Ramkrishna Forgings Limited (RKFORGE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ramkrishna Forgings Q2 FY '25 and H1 FY '25 Conference Call hosted by Nuvama Wealth Management. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] I now hand the conference over to Mr. Raghunandhan from Nuvama Wealth Management. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. On behalf of Nuvama Wealth Management, I would like to welcome you all to this earnings call of Ramkrishna Forgings. I would like to thank the management for giving us this opportunity. From the management team, we have with us today: Mr. Naresh Jalan, Managing Director; Mr. Chaitanya Jalan, Executive Director; Mr. Lalit Khetan, Whole-time Director and CFO; Mr. Milesh Gandhi, Executive Director; and Mr. Rajesh Mundhra, VP, Finance, and Company Secretary. Before we begin, may I remind you of the safe harbor. The management may be making some forward-looking statements that has to be understood in conjunction with the uncertainty and the risks the company faces. I shall now hand over the call to Mr. Lalit Kumar Khetan for opening remarks. Over to you, Lalit, sir.

Thank you, Raghu. Welcome, all of my investor friends, on Q2 FY '25 and H1 FY '25 earnings call of the Ramkrishna Forgings Limited. In the midst of rising geopolitical tension and ongoing global economic uncertainty, we have continued to make steady progress in our strategic efforts. While maintaining a strong financial performance, we are undertaking multiple initiatives to further strengthen our business model and keep ourselves with levers to ensure sustained growth in the quarters ahead. As you are aware, during last year, we acquired Multitech Auto; JMT Auto, now renamed Ramkrishna Casting; and followed by accretion of ACIL earlier this year. We are focused on integrating these acquisitions and have established a plan to streamline our corporate structure. In Q2, we divested 100% stake in our travel company Globe All India Services Limited to Yatra Online for a cash consideration of INR 128 crores. These funds unlock on non-core assets are being invested as growth capital. The Board of Directors has also approved an investment of INR 57.5 crores to establish an aluminum forging capability, around 3,000 metric tons per annum, at Jamshedpur, primarily to sell to the EV segment. This will significantly enhance our [ projects ] in EV market. This is in addition to our previously announced plans to enhance capacity by -- our forging capability of 40,000 tons and cold forging capability by 25,000 tons. Additionally, the company in Mexico which we acquired in Q2 has been renamed as Ramkrishna Forgings Mexico. This will serve as an operational hub for some of our international business in North America and bring us additional business in the entire North America continent. Apart from [ Hollow ], we have done significant CapEx in upsetters cold forging, our 8,000-ton case capacity during H1. Further, we have also [ overseen ] a ramp-up of production of our subsidiaries, that is, Ramkrishna Casting and ACIL. We have also built up stock for new developed products for the order wins in the recent past and for the assembly vertical. This strong buildup, coupled with the ramping of our production in subsidiaries, has also led to a little bit of an increase in inventory during H1 '25. But the little bit inventory has also gone up due to buildup of stock in transit and at warehouses due to the rate of [indiscernible] usage. All the other combined -- events combined has led to increase in consolidated debt by INR 282 crores in H1 FY '25. That would -- same is likely to normalize in upcoming periods as we anticipate seeing the benefits from the other initiatives in the coming quarters, with more substantial momentum expected from FY '26 onwards. For investors, the key takeaway is that our growth will become increasingly multidimensional with an expanded range of end user industries. RKFL now has multiple growth avenues, which are also seeing exciting potential in non-automotive segment, mainly railway and farm equipment and assemblies. Additionally, we are positioning ourselves to scale up in the electric vehicle industry also. The ongoing integration and growth initiatives are expected to gradually improve our EBITDA and margin profile. In our [indiscernible], let us go over to our financial performance for the second quarter of financial year '24, '25. During the quarter, raw material pricing has decreased by 4%, which has also resulted in lower realization per ton and also impacted top line to that extent. But still, we have been able to achieve highest-ever top line for the company in a quarter. We report revenue of INR 1,053 crores, INR 1,053.63 crores on a consolidated basis, representing 17.2% year-on-year growth. EBITDA at INR 232.75 crores represents an increase of 16.2% year-on-year basis. With that, consolidated EBITDA margin for Q2 FY '25 stood at 22.09% and the same has been moderated by 20 basis points year-on-year. We believe that we will be able to improve upon the margin in the near future. Profit after tax, including exceptional items, is INR 189.77 crores in Q2 FY '25 compared to INR 82.2 crores in Q2 FY '24, which is a rise of 130% year-on-year. That's all from the financial from my side. Now I will request Milesh to update the investors on the order win during the quarter. After that, we can have the floor open for the Q&A. Milesh, over to you.

