Talbros Automotive Components Limited (505160) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Talbros Automotive Components Limited Q4 and FY '20 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs of -- on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Talwar, Joint Managing Director of Talbros Automotive Components Limited. Thank you, and over to you, sir.

Thank you so much. Very good afternoon, everyone. A very warm welcome to our quarter 4 and FY '20 earnings call. First and foremost, I hope everybody is safe and sound and trying to find some positivity in this chaos, like we are. On the call today, I'm joined by Mr. Navin Juneja, our Director and Group CFO; SGA, our Investor Relations advisers. The results and the presentation are uploaded on the stock exchange and the company website. I hope everybody has had a chance to look at it. Let me begin with a few updates on the industry. India's automotive industry was already battling a prolonged slowdown due to declining demand owing to various reasons. Our own company saw the stress for many, many quarters after we hit the peak in the year 2018 and '19. The outbreak of the COVID-19 pandemic has added to the pain. The lockdown announced to prevent the spread of the pandemic has a huge socioeconomic impact globally as well as India. The uncertainty has led the automobile industry to cut down on CapEx plans. This includes various OEMs, not only in the IC engine but I also feel that the EV space will be delayed a long, long time. This will also have a cascading effect on the Indian auto comp industries, which we are a part of. Representations have been made to the government to reduce the GST rate for a few months to provide some support to stimulate demand, but we've heard nothing back from them. We are also waiting for a scrappage policy for the commercial vehicle segment, which is really lagging behind at the moment. And also, we've heard nothing back from the government. During the financial year, the automotive industry posted a de-growth of 15% year-on-year with respect to the domestic passenger vehicle sales, which is a de-growth of 18%; commercial vehicles, 30%; and 2-wheelers, a decline of 18%. Our exports registered a growth of 3% over last year. And I think, here, the government is trying to incentivize auto comp companies to increase exports. And that is what we have been doing also since the last couple of years. Further, it gives me great pleasure to announce that during this challenging time, we have been able to secure orders worth USD 31 million for the domestic as well as export market. These orders will be running through till about -- from H2 of this year to 2025. This order is the peak value over 5 years. Our continued focus towards export business has borne fruits. Over the last few years, we made a lot of efforts towards product development, testing with global auto majors. Our exports now cater to U.S.A., U.K., Europe and Japan. I personally feel with this whole anti-China movement that is happening, this could benefit a country like India. The new orders are a huge validation of our technical capabilities and open the doors for many new customers across the globe. In these tough times, these orders will hugely benefit the brand equity of Talbros Group and further enhance our commitment to Make in India initiative of the Government of India. It clearly provides us long-term visibility and business momentum. Now I shall give you a brief on our company. Our business is broadly divided into our stand-alone business of gaskets and forgings and have 3 joint ventures with global auto comp leaders for gaskets, suspension, chasse and anti-vibration, rubber components and hoses. To reiterate the fact that your company, Talbros Automotive, is a very hedged auto comp player, our domestic sales last year, only domestic sales last year were: 28% came from 2- and 3-wheelers, 38% came from the passenger car segment, 20% came at the CV segment and 8% came in the agri segment. So whatever green shoots we are seeing today, in the coming months, since in every sector possible, your company will grow faster than a few others as a rule based on a particular OEM or a particular segment. So this hedge strategy of having a diverse product portfolio and a diverse customer base does help us, especially in times like these. Let me give you some details on the segment-wise business. Gaskets and forgings are our stand-alone business. In our stand-alone gasket business, we continue to hold a 40% market share domestically. And along with our joint venture of our Nippon Leakless Talbros, our market share goes up to 50% in the country. Here, I'd like to tell you, like we have been focusing on exports and on technical validation of our product, we are proud to say that in our gasket business, we are totally BS-VI ready. In fact, with our commercial vehicle space, our value content goes up in the vehicle higher by about 2x than earlier. We are also focusing a lot on technology to help and localize a lot of the raw material imports. We have a line called post-coating line, which is a technology tie-up with Japan. This will help us in further reducing our imports and result in cost savings. We have made strategic raw material sourcing agreement with Lydall Performance Materials and Interface Performance Materials, U.S.A., to bring savings in operational costs, reduction in raw material inventory and working capital investments. As mentioned to you earlier, a new product line, I've been always talking to you about, is the heat shield line within the gasket business. Here, we are seeing a lot of traction now finally in the Indian domestic automotive market with certain key big players in the OE space. This is, again, linked to the engine sizes becoming more powerful, but the space to put the engine becoming more smaller. There is CAFE norms that India is going to be a part of Euro 6. This is going to have a huge traction for this product line going forward. The forging business has continued to perform well, and we have had orders from both domestic and international markets. We are in discussion with various Indian and European Tier 1 customers for heavier forging products and are very optimistic for a good performance in this segment. The forging company is an outlier in our business where exports are almost 45% of the turnover. We are now swiftly moving towards heavy value machine components, which will improve our margin trajectory. We've completed the installation of the 2,500 ton press during this year. With this, we have become a one-stop solution for hot forging between 750 to 2,500 tons, thereby expanding our strength in this segment. Let's come to the joint ventures. The first joint venture, which is the Magneti Marelli-Talbros joint venture. This is a 50-50 joint venture with Magneti Marelli Chassis Systems, a Fiat Group company, with a scope to design and develop as a complete chassis for OEMs. We received orders from our domestic OEM with a supply of lower control arm, worth about INR 10 crores per annum in the past, and from a U.K.-based OEM at around INR 35 crores plus per annum. Further, we received fewer orders from various other carmakers in India and internationally. This JV has posted a fantastic performance during FY '20 being an outlier. The margin improved on account of better recoveries for the new businesses. And this was the best ever performance, which Mr. Navin Juneja will talk you through when he comes to numbers in terms of EBITDA and profit margins for the Marelli Talbros Chassis joint venture. Coming to the rubber division. Our joint venture with Marugo Rubber Industries caters to OEMs for anti-vibration products and hoses. Pending price increased settlement with domestic customers has impacted the profitability along the decline in top line. But here, I'd like to also pass a very strong comment. Here, we have a hose division, which started seeing declines over the last 3 to 4 quarters because Maruti decided to go and ban its diesel vehicles on account of BS-VI. As I said earlier to you people in the call, to the investors and the shareholder community, that Maruti was not ready with its BS-VI diesel product because the pricing will go up very, very high. And we unfortunately got caught on the wrong wicket because our hose business was entirely linked to the diesel production. And I'm very proud to say with this -- with -- that we are getting a lot of support from OEMs in India now, who are opening up the doors to a lot of petrol hoses, a lot of air hoses, a lot of fuel hoses. And also our partners in Japan are giving us a buyback opportunity. So I feel that the pain is there in the joint venture, another 6 to 9 months, and we should be back to good times. Now I request Mr. Juneja to update you on the financial performance of the quarter.

