the demand and the availability of the people. The idea is to try to minimize our cost level and wait until the market comes back again. There is not any special [over] action.
Got it. Yeah, that is it from my side. Thank you, and all the best.
Thank you.
The next question is from the line of Bharat Sheth from Quest Investment. Please go ahead.
Hi, good evening. This question is for Ander. So Ander, Metalcastello, we have seen several years, I mean, flip-flops kind of a thing, that once the customer comes in, order book grows, and they start picking up, so it throws a good amount of money for us. What are your strategies going forward to de-risking the larger relying on one customer more largely?
You are right. We have had a high dependence on one of the customers, one American customer, in Metalcastello. It is also true that this market where Metalcastello is now involved is a cyclical market. We have good times and bad times depending on the cycle of this kind of overall vehicles . But we are already, as you suggested, we are already working on the diversification. We have included new customers and also we got, and we explained in the last calls, that we got a big business from a few American transmission manufacturers for the electric vehicles, especially for the electric commercial vehicles and light commercial vehicles. Those programs, unfortunately, because of the situation of the electrification, are delayed.
That's why, on one hand, we have the Caterpillar business in the bottom side of the cycle, and the new programs that should have been offset this drop are delayed. Let's say that we are now in the middle of this bad situation, but for the future, we will see the diversification coming with more customers. On top of that, with certain electrified components that will balance our portfolio much better for the future. Even though we are in a, let's say, weak situation from the turnover point of view in Metalcastello, the margins are positive, and we are still in a positive situation. We are not making any negative margins in Metalcastello, thanks to all the action that we have taken and the good management that we have had in the last years.
Okay. We had undertaken a certain light weighting because of, say, aluminum forging in Europe. What is any color on that? What stage that business is?
Yes. This aluminum forging activity that we are pursuing continuously from our factories in Europe is, let's say, it's performing. We have got some businesses. But, as I said, unfortunately, let's say all the programs have been delayed and the volumes are very low in this moment. Okay? There is no special activity. Let's say that we will need at least a couple of years, two, three years in order to see this business giving us a relevant chunk of business in our comparison. Till now, there is no news to say. Let's say that the market is quite depressed in the electrification and also in the internal combustion engine also. Let's say it's a weak period in Europe for the automotive industry.
Any export [inaudible].
Bharat bhai, what was your question?
Any export opportunity? Because currently I understand you are at 10%, and you wanted to make it 15%.
No, last year we were higher than 10% from India. From India, we were closer to, I think, 13%.
Yes.
Yeah.
Export opportunities in India are there—
As I said, the biggest opportunities are there in castings, iron castings. They are also there in gears and aluminum castings. Yes, we do think exports will keep on increasing. But the point to be noted is that export businesses have a longer lead time before they rectify. That is the only difference from domestic orders.
Okay, thank you and all the best, Vikas and Ander.
Yeah. Thanks, Bharat [inaudible].
Thank you.
Thank you.
Hello, Aniket Mhatre. Please go ahead.
Hello. Hi. Thanks a lot. One quick question on Metalcastello, a clarification. This slowdown that you are seeing in Metalcastello, should we look at this as a near-term slowdown related to upcoming elections and it should recover in FY 2025? Asking this question because we are hearing slowly even U.S. is sort of entering into a slowdown. How should we look at Metalcastello growth for next year, CY 2025?
What we have done in the last years, we have analyzed the evolution of the orders in Metalcastello in the off-road. Let's say this is big machinery for especially big civil works in the U.S. What we consistently see is that every four years before the elections, there is a slowdown of all the investment activity because everybody is waiting for the new government to, let's say, to launch the new strategies for investments. Depending on the winner of the elections, the result is different. We are now exactly in that moment where everybody is waiting for the elections, and what we all expect is that after the elections, there will be a revamp. Depending who wins the election and depending also the strategy that this new president sets in the country, we will see bigger or lower growth.
What we expect is that for sure we will see a certain recovery, and we will see better 2025 than this 2024. That is, let's say, we are in the bottom of the cycle. That's what I can tell you about that. We are all willing that next year will be a good year, but we need to wait until the elections and also to see the strategies of the elected new President.
Sure. Understand, sir. On Europe specifically, any outlook you can share for CY 2025 again, since we are already in seven months of this year. How do you look at Europe for next year? Should we expect any growth, or it will remain flat as we had last quarter?
Look, what we were expecting for Europe this year was a drop of about 2%, 3%. That was what IHS was saying. For next year, more or less, the expectation was the same. Let's say we were expecting a flat market. The reality is that at least after the second quarter, third quarter, what we see is that the drop is a little bigger than what the IHS forecasted. So we can expect that this flat or slightly better market in 2025. It's very difficult to make predictions in Europe now because of all the things that are happening with electrifications, with economy, with, let's say, all kind of elections that we have had and the political uncertainty in Europe, plus the introduction of the Chinese cars that are entering into our market.