Good afternoon, very good afternoon. Milesh Gandhi here. Would like to convey that we have secured orders during the quarter worth INR 1,522 crores to be executed over a period of 4 years. Against the INR 1,522 crores orders, we have received from North America, orders worth INR 1,475 crores, in which we have secured INR 1,312 crores from the auto segment. And from the non-auto segment, we have fetched orders worth INR 163 crores. From India, we secured INR 47 crores orders in which non-auto represents INR 39 crores and railway represents 8 crores order win. This is from my side. Thank you.

[Operator Instructions] The first question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead.

Congrats on the strong order wins for this quarter. So sir, firstly, this quarter, we saw very good growth from the domestic revenues. Can you help us understand with [indiscernible] this quarter? So we notably outperform that market. I just want to understand which orders have seen the ramp-up and which segments are doing well in the domestic market?

I think in this quarter, we have seen degrowth in the commercial vehicle sector, but we have grown because of share of business going up in a lot of businesses and also new pipelines of new components which we have introduced in our business scenarios. That has resulted in the strong order -- strong revenue from the domestic sectors.

And sir, this kind of outperformance, we expect to maintain this new orders ramp-up, right, sir? [indiscernible] orders?

We expect to grow from here. I think domestic business will further grow from here.

Okay. And sir, this year, first half has been around 7% growth on the revenue side and we have a target 15% growth. So do you see this year will be a bit lower than the guidance? But from next year onwards, you should see much better growth, right, sir?

No, I think we have -- I think we stick to our guidance of 15% to 20% growth. And if you see realization from raw material, basically has gone down by 4% in this quarter. That also has resulted in the lower revenue. But overall, we expect 15% volume growth for the full year.

Okay, sir. And just, sir, on the overall medium to long term, sir, you talked about multiple segments expected to do well for Ramkrishna. So just want to understand, do you see the pace of growth of 15% to 20% further increasing over medium to long term, sir?

I think we are right now well positioned for 15% to 20% growth. And with new sectors coming in like 2-wheelers and passenger vehicles in the coming months and coming quarters, we will see further growth coming from the automotive sector, which we were not present. So all these levers will help us to maintain the growth trajectory. With the capacity additions which we are having, this will show -- surely help us in getting into the trajectory and on a continuous growth basis.

So broadly, our target also would be there, sir, 15% to 20% is what we are looking at in terms of growth, sir?

Yes, we are confident of 15% to 20% year-on-year growth also [indiscernible].

Just lastly, sir, on the other expenses. Last quarter, we had this one-off item of electric vehicle [indiscernible] trust and the fleet costs were higher. This quarter also, we saw other expenses on the rise only. So any reason for the higher expenses?

So other expenses, the only region this quarter, due to that export expenses, carriage cost has increased on the Red Sea. That's why it looks flat quarter-on-quarter. That increase of onetime expense has been -- was an increase in export carriage cost.

The next question is from the line of Shaleen Kumar from UBS.

This is more of a low to medium type question. Like you're facing challenges in the CV market, right, it's like both domestic as well as global. That's what we've been hearing, right? So understanding that, how do you see us delivering the growth that you're talking about, right, if let's say this continues for in this year as well as the next year? And is that some of the big concerns exactly we've been hearing from investors and analysts. So how do you see that?

