Alicon Castalloy Limited (531147) Earnings Call Transcript & Summary

Thank you, Stanford. Good day, everyone, and thank you for joining us on Alicon Castalloy Limited's Q4 and FY 2020 Earnings Conference Call. We have with us on the call today, Mr. Rajeev Sikand, Group CEO; Mr. Vimal Gupta, Group CFO; Mr. Shekhar Dravid, Group COO; and Mr. Rajiv Gupta, Head of Domestic Business of the company. We will begin the call with Mr. Vimal Gupta, who will cover the financial performance, following which Mr. Dravid will walk us through operating highlights for the quarter, the COVID-19 impact on business operations as well as the impact on exports. Mr. Rajiv Gupta will share a more granular view of initiatives towards the domestic markets. And we will close with Mr. Sikand, our group CEO, who will then cover business developments, following which we will have the forum open for a Q&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 that have been shared with all of you earlier. I would now like to hand over the floor to Mr. Vimal Gupta for his opening remarks.

Thank you, Mayank. Good afternoon, everyone. On behalf of the entire management team of Alicon Castalloy, I would like to extend a warm welcome to all of you on the earnings conference call. I hope that you and your love ones are safe. I will be covering the financial highlights for the quarter and the year ending 31st March 2020. We began quarter 4 financial year '20 with an expectation that the quarter would see increase in demand and volume, as auto manufactures in the domestic market had, by and large, balanced their retail inventory of BS-IV vehicles. So we were anticipating a pickup in demand for supplies of BS-VI components. However, on the international front, demand started showing a contraction as impact of COVID-19 started affecting supply chains globally. This trend coupled with the nationwide lockdown imposed in March hugely impacted our volumes in Q4 FY '20. As per the directives of the central government, we temporarily closed operations across our manufacturing plant from March 22, 2020 to May 11, 2020. This affected production and sales in the domestic market. Also due to restrictions imposed on movement of vehicles and close of port operations, even export sales were impacted from February 20 onwards. A weak demand environment for the auto industry, both in the domestic and global markets, combined with the unprecedented situation due to COVID-19, resulted in subdued performance in quarter 4 FY '20. As per our assessment, the revenue impact owing to COVID roughly translated to around INR 59 crores, and on account of transition from BS-IV to BS-VI was about INR 17 crores. This had an adverse impact on our Q4 performance, which, as you would have noted resulted in us reporting a loss for the quarter amounting to INR 5.8 crores. This is the first time that we had such a dismal outcome. Coming to the performance for FY '20, the fiscal, as a whole, was a challenging one for the auto industry. The slowdown witnessed in the second half of FY 2019 continued and was further complicated with the transition of BS-IV norm. In addition, the outbreak of pandemic and subsequent lockdown call, disruption in the operating environment had affected sales for auto and auto component companies. As to the current scenario, we have started supplies to our customers, but with the continuing scenarios of increasing COVID cases in EMEA, we expect the recovery to show a start-stop pattern in India. Despite this, we are highly committed to ensure continuous supply to our customers. I will now turn to the numbers. On a consolidated basis, we reported a total revenue of INR 197.7 crores in Q4 FY '20. For the quarter, exports include -- including overseas revenues, contributed to 26% of the total revenue, while domestic contribution was at 74%. In FY '20, revenues from operations stood at INR 957.2 crores against INR 1,188.9 crores in FY '19. Exports, including overseas revenues contributed to 21% of total revenue in FY '20, while contribution from the domestic market was 79%. Adjusted to the impact of the pandemic, we believe we would have likely been on track to deliver performance as per our internal business expectations for the quarter. Across verticals, the auto division contributed to 90% of our total revenue in quarter 4 FY '20, and non-auto division was at 10%. For FY '20, our auto segment contributed to 92% of the total revenues, while non-auto stood at 8%. Gross margin stood healthy at 51% in quarter 4 FY '20, and EBITDA stood at INR 12.8 crores, while the EBITDA margin at 6.5% in quarter 4 FY '20. In FY '20, EBITDA stood at INR 108.7 crores with margins at 11.3%. PAT stood at INR 17 crores in FY '20. Let me share some of the improvements in our cost line. We were aware that we need to adopt cost optimization strategies across our business models and improve resource utilization to ensure steady cash flow. Given this current challenging condition, we have pursued certain initiatives with greater emphasis. In one such step, we created a business excellence division for continuous process and operational excellence to drive savings in direct, indirect and administrative costs. And this cost structure we believe will further enable steady margin going forward. On the [indiscernible] front, our net debt on March 31, 2020, was INR 326.5 crores with a net debt-to-equity ratio of 1. On the CapEx front, as indicated earlier, we have deferred our expansion plan and are still focusing on setting up existing facilities and for FY 2021, we expect regular continuous expense. On the whole, we are encouraging -- encouraged with a healthy balance sheet and cash flow position, which we believe will help us tide over these extraordinary circumstances. On that note, I would like now to hand it over to Mr. Shekhar Dravid, who will talk about operating environment for the quarter. Thank you.

