Ramkrishna Forgings Limited ($RKFORGE)

Ladies and gentlemen, good day, and welcome to the RK Forgings Limited Q4 FY '26 Earnings Conference Call hosted by 360 ONE Capital Markets Private Limited. [Operator Instructions] I now hand the conference over to Mr. Annamalai Jayaraj from 360 ONE Capital Markets Private Limited. Thank you, and over to you, sir.

Welcome all the participants on behalf of 360 ONE Capital Markets for Ramkrishna Forgings 4Q FY '26 and FY '26 earnings conference call. From the management, we have with us today Mr. Naresh Jalan, Managing Director; Mr. Chaitanya Jalan, Whole-Time Director; Mr. Lalit Khetan, Whole-Time Director and CFO; Mr. Milesh Gandhi, Whole-Time Director; and Mr. Rajesh Mundhra, Vice President, Finance and Company Secretary. I'll now hand over the call to the management for opening remarks to be followed by the question and answer. Over to you, sir.

Thank you, Jayaraj. Good evening, everyone, and thank you for joining us on this call to discuss the Q4 FY '26 earnings. I trust all of you have had a chance to review the earnings document that we have shared with you. In Q4 FY '26, the global macroeconomic environment turned incrementally more challenging, although conditions continue to vary significantly across regions and sectors. While the quarter commenced on a relatively stable footing, carrying forward momentum from the prior period, the outbreak of conflict in Middle East adversely impacted operating conditions towards the later part of the quarter. As a result, the energy price volatility, persistent inflationary pressures and renewed supply chain disruption created uncertainty for a certain business environment. In contrast, the domestic macroeconomic environment remains relatively favorable. India continued to stand out as one of the fastest-growing major economies supported by resilient consumption, sustained government CapEx, infrastructure activity and improving manufacturing momentum. Against this backdrop, we are pleased to report an improved performance in the fourth quarter, enabling us to end FY '26 on a strong note. Volumes in domestic market have been strong. Following the GST rate rescission in September, there has been sustained momentum in domestic auto industry in India. This resulted in sustained momentum in wholesale volumes with all segments such as M&HCV, tractors, PVs reporting double-digit growth in the fourth quarter. As we had indicated, the railway business has been a strong pillar of growth. We have taken steps to deepen our footprint and enhance capabilities in this segment in recent years. These are now paying dividends as the share of business from railway has grown to 7.5% of revenue in this year against 4.6% a year ago. Now let me share some financial highlights for the quarter. We reported consolidated revenues of INR 1,216.78 crores, that is higher by 28% on a year-on-year basis compared to INR 947.21 crores in Q4 FY '25. On a quarter-on-quarter basis, revenue were higher by 11% compared to INR 1,098.52 crores in Q3 FY '26. A strong performance in domestic market, supported by recycling performance in international market has helped us to deliver solid top line growth on a year-on-year basis as well as on Q-on-Q basis. EBITDA, excluding other income, is INR 208.19 crores in Q4, higher by 111% year-on-year compared to EBITDA of INR 98.5 crores in Q4 FY '25. On Q-on-Q basis, EBITDA was higher by 27% compared to INR 163.37 crores in Q3 FY '26. The margin improvement -- the margin improved to 17.1%, higher by almost 220 basis points quarter-on-quarter. Profit before tax is INR 64.33 crores in Q4 FY '26 compared to INR 29.69 crores in Q3 FY '26, reflecting a 117% quarter-on-quarter growth. Profit in the consolidated accounts has been impacted by around INR 10.4 crores due to elimination of profit of INR 5.9 crores from the subsidiaries and loss of INR 4.5 crores from the Mexico subsidiaries. Otherwise, the profit could have been much higher on the consolidated basis. On the full year numbers, we reported consolidated revenue of INR 4,238 crores for the full year FY '26, that is higher by 5% on year-on-year basis compared to INR 4,034 crores in FY '25. EBITDA stood at INR 642.70 crores for FY '26, that is higher by 15% year-on-year compared to INR 559.56 crores in FY '25. Profit before tax is INR 112.58 crores in FY '26 compared to INR 148.79 crores, excluding exceptional items in FY '25, that is lower by 24% year-on-year. Additionally, our Rail Wheel joint venture remains on track with commercial production anticipated by Q1 FY '27. With these growth levers firmly in place, we are confident that from the next quarter onwards, we will return to further improved operating trajectory and look to sustain the momentum throughout FY '27. With that, I would like to hand over the proceedings to Mr. Milesh Gandhi, Whole-Time Director. Thank you. Over to you, Milesh.

