Alicon Castalloy Limited (531147) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. On behalf of Emkay Global Financial Services, we invite you for the conference call with Alicon Castalloy management. [Operator Instructions] Please note that this conference is being recorded. To introduce the management team and take the call ahead, I transfer the line to Mr. Raghunandhan of Emkay Global. Please go ahead.

Thank you. Thank you, Asli. Good afternoon, everyone. Thank you very much for joining for the conference call with Alicon Castalloy management. On behalf of Emkay Global Financial Services, we thank the management for providing us time for the call. We wanted to request the management for some insights on business environment and also the demand conditions and order bookings. We have the opportunity today to host Mr. Vimal Gupta, the Group CFO. A quick background. He has industry experience of over 25 years and has been that Alicon Castalloy for over 15 years. He has experience in areas of global finance, accounting, forecasting, restructuring and acquisitions. Prior to Alicon, he has worked with companies such as Motherson Sumi and Subros. Also, we have Mr. Rajiv Gupta, the Head of Domestic Business -- he has over 10 years of experience in business development and marketing within the automotive sector. He handles a range of customers, including the leading OEM and tire 1 companies in India and global markets. We request the management for some opening remarks, and then we can open the floor for Q&A session. Over to you, sir.

So first, we will explain a little bit about the Alicon Group and then we will go about the business, and then we will move to the question and answer.

Thanks for attending this call. So let me first start with giving any sights about Alicon Group who talked about the capacity, the capability and the customer base and our reach to our customers. So talking about the Alicon Group, we are a global consortium of companies involved in designing, in delivering, casting and value-added services for aluminum components. We are having plants across the globe. We have got 3 plants in India and 1 plant we have got in Europe. They have got 2 plants in Pune and 1 we have in Delhi. We are doing a business of 50,000 metric tons a year. We have closed last year USD 150 million. We are exporting to 26 countries globally. We are one of the largest albeit foundry, having present in India as well as present with a European plant in Slovakia. We also have a joint venture with Enkei Corporation in Japan. Taking up our core competence of Alicon, growth is die-casting through GDC process, low presiding casting process and sand casting process. We also offer soft or protecting solutions to our customers, which we have noticed is a demand at this moment because every OEM or a tire 1 on company are working extensively on the developments. And that there talks about the USP of Alicon. Alicon is giving a full system solution, and this helps us to give them quick solution in a very limited period of time. And this is what differentiates us from other competitors. Talking about customer rates, we have total 90-plus customers with 700 live parts. We talk about major customers and 2-wheelers. We have got all extra series because they have own foundry. The intention in oil is Ducati, what we have added in our European plant. Also in 4 wheelers, we have got recent addition. We have recently added Tania [indiscernible] from India locations supply to Europe. Also we have got major logos like Daimler, Jaguar, Toyota, Maruti PSA in our city or in Tire 1 and non-auto have or plenty of other customers to make some those are Bosch and EV applications for motor housing. And then we have got [ Banco ]. It is a controller housing applications through the U.S. market. Then we have got GE in Mexico, then we have [indiscernible] who are the pioneers into railway systems for the German railways. With them also, we are supplying parts. We are there with Magneti-Marelli working 5 years when we talked about manufacturing automatic manual transmissions. With them, we are supplying a lot of parts. And Samsung is there to whom we are supplying the battery pack, which goes to Jaguar and many more. So this was just about Alicon Group. Now talking about current market dynamics. Yes, we are noticing, from '18/'19, we have noted the market was witnessing basically a downfall with several reasons like there was a demonetization when there was a NBFCs and there was the COVID 1 and 2 and 3. With that, we are noticing the market, but it's really talking about the automotive, if that market is shrinking. And that we have realized. And that's the reason from '18, '19, you will see we have added a lot of new custom -- new parts from the existing customers to increase our penetration with our existing accounts. they have added their focus to increase our share of business that just key customers. We have also added a lot of new customers, adding new regions, new logos to add opportunities from these areas where we were not there. And that's the reason we will notice if the market is noticing a stagnant growth. Alicon is able to outperform over the market, and that is the reason you see from '18, '19 to '21, '22, notice for this current market notice a downfall of around 9% and team were able to sustain this particular period. Going forward also, if you talk about Indian automotive market, they would be growing not more than 3% to 5%. But Alicon is talking about a growth of around 16% to 18% still [ 25, 26 ] from now. So this was just about Alicon growth at the current market dynamics. Further, we would like to take individual questions. And thereafter, if any point, clarity will be the

[Operator Instructions] We have a first question from the line of Amar Mourya from AlfAccurate Advisors Private Limited.