Thank you, Vimal. Greetings to all our investors. Hope all of you are well and staying safe. From the mid-March onwards, the economies and the sectors across the globe have been severely affected due to the disruption caused by the COVID-19 pandemic. In the domestic market, the nationwide lockdown from March 22 onwards impacted our business activities, affected sales and disrupted production and supply chain shiftings. Our priority during this challenging situation was to maintain and secure our business operations, while also ensuring safety and wellbeing of our employees and the business partner. In line with this approach, the company formed ecosystem strategy, consisting of Apex and execution teams, which set up SOPs through manual and training to ensure safety and help of all our employees, and implementation of all these procedures and protocol at all plants and facilities. In addition, we also formed a Guardian system, where each designated guardian was a caretaker for 15 to 20 associates during the lockdown period, ensuring the basic needs of ration or supporting in case of medical needs, thereby strengthening the bond between the organization and the employees. As a responsible corporate citizen, the Alicon team took the decisive action to support individual and the families by distributing food ration kits, which includes essential food items to sustain affected people for 2 to 4 weeks. Over last 3 months, we have distributed roughly 4,250 food ration kits in our Binola, Chinchwad, Shikrapur, Ratnagiri, these are from Pune -- Ratnagiri and the part of Pune city to the families and individuals. Coming to the operational trend, we took all recommended precautionary measures across our business model, and temporarily closed operation in our offices in India and Austria and implemented work from home. Further in compliance with the directives of the central government, we temporarily shut down our manufacturing plants in Shikrapur and Binola in India from March 22, 2020, for roughly 50 days. Pursuant to requisite government approval, we have resumed operations at our facilities from May 11 onwards. The manufacturing plant at Chinchwad, Pune was under the containment zone and resumed operations only on 8th of June 2020. While all these units are currently operating at a low utilization level at 33%, we are undertaking all precautionary measures and ensuring higher safety standards across all the manufacturing locations through the ecosystem initiative that we discussed earlier. We also have undertaken a few strategic steps to maintain and strengthen the client engagements during this period. The company deployed teams to work alongside existing and potential client base to help them navigate through this challenging situation. We also have a separate team focusing on RFQs, so that once the situation normalizes, we are geared up to hit the ground running. A combination of these initiatives has enabled us to maintain wallet share across accounts, admits and otherwise tough operating environment. All our key customers remaining committed to their development programs, and the work on product design and technical evaluation is continuing in full swing. I'm also happy to share that our recent contracts win with JLR, MAHLE, Behr and Daimler U.S.A., aggregating to INR 810 crores over the life of the contract, announced in October 2019, are tracking a steady progress. While the company has submitted the samples to the customer, due to the present situation, there would be certain delays in receiving the customer approval. However, we remain confident of commencing the production in financial year 2023 as per the targeted schedules. Export, including the sales from Illichmann subsidiary, contributed to about 26% of our total revenue -- revenue contribution in quarter 4 of financial year 2020. In financial year 2020, the contribution stood healthy at 21% as against the 20% in financial year 2019. However, lockdowns and movement restriction in many of our international key geographies from mid-February onwards moderated our international business performance during the quarter, which would have otherwise been better -- could have been better. While we faced severe supply chain disruption and production issues during the lockdown from mid-February to May, the situation on ground, especially in the international market, is slowly recovering now. In most markets of Europe, we are witnessing a rebound in production, consumption and sales, especially in June. On the immobility in non-auto business front, given the increasing demand that we were witnessing for our products prior to lockdown, we are confident that once the situation stabilizes, we will once again see encouraging growth, and we will further strengthen our position in this segment. I'm happy to share that during this quarter, we bagged an order for 42 new parts, with 2 new logos added to our kitty, one is ABB in non-auto and Dana Corporation in EV sector. So for the full year, we added the total number of 120 new parts, with the sales revenue of around INR 269 crores per annum at the peak ramp of volumes effectively entering start of production from second quarter of 2021 to '22. While we are currently witnessing cultural demand, both in India and our export markets as a result of the ongoing macro situation, we believe, in the near term, there will be a gradual and steady bounce back in the demand conditions. These are uncharted times, and while we do foresee some impacts on revenues and profitability, until the circumstances normalize, we are undertaking all measures to secure our business operations to the best possible extent. Our efforts to deepen our engagement with customers, align our objective more closely with theirs and to invest early to pursue opportunities in electric mobility, have made us more resilient, and we expect to recover rapidly as the economic activity revives. I would like to now hand it over to Mr. Rajiv Gupta, who will cover the development in the domestic business for the quarter. Thank you.