Thank you, Anuj. Good afternoon, and a warm welcome to all the participants. Let me begin with the financial overview of the company. In the gasket division, which includes Nippon Leakless Talbros also, for FY '20, our stand-alone gasket sales was INR 265 crores as against INR 333 crores in FY '19. The decline in sales is in the OEM segment by 23%, in the outer market by 22% have resulted in the decrease in overall sales of the division. The performance in this division has been adversely impacted due to slow down at our major customers in this segment. Just I want to say here that due to COVID, the plant closed on 21st, 22nd of March, and we lost sale of approximately INR 10 crores in the last 10 days from this plant, in gasket. Now revenue of NLK Talbros was INR 42 crores in FY '20 versus INR 9 crores in FY '19. This segment saw a combined EBITDA of about INR 39 crores for FY '20. In forging division, in FY '20, the revenue was INR 134 crores as against INR 166 crores in FY '19. And here, we lost revenue of about INR 8 crores in last 10 days. EBITDA for FY '20 was INR 13 crores vis-à-vis INR 20 crores in FY '19. Now coming to Magneti Marelli Talbros Chassis Systems Private Limited, our share of total income for FY '20 stood at INR 68 crores versus INR 65 crores in FY of '19 on a Y-o-Y basis. EBITDA stood at INR 8 crores in FY '20 versus INR 7 crores in FY '19. This segment posted a positive performance as there was a growth in sales in the -- to the top clients of this segment, as Anuj told you earlier. Now coming to Talbros Marugo Private Limited, our share of total income for FY '20 stands at INR 23 crores versus INR 26 crores in FY '19. EBITDA during FY '20 stood at INR 1.9 crores as against INR 2.4 crores in FY '19. There is a pending settlement with respect to a price increase with our domestic customers. This has had an impact on our performance of this JV during FY '20. Now coming to the consolidated financial performance of the company. Total income, including other income, stood at INR 391 crores in FY '20; EBITDA, including other income, stood at INR 43 crores in FY '20; EBITDA margins for FY '20 stood at 11%; PBT before exceptional items and including share of profit of JV stood at INR 16 crores in FY '20. This is all from my side, and I would now like to open the floor to question and answer. Thank you.

