Frontier Springs Limited (522195) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Frontier Springs Limited Q2 and H1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Mehra from TIL Advisors. Thank you, and over to you, Mr. Mehra.

Thank you, Denzu. Good afternoon, and welcome, everyone. Thanks for joining this Q2 and H1 FY '25 Earnings Conference Call of Frontier Springs Limited. The investor updates has already been uploaded on the stock exchange and the company website and have been e-mailed to you. In case you do not have a copy of the same, please feel free to reach out to us. To take us through the discussion we have today with us Mr. Kapil Bhatia, Managing Director; Mr. Neeraj Bhatia, Whole-Time Director and Chief Financial Officer; and Mr. Dhruv Bhasin, Company Secretary. We'll be starting the call with a brief overview of the business and the financial performance, which will then be followed by the Q&A session. I would like to remind you all that everything said in this call reflecting any outlook for the future, which can be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties that the company faces. These risks and uncertainties have been mentioned in our annual report. With that said, I would now like to hand over the call to Mr. Kapil Bhatia. Over to you, sir.

Thank you, Abhishek. Good afternoon, everyone, and thank you for joining us today for Frontier Springs Limited earnings call for the second quarter FY '25. I am Kapil Bhatia, the Managing Director of Frontier Springs Limited, and it's my pleasure to present our financial results to provide insights into our performance during this quarter. We are pleased to report that our financial results of quarter 2 FY '25 aligned with the guidance we set to at the start of the financial year. Our revenue from operations for the quarter stands at INR 52.24 crores, reflecting our 59.49% increase compared to the same period last year. Our EBITDA has also shown significant improvement, reaching to INR 10.69 crores, which is an impressive 126.68% year-on-year increase. This translates to an EBITDA margin of 20.46%, up from 14.40% in FY '24. Furthermore, our profit after tax has surged by 155.30% to INR 7.29 crores. As we dwell deeper into the performance of our key segment, I would like to highlight the strong contribution from our three primary business vertical: Coil Springs, Forging, and Air Springs. In the Coil Springs segment, we experienced a substantial increase in demand driven by sizable orders related to the production of LHB coaches, the emergency procurement associates with the -- with this demand has resulted in favorable price realization along with stable raw material cost. This combination has significantly enhanced our profitability in this segment and we anticipate that this positive trend will continue as we progress through the year. Turning to Forging. We did encounter a slight delay in the setup of our new 6-tonne hammer. We are optimistic about commencing trial production shortly. We have already begun receiving order from Indian Railways for forgings that will be produced using this new capacity, and we expect this contribution to start reflecting in our financials from quarter 4 onwards. Our Air Springs vertical is also demonstrating robust performance with a healthy order book, we are well positioned to meet the incremental demand for air spring required for LHB purchase, which should further accelerate growth in this segment. Looking ahead, we remain committed to investing strategically in the small capital expenditure aimed at clearing bottlenecks and enhancing of our production capacities. This proactive approach will enable us to cater effectively to the growing demand across all segments. Overall, we find ourselves in a strong position with a healthy order book and excellent visibility of future demand for our products. The strategic initiative we have implemented are yielding positive results, and we remain confident in achieving our stated guidance of gross revenue between INR 240 crores to INR 250 crores for financial year '25. In conclusion, I would like to express my gratitude to all our stakeholders for their continued support and trust in Frontier Springs Limited. We are excited about the opportunities that lie ahead and are committed to maintaining transparency as we navigate through these promise -- promising times. Thank you once again for joining us today. I look forward to addressing your questions during Q&A session following this presentation. Thank you so much.

Shall we begin the question-and-answer session?

Yes.

[Operator Instructions] The first question comes from the line of Aman Soni with Nvest Analytics Advisory LLP.

Congrats for a good set of numbers. My first question is on our order book. Like we performed decently in first half. But can you spend a few minutes on guiding us the kind of orders that you are witnessing that are coming to us and the kind of orders for which we are into the bid line, which can give the visibility for, say, next 2 to 3 years?

We have a very healthy order book. And as committed, we are -- we will be doing around INR 240 crores to INR 250 crores gross revenue this year. And the next year estimated will be around INR 300 crores gross revenue for our company. And orders keep on coming in for all the three segments, the Coil Springs, Air Springs and Forgings -- and this is a normal trend that there is not a single tender so that we can wait for another year or so. It is a continuous process. We always keep on offering tenders to us, and we keep on quoting. And at the moment, we are already booked for next 6 to 8 months, we are already having a good order, and we are running our business with 75% to 80% capacity and orders are in a good position.