Thank you, Mr. Dravid, and good afternoon, everyone. Taken into account the impact of COVID-19 on the auto industry and on the business operation, we believe we have delivered a steady performance in the domestic markets during quarter 4 and FY '20. From the domestic auto component industry perspective, the last 3 months have been quite challenging. For the first time in India, not a single passenger vehicle was sold in the month of April due to the nationwide lockdown to fight coronavirus. On an industry-wide basis, in quarter 4 FY '20, we have witnessed volumes decline by 20% on a year-on-year basis. Within this, 2-wheelers are lower by 19%, passenger by 18%, commercial by 48% and 3-wheelers by 24%. Against this backdrop, our business delivered steady sales. Looking ahead, the domestic automotive balance sheet continues to be disrupted due to lower utilization across manufacturing units, supply chain issues and labor on a regular basis. However, we believe in the near term, there should be a gradual restoration in the value chain. With the unlock 1.0 phase, we have started to see an initial recovery in sentiments. We are steadily increasing production across our facilities. Our teams are also actively on track with all our distributors in order to ensure streamline deliveries and supplies. In FY '20 Q4, we added 21 new parts from 5 domestic customers, with 1 logo addition. And in total, we have added 89 new parts with 15 domestic customers and 5 new logo additions. I would like -- I would now request our group CEO, Mr. Rajeev Sikand, to share with you in perspective on Alicon performance.

Thank you, Rajiv, and welcome all our investors. Thank you for joining the call. My colleagues have shared with you the details of our last year's performance and some details of the impact of pandemic on our performance and the steps we have taken to counter the impact of COVID-19. At the onset, I would like to assure our investors that in these uncertain times, we are not daunted by the tasks that lies ahead of us. In fact, it has only strengthened our resolve. Despite severe disruption caused by this pandemic, we remain in stable position, and our teams are doing the best to ensure continuity in operations with minimum disruption. We are collaborating more closely with all our customers. We are confident of our industry's resilience and its growth prospects. And it would be our endeavor to sustainably outperform the industry growth on the back of our fundamentally strong business model and stronger alliances across the ecosystem of customers, partners, suppliers and vendors. We are presenting ourselves as a reliable partner to all our customers, and continue to work with them to ensure smooth deliveries and supply even in this challenging operating environment. We are further encouraged that despite this challenging operating environment, our teams are in the process of winning large prestigious orders with global and domestic OEMs and offshore nominations from these customers are currently awaited and will be shared in due course. The silver lining for the Indian economy is that the rural segment seems to be well placed and resilient. The combination of bumper crops, favorable monsoon and water availability, combined with government incentives, are enabling rural and semirural areas to outpace metro and Tier 1 centers in terms of Indian recovery. The tractor and 2-wheeler sales have been somewhat resilient, and we look forward to this circulate into other areas of the economy. We believe we are future ready and are actively seeking opportunities, of which we see several encouraging signs. The onetime transition to BS-VI standard is largely complete, and we expect to witness a steady recovery in volumes for OEMs in the months ahead. The global pandemic is likely to accelerate megatrends such as electrification, automation and personalized mobility, all of which are in focused areas for Alicon. On the whole, we remain confident of our growth prospects, and believe that a normalizing operating environment, we should be able to deliver a healthy performance going forward. We would like to take your questions now. Thank you.