I think in CV sector, it remains flat or where it is today also. We are sure to grow by 15% to 20%. I think with the introduction of new components as well as new assemblies, we have been able to get better share of businesses. And this better share of business is resulting in a strong momentum in the domestic order book growth for us and revenue growth for us. So we are very confident with the addition of capacities and the new, more automated lines and more value-engineered lines. We will be able to still further grow in terms of our value-add with our existing customers and continue to add on to our order book.

Shaleen, I would like to add a little bit here, Shaleen. And that is we have a lot of new product development being done for the past order wins, which will also help us improving this growth and plus the capacity we're putting on, the cold forging and aluminum forging. Also, that will give us that kind of growth.

Okay. Right, sir. So sir, about the recent acquisitions which we have done, ACIL and JMT, are we getting exposure to the new segments or new clients as well?

Yes, we are getting exposure to new segments, new clients across the globe right now. I think Milesh in his opening statement has announced that around INR 1,500 crores of new order book which we have won for this quarter, almost INR 1,300 crores is from the North American industry. So they are all from new clients and new businesses.

Is it possible to share what are the new segments or the clients? Even if it's [indiscernible], you can share something there?

Shaleen, can you repeat the question? I could not hear you.

Is it possible to share the names of these segments or the clients? Anything possible from your side?

It is basically automotive segment basically.

Okay. Clients, any new clients that you have added, I don't know if you can share that or not.

We actually cannot name the clients.

Okay. Just switching on now, under-hood aluminum. So can you talk about like the economics of this segment? And again, under-hood, actually, I think it's a starting point, right? That's my understanding, you can correct me. So do you think that it's just a starting point and more of a just testing of going into the market? We should be able to do more, much more bigger CapEx here and the opportunity is much bigger there?

Shaleen, we are just starting -- I think as a starting point, the 3,000 tons of capacity addition in aluminum and with only around INR 60 crores of CapEx, this is just -- we are testing waters and while our customer, for whom we are building this capacity, is wanting much more bigger capacity, but we would want to test waters because in -- we have never ever ventured in non-ferrous ever before. So we want to enter into non-ferrous with a very cautious mode, because of the volatility in the pricing and other things. We would want to test waters with a small capacity of 3,000 tons and then put a larger sum of money. But the opportunity is, I think, almost 30x of the capacity which we are putting in right now. So it is just a tip of the iceberg and I think gradually, you will see much more bigger CapEx coming into it and much bigger non-ferrous activity starting post this done.

And sir, in terms of the profitability returns, is it comparable, better or [indiscernible], compared to the ferrous?

In terms of EBITDA margin, it is lesser because the commodity pricing is much higher than current. But in terms of realization or in terms of return ratios, it is much faster than what we are doing for our customers currently.

The next question is from the line of Mitul Shah from DAM Capital.

Thank you for the opportunity and congratulations on a very strong performance. So first question, again, clarification on this 15% plus volume growth. Based on first half number, then it implies that second half growth would be like a 20% to 25%. So do we have that type of order in hand starting from October itself or it will be [ baked in ] in Q4, and we have concrete visibility on this second half, this type of growth of about 25%?

Mitul, we are very confident on what we are commenting. And more than that, I think we would not like to substantiate, but we would only say that whatever we are saying, we are -- we have a concrete plan for that and we will be able to meet what we are seeing for 15% plus growth.

Sir, second question on, sir, casting business, where we have now increased our focus, including CapEx and all. So a majority of this are new clients or existing clients we are trying to cross-sell? How much clientele base would be overlap and how much would be incremental clients, where we can also cross-sell our forging products also?

I think we are -- we are -- or we by next year, FY '26, we will be having almost 80,000 tons of casting capacity. And we are going to sell casting both domestic and in international. Right now, we have no international business as such. We have just started getting orders from international businesses. We are focusing both on our existing clientele as well as new clientele. So it is a very, very exciting opportunity for us. And our overall aim is to double our capacity in the next 2 years. And we have confirmed visibility from our existing clients also and we have extremely strong RFQ pipeline from new customers.