[Operator Instructions] Our first question is from the line of [ Samarth Galani ], an individual investor.

I am very proud to be having shares of such company where there -- you are giving an open forum where we can interact with you directly. This is something very proud to be part of. I am into investment of your company since last 8 to 10 years, sir, when the shares was around INR 40. And I also made good money, and the company is also doing well. My question is, sir, related to debt of the company, means, what is our debt ratio? And how we are looking forward to the so called trend going on, nil-debt, like Reliance is going on? And they are marketing about nil-debt and the share price has gone like anything. So what is the focus of the company on this?

Sir, my debt equity ratio is 0.71, okay? The total debt is around INR 140 crores of the company. And -- so majority of the debt is working capital debt, and the term loan is hardly INR 20 crores approximately, and -- which we have recently borrowed some money last year for putting up that 2,500 ton press. My -- as regard to Reliance, sorry, we can't talk -- compare ourselves with Reliance. It's a different ballgame all together. And in the auto component industry, I think, we are a very -- we are very, very -- not leveraged. And in this COVID period, we are through. We had no issues. And we have not increased our borrowing in the COVID period also, by the way. So that, of course, our plan is to -- of course, the plan or the promoter is that -- to reduce our debt, but sometimes, things happen that we can't do. But my goal -- our goal internally is to reduce our debt year-on-year.

I also would like to add to what Mr. Juneja said, we're also in the process of always evaluating how can we reduce our working capital estimates? How do we increase our efficiencies in operations? How do we reduce the imported buying, reduce it to the fullest possible? So that's all -- it's an ongoing process. And I totally agree with Mr. Juneja that our debt-to-equity ratio is healthy, and we're going to try and improve this further.

Right, sir. So that was nice to here, sir. And all the best for -- to your company and the future of the company, so we are associated with you.

We'll take our next question from the line of Shikha Mehta from Equitree Capital.

Sir, you just spoke about reducing working capital. And I think, in FY '20, our working capital has inched up to some extent. So is that a one-off thing due to the virus or something of that sort? Or is it a fundamental...

It's because of the sudden lockdown in the last week of March. My inventory, we had imported inventory for the month of -- we have had inventory for the month of March. Finished inventory were lying. It couldn't go -- we can't -- couldn't dispatch to the extent of INR 18 crores in stand-alone basis. Plus, I had the inventory for the month -- sorry, raw material for the month of April, May sale also lined up, which you know that. This is abbreviation. Don't look at this -- that -- it's an abbreviation, please. This has happened because you need to keep inventory for next -- imported inventory for next 2 months also with you. Suddenly, something happened, and we're just stuck. And without the COVID, my FGS inventory should have come -- my total inventory could have come by minimum INR 10 crores. We had a definite target for that. And I will assure you, by September, you can see a further reduction in inventory from March level, by September, not by June, by September, major.