[Operator Instructions] The first question is from the line of Bharat Gianani from Sharekhan.

I joined the call a bit late. So can you just highlight what is the order book currently of -- and executable over what period of time? And given that the production utilization is currently low, so would you like to place any guidance on FY '21 revenues where -- I mean what's your sense we should expect going forward?

Basically, you see the situation is dynamic right now. And we are looking at the FY '21 will be closed with around 20% down as compared to what we are seeing, taking into consideration the lockdown period of this first quarter we lost...

Stop-start.

And stop-start activity, what we are anticipating because of this pandemic situation. So we're anticipating the revenue -- the growth of around 20% for FY '21.

And sir, any sense you can give on what currently is the order book for the business and executable over what period of time? And my another question would be that, are we seeing any increased business because of BS-VI? I mean are we -- do you have any such products that could increase our content under the BS-VI norms? That would be helpful.

I will answer your first question. So what is the order book position? Basically, as we already said that INR 810 crores of our business, which were declared in October 19, that will come into the picture. Also, we have already shared that in last year, during this lean period, we could able to engage with our customers and the new areas of the customers, and we could able to get the order booking for 120 new parts, adding to our business of INR 269 crores of business, which will start from the second quarter of '21, '22. So looking at this, and for the year '21, what we are talking recently, we are covered up for all the things, whatever needed for this year. So there is no worry in the front of order booking as far as concerned, and we are well placed as far as the orders are. What was your second question, I just missed? Can you just...

Yes. Sir, firstly, you said that INR 269 crores would be -- order book would be -- would start from -- which will start delivering from September '22, is it, the quarter 2 of next year?

FY '22, yes, because...

Yes. Okay. Okay.

Yes.

Okay. And this would be in what area, sir, INR 269 crores is roughly in which areas?

These are in all areas, but basically, we could be concentrating on the non-auto sector business, where we've had a new logo that is -- ABB has been on the board now. And we have received an order for 11 good components and sizable business for the year. The development is underway right now. And one is from the EV sector, the e-mobility sector, and that is from the Dana Corporation we received the order. And these are the sectors -- other sectors are like IC engine and the regular customers -- with the regular customers with the new products, we have got the basic confirmation of the orders from the customers.

Okay. Okay. And sir, my last question was, do we see any content increase because of the change from BS-IV to BS-VI norms? So any content increase for our product range? Or broadly BS-IV to BS-VI transition does not bring any addition to our PD? Sir, that's what my last question.

Definitely, the situation could have been normal, and not this situation what we are going through right now. There will be -- there could have been a better position. But for the normal condition, whatever the customers what we have worked with for the BS-VI parts, for whom we were doing BS-IV parts, we have got an increased share of business from those customers, being this technology is a very specific technology. And customers would like to remain with Alicon. So share of business for both parts has been increased definitely. We may not see that increase in this year because of this situation, but there is definite increase of the share of business on these customers. Also doing this with the same customers, the other products that, other than the cylinder head, which was our prime supply to all these customers, we added the other product range like the structural parts, the parts for the suspension, the parts for the other things which are required in the automotive sector. So that will add our further share of business with these customers, along with the share of business increase, for the particular component, which was there. So definitely, there is an increase, but we may not see this, this year.

[Operator Instructions] The next question is from the line of [ Rahul Talwar from DSK Capital ].

I wanted to ask that given the situation all the companies are in, are there any steps taken by Alicon Group for -- with regards to innovation or to get any competitive advantage over peers? That's my first question.

In the raw material, basically, we are working on the specifications. It's a very technical question. But we are working on the specification to...