So that INR 300 crores, you are saying for next year, but I think on a small base, we are showing a very decent growth this particular year. So are you seeing any kind of slowdown happening in the terms of the orders coming in after FY '26?

No, I don't see any shortfall. As you know that Indian Railways are already working and keeping -- increase the capacity of manufacturing their freight wagons, passenger coaches and locomotives where we are supplying our product. And next year onwards, they are already planning to go for 6,000 passenger coaches to 10,000 passenger coaches and as well as freight wagons and locomotives. So we don't see any slowdown in the orders for the next 3, 4, 5 years at all.

Got it, sir. Sir, secondly, on our margins, if we see like for the last 7 quarters, consequently, we are showing the uptick in the margins. So how do you see these margins shaping up? And is there any kind of target that we are looking at like after that, that margin will get stabilized and that should continue for a reasonable period of time?

Yes. The margin what we are having now, it will continue for a sizable period of time. And I don't see more competition in this so that our margin will go down. It will minimum remain same or it may increase further.

Increase further from the current level, like in this quarter, we did around 20.46%, right?

Yes, yes.

Got it, sir. And are we looking for any fundraise sir, for the purpose of further expansion or catering to the upgoing demand? Because if we look at our net block, so that is more or less same for the last 2 to 3 years. It is not a big CapEx happened at our company level. So what's your view on that?

No, we don't require any major CapEx this thing at the moment. whatever small bottlenecks are there to keep on our capacities upgraded as far as the supplies are concerned. So we don't see any more fundraising. And whatever it will be there, it will be from the internal accrual for at least 1 year. The small CapEx of INR 7 crores, INR 8 crores, which is a continuous process per year, we keep on doing it from our internal major fundraising at the moment for any project.

Next question comes from the line of Agastya Dave with CAO Capital.

Congratulations on great execution. Sir, I have a question on your total capacity in terms of peak revenues that you can achieve with the current asset block with the debottlenecking exercises that you mentioned, what's the maximum revenue potential of the company as of now?

Now, we can -- with the same capacity, we can reach up to INR 500 crores gross, which will be there around FY '27. And with -- as I've already mentioned, for the some net block -- bottlenecks, we keep on doing that for improvement. So INR 500 crores for the financial year '27. So there will be no problem with the current capacities, the major capacity what we are having.

Great. Great. Sir, so then if our target is to reach INR 500 crores or -- and the potential of the company is clearly to reach INR 500 crores by FY '27, why the lull in '26? Because we are growing very rapidly this year. And then it would seem that we would be growing very rapidly in FY '27. But FY '26, the 20% number, is it you being conservative? And as the previous participant also mentioned, are you seeing any slowdown? Are there any like bottlenecks that you need to address?

No, no. I'm really a little conservative, and we may touch INR 350 next year, but I'm a little bit conservative telling all these things. And when the things happen and the results speak for themselves. That is the main thing. We are not slowing down anything, and we are quite sure that the results will keep on increasing every year.

Great, sir. Sir, my next question is on the margin side. So can you talk a little bit about gross margins? How should we look at it? And when you have different divisions, which are -- I'm pretty sure they have different economics. So how does a relative shift in higher revenues in a particular division affect your margins? For example, now the forgings side will kick in when the new hammer is completely operational. So what will it do to your margins? So can you cover the gross margins as well as EBITDA margins in this question?

The forging will not increase much of the margin, but definitely add to the revenue with a reasonable profit margin. But the coil spring and the air spring will definitely increase our margin or maybe remain same. Forging will definitely -- because forging is a very competitive market, and we will -- we don't see much of the increased profit margin, but definitely add to our revenue and a great numbers. And also, we are looking for some exports in the Forgings division also. As soon as that will add, then the profit margin will definitely increase in the Forgings division also when we'll add the export because we don't see export for the coil spring and air spring at the moment because Indian markets are too high, and we don't want to go outside. Everybody wants to come to India to supply to railways. So we don't want to spoil that thing. But forging, definitely, we are looking for some export business. And maybe next year, second quarter onwards, we'll start getting order for the export of Forgings division.