During the Q4, the company secured new orders worth INR 594 crores with a program life of 4 years. 56% of these orders were from automotive segment and balance 44% were from the nonautomotive segment, reflecting continued progress in company's diversification strategy. Out of the INR 594 crores, INR 334 crores came in the auto sector from -- came in the auto sector, of which INR 323 crores came from the CV sector and INR 11 crores came from the EV sector. And in the non-auto sector, INR 258 crores came from the Energy segment itself and INR 2 crores from the off-highway. That's from my side. Thank you.

Thank you, Milesh. It's over to you, Jayaraj.

Operator can go for Q&A.

[Operator Instructions]

Before somebody joins on the question queue. Sir, how is the demand shaping in U.S. market, sir? Am I audible, sir?

Yes.

No, I was asking how is Class 8 volumes picking up in the recent time?

I think, Class 8 trucks are very, very strong right now. I think since last 3 months, we are seeing destocking happening in our warehouses in North America. And I think we are looking at fresh revenues coming in from this quarter onwards from North America Class 8 trucks in a significant manner.

And we expect this to sustain for some time, at least a year or 2?

I think at least for 2 years. Calendar year, it is good to say that it's going to stay till third quarter of calendar year '27.

Okay. Okay. We will go to the questions.

We have first question from Balasubramanian from Arihant Capital.

Sir, on that wheel set plant mentioned, it will be commencing from Q1 FY '27 onwards, whether we have submitted 300 trial wheels and for the approval. And from Q1 onwards, what kind of run rate we can expect quarter-on-quarter basis in terms of volume?

No, I think 300 wheels we are supposed to submit in the month of June or July. I think when Lalit said we are going to commence production, it means we are starting the plant, I think, probably by end of May or June, wherein we'll start manufacturing wheels and commercial production will start immediately. So 300 wheels, we don't need to wait for 300 wheels to get approved. Once the 300 wheels are supplied, we can continue supply. This year, we are looking at supplying almost 40,000 wheels from that plant to the Indian Railways.

So this will start from the coming financial year onwards, right, sir? The 40,000 wheels will be reflected FY '27 onwards?

FY '27 onwards.

Okay, sir. What kind of utilization level we can expect, sir, of [indiscernible] lakh -- so the 40,000 will be delivered in this financial year itself, right?

Yes. 40,000 will be delivered in this financial year.

So I think then it will solve the whole industry problem. It's the right way to understand, sir?

I don't know about the industry problem. I think as per our contractual obligation, we are supposed to supply 40,000 wheels. We are gearing up to supplying 40,000 wheels in this year.

Okay, sir. Sir, on the diversification side, I think we are targeting 10% plus kind of revenue from PV in the next 2 years, also trying to be a primary supplier for EV, CV makers and aerospace alloys trials also begin. I'm trying to understand like what kind of specific defense or aerospace contracts we are focusing on? And what kind of contracts we are focusing to bid post-aluminum forging commissioning side?

No. Already, I think post commissioning of aluminum forgings, we have already started bulk supplies to EV suppliers, EV equipment manufacturers globally in terms of the needs of aluminum forgings. And we are also developing a few more aluminum forgings from that facility to supply to the CV manufacturers. globally. And in terms of other alloys, we are looking at getting into aerospace. We are -- we have already set up our capacity to manufacture titanium and other stainless steel products. So we are bidding for several opportunities within domestic market as well as global market -- but right now, we don't have any contract per se to basically have any realistic numbers to this. But yes, we have already set up a facility. We are already in talks with several OEMs globally and within India to buy higher alloy material basically for aerospace activity.