[indiscernible]

So we are working on that to reduce the raw material pricing from point of view of the additions of all the ingredients, which are getting added. So over and above that -- that Alicon is presently working on one of the specific Alicon alloy, which will reduce the processes in totality, and we have already initiated that process with the renowned institutes, and working on that and expected to have the results within next 3 years to introduce this alloy. It's a long-term process, but this will reduce -- and this will be the alloy, which we will develop, that will be an Alicon identity for the customer, and it will be a competitive edge over all other suppliers in this case.

Okay. And my second question is that is there any structured medium to long-term plan, which is made by Alicon Group to -- for the repayment of debt?

I think, Vimal, you should answer this.

So first of all, debt, plan is there to -- plan is there to reduce our debt. But at this challenging moment, because the pressure -- in the current year of 2021, there will be a pressure on the cash flows. So maybe the drastic rate will not happen. But as for the expectation that quarter 3 and quarter 4, we will have with improved performance. So during that period, you can see the -- on the debt side reduction. But immediately, next 4 to 5 months, this will not happen.

Okay. And my last question would be that the news, which is going on in market, that people want to boycott Chinese products and the XYZ, I know that's not very much relevant to our group or component, but are there any steps taken to get -- increase the market share of the company? Reducing the dependence of companies on China, is there something like -- is there anything which we are doing?

Yes, definitely, this is to our advantage as far as Alicon is concerned. The customers whom with we are already working and we're getting dual sourcing from China as well as India, already these customers, we are in discussions with them, and they are also keen on transferring and reducing the dependability on China. So definitely, there will be a lot of increments we are seeing from that sector as well as we are looking for the customers who are interested to come down to India for this business, we will be definitely -- have an advantage in that.

[Operator Instructions] The next question is from the line of Saurabh Jain from Sushil Finance.

Well, it's very visible that we are facing challenging times, and I appreciate that you could assign a number to the -- following this current fiscal, that we are expecting a revenue loss of around 20%. At the same time, I was also thinking about the profitability. Our EBITDA margins have shrunk to 6.2% as against 11 plus in the similar quarter. So if you can throw some light, what steps are being taken at Alicon? And how are we going to safeguard our margins?

Thank you, Saurabh. So on the margin side, if you -- I think you have heard my speech, and this, I have explained for the quarter 4, maybe the EBITDA margin has gone down. But the major impact has come from the sales not happened due to this corona -- the COVID-19. So approximately, due to this only, we lost sales of INR 59 crores. If I convert into the margins, so around INR 20 crores EBITDA margin we have lost. So if you can add up that, so we were on the line. And you also know that, as per the government directives, we had to pay the -- all salaries, wages, even we were at -- yes, and as per the norms. So we have paid full salary wages to the contract people everywhere. That has also costed more on that side. So that is the reason. But otherwise, we were on the same -- on the track to maintain our margins. And going forward, if you see that, we are taking a lot of efforts to reduce our costs and to maintain our margins. So maybe quarter 1 and quarter 2, quarter 1, so you know that what has happened and quarter 2 is also challenging. But after that, we are hoping that things will improve, and we will maintain our margins.

Okay. And sir, one more thing. Do you think FY '22, I'm not talking about FY '21, but in FY '22, we will be able to scale back to our FY '20 revenue FY '19 -- FY '19, INR 1,180 crores?

Yes. In '21, '22, we will be at the normal as we will be back on our track. So only this year of -- '19, '20 and '21, that has just given challenges to the economy.

Okay. So just to clarify, that approximately 20% fall from current -- from the recent year to around INR 760 crores, INR 780 crores for current fiscal, and next year we'll rebound in a very handsome way, around INR 1,180 crores, INR 1,200 crores, if that's what you meant, approximately?

I guess, that we will be able to reach around INR 1,200 crores later.

The next question is from the line of [ Saahil Jain], an individual investor.

Sir, I've been reading the company for the first time, and I have these slotting numbers. Sir, I just wanted to understand that our receivable days have substantially gone up from FY '11, which was used to be in 60, 70 range, 60 to 70 range, to 100-plus range, and that especially has happened from FY '17, where we are at 87 days, which has gone to 105 days. And I think this quarter, we are into 144 days. So can you explain what has exactly happened? Like is the new business coming in -- which is coming at a high receivable day or something? Hello?