Great, sir. Sir, just to press upon this margin [Foreign Language] part again. You mentioned in, I believe, in the opening remarks that our margins will be here or if they will become better. So what should I take as the base? Because if I look at the last, let's say, 10, 12 quarters, there has been -- there was some -- like there was a little bit of a pressure in '22, '22, '23. But then you have rebounded back to the older margins of 14%, 15% and now you are reporting 20%. So what is the base, sir? You, sustainably, you can maintain and on which you can build upon? What should be?

Between 18% to 20%.

As the base, sir.

Yes.

And then you can further build upon it.

Yes.

Great, sir. And one last question, again, sir, on the margins. So if the total potential of the company is to do INR 500 crores without substantial CapEx, so you are effectively operating at 50% or less than 50% utilization. So what kind of operating leverage can you see? Because if a facility is operating at 50% utilization and then reporting 20% margins with 50% plus gross margins, as you scale towards 50% -- as you scale towards INR 500 crores and 100% utilization, your margins can be probably 25%. So is that a fair assumption? Or am I reading too much into it? [indiscernible] operating leverage, I'm trying to understand, sir.

You want to understand the capacity utilization of our units or what you want to know?

Sir, I'm looking at three, four things. One is that you said that this year, we are around 250, 270. So that -- let's say, 250, but the peak is 500, so that would mean that the current utilization is somewhere close to 50%. But at 50% capacity utilization, you're already reporting 20% EBITDA, which is like fantastic. So if you go towards 100% capacity utilization, I mean, I'm just trying to understand will the margin...

No, we are not working at 50%. We are already working at 60%, 65% capacity in some of the division. And we are, like I already told you, we are working on the bottlenecks so that we can execute more orders. Orders are there. We are not able to execute because of some bottlenecks, and we are working on that. And by next year onwards, we'll be able to get our machines in line and we'll operate more, and we are already working on 65% to 70% capacity. But we have capacity in making coil spring, but finishing or maybe testing, we require some where we have bottlenecks so that we are working on that. So we'll be able to do that with little CapEx of INR 5 crores to INR 7 crores, we are able to complete bottlenecks, then we'll be able to do it.

Okay. So that was my next question, you already answered it. All the best. Great performance, sir.

Thank you so much.

The next question comes from the line of Mahesh Atal with Atal Investment Advisors.

Congratulations on a great set of numbers, sir. My first question would be out of this INR 52 crores, can you please specify the difference -- I mean, the turnover on the coil spring, forging and air spring, please?

INR 250 crores, the Coil Springs will be around INR 80 crores to INR 90 crores, INR 60 crores of Forging and rest is Air Springs. So INR 90 crores, INR 90 crores is almost Air Springs and Coil Springs and INR crores INR 65 crores is for the Forgings.

No, I'm talking about the quarter, sir, the quarter gone by.

Okay. I was telling you the total year. So the percentage will remain the same approximately. I don't have the exact number at the moment in front of me. But I think...

Yes, I'll get it offline, sir. I'll get it offline. I had another question, which would be on the -- if I go through your annual report, sir, there is one thing that you reported in the related party transactions, which would be the job work that you have paid to Vishpa Rail, which is around INR 37 crores odd. So if you could please throw some light on what kind of job board we are paying to this party? And do we have any formal agreement with them on the job?

Sir, we are already having a formal agreement, and we are doing our -- some work for the finishing side so that we'll be able to get the things done and delivery faster to the railway. We are already having machines, but they have the more machines and they are doing it for us. So it is like that.

That's a big sizeable. Is it a promoter entity, sir?

It is a?

It is a promoter entity, right? And everything is on a arm-length basis?

Yes.

All right. Second question would be on the investment that you have -- that you're having in the equity side. So is this professionally managed investment that you're doing with the cash that you have accumulated? Or is it that internally, we are deciding on which equities...?

It is internally, and we have a team to do that internally to decide on this.

So are we going to build up further on this? Or this was just a small arrangement.

We keep on doing it, and we keep on doing it as and when we have an excess fund. So we just don't want to keep it idle in the bank account. So we keep on investing these things so that whenever we require for future expansion, we can immediately use it, and they can give us a yield on that.

Yes. And one advice would be, sir, if you could please give a breakup of which equity shares this -- the money is invested into that would throw a light for the maybe next year or so. Anyway, my next question would be on, sir, we have this a lot of cash coming into our books. So actually, by having cash in our books, we are pulling down our ROCE. So could you please throw some light on what further plans you're having beyond '27? Are you working upon that? And how far are we on that...

