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

Ladies and gentlemen, good day, and welcome to Talbros Automotive Components Limited Q1 FY '22 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based 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.

Good afternoon, everyone. A very warm welcome to our quarter 1 FY '22 earnings call. I hope you all are safe and healthy. On the call today, I'm joined by Mr. Navin Juneja, our Director of Talbros Automotive and our Group CFO. We also have on the call S. Jain, our Investor Relations advisers from Mumbai. The results and the presentation are uploaded on the stock exchange and the company website. I hope everyone has had a chance to look at it. Before I start with the industry overview, I would like to thank the management team and the employees of Talbros Automotive Components Limited for the persistent support in these challenging times to keep our operations to run smoothly. Let me begin with a few updates on the industry. There has been much listen-and-talk about the current situation of the auto industry due to the second wave, chip shortages, supply chain disruptions, inflation increases in steel. There are countless pessimistic sentiments moving around, and I don't deny that. I agree that supply shortages and chip scarcity are accountable to record-breaking trade gaps. In addition, it's also eating into the profits of a lot of companies. However, I strongly believe that at Talbros, we have been an outlier. We have been focusing our energy on exports. We have been working on not only depending on one customer, one geography, one region, and that will spill out the performance which Mr. Navin Juneja will talk about in the coming minutes. Performance of the auto industry during quarter 1 FY '22. I would like to share with you the statistics published by CM about the first quarter performance. In the first quarter of FY '21/'22, all segments faced major hit. PV reported sales of 6.5 lakh units, which is lowest in past 7 years. Two-wheelers reported a sale of 21 lakh units and commercial vehicles reported a sale of 1 lakh units, both were the lowest in the last 12 years. Three-wheeler segment was worst hit with sales of 21,000 units, which have been lowest in more than 2 decades, barring quarter 1 of FY 2021. Now I would like to highlight on Talbros and would like to share what strategy do we have to deal the situation. Our business is broadly divided into a stand-alone business, gaskets and forgings, and we got 3 joint ventures with global auto giants in gaskets, suspension, chassis and rubber components. As I mentioned to you earlier, we are a hedged auto comp company. I'll give a small breakup of our domestic sales. During the quarter 1 of FY '22, our domestic sales, 27% came from two- and three-wheelers; 29% of our revenue came from passenger vehicle segment; 27% came from the commercial vehicle segment; and about 11% came from the agriculture segment. It has always helped us in extreme situations where you may have a slowdown in a particular segment that we are able to weather the storm. As I mentioned earlier to you, we -- in the past, our exports used to be around 10% to 15% of our revenue. We were very, very clear and focused, and the work started about 5 years back that how exports should be about 20% of our turnover. I'm very pleased to announce that in this quarter 1, our exports were 28% of our turnover of our stand-alone business. Our forging business is an outlier. Exports are 53% of the turnaround of forging business. We continue to get a lot of traction from global OEMs and also global aftermarket for our products. I'd like to discuss a little bit about our stand-alone gasket and our forging business. In our stand-alone gasket business, we still control 50% of the Indian market. We still have the highest market share. We have invested heavily in R&D. We've got all the BS-VI product lines, are in line, are all being supplied to the OEMs. We are focusing on more global presence in the gasket space which we are adding traction from a lot of clients from Europe and the U.S. We are working with our post coating lines, which helps in localization further. As we've announced to you earlier, we are working with our collaborator Sanwa to introduce heat shields into the country, which is a futuristic product for noise, vibration and heat. This is an entry of our gasket business in the PV space. We understand the gasket business is predominantly commercial vehicles, tractors and two-wheelers. With this particular product line, we will enter the PV space. We have won orders already from major OEMs in India for this product line. This is the future for all vehicles with overcharged engines. Also, this is aluminum. It is light-weighting. It is going to be used with a lot of carmakers in the future as well. Our forging business, as I mentioned to you, is an outlier 50% of the revenue comes from exports. This is ongoing. This is not onetime. There is momentum. There's order books. There's a lot happening. And you can see from a lot of forging in our country today, there's a massive demand for forging in India because of the fact that the West does not want to forge anymore. So we are forgers and machiners. I am very, very happy to share with you that we are also supplying to selected vehicles in the global supply chain from our forging business. This is a good move because EV is a very exciting buzzword around the industry, and we are part of it. What I can also add and share to you that Talbros Automotive will be a part of every supply chain, will be a part of every ecosystem, whether it is hydrogen, whether it is gasoline, whether it is diesel, whether it's electrical, we are a part of the entire ecosystem. We work day in, day out on making sure that we are not missing the boat anywhere. Coming to our joint ventures. We have a 50-50 joint venture with Marelli and Talbros, which is for chassis systems. Share also we got a majority share in Tata Motors and about a 40% market share in Maruti for the components that we manufacture. We just had a review a few days back with our partners in Europe where we're now trying to leverage our production more to exports. Today, we are supplying about 15% of our components go into Europe and the U.K. from this particular joint venture. We're looking at how do we take about 25%. Even here, based on time to PVs, I believe the product with Tata Nexon, it's an EV vehicle we supply from here as well. Talbros Marugo, as mentioned to you, is a small-ish company today. But again, the potential is huge. We've got a partner called Marugo, Marugo Japan. Here components are rubber components, hoses, suspension components. And here, there's a lot of traction that is happening for this company. I honestly feel that in 2 years' time, we can double the turnover of this particular division, which, again, Navin, will talk to you about. Before I hand over the call to Mr. Juneja, I would like just like to highlight that we've had a strong performance in quarter 1. We are seeing better months coming forward. The domestic OEM play is looking a little bit better in the next few months. There is a bit of -- there is a chip shortage, but I'm sure that we will -- the auto industry will find a way how to come around it. I'll hand the call to Mr. Juneja now who will take you with all the financial performance.