Yes, sir. Sir, on the capacity utilization side, the forging utilization, it's mentioned nearly 70% in Q4. But if you look at last year Q4, it's 83% and -- but if you look at cold forging, the capacity utilization is almost 40% kind of range. Like if you could share how they are going to ramp up to 80% to 85% kind of range by FY '27?

0 No, I think vis-a-vis last year, when you compare, you have to also take into account the capacity of 8,000 tonnes plus and other addition in terms of overall forging capacity, which we have had. And basically, this capacity utilization is going to happen with firm order book already in place. We are very hopeful that this year, we will have a much better utilization vis-a-vis the last quarter. And in terms of cold forging, we are at 40% because approvals in cold forging is mainly to the passenger vehicle sector. And this is taking more time in the global market to get approvals in place. As and when approval gets in place, we are, utilization will improve. And to be putting a time line to it, I think we are not able to do that. But we are pretty hopeful by this year-end, we should be having close to around 75% to 80% utilization from cold forging also.

The next question is from the line of Aditya from Old Bridge Mutual Fund.

Congratulations on a good set of numbers, sir. Sir, my first question is on the presentation that you have shared. So it has been showcased that INR 1,550 crores of new orders will be executed in FY '27. So does that include castings also? Or is it only forging stand-alone business that it is showing?

No, it is consolidated, forging and casting together.

Okay. So how much of that -- so how much castings volume are we expecting this year because we will be sitting on significant capacities of 78,000 tonnes. And earlier also, we have indicated that we have an order book for that. So how much are we expecting this year?

We are looking at almost 85% to 90% utilization in casting over the quarters -- in coming quarters in this year.

80% to 90%. So close to around, I would say, 65,000 -- 65 -- 70...

Close to full utilization, I think. Very safe to say close to full utilization this year.

Okay. So that's great to hear. So that's basically around -- if I take that number, then that's basically around incremental INR 900 crores of revenue from castings.

I will not put a number to it, but we are safely looking at almost 85% to 90% utilization in the full year basis. It may not come in the first quarter itself, but gradually over the next 2 quarters because as per the approvals and other things are taking some time. So we are looking at by first half almost to reach there.

Sure, sure, sir. So I came to that number because of the realizations that has been shared on the presentation. I came to that number on that basis. So what kind of margins can we expect here, sir?

From margin for castings?

Yes.

So castings is, I think, Lalit -- I think you will be able to tell better, Lalit.

Margins in the casting will be somewhere around 15% to 16%, Aditya. And in terms of what you were asking in terms of top line growth, see, 62,000 tonnes is the capacity, and we have already produced 26,000 tonnes for the last year, but that's the production. In terms of sales, sales is always lower due to the machining mix. And we expect another INR 400 crores to INR 500 crores revenue for the full year from the casting business on that.

Okay. Okay. And so -- okay. That's pretty clear. And on the cash flows part, so what kind of CapEx are we looking at this year? And what is the net debt target for FY '27? Because I feel most of the investments have been done now. And with the good business going ahead, good business outlook going ahead, we should be looking at debt reduction, if you can help us understand that?

So certainly, we are looking at a quite significant debt reduction in this year on the back of promoter funding and good performance, all this. So we are looking to reduce the debt by at least INR 400 crores to INR 500 crores in this year.

Okay. Okay. Okay. And one bookkeeping question, sir. So as mentioned in the presentation, there is some casting business sitting in the stand-alone business and some sitting in the -- and other part sitting in the consol part of the subsidiary. So out of the 16,600 tonnes that we have sold this year, how much of that would be in the stand-alone, if you can help me?

Stand-alone business commenced just on 31st March commercial production. So nil from the stand-alone on FY '26.

Okay. Okay. Okay. Got it. Got it. And just one last question, sir. This is on the other business. So we also started one trailer axle business a few years back. If you can help us give us some update, like what kind of revenues have we clocked from the trailer axle business in FY '26? And -- what's the progression there? And what kind of market share and target we are looking for in FY '27?