Sir, I have a couple of questions. To start with, like this deal which we had announced with Jaguar for eAxle. And then I mean, obviously, you have not mentioned the content, but connecting to the historic and the [indiscernible] we were in the range of -- am I audible, please? Is it clear now?

Yes, yes, better.

Yes. So I'm saying, sir, you have not announced the deal size -- but I'm saying connecting to the last deals, like they were in the quantum of INR 700 crores to INR 800 crores. And when you say that this deal is much, much higher than that. So I mean, is it ranging something around, let's say, I mean, what would be the range if you cannot give the actual number?

When are we can in the range of INR 4000 crores to INR 1200 crores.

Okay. And when it is likely to be ramped up, sir, is it going to see the ramp up in this year itself or in the next year?

No. No. Because with the political reform and the sell-through at this moment is the in design state. And then the still commercial production will start from '24 and the ramp up [ GDC ] from '25 the next 5 years. I will start from '24,'25.

Okay. So basically, in next year, is it like second half, we will see some revenue from this deal? Or is it like the end of the quarter -- fourth quarter or so?

Next year, mostly is answer some vision and validation of that part. This will be a little portion in '24, '25 around 50% will come by '25, '26.

Okay. Okay. And what kind of margin profile are you will have in this deal?

Some of these I think we can disclose. But definitely, now whatever new businesses we are getting because if you -- I don't know about you, but in power cost, we are talking about the margin. So there is a shift is happening in Alicon. That is from the 2-wheeler to the 4-wheeler and other businesses. So 2-wheeler is generally a low margin business so whatever the new businesses we are acquiring that is mainly focused on the [indiscernible]. One is the technology and what are the capabilities like in the technology disruption is happening so on how to take the benefit of that and second is technically on the part of the margin. So we are good to have a good margin in this.

Okay. So your voice is little bit not clear? I mean, I think if you can come closer, I mean, not clear, very clear. I cannot hear you very clearly. I have you more. Can I ask or should I have come into the queue

Do you want me to repeat?

So yes, I think the margin part, sir, it was not very clear. Your voice was cracking.

In margin that will like we should understand the structure, what structural things are happening in Alicon group. So there is a complete shift is happening. One is the technology disruption and other is the business structure change so mainly, Alicon, used to be more dependent on the 2-wheeler side, mainly when we used to have the business of 40% to 45% contribution from the 2-wheeler. Now going forward, though, these are going to reduce in the total [indiscernible]. And there will be increase in the other businesses, especially on the EV side of the passenger vehicle . And the major contribution due to this technology disruption of major business is coming from the EV at this moment. And like when we talk about this 2-wheeler business, so always that was better on the margin from the OEM also. So -- but now when we are -- there is a shift in the business because in the 2-wheeler, our major parts are on cast side, casting only casting, not the machining. Now we are moving to fully machined parts -- and mainly this business is coming from either from the commercial or from the passenger vehicle -- and definitely, the margins are on the higher side.

Okay. So if I can, sir, ask 2 more. One is like how your mix of 2-wheeler versus EV and CV would look like, let's say, in next 2 to 3 years. And secondly, what would be the current contribution of machining? And what will be the contribution of machining, let's say, down the line, 2 years.

So first, I answer you about this machining. So 2-wheeler. So 2-wheel business is almost aircraft business, -- so without machining. So what about the increase in the business now that is completely machine parts.

Okay. So many, what you're saying is that other than 2-wheeler, whatever 3-wheeler EV and CV you are having is basically a machine business, right, along with the casting --

On all our machine.

Okay. Okay. And how does machine...

Sorry?

Yes, yes, you were saying something, sir?