No, we are already looking for -- and I don't want to reveal now, but we are looking for some takeover of some businesses related to railways. The talks are on a very initial basis. Let's something, something, something happen, then we'll definitely reveal to shareholders. We are already working on to multifold our business, taking over some companies with our cash and maybe require if something required from the primary market, we can go to that also. But it's very initial thing. Let us materialize something, and we are already doing some due diligence on one or two companies. And we are also looking for some major diversification. So let's see what happened, and we'll be able to definitely disclose to the shareholders when something happened positively.

Next question comes from the line of Vivek Gautam with GS Investments.

Yes. First of all, congratulations on a steady set of numbers, sir. My question is regarding the macro scenario for railways. I've seen in the railway recently that sort of rush is there in the general compartment and people belonging to the lower category going into the AC coaches and other things and creating trouble for it. So basically, the railway budget has sort of has also focus shifted from premium Vande Bharat sort of line to general category coaches. And as such, our air springs, which were being done in -- used in premier Vande Bharat coaches. So they are having some headwinds and some budget allocation as they are moving to more towards due to the accidents also due to [ coverage ] and other general things from our premium Vande Bharat offering, sir. So what impact can it have on us, sir?

So this is actually very good news to the shareholders that railways are a little bit curtailing the Vande Bharat things and going for the traditional LHB coaches more from 6,000 coaches per year to 10,000 coaches as you have clearly stated that there is a dart of coaches and the people are not able to get seats in the railways. So that is a good news for us. And air springs are not only used in Vande Bharat, they are now using the air spring in LHB coaches with the coil spring. So we are having bounty in our both the end. And as much as LHB coaches are made, that is good for the company and for all the three divisions because we are supplying forging for LHB coaches, coil spring for LHB coaches and air spring for LHB coaches. So that is the main thing that I already mentioned that additional demand of coil spring emergency procurement because they wanted to produce more LHB coaches. So it is good for us and good for the company as many as LHB coaches will be built and railway has really curtailed the Vande Bharat chair car and now they are working on Vande Bharat sleeper car. So once that will roll out, then they will see what is the economics and all that. So it is good that LHBs are working for us.

Okay, sir. And sir, any client concentration risk for us, railway being our major customer only? And any risk mitigation plans we are taking? And what about the opportunity size for us and the expected growth, which we can expect, sir?

No. Railway, you can very well see that because of the country's population and government policies of our Prime Minister Make in India, which has really helped the company to work in such a manner. So -- and for next 10, 20 years, we don't see any downfall as far as railway business are concerned. You are already seeing that almost INR 3 lakh crores is allocated to Indian Railways, this budget and maybe more for the next financial year. So -- and all over the world, people wanted to come to India and supply to Indian Railways because the business is there. So things are good, and we are sure that the field where -- and the country and the Prime Minister vision working on the infrastructure, whether it is rail road or maybe shipping, all these things are working on a great manner. So the companies associated with these infrastructure things are working all right.

And expected growth rate for the next 2, 3, 4 years, sir? What is the expected growth rate?

We mentioned that by '27, we'll be touching gross revenue of INR 500 crores, maybe a little more. So things are good, 20%, 25% growth every.

Sir, I remember the IPO of Frontier [indiscernible] scheme came somewhere in the mid-90s. And that's a good part actually in the sense that so many companies came with the IPO at that time and many of the companies disappeared and only a few are remaining, including ours. So -- and what happened, sir? And in between not much of the change happened and what were the positive figure for us and visibility for our earnings hasn't started? If anything you can like to highlight, sir?

Earlier, when we have come to the -- when we have got our company, initially we were majorly working for the Leaf Springs segment for the state transport corporations and for the trucks, buses. But later, around 2000, we have stopped making those product because of the major competition and very, very low profit margin and the state government has started buying from the local vendors from their state. Earlier, we used to supply to all the state transport corporation like MSRTC, Delhi or Hyderabad, and everywhere we used to supply. So things were different at that time. So business was very low. And then we enter into railway and it took some time 2, 3, 4 years to build the new plant and then the new product. So it was like that. And slowly and steadily, we have come on this way. And then Indian Railways used to import a lot of springs, they were not buying from Indian sources. As I already mentioned that because of our Prime Minister Make in India thing, we are able to do that, but Indian Railways was not buying from the local vendors, but now they are buying it, and we have already proved our quality and air spring, we have already got our technical know-how partner from Germany, ContiTech, Continental. So things are now good with us.