So I think trailer axle, I think we roughly had around INR 120 crores business from there in last year. Roughly, exact figures, I don't have right now. We -- at the market share, I think we are at about 4% or 5% market share in 2 years, we have been able to make a good amount of inroads and satisfactory amount. And this being a first B2C business for us, I think we are pretty satisfied with the performance of getting into around 4% to 5% market share. And I think this year, we are looking at almost doubling this business to INR 250 crores and to a market share of about 10%.

[Operator Instructions] we have next question from Ayush Goyal from CAVI Capital.

So my first question was regarding the presentation. Like in this quarter's presentation, the orders that are split over the next 4 years for financial year '27 is INR 2,000 crores -- sorry, for this is INR 1,550 crores. And for the -- like in the last presentation, it was INR 2,200 crores. So like there's a INR 600 crore reduction. So have any of the orders been revoked or something?

No, no. Ayush, how it works? So it was incremental orders. So last presentation, what you stated for that was incremental order for FY '26, which has gone. So residual order has come here in FY '27.

Okay. So basically, the order was executed earlier than expected?

No, no, early. So see, what you are looking at FY '28, again, it is INR 2,800 crores, but INR 1300 crores -- INR 1,100 crores incremental over FY '27. You understand that. So there was some incremental earlier. I hope you understand that.

Yes. Got it, sir. And like with the new added capacity in the press segment, how do we expect the utilization to improve going forward? Like quarter-on-quarter, what percentage can we expect?

No, on a full year basis, I think it is not right for us to say quarter-on-quarter, it's very difficult because of the approvals and other things. But it is safe for us and better for us to say that by this year-end, this financial year-end FY '27, we are looking at almost 85% utilization in our press plant.

Okay. That's great. And one last question I had. Like with the rising commodity prices, what effect does it has on our P&L? Like when we book an order, so we take an order on the spot price, right?

No. I think it's basically -- as earlier also expressed, all our pricing is based on pass-ons. So I think with a quarter lag, we pass on all the price increases of commodities. Basically mainly for a commodity for us is steel. Steel is passed on for us every quarter.

And other -- largely our margins will be not affected by this.

No, other commodities like consumables like gas and other things are basically which affects our bottom line. So we -- that is on a yearly basis, we are discussing with customers. And I think most of our customers agree with the current scenario because of this geopolitical issue. And we are expecting compensation on account of all these geopolitical issues in terms of price increases to come to us soon.

The next question is from Kiran Nayak from [ Mody ] Fincap.

Sir, can you give me a rough idea what will be the revenue growth in FY '27?

No, I think we will not be able to give any number to FY '27, but with the current order book and with the current capacities in place, we are looking at continued growth trajectory, and we are looking at a healthy growth in FY '27.

Okay. And EBITDA margin for '27?

It will continue to -- I think with what -- if you have seen quarter-on-quarter, 200 basis points, we have improved in terms of our EBITDA margins. And I think with the current scenarios in place, we are looking for a healthy growth in both our top line and the bottom line of the company.

The next question is from [ Dharsil Jhaveri ] from Crown Capital.

Firstly, congratulations on a great set of results, sir. Sir, just wanted to confirm like in terms of casting when we are saying we'll be at near full utilization. So did I hear correctly, sir, we could do nearly INR 900 crores of additional revenue from that, sir?

No, no. We have not put any number to it. I think Lalit has clarified out of the 70,000-odd tonnes of casting capacity already current utilization, we are getting a significant revenue. Additional casting capacity, which has come in -- by end of March, this is going to create at the current commodity level, INR 400 crores to INR 500 crores revenue in the coming years.

Okay. So the new March capacity would be around INR 400 crores, INR 500 crores. And sir, sorry, but I'm a bit new to the company. So when we talk about the wheel sets, so wheel sets we are expecting to do around 40,000 wheels, right? So what are the unit economics of it? Like is this on the similar margins that our company does on a consolidated level? And also in terms of what is the selling price, could you help me with that, sir?

I cannot give you the selling price, but I can tell you that the wheels are in a similar trajectory of the forging business we do right now. And it is a new CapEx. And this year, we are going -- we have set up a capacity for 230,000 wheels. This year, railway offtake guarantee is for 40,000 wheels, which we are getting ready to supply in this financial year.