The can do why? Because if you talk about 2-wheelers, Two-wheelers is high with volume. There are a lot of competitors. And I deal,what -- also it's a complete [indiscernible] of solution. That's the reason OEMs give this opportunity to lot of suppliers like us they asked us to make through this process because this particular process, mostly is not with all other OEMs. That's the reason they buy this as scrap part, but the machining is an area where definitely the assembly OEMs can put in-house. And that's the reason they ask us, as supply and they do machining in-house and thereafter they use those components. We basically have very less margin here because it's a commodity, not much of a sign or not much of a technology is there. But because of four-wheeler components, customer looks for a very to lose some [ moment ] and the assembly -- and that's the reason we're saying a part to machining and add value of this proves and give me ready to use component. And there is a way that is where the option to get extra [ wait ]. And that's the reason -- that's the reason we are noticing going forward, [indiscernible] reduced the [indiscernible] and create this capacity for the passenger and commercial vehicle. So that overall margins we can improve for the growth. Talking about numbers currently two-wheeler is somewhere around 45% to 50%, which I'm planning to reduce this to 22% to 25% by '25,'26. My passenger or retail is something around 25% to 28% annually increase to around 43%, 45%. We are 45% and commercial currently around 15% to 18%, which we are aiming to increase it to 19% to 22%. So this is a hit what we are talking about, abate which is speaking also if you see our new order booking trends from '18, '19, that talks in line with what [indiscernible] have defined at that time. Because customers very openly. If you want a simple part don't come to me. Okay, if you [indiscernible] part company, I'll give you a solution.

And sir, like this kind of orders which you had won correctly, there would be such more orders would be in your pipeline and obviously investing

Mr. Kamal, this is what we say that now this technology change is happening. So the world is moving towards the EV. so this is a first to mobility only eAxle. And this is -- I can say that this will start. And at this moment, we cannot disclose the name -- and maybe Rajiv would like to add. So I'll tell you, one thing is, yes, we know very well EV. We anticipate where early EV is coming up. In Europe, it was early because the transition was in very early. and Alicon as have got a plant in Europe have got the added advantage. Today, I'm proud and happy to share with you, be a electric scooter, be a motorbike, be a passenger vehicle be a commercial. Alicon have already developed parts for all these [indiscernible] solution. Now coming to the OEMs in India. Now even all OEMs want to have a quick development to catch the width because almost all OEMs are working extensively on this particular platform. And there, they want to go ahead with the supplier who have bought knowledge who have spend time in these know-how, which definitely, they know very well we can help them get ready to get first and right components that is the reason. Now OEMs are approaching almost all OEMs approaching on these parts to us. You're not talking about the eAxle. This is one of the critical and complex parts when we talk about e-mobility. So this order win from Jaguar, what we have announced, with such a advancement the existing and upcoming customers about the capability and capacity of developing these parts. And we are quite sure on development of this part, definitely one of other suppliers will directly approach us for development.

Okay. Sir, you have indicated that your '26 goal was 36% target of percentage of revenue of EV. Now after this order win I mean, is that percentage going to reach up?

Now we have beat with this order book around 28%.

No, no. Because You guided for 36% target..

36% the target. So because what we are talking about, this is to what we already have in hand.

Correct.

For the order. So some are under negotiations. And definitely, we will be able to maybe -- I don't know, the next control or maybe another control, we will again revise our goal. But the 36%, what we have mentioned, was the [ face ] what I will be generating by the year '25, '26 from EV? Till now is the current order bookings, we have such somewhere around 27% to 28%, which going forward, because still we have got 4 years on the line to [indiscernible] So we are quite comfortable of achieving the target that we have defined. Maybe in the coming quarters, if the way things are moving, the way customers are approaching, it might be we can increase this target going forward. But we are just keeping a close work because a lot of developments are being happening across all -- with all the OEMs.

My question was looking very different, sir. Because this 36% revenue target guidance of EV was before this [indiscernible], right? Now you already won this deal and this deal is primarily into EV. So I'm saying naturally, the 36% number has to go up. And along with that, your margin goal of 16% and the revenue target of INR 25 billion also will upgrade, right? That is what I want to understand.

I got your point, the point is to understand this particular order the peak sale will come somewhere around 26% or 27%. And that's the reason that portion is not it. We're not able to get 100% benefit on the target, what we have defined for the year '25. So yes, a little bit is a benefit from this order win or major chunk, I do understand. But going forward, the presale of this order will come somewhere for the year '26 or '27. But definitely, deep parts are going to support that. And we be a couple of such orders if I get in the coming years, definitely, that will help me to revise my target.

[Operator Instructions] We have a next question from the line of Pravin Motwani from India Mutual Fund.

This is Pravin from Bank of India Mutual Fund. Sir, I have one question on your recent order win of eAxle. If you can just elaborate a little bit on this piece, like what exactly we are going to do in this product -- and what is the usual content per vehicle for this?