And sir, one more thing I would like to congratulate you is about -- I believe your name of the company, our company is named after Frontier province of Pakistan. So your father started the company and you take it to a next level. Fantastic work by the first generation entrepreneur, sir. And a few words about the next generation who is there in the company and what are their role and who are they?

My nephew, Mr. Shantanu Bhatia has already joined business, Mr. Neeraj Bhatia's son, he has already joined business and looking after Air Springs and Forgings division, and he is working really hard for that. And things are in line for the next generation also, and I'm quite confident that they will take it further to the next level.

Yes, sir. And the UP double-engine sarkar is there and Kanpur used to be the major industrial hub, and I believe they went through a bad time. But now Frontier Springs might be one of the leading light of the Kanpur industrial unit, sir. And what is the encouragement you're getting from state government, sir?

State government is -- you have already seen that double-engine sarkar is working all right and law and order situation is very good and power situation has improved tremendously since last 7, 8 years, we don't -- we are not using any gensets and all. And things are very really working and all the departments in the administration are really helpful for the units as Mr. Yogi is looking after daily basis. So we are associated with all the CIIs and other entities. So things are good as far as UP governments are concerned.

Yes, sir. Excellent work, sir. And seems our Maruti is on the way to become Mercedes now. And keep up the good work, sir.

Thank you.

Next question comes from the line of Aman Soni with Nvest Analytics Advisory LLP.

Sir, you mentioned to one of the participants like we are targeting INR 500 crores by FY '27. And at the same time, we are looking for INR 300 crores kind of number for FY '26. So can you explain like what is the thought process or what is the rationale? Is it like we are expecting some big orders in FY '26 that are going to be executed in FY '27? So can you put some color on it?

Yes. Railways -- Railway demand, I've already mentioned that increasing in all the three segments where we are there, freight wagons earlier, they used to make 10,000 to 11,000 wagons. Now they are planning to produce almost 30,000 wagons a year freight wagons, and from 6,000 passenger coaches to 10,000 passenger coaches for the next 3, 4 years. And as many as freight wagons and coaches will be made, so that much of locomotives are required. So we are there in all the three segments. Anything which carries load and moves required a coil spring from us to Indian Railways. So all the three things, freight wagons, passenger coaches and locomotives required our springs and because we are into suspension. So without suspension, nothing can move. So we are quite positive that things will be all right for the next 7, 8, 10 years. There will be no dart of business as far as Indian Railways are concerned.

Got it, sir. And sir, I think in previous con-calls, you mentioned like we are one of the three approved players in India for this air springs. So sir, can you comment upon like who are the other players who are getting ready for getting those approvals or what kind of competition do you see, say, in next say 1.5 years, like what kind of players are coming in, how much capacities are coming in and whether it is likely like those upcoming capacities are likely to exceed the demand level? So how it is going to shape up, sir?

Still there are only three approved sources. And I think maybe one another one is they are in line to get themselves registered and getting registered with railways because these are the safety products required a lot of time and it requires at least 2 years to get your product approved with the railways after testing field trial and all. So next 2 years, I don't see much of the competition coming in as far as the coil springs and air springs are concerned.

Got it, sir. And lastly, sir, like we are an R&D company only, like we are developing the product and customizing it as per the requirement of new products that the railways is bringing on. So are we looking to diversify further into the product segment? Like is it possible like we will be introducing newer products apart from catering to the existing areas?

No. We are into suspension, and there are some other parts in forging division, which required heavy-duty hammers, which we are under installation. So we will able to produce more forgings to the railways. And rest of the things are -- will remain same. And as we have already collaborated with Continental ContiTech Germany for further improvement in the quality of air springs. So we are already doing that in consent with the railway research department, which is in Lucknow very close to us, and we are working hand-to-end with RDSO and our company that whatever research is required for further improvement in quality and product, we are already doing it. So that is an added advantage as we are in Kanpur and Indian Railway Research division is in Lucknow just 1.5 hours away from us. So we keep on doing that and which help us for understanding the railway need and railway further requirement for quality as well as the protection is concerned.

Next question comes from the line of Raja Panda, an individual investor.