Right. Sir, my next question is, we have a lot of orders lying... [Technical Difficulty] Hello, am I audible?

Your voice is not clear, my dear.

Am I audible now?

Yes. Now you are audible, yes.

Yes. So my next question is, we have a lot of orders from Europe, and the situation currently in Europe is not very good. So I mean -- and most auto players who is called only for it are saying that the second half of FY '21 should be better. So these orders, are we seeing them to start getting executed from the first half of the year itself? Or are we...

That's correct. Let me clarify. These orders are fresh orders, which will only start in a limited manner from H2 of this year. And these orders are across all the countries, there's U.S.A., there's U.K., there's Japan, so -- there's Europe. So it's a very hedged order book and only starts after H2 of this year. And you're right, Europe will pick up only after August, September.

So the first half of FY '21 is expected to be sort of dull for us as well, right?

No.

Yes. See, if you ask me domestically, I think, you all know that quarter 1 was pretty much a write-off. But June was better than May, July is better than June, August will be better than July. Because, see, in our company, as I mentioned to you earlier also, we have a very hedged portfolio. First, the 2-wheeler started. So far us, the orders came in from Bajaj Auto, then now from Hero, from now Honda Motors is going to be -- start soon. And we are also in the PV segment. So now Maruti is picking up. Maruti has made some good comments about July and August. So it's going to get better gradually.

Right. Sure. Sir, on an EBITDA margin front, initially, we were hoping for a severe margin improvement. And now I'm guessing that is going to be deferred again by a couple of months to years. When do we -- again, now how do we look at that playing out? When do we expect to be back at like 12%, 12.5%?

I think EBITDA margin, we have -- you will see an improvement in the EBITDA margin because we have reduced our fixed expenses. You will see over a period of next 6 months. I think by last quarter, we should be back to original 11%, 12% EBITDA margin. We should be back by year-end, if nothing more happens, please, if nothing happens. By the way, we -- I'm just telling you, April was a washout. You know that, everybody. In May, we have -- I think we did some okay business in gasket and forging. In the month of June, my gasket and forging should be in green. But other JVs, et cetera, they will start picking from August onwards because we have Maruti-based, 2 JVs. And I think, by September, everything will -- should be in green.

[Operator Instructions] Our next question is from the line of Arun Agarwal from Kotak Securities.

Sir, my first question is on the gasket business. Sir, could you just help us out on the wiring harness gasket. We talked about we have some orders, and we would be starting maybe by end of fourth quarter and we'll pick up in first quarter. So how is that going on? And have we added more orders in this particular segment?

No. Just for the -- Arun, we have just started supply in a limited way in the month of June. I have got schedule for July, but the projections given by some is 3,000, 4,000, 4,000 and going up to 8,000 by December, okay? So we are ready for that because our market projections are high because of this chaos happening, so the projections have little bit come down. And don't -- we are hopeful that this year, if -- from next year onwards, we'll be back to the original plan of INR 25 crores what we told you, we will be there. That is all.

Right. But -- yes, have you got any other OEMs added somewhere maybe in the international market as well? Or is it coming to full...

Only for wire harness or other products?

Yes. No, no, wiring harness.

Wiring harness right now is only Cummins. All the OEMs are shut right now. So...

At least -- Anuj, we have added some product in -- because we are not sitting together, just what I'm saying. Anuj, we have added some products for the Cummins, which gasket, we have butterfly gasket, what you are talking about?

I think -- no, he is saying for any other customer, but wire harness, and we added many of our products for Cummins right now, some exhaust gaskets, butterfly gaskets, oil pan gaskets. We added more product lines for them.