[indiscernible] , as a part -- if eAxle is one of the critical parts of the e-mobility, it's a combination of a motor housing and e-water housing.

So are we developing this end-to-end product or we are just providing the casting and machining on specific product?

Yes, we have received supply of a casting at [indiscernible] machining for this particular part. Ideally If you talk about the e-mobility, there are basically 3 paths in a vehicle. One is the motor housing, other is inverter housing, and third is the battery housing. And eAxle there trying to make this component, which is a combination of these packages under a different platform. So this quantum, Ideally if you talk about -- I believe you talked about a motor housing, that is ranging around 4 kg to 5 kg. If we talk about our central housing, again, 6 to 7 kg, a battery housing for a normal car would be around 10kg. This particular component is weight 21kg. So you could understand, it's a combination. And there is what we have grabbed this order of eAxle is a portfolio where a lot of OEMs are now working extensively to come up a unique solution.

Okay. And okay. So basically, you will be more into this semi casting and the machining front is my understanding

This EV, 3 major components are there one is that we talk about the battery, motor and the composition. So 1 is the battery housing, we are doing for the battery. And for the motor and the transmission, this is just EV in itself. So almost -- the critical part to run an electrical vehicle. We have got all parts.I mean this is why we were not there and which also we have added. And now we offer our customer as a complete solution of all the type of parts in e-mobility. And another question you were asking about -- so this content for vehicle -- Talking about the content per vehicle, if you see in IC vehicle, if I talk about, for the passenger vehicle. I've got opportunity somewhere around 12 to 15kg which is the opportunity from me around 40 to 40... Same if I talk about similarly, in commercial vehicle in IC, we have got opportunity of 8 to 10 kg, which is around 70 to 80 kg in a commercial vehicle. and a two-wheeler in IC, we had a fortuity around 4 to 5 kg, which we are noticing around 8 to 9kg this, we have reduced now because we understood when [indiscernible] they have launched, they came up about prelim technology bits where they have planned to build most of the part through aluminum to give a unique product. But now if you talk about a sale, it's more of a competitive market and that's the reason the OEMs are coming up with more of a fabrication concern. And that's the reason what we have understood now in the -- the opportunity and that's the reason if you see our previous steps. That's the reason we are trying to penetrate more in a passenger and commercial also when we talk about the e-mobility also.

We have a next question from the line of Aman Agarwal , I am sorry his line is disconnected [Operator Instructions] We have our next question from the line of Divesh Shah, Individual Investor.

Sir, first of all, compliments for winning best order of our company. Sir, my question is regarding our Jaguar new order. I want to know sir why and how we won this order. Number one, is it because Europe is in difficult period we've got the orders or because of our cost efficiency. What are the prime reasons for winning this order? And second, who is our competitor for this order? Who are the other competitors?

Okay. Thanks for that question. So basically, we are engaged with Jaguar for last 4 years now. If you remember, we have mentioned in the previous call in meetings also, that we have already developed a battery housing for the Jaguar from a European facility, [indiscernible] technology. We have given them a [indiscernible] solution, which they have appreciated and they've recognized us the technology partners. Forward, this was one of the aspects, which from the European facility. Thereafter, if you remember, we have already announced a few years ago, we have got 1 more order for a [indiscernible]. So that supply was from the Indian location, which for last year supply. So consistency as the technology support what we have given to them have given them a confidence to give this unique critical part development for this eAxle. And that's the reason we got the privilege to get this off for that so we were talking about how we got this business. So basically, the development. The past developments, what we have given them have built confidence we started with -- in the year '18, '19 with the development of a battery housing from a European plant, which they have appreciated. And we have given a value addition, cost benefit, rate reduction and a unique solution to develop that part, which they have recognized us as a technology partner for these parts. Going forward, in the year 2021, they further gave us opportunity for a structural part from the Indian location and successful development of that part and supplies for almost a year are further added to the confidence. And that's the reason for us to grab this order was quite easy when we give this technology offer. Talking about competition, yes, there is a competition for this big project there were competition from other countries. We also there have a competition from India. Sorry, I won't be able to disclose their name. But yes, there were some competition from 3,4 basically from 3, 4 countries to grabbing this order. But as even customers -- these are a critical part customer want to go ahead with who have to know how about this technology critical part development, and that's the reason they are comfortable going ahead with Alicon.

As I understood rightly, I think our technical skill engineering skill has the edge of our other competition. This is the main reason why we got the order. My understanding is right, sir?