Will there be more new clients or majority of it would be existing and maybe about 20%, 30% only in new clients?

I think Mitul, whoever gives me business, whether it is existing or new, it does not make a difference for me. As far as I am concerned, I am ready to set up of capacity of 80,000 tons. We are on path, by next year, we should be having this capacity. And we are confident, our marketing team is confident of selling the entire capacity.

Yes, sir. I'm just trying to analyze whether there is a possibility of cross-selling forging products to these new clients. From that perspective, I was trying to understand.

No, basically, we are always, Mitul, we are always looking for new clientele. I think these new order wins which we have announced right now for -- from North America, these are from new clientele. So obviously, this forging will -- also, we are picking castings to offer them. So it's cross-selling or because RKFL as one, we have different bouquet of products to offer to them. It is up to client to choose which one they want to source from RKFL.

Great. Sir, lastly, on railway side, we are hearing slowdown and some trend down by government orders getting delayed, et cetera, anything on that for our JV business?

We are not into wagon building, so we cannot comment on anything on the wagon side of it. But in terms of passenger, I don't think there is any slowdown. While I think the entire focus of government CapEx is improving passenger comfort and passenger safety, so their focus and ramp-up is continuously there. And we have a very strong pipeline in terms of order book from railways. So we are not at all impacted by any news which is coming in terms of there is going to be slowdown in railways.

The next question is from the line of Jyoti Singh from Arihant Capital Markets.

Sir, just like you mentioned, we are having impact from the Red Sea side. So just wanted to get the idea on the Red Sea side that which country and geography is benefiting with the export because we are not able to export at this time?

We have never said that we are not able to export. We are obviously able to export. Our sea -- time of transit time has increased because of the Red Sea issue, because the ships are taking a divergent route. That's the reason our transit time has increased, but it is not that we are not able to export.

So we are exporting full freight?

Yes, yes. We are exporting full freight and we are doing extremely well in exports.

Okay. So sir, doesn't China benefiting, as they can export directly?

We cannot comment on this. I think it is extremely difficult for us to comment to -- over China.

The next question is from the line of Raghunandhan from Nuvama Wealth Management.

Congratulations, sir, for another set of strong numbers. Sir, firstly, in terms of subsidiary performance, MAPL in Q1 had seen INR 86 crores of revenue, with a 16% kind of margin. Can you talk about Q2 performance and that we are on track for the 5 billion target for the full year, the 17%, 18% margin?

So along to the subsidiary performance, we have just started ramping up of subsidiaries like JMT and ACIL. And if I look at the performance, there is a Multitech [indiscernible] already established and we have done a turnover of about INR 90 crores in this quarter in the Multitech. And about -- that's before JMT and [indiscernible] ACIL. There has been some elimination due to the material being shipped from the RKFL to the [indiscernible] and other [indiscernible] for the value-add. So that's why the consol number is [ 1,053 ]. But this is going to book significantly in upcoming quarters. And coming to the 5 billion target of top line, I will say we are very much on course. Only we have to -- this [indiscernible] we have already disposed of our subsidiary, Globe. So that's still has to come, the impact on that. And otherwise, if there is a material decrease or [indiscernible] decrease, that can have impact. Otherwise, we are very much on course on that top line guidance [ target ].

Good to hear that. Sir, in terms of your product portfolio, you have been continuously expanding and adding new products. And in one of your slides, other categories, you have displayed products relating to the trailer axle assembly and suspension. Just if you can spend a little time explaining the potential for these products?

I mean trailer axle assembly, we have just launched in this quarter and we have achieved a sales of almost INR 20-plus crores. This is a INR 2,000-plus crores market and growing at a very rapid pace of 17% to 20% every year. And it's that we are expecting to at least by this year and -- or first quarter of next year, to get to almost 25% market share in this segment. And we have patented our axles and this is a proprietary item going directly to the consumer. And we expect a large -- very large growth in next 2 years to come from this portfolio. And in coming months in this quarter or maybe by next quarter, we are launching some more proprietary parts, which is going to be exceptionally good for our growth in terms of our assembled verticals which we are launching.