Sir, my question is regarding the Air Springs. And we had a INR 52 crores order, which was supposed to be delivered by December of this year. So I'm assuming we are close to completing that order. Are there any further orders or any update on how the capacity is going to be used after this order?

Yes, we already got another INR 50 crore orders keep on coming. Orders are keep on coming. That was the first [indiscernible] order -- so orders, INR 10 crores, INR 20 crores orders keep on coming in, and we are booked for the next financial year, the total financial year at present, and we are having a very good order book as far as air springs are concerned.

That's good. Sir, we had also updated that Alstom and Siemens and Bombardier and some other customers have visited the facility, and they're looking to locally procure from you for Make in India. So get that materialized? Are we getting some orders from these clients?

I couldn't get you. Your voice was a little cracking. What are you saying?

No, I said I think we have said in one of the call that Alstom and Siemens and...

That is we are already there. And as our air spring, we are having a collaboration with Continental ContiTech, which is an international company, and they are already supplying to Siemens and other major player who is producing the metro coaches. So as now we are in India and we are partnering with Continental ContiTech. So that is added advantage to us to supply these and things are already in line and whatever their requirements, they will definitely come to us. It's already discussed.

So what will be capacity utilization currently and going forward for this division, Air Springs division?

The Air Springs we are just at the moment doing 50% capacity utilization.

Okay. Okay. So do we look forward to increasing that utilization rate?

Yes.

Next question comes from the line of Mahesh Atal with Atal Investment Advisors.

Sir, can you tell me the capacity of this air springs, is it online now? The 250 -- we were supposed to move to 250 coaches per day, right? So is it on now?

Initially, we have started with 100 coach per month -- 100 coach set per month. And we are already doing it 50 coaches capacity already increased to 250 coaches per month.

So like since last month, we are doing it 250, right? So we can take it as 250.

Yes.

Which is 1,000 air springs per day -- per month.

Yes.

And sir, as you said, the areas booked for the next financial year coming to air springs, right?

What?

We are completely -- we have orders in hand for the next financial year...

Yes. We are booked for almost the full year for the next financial year.

That is for the extended capacity, right, sir?

Yes.

Next question comes from the line of Rakesh Roy with Boring AMC, Omkara Capital.

Just my first question regarding, sir, as you mentioned earlier, you are working for defense also metro also. Can you highlight on the progress on this sector part, sir?

For defense, we are working for our Forgings division and [indiscernible] 4, 5, 6 months to start something to the defense areas. We are at the [indiscernible] at the moment. And next what you have asked defense and metro. Metro, yes, now as we are [indiscernible] for Indian spring and things are already started coming in from the BEML and our manufacture of the coaches for supplying for their metro. And we started discussing with our OE Messrs ContiTech with their design. So every metro has a different design of air spring, whether it is Siemens, Bombardier, BEML, whoever manufacturing metro coaches. So we keep on developing the air springs for each and every one. As far as facility approval is concerned, that is already there. So now the product approval will start -- we will start doing the product approval for their type of metro coaches. That is the thing.

Right, sir. Sir, next question regarding, sir, can you give me the number, sir, for coil spring, you said INR 80 crores to INR 90 crores. For air spring, how much, sir, for forging?

For Air Spring this year, the same, INR 90, INR 90 for air spring and coil spring and around INR 60 to INR 70 for forging. Yes, INR 240 crores to INR 250 crores was what we are targeting this year.

Okay, sir. My next question, sir, as you mentioned, government has shut down Vande Bharat this number and increase the LHB coaches. LHB coaches, we use air spring plus coil spring, both. Okay, sir.

Yes.

And how -- yes. So if I'm right mathematically, if we take 50% coil spring and 50% the air spring. No, no. The out of total 800 coaches -- 8,000 coaches every year. And, one, if I'm right, one air spring cost is nearby INR 1.25 lakhs nearby?

Yes.

And coil spring is nearby INR 30,000 per unit?

Yes.

And our market share is nearby 50%?

Yes.

So in that case, sir, our revenue will increase further? This is apart from the maal gaadi sales this one, sir.

It is there and the prices is also going up because of the additional demand, and we are getting a good margin for coil spring. What you are saying, we are getting much better than the INR 30,000 at the moment and being an emergency demand by railway and suddenly increase the capacity. So we have good margins from the railway. And things are good as far as cap utilization.

Sir, my question is, sir, regarding if you take 8,000 coaches, LHB coaches, and if take 50% air spring, in that case only, this add only nearby INR 160 crores market. Out of...