Thank you to make it very simple, right? This is our point are able to grasp this order.

And sir, my second question is regarding the defense opportunity. Nowadays, we hear a lot of making India armouries so [indiscernible]

On basically on non-auto front also, Alicon is focusing much because the way the markets are behaving, talking about the domestic market where -- there is a pressure of EV. There is a confusion built up on the consumers which vehicle to buy and so on. Also, we are noticing disruption in the global market like the way Ukraine happened the disruption in the supply chain. So that's the reason we want to increase our wallet when we talk about the contribution of the non-auto. And here also, we are doing quite well. If you have noticed, maybe in the previous call, we mentioned about a project what we have developed for the make in India. And this particular part also was a critical and complex part. The weight of this part also is in the range of 20kg, and the supply condition is on machine one. So this, again, is a very critical and complex part, which we have offered to our customers. And this -- these parts will now give confidence to our customers in terms of the capability and capacity, what we can offer to them. And this will further help them to localize going forward a lot of other parts also going forward.

And sir, one last question regarding our partner, Enkei Corporation in Japan. So can you some elaborate a little bit about what are their contribution to our company to take from INR 1,000 crores to say INR 2,000 crores and then to INR 3,000 crores. So what is the reason of Enkei about Alicon Castalloy.

Talking about Enkei, see the process of both the companies are same. They're making components in a low pressure die casting and Gravity components, a range of alloy wheels, and we are making components apart from the alloy wheels. But the process are the same. So they are working. We are together working on continuous upgrading our processes, our know-how, continuous Kaizen. So we share our know-how. So it's like a [indiscernible] struggle their plant domestic as well as global plants across the globe to share the know-how. And even we offer our solutions to them. So this continuous sharing about knowledge is helping both the organizations in terms of innovation, in terms of innovation, in terms of coming up with new technologies. Also, every quarter, the President of Enkei Corporation J. Suzuki is visiting our plants and doing the detailed audit where he shared his views on his areas of improvement. Unfortunately, because of COVID, for last 2.5 years, this audit was not done. But they are still supported to a virtual platform. But we have got that other team members who are visiting us on a frequent basis, and we are able to share our know-how together to upgrade both the group for the customers. Also this, if you see the Toyota business, what we have backed, this is the first time in history of Toyota, of 8 years, they have decided to outsource the cylinder head and they decided to go with Alicon. And that was also with the support of Enkei cooperation because they were familiar with Enkei group since long because they are supplying alloy wheels to them since very long. So as a technology partner, they have that confidence for going ahead with Alicon for development of A class, cylinder heads, we call it as an A class component. It's a very critical and complex part. So with this, they were able to -- I mean, they had a confidence to decide to go ahead with Alicon for development of these parts.

And definitely, on other side like one is that on the technology side, segment is to get the new orders, as explained by Rajiv, about the protein the same way, they are supporting us for the we are explaining about the technology change. So whatever the new customers because in India also a Japanese OEM. We are -- there will be a gain in the technology. So they are supporting either on the technology side as well as to negotiate or to get the new orders from the existing the OEM, is Japanese OEM.

And sir, Avitas, Suzuki and Toyota Japan is showing their interest to invest heavily in India for a battery. Is this a good opportunity for companies like us?

Just before this, I have explained, like for the new businesses, the Enkei supporting and definitely, and when I'm talking about the Japanese OEMs. So as you understand that we cannot disclose all these projects, but yes.

Okay. Okay. But Suzuki is a big opportunity

A lot of support on both the sides for the new order for the technology.

We now have a question from the line of Chetan Gindodia from AlfAccurate Advisors Private Limited. Please go ahead.

2 questions. Firstly, what would be the period of the order? Is it INR 1,200 crores order over a 10-year period or something different?

So mainly the total period is 10 years, but the major chunk will go in 5 years. Because after that 5 years to very small quantities, they have to maintain too that model.

Okay. Okay. And secondly, sir, with respect to now new orders, are you seeing increased inquiry from European OEMs, given that we are already suppliers to them in some or the other way, -- has there been any increase in inquiries from their side in the last 6 months?

Yes. The number of [indiscernible] have increased. And especially when we talk about the e-mobility pass, we have given a lot of solutions with those inquiries, which we are in discussion with them going forward.

So there is a increase in the number of inquiries and the size of the inquiries, both having

Okay. And would it be possible for you to explain a little bit about what is the cost differential between company manufacturing here and the cost differential manufacturing there. And how has this changed because of the power dynamics.