Thank you, Anuj. Good afternoon, and a warm welcome to all the participants. Let me begin with the financial overview. For Q1 of FY '22, our stand-alone gasket sale was INR 88 crores as against INR 32 crores in Q1 of FY '21. In Q4 FY '21, this sale was INR 102 crores. Total revenue of Nippon Leakless, our joint venture in gaskets, was INR 13 crore in Q1 FY '22 as compared to INR 5.5 crores in Q1 of FY '21 versus INR 24.6 crores in Q4 of FY '21. The top in sale in this quarter is mainly on account of closure of plant by Honda for more than 1 month, and Hero also closed their plant for 1 month in this period. This segment saw a combined EBITDA of INR 14 crores in Q1 of FY '22. Now coming to our forging division. The forging business was -- is consistently performing better. The revenue in Q1 FY '22 is INR 51 crores as against INR 19 crores in Q1 of FY '21, and last quarter, with Q4 FY '21, it was INR 59 crores. MTC, Magneti Marelli joint venture, total income for Q1 of FY '22 was INR 32 crores versus INR 5 crores in Q1 FY '21 and INR 46 crores in Q4 of FY '21. This joint venture is supplied to Maruti in a big way. 40% of their product is in Maruti. So Maruti plant closure in first quarter affected the turnover of this company. Now coming to Marugo Rubber Pvt. Ltd, total income from operations of -- for Q1 of FY '22 stands at INR 12 crores versus INR 3 crores in Q1 of FY '21 and INR 14 crores in Q4 of FY '21. In the last quarter, because this company is also dependent on Maruti, so my -- 40% or 45% sale is to Maruti, so Maruti plant was closed for more than 1 month. That's why it has an impact on the turnover of the company. Now coming to the consolidated financial performance of the company. On the slide which we have put on the company website and the stock exchanges, that as on the consolidated basis as per NDS, the total income, including other income, stood at INR 138.8 crores in Q1 of FY '22 as opposed to INR 50.5 crores in Q1 of FY '21 and INR 160 crores in Q4 of FY '21. We could manage decent levels of revenue during this quarter -- this lockdown period by execution of our multiyear orders, which we received last year, and as a vision of that, and Anuj told you also earlier that export, which we closed last year, helped us in this period of time. EBITDA, including other income, stood at INR 19.1 crores in Q1 of FY '22 as opposed to INR 1.8 crores in Q1 of FY '21, and in Q4 of FY '21, EBITDA was INR 24 crores. Second wave of COVID-19 impacted the performance of Q1 of FY '22. In spite of drastic jump in the commodity prices and other supply chain disruptions, we achieved EBITDA margin of 14%. Our PAT stood at INR 10 crores in Q1 FY '22 as compared to a loss of INR 8.9 crores in Q1 of FY '21, while in Q4 of FY '21, my PAT was INR 12.74 crores, which exclude -- after excluding the exception gain of Chennai sale. We continue to book our orders and add new customers along with the long-term relationship with -- we are having with our existing customers. This is all from our side, and I would now like to open the floor to questions and answers. Thank you.

[Operator Instructions] We have the first question from the line of Shikha Mehta from Equitree Capital.

Congratulations on a great set of numbers, and I hope you and your team are both safe and healthy. I just had a couple of questions. Sir, if you could just tell us how the raw material has been playing out, commodity prices as we've were a little choppy in the first quarter. Has that settled a bit? Or do we still expect some volatility in our gross margins?