Yes. More products have been added to the customer.

Sure, sir. Sir, my other question is on heat shields. We have been quite optimistic about getting new businesses in the international market in heat shields, not so much on the domestic side so far. So I mean, in the last quarter or the past 3 months, have we sort of added new businesses there? How are the talks going on with OEMs? Any progress on that?

Yes, yes. We are constantly adding business with OEMs internationally on this segment, on this product line. We're doing that. We've ordered -- we have added some more partners, U.K.-based OEM. And what you call it, we are also working with some other players in Sweden as well for this particular product line. But also to share some good news with you is that, even now, I think, domestically also, we're seeing a lot of traction of this product line, again, linked to CAFE norms, linked to BS-VI. So I could give you more clarity maybe on a separate call or whatnot, I think we'll move it happening out here.

Okay. And sir, on the forging side, we have installed a 2,500 ton press. So I mean how -- what has been the utilization there? A lot on the -- I mean, I'm talking more to the pre-COVID level so...

Last year, the utilization, when we -- after installation is around 40% to 45%.

Okay. And how do you foresee the forging segment this year, given that we've seen a lot of pressure on volumes, we already know what's happened in the first quarter and the way the volumes are ramping up. So do you think the forging segment sort of will be in the positive in terms of profit? Or how is it going to be this year?

Looking into the schedule which we got for the month of June and July, things are looking good in forging. Because of the export is giving us good because in India, we supply to CV segment line and 2-wheeler segment. In the export front, we supply to agri, off-loaders and U.K.-based customers and else, and U.K.- and Europe-based customers. Their schedules are worth. We have added more parts also from there. From -- those customers have given us more parts. Yesterday, we received the order from a European customer. He had a plant in -- the company has a plant in China. They had a plant in Vietnam. So they supply from China to Vietnam. Now they have reduced the schedule of China. Because of the China thing happening, they have reduced their schedule of China and gave us 50% share of that product immediately. So things are -- and things are looking good, good, really good, next forefront.

Okay. And then the order size would be meaningful enough? The ones you talked about right now?

Pardon me, how much, what you said?

The order which you have got, when you talked about some order moving away from China to you. So that order size would be meaningful or is it smaller?

This -- it would be INR 4 crores, INR 5 crores per annum to start with. We are getting -- from that customer, we had got another order win for their -- for electrical vehicles. And for that, we are supplying a bush of metal, duly machined, and that we also started. So my total will be -- of these 2 compounds will be around INR 10 crores per annum.

Okay, sir. Sir, and this year, can you help us on which are the new orders that are going to start getting executed?

This year, we are expecting new orders, which are not there until December.

Last year. Yes.

Last -- that were not there until last December. And with these bookings this year, we will be around INR 20 crores.

INR 20 crores. That's the total additional revenue...

That is excluding wire harness. I'm not talking, wire harness is over now.

Okay. Okay. Wire harness is separate from this. Okay.

Our next question is from the line of Apurva Mehta from AM Investments.

Sir, can you give the breakup of this $31 million order which we have got? Which are the segments? And in which product line or which companies are getting first thing from that ballpark?

This order is based on pretty much all our divisions, whether it is a chassis joint venture, which is -- has a majority share; and the rubber joint venture, which also has a good play out here with exports to Japan; also includes our gaskets; and our forging division as well. So it's basically a -- it's very difficult for me to break it up right now on the call because of the various customers, but I'll be happy to share it or even ask SGA to share it with you. But all I can say to you, we've secured these orders. We've added some new OEMs, both...

New OEMs also will be added here.

And domestically, new OEMs. And this order will start some time in H2 of this financial year and has a lifespan of about 5 years. That's across all the divisions that we operate in.

Sir, this year, what will be the approximate contribution from this new order?

Like as Mr. Navin said, about roughly approximately INR 20 crores.

INR 20 crores. And in the next year?