Basically, yes, apart from manufacturing, ideally for these parts, customers are looking for solutions. And they want to go with a partner who have spent near about 3, 4 years of the research and time on developing this part. Like, for example, the battery housing, when we received from Jaguar in the year '18, '19, that was weighing 36 kg. We have developed that part with around 28 kg. So roughly around 8 KG, we gave them a weight reduction. So this is what is the OEMs are looking for at this moment. And that's the reason they don't want to try any new supplier and new entrants, but they want to price with suppliers who have that extensive experience and also record of developing this path over more than 3 to 4 years up till now.

We have our next question from the line of Aman Agrawal from Carnelian Capital.

I actually had a few questions. So the first was how much cylinder head would be as a mix of revenues right now .

Currently, our cylinder head portfolio would be around 40% to 45%.

Okay. [indiscernible] And the large we have -- yes.

Sorry. So currently, my cylinder head portfolio would be around 40% to 45%. Out of that, around 10%. 8%to 10% would be the 4-wheelers. Now we are trying to increase the portfolio of the 4-wheeler cylinder head. We are trying to increase this 8% to roughly to 15% to 16% in next 3 to 4 years, which will give me a higher margins and higher value addition.

And the balance 30% currently would be some two-wheeler or we have some mix some EV also?

No, we are definitely going ahead with acceptance of EV. We also anticipate consumers would like to shift to this new technology. And that's the reason we also anticipated the volumes of 2-wheelers will come down.

Okay. Understood, sir. And on this order book, like we indicated last call that our annual order book currently is somewhere around INR 620 crores per annum. In that order book, sir, how much would be cylinder head was

In that order book, we have added customers like Renault for the Brazil location. Then we have added Toyota and [indiscernible] . And also we have added PSA. So I think roughly this would be around 20% to 25%. This was PSA. They're talking about the huge volume. They are talking about roughly around 3 lakhs, 3 lakhs volume per year for the domestic as well as export business also this Toyota, they're also talking about our good volume for India and also a few projects for the global market. So we are anticipating good numbers from these 2 projects.

Understood, sir. And on this order book, it is like we have dividend around 25% to 30% is easy in this order book. So like in EV is basically a hybrid or pure EV, what will be the mix of these products?

This would be around 90% would be pure EV.

And sir, on the Tata JLR order, which we have basically indicated to the exchanges. So like as I go through JLR [indiscernible] will be introducing this model from 2024, but most of this -- their models will come from 2025 and 2026. So we will be planning to range over also, majority of our pause going on other models in [indiscernible] which comes in

We are not sure about the model, but what we know is a new development, what they are working currently, if not for the current -- any resource project, but just for the new development?

Understood, sir. And sir, on this overall light weighting things, which the aluminum content is increasing in the EV going forward. So given we are currently with so many global players like we have gotten orders from a lot of players, even globally as well as in India on the EV side. So how do we see this opportunity for us in the future? Like any aspiration of basically growing the top line or like reaching some top line number in terms of Alicon for the next 4 or 5 years?

We are noticing a good opportunity going out with EV because not just developing this part, but also lot of other venues have opened up when we talk about in EV. Like a lot of structural parts, which currently is into steel or a cast iron. For the light weighting, definitely, customer is looking to develop this part in the aluminium like. For example, a cradle what we developed for Jaguar 2 years ago was actually -- was previously being made up with a cast iron component, but we give them a solution, a unique solution in aluminum, which have given us a new platform for us to enter. And that's the reason from there, if you noticed last 2 years, we have added a new segment called technology-agnostic part which we also EV. And we call it a technology agnostic, which means we are IT vehicle be a hybrid or we are EV. This past will remain common. And this will help me to grab a particular share in the existing market. So yes, with the combination of EV and technology-agnostic part, we are going to increase our sales going forward.

Understood, sir. Just one more question, sir. So we have gotten this PLI incentive approval. So like which of our products will basically qualify what kind of CapEx we are looking to incur for this PLI going forward?

Sorry, voice is not clear.

So we have -- approval, Yes. Sorry, sir. So we have got an approval for production incentive schemes, PLI scheme of government -- so like which of our projects will qualify under that and like what is the kind of CapEx we are planning to incur for the PLI scheme going forward, sir?

For the PLI, that we need to recheck, but I think it is in the range of INR 40 crores, INR 50 crores minimum that is going to happen.