Okay. Okay. So is this like on a broad basis, the incremental revenue would be how much from the wheel sets, sir?

So I think selling price, it is right now very difficult for me to tell you because we will -- because the contractor was awarded 2 years back. So we'll need to have a real-time pricing done with 2 years of inflation and other things to capture and get to the new pricing. So I will not be able to give you exact number right now. But we should be anything between INR 400 crores to INR 450 crores roughly in terms of revenue from the wheel plant.

The next question is from Sunny Gosar from MK Ventures.

Congratulations on a good set of numbers for the quarter. So my first question is on the overall peak revenue potential. So we've almost now expanded to about 4 lakh tonnes of capacity. So assuming a normalized utilization and adjusting for seasonality in the business, what is the peak volumes or peak revenue? If you can give some color either on one of them over the next 2 to 3 years, we can achieve with this current capacity that we have already set in place?

No, I think, Sunny, putting a revenue number, I think it is difficult depends. Revenue number is absolutely dependent on the commodity pricing. But in terms of utilization, we are looking at almost 80% utilization this year in terms of our capacity. Means, close to around -- go to around 350,000 tonnes of overall forging and casting put together in terms of our utilization. And I think that's the ballpark we are working with.

Got it. Got it. And second question is in terms of the domestic and export mix. So this year, our domestic business performance has been very strong with strong CV demand. And the mix, which used to be about 40% -- about 40%, 42% export and 58% to 60% domestic has seen a swing towards higher share of domestic. So based on the current visibility in terms of the order book or customer discussions that you are having, how do you see this domestic export mix moving over the coming 1 or 2 years? And how does the domestic export mix impact the overall margins? Does higher export mean better margin profile? And how is the outlook on that?

So I think with the current trend in the overall overseas market and with the new order wins in the European market, we are expecting in next 2 years, our export mix to significantly improve. And I think historically, which was 60-40, I think we are looking at going above 40% in terms of our export volumes in the overall scenario -- current scenarios. And export is always higher remunerative than the domestic market. So we are very confident with the current order book and with whatever is playing around in terms of the overall global market and the demand side. We are very confident that our margins also will considerably improve going into coming quarters, but it may not happen immediately, but going on to next 8 quarters, roughly 2 years, our margins should be significantly improved with export volumes better than previous 40%.

Got it. Got it. That's very helpful. And my last question is around the capacity and the CapEx. So basically, our utilization in the last quarter was around 65%, 70%, and we have already expanded capacity. So how do you see the CapEx intensity for, say, FY '27 and FY '28? Because we've spent about INR 800 crores plus of CapEx over the last 2 years. How will that number look like, say, in the next 2 years?

Sunny, this year, we are looking at more of consolidation. I think with the contribution in JV, I think we are not looking at -- and maintenance. We are not looking at CapEx of more than INR 300 crores to INR 400 crores, maximum to the tune of INR 400 crores. That also maybe most of may get into only value adds and our contribution into the joint venture. And most of our thrust will be in terms of debt reduction. Lalit has already given a ballpark of close to INR 400 crores to INR 500 crores of debt reduction over this financial year. I think this year, by this financial year-end, we should be anything above 80% to 85% in terms of our existing capacity utilization. From wherein in FY '28, we are looking for further CapEx to grow the business into the next level. We have not yet basically freezed any CapEx plan for FY '28 right now. So still, we are talking to customers and getting their feedback in terms of what next to do in terms of the overall capacity requirements.

Got it. And in terms of our cash outflow, whatever contribution had to go for the JV, has that been paid for or there is more equity that is yet to be?

Some more part is left. I think, Lalit, can you give the exact number?

Yes, about INR 50 crores will further go, Sunny, this year.

So taking that INR 50 crores, Sunny, the ballpark number is around close to INR 400 crores of CapEx is taken into account of that INR 50 crores.

This is very helpful and all the best for the coming quarters and the year ahead.

The next question is from Kumar Saurabh from Scientific Investing.

Yes. Sir, I have one question on the aluminum capacity, which is there. In terms of realization or margin, how is this business?