That's good to hear, sir. And in terms of order book in this space, you would be in discussion with the customers? And what would be the status kind of orders you would have already received?

No, I think this is a B2C segment and directly to the consumer. This is not with the OEM. So there is no confirmed order book. It is a tailor-made to the requirements, but we expect a month or year -- quarter-on-quarter, at least 40% to 50% growth until we achieve a 25% to 30% market share. And for us, the current market -- market today in India is close to around INR 2,000 crores for this.

Wishing you the best there. And so in terms of the EV business and we had the [indiscernible] related orders of INR 270 crores. So would it be right to understand that these orders could be executed over '26, '27?

Yes, it is right. It is going to be executed over '26, '27.

And one clarification on the aluminum forgings. So the capacity we are putting up would be backed by the orders, sir?

It is already backed by an order. The entire capacity of 3,000 tons is completely backed by a firm order for 5 years.

Got it. In terms of our growth, the share of North America has been consistently going up and we have been doing very well, both in terms of order wins and growth in that particular market. Your thoughts on how the demand is there? How do you expect the outperformance to continue? Recently, they had comments by Volvo that 2025 North America CV market should see a positive growth. So in terms of what you're hearing from that right now, the share of business is increasing.

Right now, the market is flattish. We are growing and we are doing exceptionally well because of our marketing is being able to penetrate new segments and new customers in North America. And that's the reason we are growing. And with setting up of facility in Mexico, we expect this to further consolidate and grow. And we are extremely bullish on our North America segment with setting up of this facility, which is going to be upstream from this quarter onwards. And next quarter onwards, we are going to see revenue coming in from that sector. So the current pipeline and the current visibility which we have gives us extreme confidence that in North America, we will continue to grow and continue to consolidate in coming quarters and coming years.

Got it, sir. And in terms of the PV space, how do you see your share in the PV space to increase? And a [indiscernible] will contribute to that?

PV space, I think Raghu, we have just entered it, it is very, very minuscule right now. But I think the biggest PV chunk is going to come by FY '26, both from North America and from India.

The next question is from the line of Dhaval Shah from Girik Capital.

My question is for Mr. Gandhi. I read somewhere that in 2027, the North American heavy commercial truck market is having some emission norm change. So could you share your thoughts on it? With respect to that norm change, how would the customer buying be -- how does that happen? How does it work there?

So I heard your question. See, whenever any norm change comes in, there is always a prebuy that is always expected. And so -- but obviously, the norm change comes in '27, '26 is going to be a very strong year. And North America has already been spending so. But because of many of the infrastructure demands and the way America is trying to rebuild itself, the demand is going to be very strong for the next 2 years. And we foresee even if the change is going to happen, but the demand will still remain when the emission norms get changed. I hope I answered you.

Yes. And this is for Class 8 specifically? Or is this for other classes of trucks also?

Class 8 takes the maximum effect because the long haul comes under the Class 8. So that is going to be the primary market. And vocational trucks, along with direct trucks, also come into the same [ trade ]. So it is going to be an effect across.

Okay. So you feel that the prebuying, that the growth would be better in calendar year '26?

I did not hear your last point.

I'm saying because of the prebuying, the growth could be better in the calendar year '26.

America has been stating very clearly that demand is going to be good over a period of time in the forthcoming years. So even I -- I find -- I think the demand will continue to remain so. And I think the prebuy can always give a better number, but with the amount of demand on account of the construction and with regard to infrastructure, that should continue in the same pace.

The next question is from the line of [ Rakesh Lorie ] from [ Bowring AMC ].

Yes. The first question regarding, sir, you were setting up a new plant of additional capacity, 3,000 tons. So mostly, we are focusing on EV segment or other auto? On EV segment, what we are going to make?