Okay. And sir, overall CapEx plan [indiscernible].

For the year is -- around, we will be in this year, around INR 80 crores to INR 90 crores.

Okay. And sir, what would be the -- are optimum asset turnover like on the CapEx which you do?

It's totally different because it moves where we are having -- making the investment for the machining. So then generally, it is on the lower side. But for the other, because we are already having the facility here for the casting and other processes. So our expectation for the new orders is between 2 to 4. Because some orders we are having 3, we are having 4. Like when we were talking about the JLR, may be in the range of 3.5 to 4

Okay. Sir, one final question on the margin. So like we have been indicating that structurally, we are moving towards a 14%, 15% kind of margin that has been forward. But like currently, our EV volumes would be lower, right, because of the part we are developing. So once the volumes basically ramp up, do we see these margins going down because the competition starts increasing? And even these OEMS basically go for multiples versus in terms of sourcing this product any directions beyond that?

Generally, it doesn't happen because all these global OEMs, they go for the long-term agreements. They don't play like this, okay, cut down the prices. And like just a example of this Jaguar Land Rover. So they have also to spend around 1.5 to 2 years with us to develop and maybe a huge amount there to invest for the development. They don't go to the competitors or renegotiate because you see that they have negotiated all this side based on the current situation. And definitely, it is in the coming years, we have to face -- like the inflation impacts are there. So that also they keep in the mind So maybe when this -- after 5 years or 10 years down the line, this technology becomes the general technology or like the part becomes the commodity, then we can see the -- some competition in the pricing. That was really helpful. Thank you.

We have a next question from the line of Amar Mourya from AlfAccurate Advisors Private Limited.

Sir, just on thank you for [indiscernible] like if I see your '26 guidance, basically, you are talking about 23% kind of revenue CAGR and round about 37%, 38% kind of EBITDA CAGR. So what I'm trying to understand here is that, is that kind of trajectory would be seen from the starting of the years like -- so I mean the margin improvement which we are in about, let's say, currently, we're at 11% odd. So is that from here on, every quarter kind of we will see the margin improvement or this all will happen, let's say, in the probably after 2 years of [indiscernible]

Amar, this margin improvement, so definitely -- because now from we can say from the next year '23. '24. So we can see a good improvement. But for the current year, like in the last con call, I've explained that maybe we are targeting between 12% to 12.5% for the full year. So slowly, the improvement will be there. Another impact that -- because major impact has come from the inflation. So it has also started easing out. So that benefit we will get for the current year and maybe some price corrections from the customers to the pass-through of this impact of the inflation.

But then you're saying, let's say, if you end -- exit the year with 2.5%. Next year, you will see inch-up on margin even on the current half, right, in '24 because your business is start kick in?

Yes, yes. So we hope that they should do further.

Okay. And in terms of the revenue growth, sir, like as you said that in majority of the growth, basically the commodity prices also linked. But barring the commodity prices, do you see that kind of volume growth for us to do this kind of double-digit revenue growth in this stage of time?

Yes, this double-digit growth is I think that it is normal because the kind of orders we have got and the ramp up we have to do. Even whatever we are talking about, we are not banking on the existing portfolio, that whatever the -- we are heading the businesses from the past. So this growth is coming in the double digits, that is very easy and maybe like the last [indiscernible] also explained that we have revised on the upward side for the current year. So there, we were talking about 18% to 20%. Now we are talking about around the 25%, 28% growth in this year.

If you can help us like this order book of INR 3,000 crores odd, which we are having INR 2,100 crores, how this order book will be executed in this 5-year phase? Is this a

I think I should explain properly is the understanding of INR 3,000 crores. So what Rajiv is. Explaining, this INR 3,000 crores, and now the INR 3,300 crores, that is still FY '26. So actual order book size is around INR 7,000 crores of the new businesses, new order -- and when we down the line going forward, when we talk about around the 7 years, when these completely these projects will be executed. So INR 7,000 crores is estimation I'm giving. And then from the existing business also approximately around -- around INR 7,000 crores. So total order execution in the next 7 years will be in the range of around INR 14,000 crores.

Okay. Sir, I didn't understood -- what you're saying. Currently, when you're saying your current product book is INR 3,000 crores, but you are saying that this order book is now...