There are a lot of distortion factors that make everything difficult to predict. But overall, we can say that there is an uncertainty. We expect that the market will be flat or slightly better, and it's aligned with the IHS forecast.
Aniket, just to add to what Ander is saying. If you go to page 23 of the presentation that we have put out, you will get some details on the market. What is the expected forecasted growth in this year is about -5.8%. As Ander was pointing out, this was lower, roughly in the range of -2% or 3%. The growth for next few years, next year is between 1%-2%. But having said this, as Ander reiterated, there is a lot of uncertainty in Europe, so things can change pretty much quickly there.
Got it. Thanks, sir. Just quickly on the results, in Europe business specifically, despite the weakness in the revenues, we have still seen a decent margin improvement. What has driven that margin improvement on a sequential [inaudible]?
It's a difficult question because what we are now trying is to adapt our businesses, our companies, to the new reality. When the volumes are going down, usually the margins are negatively affected. We try to minimize this negative effect. As our businesses are well managed and are very solid with the minimum structure, I think we will be able, even in this bad market situation, we will be able to give reasonable margins. Okay? That's the strategy. You can see that in this quarter, we also get a reasonable margin in Europe despite the situation. In the future, we will try to continue with the same trend.
Great. Fair to say that there's no one-off in this quarter, right?
No. No one-off in this quarter.
Sure. Just finally, sir, on your debt, are there any debt repayment plans for this year incrementally? We have reduced debt, that we can see. Incrementally, would we think of further paring down our debt?
No. I will take that, Ander.
Yes, we do.
Okay.
We expect another INR 1 billion to go down by the end of the year.
Great, sir. Perfect. Thank you so much. That is all from my side.
Thank you.
Just a reminder for the participants. Anyone who wishes to ask a question may press star and one on their touch-tone phone. The next question is from the line of Bharat Sheth from Quest Investment. Please go ahead.
Hi. Thanks for the second time opportunity. Ander, I understand that our Metalcastello customer business started going down last year from Q3 onwards, and so second half was Metalcastello was very weak. From that perspective, do we expect that YoY H2 will be better than, say, second half of 2023 vis-a-vis 2024?
There will be a certain recovery, let's say, in the next quarters, but we will still be in the negative side. The ramp-down started, as you said, at the end of Q2 last year. Then Q3 and Q4, we slightly went further down. It is true that in this first half of the year, we are in the bottom. For the next quarter, we will see that the relative growth will be a little bit less than this 30% that we are suffering now. But we will still be in the negative side because the current sales level is lower than the sales level that we had in the second half of last year.
Okay. Thanks for the clarification. All the best.
Thank you very much.
Thank you, sir. The next question from the line of [inaudible] Capital. Please go ahead. Just shortly. Please go ahead.
Am I audible?
Yes .
My question was, I just have one question. It was on an Indian business. As we know, our major customers are Mahindra & Mahindra, Bajaj, and Maruti. Are we there in any new upcoming models which are there? If we are, then what kind of content that would be going in? If you could just share some light on it would be really helpful.
No. As we have been pointing out, these are our anchor customers, and we are normally there in most of the new platforms that they put out. In terms of content, that depends on particular platforms. As they say, they are our anchor customers, and we are also very important for them, from a supply chain perspective. It's very hard to talk about content per vehicle because there are various divisions and various kind of products involved. Suffice to say that we have a major presence on most of the platforms of these anchor customers.
Okay, we are not in new upcoming models. Is it that what should I understand from this?
You have to understand just the opposite. We will most likely be on all their new models, is what I'm trying to tell you. That because we are very important suppliers to them, and they are also extremely important for us. Normally, we are there on all their major platforms, both existing as well as upcoming. Okay?
Yeah. Just, if you can share which business division would be more beneficial. Is this any specified, if you can answer?
All business divisions, all technologies deal with M&M. Bajaj, as you know, our Aluminium business is the one that has the maximum amount of business with Bajaj. And when it comes to Maruti, our forging business, both out of Chakan and Bill Forge, they are major suppliers to Maruti, both directly and indirectly.
Yeah. Okay. Thank you so much, sir. I will join back to the queue.
Thank you.
Thank you, sir. Just a reminder for the participants. If you wish to ask a question, press star and one on the touch-tone phone. Participant to ask a question, you hit star. Participant, to ask a question, press star and one on the touchtone phone. As there are no further questions, I would now like to hand the conference over to management for closing remarks.
Closing remarks.
Ander, to you for your closing remarks, please.
Okay. Thank you. Just to, as always, I would like to thank all the participants for their well-directed questions and their interest in our company. We hope that we answered properly all the questions and with the most honesty and transparency that we could. Also, I would like to say that the company, even with certain regions in a, let's say, weaker situation or weaker market situations, we have a very solid and robust company, and we are sure that we will be stronger in the future. Thank you very much for the participation, and Vikas, over to you.
Yeah. No. Thank you, everybody, for your time. Basudeb, back to you.