Yes, 1 minute.

Hello. Yes, are you talking about the receivables side?

Yes, yes.

No, that is mainly that export -- there was increase in the exports as well as that there was -- we were on the track of the -- at the end of the year. The sales were on the track and due to this lockdown of last 10 days, so the recoveries were also slow and customers have not paid during that period. That has just given the increase in debt also, our receivables.

Sir, this is -- let's say, this year was an exceptional year, but if you look at FY '17, sir, which -- where our receivables used to be in the range of 80 days, which has gone to shockingly 105 days? So -- and what are the export receivable days, sir? Like what is your standard term -- credit term, sir, for export and for the domestic market?

Definitely, the exports will come to between 120 to 150 days.

Okay. Okay. So sir, any incremental export, we will have a little higher receivable rate, is that right?

Yes.

The next question is from the line of Apurva Mehta from AM Invest.

Sir, can you just let us know that what cost-cutting measures we are doing currently to bring down our expenses, bring down our costs for the long term and for the short term?

Yes. On the cost reduction side, we are taking reductions from all angles. So that as I explained that we have made a model of business excellence. So in this, we are working mainly on the technical side that how to improve the efficiency, the productivities and as well as where are the areas we can go for the cost reduction, either on the variable side or the -- or to improve the margins as well as on the fixed cost side, like one example was for the material where so many activities we are doing, how to improve on the material side, so the cost can be reduced as well as like energy cost or on the manpower cost also, you will find in the coming quarters that costs are on the downward trend only. So administration costs also, we have taken a lot of actions to reduce those costs. So these are the main areas to bring down the cost. And as well as like -- because new projects are coming, we have to invest, but we are more focused how to control the CapEx side also.

Sir, on the presentation, one line is that currently, the units are operating at 33% capacity utilization with a 60% efficiency rate? So what does that mean exactly? Can you explain, if you could, what does it mean?

If you go through the government referendum is that they allowed us initially to start with only 33% of our manpower to avoid -- social distancing, and with this 33% manpower inducted and the social distancing, non-servicing is followed, so efficiency of operations is coming down to 60%. That is what we mentioned. So even if that -- whatever the capacity available, that is getting utilized with 33% manpower with 60% of efficiency.

Sir, on the export front, working ever when we had 26% of exports last year also. So what is the traction in export? And we are getting orders or getting any cancellation of orders? Or what -- can you show some -- what type of visibility we have on exports?

First of all, I would like to answer your second question. There is no order cancellation as such. But certain orders, which products are completing their life and the new products are getting introduced, those products will be eliminated by next year, and we will not have those. But at the same time, for those particular products, the new products have already been inducted from the same customer, which are going to be replaced of this old product. Coming down to the revenue of export, roughly -- exactly at this moment, as I already said, the 26% is the export revenue, which we have got at this moment. And our target is that, how we can increase this? And right now, as I already explained, that our journey towards getting the new businesses, more focus is on the global business.

But how is the traction towards, when we see domestic is very towards, but on the export front, are we seeing visibility of getting more orders or normalization towards that?

Yes. We are seeing the enthusiasm as far as aluminum castings are concerned in a global arena, and we are getting a good response from that area. It is a bit too early to comment on this because we are working with too many customers, the new arenas we are dealing with, and it will be basically. But basically, if you see, I would like to add one point here, that we have sharpened our focus in e-mobility, where we have now started providing the thermal engineering solutions to our customers for e-mobility sector. I will just explain what is the thermal engineering solution. Basically, this battery housing and the motor housing, which are getting used in e-mobility, during the operation, there is heat generation into this component, and these components need an online cooling of these parts to have a better performance and efficient performance of this. While doing this, we have to incorporate the cooling systems into the particular component. Unfortunately, till date, the designers are working with a jacket, which will be attached to this component to do this cooling of that particular component, which is not very efficient. So we have provided the solution working with the customer. And inbuilt cooling system, which we call as a thermal engineering solution, we offered it to the customers like Bosch, Samsung. And right now, we are in discussion with the customers like Danfoss, Dana Corporation and Hitachi, Panasonic, by offering this solution to them. Ensuring that with this technology, the customer will remain with us. So this is for -- as far as the global business is concerned, we are seeing a good opportunity and good response from the global customers.