No, no, no . I mean INR 3,000 crore is a order book from the new businesses we have got and this up to March '26 around 3.5 years only. But then we see the size of these orders, the total size because the period of the complete order is around 7 years. So when we take those sizes of 7 years, so the order side of these new orders is around INR 7,000 crores. This is coming from the new orders that I'm talking about. And second, my existing business where we are doing, and that is also for next 7 years and taking just a ballpark figures, approximately same figure of around INR 7,000 crores. So total order execution in next 7 years is around INR 13,000 crores to INR 14,000 crores.

Okay. Okay. So basically, you are talking about a INR 2,000 crore kind of a run rate for the company.

Average that we talk about at this moment this is, Whatever the orders in hand we are talking. And maybe in the 7 years, there will be continuous addition of the new genesis. That will further increase our run rate.

And this INR 3,300 crores is execution over 3.5 years, correct?

From the new business new order we have got.

Yes. So basically, I got it. So basically, let's say, and this ramp-up of, let's say, INR 900 crores will happen from the '23 -- I mean, FY '23, '24 itself? Or is it like equally divided? Or it is like benchmarking one particular year and then it to lean out something like that, I wanted to understand.

Yes. So this INR 900 crores of peak still what we are talking, this is from the new businesses what we have added from '18, '19 still days and this will come somewhere around from the year, '25, '26.

On '25, '26.

But '25, '26, this will be in a range of INR 900 crores. And you can map for a previous year, we can factor around 80%. But from '25, '26, this will further increase.

Okay. So basically, peak is INR 900 crores, which will be touched at '25, '26. But I -- but you're saying 80% of that could be executable in these 3 years period, right? Out of that, INR 900 crores.

[indiscernible] grwoth will give a INR 900 crores will be for '25, '26. And thereafter, there will be a ramp-up.

I got it. Sir, but then what will be the order executed in '24-'25, '23-'24, '24-'25, '25-'26. That is what I'm asking. Okay.

So Roughly around -- it would be INR 700 crores to INR 720 crores in '23-'24, somewhere around INR 800 crores to INR 820 crores in '24-'25.

So '23-'24 something around INR 700 crores and INR 800 crores is '24-'25.

'24-'25. Right.

And what's in -- okay. Okay. So basically from next year, the new order app up will start. That is what you're saying, right?

Correct.

And this new order would be, again, a premium margin business because this quarter would be largely your 4-wheeler or CV order?

Right. with the value addition

It's a value addition. It's a value addition. Okay. Okay. And sir, from existing product line, existing business lines, is there an opportunity for you to increase your margin or there basically, this transition from 2-wheeler to 4 wheelers will happen, and we'll keep on reducing those business. That is the only way we are going to increase the margin? On that run also, we are continuously working

Like the other ways how we can increase the productivity, how we can reduce the cycle time for those components so that we can get a [indiscernible]. And also we need to pass on to our customers with the yearly year-on-year reduction also in some case, customers are expecting. So some we pass on to our customers also. But definitely, we are working extensively on the other avenues, how we can reduce the cost of operations of those plants.

We have a next question from the line of Raghunandhan from Emkay Global Financial Services.

Yes--thank -- more or less, all my questions are answered. Just one final question I had. How do you see the share of overseas business trending over the next few years?

So currently, I am at around 24% to 25% when we talk about global. So we are noticing an increase in this particular portfolio also as the new projects what we have at most are from the global numbers also. So we are anticipating this would grow somewhere around 36% to 38% in next 4 to 5 years.

So [indiscernible] based on the order book only, you're talking about 26% to 38% global [indiscernible] scale it up to 35%.

Got it, sir. And my understanding would be correct that these would be more value accretive and margin accretive orders?

Definitely, our focus is mainly on that

That's wonderful, sir. Sir, with this, we come to the end of the time and end of the session, I would request you to make some closing remarks for the investors on the call.

So on this, thank you very much for attending the call and thanks to Emkay Global to arranging this platform for the discussion. And definitely, just now showing that interest and the confidence in the Alicon and only one thing I will say that now we are seeing a lot of -- because we are talking about the many customers on the EV side, how the things are happening, how Alicon is performing, just to say things. I will say that now Alicon is mainly like when we talk about the EV. So we have developed almost all the parts. Those are required in aluminum and Alicon is the first preferred partner by almost all OEMs. So when they are talking about the EV development. So first, they are approaching to Alicon -- and hopefully, we will be able to what we are promising, we will be able to deliver. So thank you very much for attending the call. Thank you.

On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.