And it base up -- it goes up to, let's say, about up to INR 45 crores next year. And it goes up to about INR 60 crores, INR 65 crores. It's for 5 years, this order that we received.

Yes. And on the gasket side, any traction from international levels where we are focusing on sort of probably win U.S. on that?

Yes. Gasket is also looking positive. I think you'll see a lot more traction next year. We've secured orders from U.S.A., from U.K., from France. So yes, we are on track. Whatever we had initially said about that this is going to be export in the gasket, we're working towards that. There's a lot of traction coming up right now, especially from the U.S.A. with this whole China issues, is very, very interesting at the moment. And even gasket has got a good order play out here for exports going forward.

Sir, what is the opportunity size you see in U.S. if we go through all these things? Can we see a big order coming in for gasket like?

Yes, of course. There was a huge -- there is a huge opportunity in the U.S. I mean, put a number to it, and I see $4 million, $5 million of opportunity. The answer is definitely yes. I'm talking about annually. If I breakup this INR 231 crores, gasket itself is about INR 50 crores. But it's just the beginning. And so this -- I've secured this already right now. So there are some positive movements happening out there, yes.

And on the margin front, if we just ask with previous, the margins will be far better than what is currently in the domestic?

I'll let Navin answer that on the margin front.

So margin, don't look for last quarter margin, please.

No, no, no. I'm talking about the...

But of course, the more the export content -- or more the export goes up, the margin will be better.

Right. Sir, on the forgings -- yes, tell me, tell me, yes.

I'd like to share with you. In our stand-alone business, I don't have the breakup of gasket and forging, but only in the stand-alone business, which is gasket and forging combined, in year '18/'19, the export was 51%, okay? And even -- and in '19/'20, the export was 24%. Had it in the COVID situation in the last month, where all the printing was shutdown, the supply chain shutdown, this could have been higher by maybe a couple of percentage points more. So you can see in the stand-alone business only, not the JVs right now, only gasket and exports -- my exports are on the increase.

Yes.

Okay. And on the forging side, can you throw some light, like what is your movement? Going forward, what can be the growth opportunities? And where we are talking more? And where we are seeing traction coming in?

We just -- I told you in the last call, last participant who talked to me, Mr. Agarwal, I explained that we have got -- from the existing OEM customer, international car manufacturers, we are getting more traction. We are getting new orders from the same other components from them. In my U.K.-based customer, car manufacturer, and the U.S. -- Europe-based car manufacturer, we are getting very good traction. We have very, very good traction. The order which used to be INR 25 crores, INR 30 crores, now we are talking about INR 40 crores with them. The order which used to be INR 10 crores to INR 15 crores, now we're talking about INR 30 crores again with them. So going forward, these 2 customers are giving us very good traction, plus the market is now opening up to export process, the market -- Europe market, other customers are now -- were lying down when we had to go up. But I think when they go up by next month, we'll get new opportunities. Everybody -- because we are getting -- with our existing customers, they are giving us very good opportunities.

Sir, this year, we will be starting this business, the new opportunity what you are talking about...

Yes, yes. Some business, we will start getting -- like, I told you, as it grows, we'll get around INR 20 crores new business this year as part of that.

And on the heat shields side, do you see any -- this one -- any contribution from heat shields?

Yes.

Yes. We do. Yes. Yes.

The projects of the European car manufacturer which was -- went on hold after the COVID, now they are coming back from August onwards. So that supply of new partners starts moving from there.

Our next question is from the line of Pankaj Jain from Mahavir Investments.

Sir, I would just like to know what was the potential revenue loss due to this lockdown period. And what is the situation currently? Can you just give me a broad-based breakup of capacities that we are operating currently? And maybe a bit going forward, what do you see as an order book?