Realization is -- commodity price itself is close to around INR 400 per kg. So obviously, realization per tonne is going to be always higher because of the commodity pricing. Margins are close to around 14% to 15% at the absolute numbers.

Okay. Okay. So almost similar to our current business. So it should not...

Overall, in terms of contribution, I think it's much higher because 14% to 15% you get on the INR 400 per kg also. So overall, I think contribution is much higher than the current ones.

Okay. Okay. And sir, I think currently, our total fixed asset is around INR 4,000 crores. And historically, I think if we take a blended fixed asset turnover, it's somewhere around 1.5, 1.6, which takes us to almost INR 6,000 crores revenue. I'm not looking for exact number, but ballpark kind of number. So like do you have any plans that when you want to utilize this full capacity given we have done with major CapEx and now this time to reap all the CapEx, which we have invested?

So we are looking at during this year, I think by third quarter or fourth quarter to reach close to 80% -- 80%, 85% plus utilization in terms of our overall capacity.

And sir, historically, when we shift from, let's say, 70% kind of utilization number to a peak utilization number, historically, we have had higher margins. So do you see possibility -- I know you have said that -- and this quarter also, we have done well on margin and you are expecting it to improve. But do you see possibility of going back to the previous highest utilization peak margins?

I will not put a number to it, but we are very confident of continuing to improve in terms of margins. And I think that is what best we can guide for right now. And we continue to work on margins. And I think rest -- I think in terms -- as utilization improves, as we start delivering the numbers, margins are going to be much better than what is expected.

Great. Great. And sir, I think in our business in casting and forging energy is a major cost item. And given whatever is happening globally in terms of the whole energy thing, so do you see any major pressure on the expense side because of energy? Or like how do you see it panning out in the next few...

Raw material is completely passed on for us. We don't -- with a 1 quarter lag, it's completely passed on for us. So we don't get affected by the raw material increase. But in terms of other consumables, major consumers in terms of commodity is gas for us post the raw material. To my earlier question also, I've answered. With the current geopolitical issues, we have gone back to the customers in terms of force majeure clauses. And we are very pretty hopeful that the customer will compensate us to the maximum possible in terms of the gas energy price increase.

The next question is from Vinil Shah from Dalal & Broacha.

Sir, my question was in respect of realization for our forgings. So even if we take our annualized capacity utilization, we are already close to 70% or 74% capacity utilization as per our presentation, if we take the annualized installed capacity. But yet our realizations have been poor than the quarter 4 of FY 2025. So even if we move forward with a higher capacity utilization, how do we plan to improve our realization of INR lakhs per tonne, sir?

No, I think realization also is affected by the commodity price. I think realization is not absolutely what we -- the realization is directly linked to the commodity price. And the whole year has been -- you must have seen that raw material prices continued to decrease. So with the decreasing trend of raw material pricing vis-a-vis FY '25, that is the effect which we have had. In terms of product mix, I think we have had a much better product mix in the second half of the year -- of this financial year. So I think we have done much better than what presumably would have been with the current commodity price if the product mix would not have been what it is right now.

No sir, because my confusion was because our export realization have increased from INR 1.77 lakhs to INR 1.85 lakhs.

Both the things, I think exports realizations are always much better. And if you see the previous year, exports were higher than this current financial year. So as a percentage. So export -- as the export grows, automatically, the realization -- overall realization is going to be much better than what it is currently there.

The next question is from Mr. Saket from Sagari Cap.

Yes. So one -- first question is pertaining to the non-auto order wins. So almost INR 250-odd crores order has come from Energy segment. So can you just explain what exactly -- what kind of orders this within the energy space?

Milesh, can you answer this question, please?

So basically, as you know, energy storage has become the latest trend in the market. And we have received a lot of orders from companies which are doing very good in energy space in the North America market, and they have a very ambitious plans with regard to the energy storage devices. And these devices actually require a lot of forgings and castings as a mix in order to go forward there. So we have received a good order book on account of it, and that's what we have reflected in the order books.