I think we are focusing on the EV segment. What we are going to make, I think we would not like to name the product or basically -- we basically it is the transmission components which we are going to make. But exactly the component, we cannot name. It is primarily the entire capacity is for EV segment.

And can you highlight the North America truck market is specific for the Class 8 truck market, how you're doing then for next 12 months? What is your outlook?

I think we will not be able to comment on Class 8 in particular. But overall, as far as RKFL is concerned, we are doing extremely well in the North America market. And we foresee going forward also, we will do our operations and our volumes from North America is going to continue to remain strong.

[Operator Instructions] The next question is from the line of [ Pratik Bhandari ] from [ Ark ] Ventures.

I just wanted a breakup of order wins during the quarter. If you can just repeat the same?

Milesh, can you repeat it?

So I will repeat what I stated. Against the INR 1,522 crores orders that is to be executed over a period of 4 years, for North America, we won INR 1,475 crores orders, in which auto constitutes to INR 1,312 crores and non-auto constitutes to INR 163 crores. Further, from India, we secured order of INR 47 crores in this quarter, in which non-auto is around INR 39 crores and railway specifically is INR 8 crores.

The next question is from the line of Khush Nahar from Electrum PMS.

I have one question. Is there any update on the Ramkrishna Titagarh JV? What is the expected time line of our first product?

I think we are doing extremely well in terms of our Titagarh JV is concerned and projecting moving as per time line.

If I'm not -- on that, would be by FY '26, I think?

Last quarter of FY '26, we will start producing wheels and delivering to railways.

[Operator Instructions] The next question is from the line of Mr. Raghu from Nuvama Wealth Management Limited. Please go ahead.

Thank you. Raghu here again. So on the CapEx and investment side, first half this year, we have done INR 400 crores plus of CapEx and investment has been INR 100 crores plus. How do you see the CapEx for the full year? And also, in terms of the debt, if you can talk about how you see the debt reducing as working capital normalizes and your efforts on improving the cash flows?

So Raghu, on the investment side, I think we are largely done on the investment in the subsidiary. There will be a small amount on the subsidiary side. And what we have given the guidance of about INR 500 crores of CapEx [indiscernible] it may be increased by another INR 50 crores per year. And on the subsidiary side, it remains the same. On the investment side also, we only need to invest on the JV with the ramp up [indiscernible]. So that also we have given a guidance of INR 100 crores for the full year. We have already given INR 53 crores in the first half [indiscernible].

Got it, sir. And in terms of the EV space, how would you look at the aspiration you would have to improve your presence on the EV, given that you are putting in more efforts? It helps both on the diversification side and also is opening up new opportunities for you. Over the medium term, how would you look at the EV contribution to your overall business?

Raghu, on the EV side, as already explained that we have just started and the aluminum forging is for the EV. We are also doing that currently on the EV, the aluminum forging will go a long way on the EV side. [indiscernible] we will comment on how we are moving ahead on the EV sector because [indiscernible] for some time on.

But I think, Raghu, just to update on what Lalit said, our vision, internal vision, in next 2 years by FY '27, our 15% to 20% revenue should be coming from EV or hybrid vehicles. That's the vision we are working with and I think we are on track to achieve our vision.

Wonderful, sir. And would TSUYO also form part of that vision? You had one investment in TSUYO.

No, no. So TSUYO investment, I think last call also, we have said we are not expecting anything from that. We have withdrawn from that investment and INR 10 crores, which we had paid, we have already got that refund.

The next question is from the line of Vidrum Mehta from ASK Investment Managers.

Firstly, season's greeting to you and the entire team of RK Forging. So my question was more related to the stand-alone business, revenue growth of 10%, which we reported as against MHCV industry volume, which reported high single-digit or double-digit decline. So if you could share broadly what could be the growth in terms of -- if you can break the growth with respect to the new products, the increase in share of business and pure organic volume growth.