Yes. Regarding the loss opportunity, I've just told you, percentage, I can't guess the -- if you see 4% to 5%, I lost in gasket, and approximately 5% to 6% in forging. Because in those -- these 2 places we locked export and aftermarket. Export goes in the end of month because it goes in the container. Container has to be -- we lined up containers the end of the -- by the last week of the month. And the aftermarket, we lost the whole month literally because aftermarket sales generally started by April 20 only. Because they have -- we have to combine all the items, 10 items to be ordered, 15, when we pay to maybe one consignment that is sent to the distributor dealers. Yes, there, we lost that. On the 2-wheeler front and all the JVs, that the 2 JVs are Maruti-based JVs, Maruti stock, we had lost. They are approximately 8% to 10% everywhere. So going forward, I can't talk much about going ahead. And because some states have still not been opened, like Maharashtra is not still open fully. And like I think, my -- Guwahati is still closed, Calcutta is closed. So whatever the impression I am getting at present, I can tell you. And we are getting good traction in our gasket division and the forging division. We have achieved 60% capacity, we have achieved there in both the divisions. Regards my JVs, in MMT, I think, from next month, they will start having -- not this month, they will be only hardly working at 35%, 40% in June. For next month, they will be going up to 60%. And my other JV, Marugo, also by 60% by next month. And third JV, Nippon Leakless, will be based with Hero and Honda, they will be around 65% to 70% by next month onwards. This is what I can say.

Sir, just picking up from the MMT part, MMT has been in the positive territory. So if you could just let me know what is the driving factor for the good performance of this JV? And what is your outlook for FY '21?

FY '21, because we lost one quarter in this company. And export is for the -- I will be able to give better answer by the next call, not this call. I would be able to give you a better, better outlook by next call.

Got it. Got it. No worries. No worries. Sir, lastly, are we facing any labor availability challenges in terms of ramping up the capacity?

No. Labor availability is not a challenge, but COVID is a challenge. To control the COVID, labor is a little challenge. We need -- we can't bring all the labor inside. We need to keep a distance, et cetera. To manage that is a challenge. But again, one day, we need to -- we'll get panic with somebody -- you know that we are doing all the checkings, all the sanitation work, everything we've been doing. But we can't call all the labor in one go. That is affecting my productivity a little bit. For it -- because I can't expose -- earlier, it used to be 500 workers in morning shift. Now we're working with 300, 350.

Okay. Got it. Got it. And that is why dynamic has been changing on weekly basis.

[Operator Instructions] Our next question is from the line of Atul Shah from Progwell Securities.

Sir, I have got a couple of questions. First of all, sir, regarding our working capital cycle. So what is the situation currently? Are we witnessing any delays in terms of getting payments from -- or any delay in receivables?

Sure. Regarding the -- payments are there, touchwood, we have no problem with my OE customers and my export customers. Everybody has paid in time, maybe a delay of maybe 10 days, 15 days because of COVID thing. But the main problem is in aftermarket. It was very bad in April and May. It was hardly anything. But in June, we were able to start getting the money from them. Yes, they may form -- replace the market only.

Okay. So sir, is the working capital cycle likely to get stressed in FY '21?

Not stressed. Of course, we need to tighten our belt. We are working to reduce our debtors, to reduce my inventory and working on that front so that I will not borrow more, by the way. We will work in this borrowing limit only, don't worry.

Okay. And sir, how does the production schedule from OEMs look like going ahead?

Sir, it will depend on the customer to customer. 2-wheeler is looking good, okay? And agri is good. And from the commercial vehicle, also, we are not feeling very bad. Because numbers, they are just starting to push -- making some vehicles. Of course, there is a slowdown. Of course, it is not on the same level as it used to be, but some traction has started there from this, there also. But as you are aware, we are a hedged company. So -- and we have -- I told you in the earlier call, my capacity utilization in the gasket is now at 60%. In forging, we are export -- in also gasket, we are getting very good export business. It is helping us to maintain my -- keep my neck above water.

Okay, sir. And sir, how is the traction with respect to BS-VI compliance products?