Sir, last time, when we talked about the turnaround within the U.S. business, so we talked about largely the new customers or the new wins, which were helping us come back slowly on growth. And that also shows up in the numbers, almost Q-o-Q, there has been a growth. Now going for FY '27, are our -- with the tariff behind us now and as Naresh sir also talked about coming revival of demand as far as Class 8 trucks is concerned. So do you think FY '27 could be a normalized year from a U.S. export or a North America exports standpoint? Or it would be even a growth year given that Mexico is, I think, likely to go live in a couple of weeks, if not couple of months.

I think it will be a growth year vis-a-vis previous year in terms of our North America performance is concerned.

That's great to hear, sir. Sir, now another question that I have is pertaining to, I think, mainly for CFO, sir. There is given in the notes of the results, there has been some loss provisions that we have made vis-a-vis the tariffs that some of our customers have had to bear. So can you explain something pertaining to the ECL? What exactly is this?

See, so we have made a provisioning of ECL for INR 42 crores in this quarter as basically, this is in light of income of electricity duty, which we got ordered in the last quarter and the income has been recognized as exceptional income. So but we did not want to carry it into our profit. And so on a prudent basis, considering the current economic scenario and whatever the volatility we have in the global environment, we just provided as ECL on our receivables for this INR 42 crore amount. This amount is totally receivable, but still we got this headroom to provide for this. This will help us in future only.

Okay. Now coming back to the shipping time. So how is the shipping time? Is it now back to normal, especially for our U.S. side? Or is it still on the higher side? And how is the cost for shipping costs right now?

Shipping cost has gone up by about 15% to 20%, and the days have increased by almost 15 to 20 days.

Okay. So sir, because last time when this happened, a lot of our floating inventory ended up becoming on our books. So right now, how is that floating inventory right now? Is it in line? Or do you think that should be fine going forward?

It is in line.

Okay. And sir, do we have any West Asia exposure in terms of clientele or revenue?

No. No revenue and no exposure.

Sir, last question is you have elaborated a bit on the titanium and that, those kind of alloys where RK Forging is foraying into. And it's good to know because, again, aerospace is gaining a lot of traction. So -- but these are also long gestation period because approval times are quite longer. So when do we think that this would end up, say, adding something substantial to our top line or at least in the order book will start reflecting, say, in the order book. So any sense or color on that?

I think in terms of order book, I think by this financial year-end, it will start reflecting in our order book. And -- but in terms of our revenue in terms, I think it will take additionally, I think, 12 to 24 months because these are long lead items to make also and get approvals. So we are not looking anything in terms of our revenue before FY '29.

Okay, sir. Now sir, specifically to the EV segment because it is now kind of making some sort of a comeback, right, both across Europe as well as even U.S. had a reasonable quarter. So now how are those EV-focused order or revenue looking up? So are we looking at, say, much better contribution from them going forward?

I think EV is performing extremely well for us, both in the domestic market and overseas market. And I think as our diversification strategy and as well as our dependence on ICE, to decrease the same, we are already working very aggressively to improve our passenger vehicle portfolio, which is mainly constituting of EV segments only. So I think we have already guided for a 10% revenue in 2 years' time from -- to come from basically passenger vehicle segment.

Okay. So 10% PV is synonymous with 10% EV at an overall level. Is that a fair understanding?

Fair understanding.

The next question is from Kiran Garg from Knightstone Capital Management LLP.

How much revenue did we generate from railway assemble undercarriage for the full year?

Can you repeat the question, please?

How much revenue did we generate for the railway assemble undercarriage for the full year?

We will not be able to give you exact component-by-component revenue achievement. But we have achieved a significant portion of Railway business as an overall, 7.5% is overall in terms of our railway business, which is performing, and we are looking at double digit almost to achieve the number by this year from railways.

The next question is from Kiran Nayak from [ Mody ] Fincap.

Sir, can you tell me from where you are buying aluminum, which is your raw material for forging?

We are buying from Hindalco.

Only one supplier you have or you import also?

We basically are customer directed...

The next question is from Kunal Bhatia from Dalal & Broacha Stock Broking Limited.

Sir, I just had a clarification question. So you mentioned that this time around, you will be having almost an 80% utilization on your capacity of 350,000-odd tonnes. Sir, but what is your, say, your target which you are expecting in terms of the overall sales volume because given...