As I'm saying, the next year order book is full. So that is why it is full, sir, because of the more requirement and the more...

Okay. Right, sir. And sir, there is a highlight on this forging business and how is the market size? And who are the other players in same for railway forging?

There are -- one of suppliers, as I already mentioned that forging will not have the same margin as coil spring and air spring are having. But there are good suppliers like RKFL, Ramkrishna Forgings, which is already listed company, and there are a few companies from Punjab who is supplying to railway. So there are seven, eight companies in forging this thing. But what we are doing with the regular supply as we are increasing our hammer capacity, so we are entering into some components which are having a less supplier so that we get a better margin. So that's why we are increasing our capacity to go for a bigger hammer in the major heavy product where we are having only two, three suppliers so that we can get a better margin on that in the forging division also.

Okay. Sir, one is, and you mentioned in the air spring, we have only three players. And who are the other two players, sir?

One is Avadh and there is a tile. Avadh Rubber, [ Tile Engineering ] like this.

Next question comes from the line of Saket Kapur with Kapur & Co.

Firstly, when we look at the closing balance for CWIP, is it for the debottlenecking exercise that we have commenced? And when we are going to reap the benefit or when is it going to get capitalized at INR 4 crores?

Yes. Now what are you asking?

I was asking about the capital work in progress balance of INR 4 crore. Is it towards the debottlenecking exercise that you alluded in your opening...

It is a debottlenecking exercise as well as installing our new hammer in the Forging division. So it will be around INR 4 crores to INR 5 crores, which is -- which we are already doing for this financial year. So it is for both installing our hammer as well as debottlenecking the capacities of our Coil Springs and the Air Springs division.

Okay. And when will this get utilized and the benefits start flowing?

So it is on a daily basis. By March, this will all be done, and we'll start getting more better revenue for the next financial year.

Okay. And, sir, can you give the raw material basket mix, what constitute the major raw material currently?

We are having a different type of raw material, like for our coil spring, there is a spring steel rounds, which we are buying RDSO approved sources, and four railway resources, the steel plant who are supplying for that. For air spring, we required cold-rolled copper grade, which is also supplied by a few steel plants. And in forging also, we require a different type of billets. So it is all the steel basically, and we are buying from the different sources of product because all the items are safety item, forgings and air spring, coil spring which we are supplying. So their raw materials suppliers are also picked by railways.

Sir, I missed last two comments, sir.

Like our products are [indiscernible] item, all the three products air springs and coil spring. So their raw material supplier is also approved by RDSO...

Sir, you are answering that even for the raw material part, you have the RDSO that with a certified supplier from the railways, taking into account considering safety aspect of the finished product.

Yes, yes, yes.

Sir, in that case, also for the raw material part also, the railways are well aware how the price trends are and that even insulates your margins. That's a better understanding?

See, it is there because of the quality, they might charge a little bit higher from the other sources. But that is there in our quotation that we have to buy from this and their prices are X plus from the other supplier from the market. So railway understand that and they give us that margin of buying a little bit expensive material, but because of the quality, railway allows that.

Okay. And other private players -- private steel players are also providing these value-added steel products or it is..

It is all private players who are supplying steel to us, Jindal [indiscernible] iron and steel company, Ocean Steel. So it is all the private players who are supplying steel to us.

Okay. Right, sir. And sir, if you look at the other expenses line item, do you have any specific components that are -- that constitute or there are a lot many items that goes into this INR 14 crores, INR 15 crores quarterly run rate?

No, I couldn't get you. What you are actually asking?

Our other expenses are to the tune of INR 15 crores for this quarter. So are there any major component that constitute and are clubbed as other expenses? Or are they very small minor..

It is the remain same. What was the previous year, nothing, nothing, nothing else.

[Operator Instructions] Ladies and gentlemen, we have reached the end of question-and-answer session, I would now like to hand the conference over to Kapil Bhatia for closing moments.

Thank you. Thank you all the participants who have come and asked the question about our company. Thank you for joining us today for our earnings call. We appreciate your time and interest in Frontier Springs Limited. Should you have any further questions or require additional information, please do not hesitate to reach out to our Investor Relations adviser at TIL Advisors. We look forward to continuing our conversation and updating you on our progress in the future. Thank you once again, and have a great day ahead. Thank you so much.

Thank you. On behalf of Frontier Springs Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.