Nice to hear from you, sir, but is this -- this -- whatever solutions we are giving are some kind of a patented solution of ours? Or what we are doing to ensure that this solution doesn't somebody copy or replicate? Or is it something which is unique for us?

Yes, I just tell you that this particular solution, renowned foundries in Europe have failed initially to develop these components with this integrated cooling system. But Alicon could able to have successfully developed this with Bosch in Europe and then incorporate this with a customer like Samsung, and giving solutions to these new customers, as I explained already. So this is the technology. But making this component with this technology is which requires a specific technology with the critical care in production and manufacturing of this product. So there, we will have -- Alicon will have an edge over other competitors to have this proactively available and giving solutions to the customers.

Congratulations, sir. And sir, this product, basically, when you will start producing it, which year you will start producing it, which is the year -- inflection point to restart the product?

Already 2 of the products we have are already on the mass production line. Samsung has already -- Samsung is supplying the battery part to JLR.

Yes, yes. Yes. Okay. Congratulations, and wish you all the best.

The next question is from the line of Bharat Gianani from Sharekhan.

Sir, this INR 269 crores orders that you pointed out and INR 810 crores that you already had announced 6 or 8 months back, sir, what is the time frame? Or which year it will -- this will be executed? Hello? Hello? [Technical Difficulty]

Excuse me, this is the operator. Participants, you are requested to stay connected. We will just check the management's line. Ladies and gentlemen, thank you for patiently waiting. The line is reconnected. Mr. Gianani, may we request you to repeat your question, just in case if the management has not heard it?

Yes. So sir, my question was that the -- on the order book that you pointed out earlier, INR 269 crores that you received last year and INR 810 crores that you announced 6 to 8 months back, so this executable over what time frame? That was my first question.

For INR 810 crores, what we have declared in October 2019, the development is already started, and that will come into the mass production from 2022, '23. And whatever the order, what I just declared, the 120 components, with INR 269 crores of business with a peak SOP, which will be starting from second quarter of 2021 -- 2022.

Okay. No, no, sir, this is executable over what -- I mean, this order duration will be like 3 years' duration, 4 years, I mean, what is the time frame over which these orders will get executed?

This will be 5 years. The life of this product is 5 years, and customer share which was the total 5 years' volume for this particular order.

Okay. So both of this is 5 years' duration?

This INR 269 crores per annum is totally new, other than INR 810 crores what we talked of.

Yes, yes. No, but both of these will have a lifespan of 5 years, right? Execution?

Will be having a lifespan of 5 years.

Okay. Okay, fine. Both of them, yes, okay.

Yes, sir, [indiscernible]

Yes, sir. Hello?

Yes, go ahead.

Yes, yes. And sir, my other question was that you pointed out that CapEx will be very minimal in FY '21 maintenance CapEx. So can you give the quantum what it is FY '21? Or what is the quantum of minimum maintenance CapEx?

It is normally between INR 25 crores to INR 30 crores for maintenance, plus there will be certain small CapEx we will have, because all these new orders what we are getting it and undergoing development, we need to have some adjustment of the capacity. Even though we have got the capacity available for the casting, but for casting whatever machining and other specific requirements, component wise ready, for that, we have to make certain investments. So roughly our target -- our budget for this year is roughly around INR 45 crores. So around INR 15 crores to INR 20 crores will come for this new product that are under development.

Okay, okay, okay. And sir, like -- lastly, I wanted to ask that in the quarters previous to this, we had delivered on the margin, which was like consistent for last 2 to 3 quarters, which is like in the range of over 13% or so. So do you believe that in FY '22, we would be kind of getting that margin? Or our margin will be in that 11% to 12% range? So what's your target for FY '22 for next -- obviously, this year, we'll have a toll on the margins because the revenue will be down. But for FY '22, what is your targeted level of margin? And what would be drivers for that? That's it.