I think it is extremely difficult for us to break it down in terms of product. But we can only say that overall, in terms of our ambitions and our hard work for the last few years in terms of getting into more value-added products and assemblies have resulted in higher share of business across the vehicles and that has resulted in an extremely strong domestic market for us and getting into strong volumes with even the drop in overall MHCV volume. And I think going forward also, we foresee the same pattern to continue with the kind of work we have done and our continued progress in new product development and getting into higher value-add. We'll continuously work on the same momentum to get a higher share of businesses and strong domestic market.

So sir, in that case, how much should we outperform the overall industry? Could you give some sense on that?

No, I think we don't have a definite number to it, but I think we are working towards our overall objective of 15% to 20% continued year-on-year growth for near foreseeable future. So with this kind of thought process, we are on the track to continuously keep on adding new products and as well as keep on working on the existing products to offer better solutions to our customers by which we gain market share.

Okay. Okay. Sir, secondly, I understood the point on the volume growth, that we are building in 15% to 20% -- we expect 15% to 20% growth. But obviously, it is because the lower RM cost is resulting into lower realization. And so if I look at for H1, our realization is down roughly 3-odd percent despite volume higher in H1 of FY '25. So how you look at realization or probably the RM basket moving in H2 of FY '25?

I think it is extremely difficult. I think raw material prices is something which we cannot comment on. We would love to have a stable raw material, but I think it is next to impossible for us to comment on whether raw material prices are going to fall from here or are going to correct further from here or not. So we have to live this -- we can only say that -- we only can say that we would continuously keep watch on it. And we will -- on our side, we will be able to only keep on maintaining our conversion margin and keep on adding value to the products by which we are going to try and see whatever best we can achieve in terms of our top line.

Sir, in terms of procurement, would it be a quarter lag? Or how should one look at it, like a...?

It is a quarter. Quarter lag.

It's a quarter lag, right?

Yes.

Okay, okay. And sir, one more question from my end. So you gave a breakup of revenue from the subsidiaries, which works out to be north of INR 140-odd crores. But the reported number states that it is INR 100-odd crores, if I just subtract consolidated minus stand-alone. So you said there is some related party transfer...

Basically, the goods are -- like a lot of forgings are going from the parent company to the subsidiaries. But ultimately, they have not been sold to the customer yet. So that sales have been knocked off.

So how much percent should we assume in this knocking off?

That I already told, about INR 40 crores has been knocked off that number [indiscernible].

So that -- so broadly, that should continue in coming quarters as well, right?

No. So it depends upon the ramping up and how much the material is produced and stored, the number will certainly change, percentage will change.

It will drop somewhat because a lot of samples and other things have been developed in this quarter. So that has slowed down. But that will get further ramped up in this quarter, wherever sample approvals and other things have come in. So all those inventories will get liquid, and there will be -- it will come into a regular cycle. That's the reason we have mentioned in our presentation also, the working capital is going to moderate, which is seeing at an elevated level right now, is going to moderate in coming quarters with all these samples getting converted into bulk supplies.

Okay. So sir, the 5 billion target of top line on subsidiaries is including that or excluding that?

We have never said 5 billion revenue from subsidiaries. I think that is -- Lalit, can you clarify?

So you are talking about 5 billion consol, that guidance [indiscernible] it was including [indiscernible] subsidiary that was already [indiscernible]. And certainly, I said you have to adjust it for the raw material impact. So considering 15%, 20% growth, we are there almost online for that kind of number. But certainly, now it will not be 5 billion, it can be somewhere between INR 4,500 crores to INR 4,600 crores kind of thing right now on the consolidated for FY '25, doing that adjustment on the [indiscernible] opportunity.

The next question is from the line of Karan Gupta from InvestSavvy Portfolio Management.

So first question is on the inventory that you [indiscernible] compared to H1 of last year to H1 of this year increased significantly. So can you comment on that? And the second one on the CapEx breakout across the facilities. We are starting our -- building capacity. So that's the second one.