Sales volume, I think every quarter-on-quarter, you will see significant improvement. But I think in terms of percentage, it's very difficult to say. But we are very confident whatever we'll make, we'll be able to sell that.

Okay. Sir, because even in the last conference call, if I'm not wrong, we had mentioned an upper limit of 10% to 15% kind of growth for FY '27 and FY '28 in terms of a CAGR.

With the current order book, we are very confident of surpassing -- we are not trying to put any number to it right now. But I think with the current geopolitical issue going on, it is a risk also. But with the current order book, we are very confident of growing. So -- but with the capacities in place, we are looking at achieving those tonnages in terms of our production plans, and we are very confident to sell those.

Okay. Okay. So it's fair to assume that we'll be growing higher, upwards of the 15% number?

I will not put a number to it, but I think we are looking at a decent and very good growth in FY '27.

Okay. And sir, ballpark on an 80% kind of utilization levels, what is the kind of leverage in terms of margins that kicks in, assuming every other thing remains status quo?

So I think the current margin, which we have been able to achieve in the fourth quarter, I think now it's here to stay, and we are going to do better margins than what we have achieved right now in this quarter. So I think as the capacity utilization economics of growth continue to scale and if everything remains as where it is, and we are able to pass on the energy price increases, which have happened, we should be at least 100 to 150 basis points better than what we have done right now. But it all depends on whether we are able to pass on the energy price increases.

Okay. But you would have some fair bit of an idea from your current month exports, say, in April, May, have you been able to get those better or a higher realizations to...

I think we have not yet been able to pass on the energy price increases. We have already had discussions and the discussions are in advanced stage. So beyond that, I think it's very difficult for us to say anything that whether -- by when we will be able to get. Whatever we will get, we'll be able to get from 1st April onwards. But exactly how much and by when, it is very difficult for us because it is industry-wide, which is going to happen. It's not going to be happening for us as an isolated case. But whatever the customer approach, OEM approach takes, it is to be happening in the industry-wide space. So I think we'll wait for some time before we can comment on it.

Okay. Okay. And sir, my final question, I'm not asking you for a particular number. But in terms of volume on the export business side, looking at the current situation, how has been, say, the month of April, which has already gone by? Was it better than March or things are not.

I think it's very -- I will not be able to give you a reflect on the -- anything on the current numbers, but I can only say this year, FY '27, export volumes are going to come back and it is extremely strong. So we are very confident of doing much better exports than our previous, in terms of overall mix of percentage to sales, we are going to do much better than what we have done in previous years and quarters.

The next question is from Mr. Kushal from [ Asian ] Broking.

Are there any plans to increase ring rolling capacity?

No, I think there is no plans right now in this year, this financial year to increase the ring rolling capacity.

The next question is from Mr. Aditya from Old Bridge Mutual Fund.

Sir, just one clarification. The orders that you have won of INR 323 crores on the domestic CV part -- on the CV part, how much of that would be domestic and how much of that would be exports?

Milesh?

Can you repeat the question, please?

Yes, yes. I was asking the INR 323 crores order that we have won on the CV side, what would be the split between domestic and exports?

Against the INR 323 crores, the CV would be more than 50% -- in the CV, more than 50% of it is export and around 50% is from the domestic.

We have the next question from Mr. Kushal from [ Asian ] Broking.

Just again regarding ring rolling, that I'm seeing here, it's at 121% utilization. So does it affect in any way negatively crossing the capacity?

No. Basically, it is 121%, if you see the history also, I think rolling has been operating at more than 100% as always. And it does not affect in terms of the life of the equipment or any way...

As there are no further questions in the queue, I now hand the conference over to management for closing comments. Over to you, sir.

Thank you. We would like to thank all for taking out the time and joining our earnings call. We hope we have answered all your queries to your satisfaction. We would like to further inform that get in touch with us or CDR if you have further information required. We look forward to interacting again next quarter. Thank you again very much for talking to us. Thank you.

Thank you. On behalf of 360 ONE Capital Markets Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.