Mainly that we are also targeting to improve the margins. So we are expecting it should be 12 plus during '21, '22. Because a lot of cost reduction measures we are making, that will also continue in the next 2 years. So definitely, we can see that improvement.

The next question is from the line of [ Rahul Talwar from DSK Capital ].

In previous question, you were mentioning about some technology being developed in Europe with Bosch. So if I'm not wrong, that was Bosch, right?

Yes.

So I wanted to ask, is the technology so unique that we would be having a patent on that?

No. It's not patent can be, but it's very typical. And only the few foundries can work on this because it requires a very structured infrastructure with technology having available with you, which Alicon has got today. And with horizontal deployment, from India also we started supplying with this technology part to U.S.A. now.

The next question is from the line of [ Jatinder Agarwal from Relax Capital ].

Sir, regarding this EV business where you are now getting approvals for parts, can you give a broad sense what is the market opportunity or the potential for the existing parts that have already got cleared? So maybe that gets realized over 3 or 5 years, could you give us some broad sense in terms of numbers?

Yes, sure. Definitely, [ Jatinder ], give me a minute, I'll just -- give me a minute.

Yes, sir.

Right now, whatever the part -- sorry to put you on hold.

Yes, no problem, sir.

Whatever the part what we have developed and which are going to be an SOP in next 2 years' time, we will have the revenue of around INR 150 crores from this part, what we have booked, which roughly comes to around 6% to 7% of our total revenue.

Perfect. And sir, is there an overlap between this INR 150-odd crores and the INR 269 crores and the INR 810 crores that you have already discussed earlier? Or this is separate from those 2 different orders?

No, this is INR 810 crores plus INR 269 crores, what we said.

Right.

This is from that only.

So out of that, approximately INR 1,100 crores, this is about INR 150 crores approximately?

Yes.

Perfect. And sir, this is again...

Just to add it -- sorry to interrupt, but just to add it, as a strategy, we decided to have our strategic goal towards e-mobility, because that is the disruption we are anticipating. And as the last 2 meetings also, we have said that our concentration will be on e-mobility as a technology disruption. So we are going towards that, and we are getting good response from the customers in that area.

Perfect and...

[indiscernible] question.

And my second question is, again, a follow-up to what was discussed earlier, sir, with regard to your debtors. So if I look at last 4 years, right, sales have grown at about, point to point, maybe about 25-odd percent. And inventory has actually doubled, and so have debtors. So debtors you already answered. Can you throw some light with respect to the inventory?

For the inventory, first of all, that, if you see that as a number of days, it has not gone up. But only thing is that now further, we are taking the actions of how to reduce further. But you know that for all customers, we have to maintain the minimum inventory for their location because all this OEM, they go for the just-in-time system. That we have to maintain. But definitely, we are focused on this how to control the inventory, and it is already under control. It has not gone up suddenly like that.

Which is good. Obviously, that you are focusing on it. But if I look at the last 4-year track record, payables have not really increased that much, while debtors and inventory has increased. So is this because of the new products that are getting developed on which approvals are coming across? Is there any correlation to that? Or...

I think that we have to maintain, for the different locations, the inventory. After the implementation of GST, warehouses are there, that we have to maintain as well as that new products are developed and now, the number of products have increased. So it's a difficult time, but I think we have to maintain for each product.

I would like to add one thing to it. Already last time also we've discussed, out of this 686 live parts what we are working with, 139 parts, we have a single source to the customer. And keeping the requirements of the lockdown and the surges of the production coming into picture, we have to keep minimal stock, which has been agreed with the customer. So this increase is sometimes because of that, that we have kept the stock, but they have not inverted that much of a material, because of the fluctuation in the manufacturing. So there is a fluctuation in the inventory, sometimes on the higher side. Normally, it is on the higher side, it doesn't come to the negative side, because we always are sensitive being a single source to this customer, and we want to maintain our singularity for that.

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Thank you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarification or would like to know more about our company, please feel free to contact our team or CDR India. Thank you once again for taking out your time to join us and showing interest in our company on this call. Thank you very much.

Thank you.