So looking back at -- even if you look back on the consolidated, it has gone up by INR 119 crores and that's a little bit on the subsidiary [indiscernible] from the overseas [indiscernible] it is likely to moderate improve in the upcoming quarters. So I would say it's a marginal impact in terms of days because they are either increasing sales also, commensurate with revenue. So it's about 80 to 94 increase, which is likely to be corrected in the next quarter. So on to the next part of the question that's on the CapEx. The CapEx I have already listed. Specifically, there are CapEx on cold forging, 8,000-ton [indiscernible] line and upsetter capability. And we have made significant progress on all this capacity. Apart from that, there is CapEx ramping up on the JMT, that is ramping up [indiscernible]. They've already started production in [indiscernible] and we are in the process of adding up the capacity there and same is with the ACIL, ramping up of the capacity [indiscernible] innovation capacity, ramping up of all these [indiscernible] with this kind of CapEx.

The last one is can you just give some economic number of your aluminum capacity? What may be the EBITDA? What will be the kind of margin realization part?

So we have already given that [indiscernible] investment. And at the optimum capacity utilization, it can give me around INR 250 crores of top line. You can understand that this 250 crores plus kind of asset. And in terms of margins, certainly, EBITDA will be lower. But in terms of realization, it is much higher in terms of EBITDA [indiscernible]. And that's why if you look at, it will be a payback of less than 2 years, if we go on the full capacity.

[Operator Instructions] The next question is from the line of [ Hersh Sera ] from [indiscernible] Securities.

One clarification question. If you could provide an update on the bogies that we were planning to assemble for the Vande Bharat?

You're talking about the bogie frames particularly?

Yes.

Bogie frames, I think this month, we are submitting the prototypes for Vande Bharat. And I think post the approval of prototypes, this will go into bulk production.

And sir, just one clarification question on the comment you had made earlier. You said that you have divested from the TSUYO partnership and [indiscernible] refunded?

Yes, we have divested from the TSUYO partnership.

The next follow-up question is from the line of [ Pratik Bhandari ] from [ Ark ] Ventures.

Sir, about this aluminum forging [ plant ] line, what quantum of CapEx have we done?

We are going to do INR 60 crores almost of CapEx for setting up this plant.

Okay. On that, we are somewhere expecting INR 250 crores of top line?

Yes.

You stated that the payback period would be 2, 2.5 years roughly?

Yes, roughly.

The next question is from the line of [ Polli Zarili ], an individual investor.

Just one question on your aluminum forging capacity. You said that it's a small capacity, right now 3,000 tons. Just wanted to understand how big is this opportunity within India? Any kind of number that you would have for the domestic aluminum forging capacity in India currently?

No, we are not setting up this facility for manufacturing any products for Indian OEMs. It's for overseas OEMs. And we -- the total available opportunity in overseas market is 20x of the capacity which we are setting up for the customer, which we are doing this. So I think this is only a tip of the iceberg which we are setting up. And I think with -- as we gain experience, we add on more capacity.

So is there any kind of -- at least in the short term, maybe the next 12 to 18 months, do you see that this will only be -- once after this customer as well, this will only be used mostly for the overseas facility and only when the demand comes in the domestic market, then you will then put up additional capacity. So is there a stable...

I think demand in domestic market is also there, but we are setting up this capacity for overseas. But once we gain experience in non-ferrous, I think post development and post some bulk supplies for a few months, once we are confident of delivering good, we will extend our CapEx in this line to cater to the domestic market as well. So opportunity overall globally is extremely huge. So I would not be able to substantiate or comment on exactly what is the total opportunity. But I can only say we are setting up a very small capacity and opportunity for us is extremely big. And you will see in coming years, large amount of CapEx being allocated to set up more capacities in aluminum in RKFL.

So just one clarification sir. Your current capacity, the opportunity is '28, with the current customer, right, which you're setting up the capacity for?

Yes, '28.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you. We take this opportunity to thank everyone for joining the call. We hope that we have been able to answer and address all your queries. For any further information, you can get in touch with the Investor Relationship advisers. Thank you very much for sparing your time and joining us on the call. Thank you, and have a good weekend.

Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.