Very good. Very good.

Our value content has actually gone up by about 2.5x.

In commercial vehicle, my value contract -- with one customer has gone double, with second customer gone 1 point -- it was 1 to 1.6x.

Okay. So sir, how about -- how much margin accretive this is going to be on an overall basis?

Sir, we have not made budget for this year to be very fair because nobody knows what's going to happen. We had just opened recently in the last week of May. So better projection, I can't give you right now. Maybe in the next call, I will give you -- able to project what the year looks like and what is the margin we are looking at.

Okay. And sir, how have you managed...

But on the other hand, it will be -- not be depressed, by any way. It should be a decent number, not very good, but it should be decent. Because we have reduced our breakeven at every facility.

Okay. Sir, how have you managed our fixed cost during Q1 FY '21? Basically, what is our fixed -- I mean, so you can also throw some color as to what is our fixed cost component on a monthly basis?

We have analyzed the fixed cost component in every business. Every business are different. Some business are 16-year-old, some is 10-year-old. Every structure has a different fixed cost. Then we attack each and every add, and we bring it down on an average from plant-wise. In some plant, 12% is large; in some plant, 16%; in some plant, 19% fixed cost, we were able to bring it down.

Basically, all the hedge, all the hedge...

Each and every fix, like salary wages, printing and stationery, travel, you talk about -- staff welfare, you talk about any head, whatever, because raw material we can't do. Of course, what -- because of presumption there. But these heads which are there, we -- every head, we have touched upon. And we put a figure, we agreed upon that. The message has gone to the whole comp team, and everybody has been allocated. He has to look at this head, this head to look at that head. So we are working on that. I think we will -- it will show, going forward, we'll show the result.

Okay, sir. Sir, and what was the CapEx incurred during FY '22?

'22?

'21...

Last year?

Last year, FY '20, sir. I'm sorry, FY '20.

It was around INR 10 crores to INR 12 crores on stand-alone basis.

How much, sir?

INR 10 crores to INR 12 crores.

Okay. And sir, what is the budgeted CapEx for FY '21?

Only the CapEx required, which has already been ordered -- machines, which has been ordered will come. For fresh CapEx, we are not going ahead with fresh CapEx as of today.

CapEx is on hold at the moment.

Only need based, need based. If some business comes for that, a particular machine is required, only that, that's all. Nothing more.

Sir, but can you put a value to the machines which we've already ordered? So what will be the CapEx for that?

Approximately INR 2 crores, INR 3 crores.

Okay, sir. And lastly, sir, have you opted for any moratorium facility?

In the up -- not interest, no moratorium interest. A small term loan moratorium we have used, which is totaling about INR 4 crores. That's all.

[Operator Instructions] As there are no further questions from the participants, I now hand the floor back to the management for closing comments. Over to you, sir.

Yes. Thank you so much, everybody, who took part in the call today. I think we are very, very positive about our business. As again, I will reinstate and restate that we are a very hedged auto comp company. We are across -- we are present in every possible segment, and that is the beauty of our business that when the 2-wheelers picked up because there'll be a lot of first-time buyers of 2-wheelers; entry-level cars will pick up, lot of first-time buyers of entry-level cars, they're there in all these segments. Agri is doing well. A lot of money is being spent in the rural economy that will help us in the agri part of the business. So we're everywhere. The domestic -- the business is good. The global business will pick up even further. There's a whole thing that's happening on China border at the moment. We'll have more traction. U.S., China, we'll do export more. But all I'd like to say to you as a closing remark, as a promoter group, we believe in our business. We have increased our stake, and have firm believe that we'll be able to build a solid growth planned for the company. I would thank you all for being on the call today. Thank you.

Thank you.

Thank you, members of the management. Ladies and gentlemen, on behalf of Talbros Automotive Components Limited, that concludes this conference. Thank you for joining us. And you may now disconnect.