First of all, the voice is not clear. Can you repeat the last few words, please?

If you could just help us understand the gross margin better, so just how the raw material prices have been moving.

Yes. First of all, I want to say the raw material prices has gone crazy for last -- since last November, December till April, May. So it has gone -- in forging up to 20% up. And in gasket, lot of material we use, we've seen copper, paper, et cetera, it has gone up. And we are conversely recovering the sales. Of course, there is a time lag of 1 month, 2 months and 14 sometime. Gradually, 1 month lag is in forging, but in gaskets it's some times is 1 month, sometime 2 months, sometimes immediately. And so of course, there is some impact of that, which is there in my EBITDA levels. But we are hopeful that everything -- we are already launched the price increase at all the customers. Some customers we have received; balance, we are also receiving. I'm quite hopeful that my [Technical Difficulty] should improve, it should not -- it should be in the range of 14% plus going forward. I'm quite, quite hopeful.

All right, sir. And if you could also give us the capacity utilization in gasket, forgings and all the joint ventures.

Yes. Definitely, I will do that. In gasket, my last quarter capacity utilization was around 76%. In forging, it was 72%. And my joint venture of Nippon Leakless, it was around 60%; MMPC was around 70%; and Talbros Marugo, the 2 divisions, anti-vibration was around 75%, and in hoses it was around 30%. That was my capacity utilization. And there is a lot of scope to improve that. I think the things are improving every quarter-by-quarter.

And are we looking at CapEx in any of these headwinds?

Yes. Yes. We are looking at CapEx in the whole stand-alone business -- my stand-alone business. Gasket, we are looking at a CapEx of around INR 11 crores, which includes 4 to 5 new heat shields for which the supply will start from the last quarter of this year. And in forging, I'm looking CapEx of INR 12 crores to INR 13 crores, which includes a new building of about INR 4.5 crores to INR 5 crores because we are having a lot of machining space is getting short. We want to have a full machining center, new machining center of 150 machines. So already, we're having 70 machines, I want to make a building for that, plus a lot of new machines to be added there for our future growth.

Right. And sir, has the logistics cost come down in, say, Q2?

First of all, for November, December logistics cost has gone crazy, especially exports. Per container will used to cost me 2.5 has gone up to 4.5. But now -- and we allot the increases with our customer also, and some has agreed to give [indiscernible] bid for that. But going forward, what I'm reading that it will come down in a couple of months. The prices are getting softer, a couple of months.

We have the next question from the line of Sunil Kothari from Unique Portfolio Management.

And congratulations for such a good numbers in very challenging time.

Thank you.

Sir, yes, Anuj ji and Mr. Juneja, what I think I'm observing is since long, the way you were speaking and you were promising, everything you are fulfilling. So really, congratulation for doing. Wherever you promised something, you fulfilled, whether it's a margin growth or CapEx or revenue growth. So really commendable job, sir.

Thank you so much.

It's all your encouragement and the promises, which give -- for which compiles to fulfill that. But really, we want to do better than what we say.

Great. Great.

Wanted to do better, we'll try for that. But some situation happens, we can't control those. That is the difference.

No. Really commendable. Sir, my question is on this -- we hear a lot about EV. So I think we already started doing work related to electric vehicles. Some orders also we got. Some detail thought process and strategy on which segment of EV we are entering, whether this new EV scooters, which we are not currently from Ola or Hero or Bajaj? Are you part of any of those products? Something on this strategy. And what -- because I think itself will save us and give us production from losing market share or market from the engine gaskets. So if you can a little bit make us understand how this change scenario can affect us and how we are preparing ourselves.

So we are also hearing a lot of noise on EV because every second day, we hear that one company has -- some garage has opened a electric -- or a scooter coming in, something, something. We keep on listening and necessarily watching on the media also for that. And as regard to Hero, Hero is concerned, it's not doing much about -- of course, we are working towards electrical. The good statements comes from Punjab that invest so much, so much in the EV segment. On the ground, nothing is there. In Hero Honda there is nothing there on the ground, at present, okay? But as Talbros, what we are doing, as you're aware, that we are entering in the EV segment. Early what we have talked about, already supply to Tata Motors EV. And they have already a contract with our European carmaker. If you are going EV in future, my component will be there in that platform. That is not an issue. In forging, we are supplying to export customers, like I mentioned, GKN. GKN is giving to Volvo and BMW. My component in this EV segment is going at present. It started going there, and monthly volume, I mentioned INR 25 crores, but can go up to INR 30 crores, INR 35 crores yearly. We are supplying to BMW, which goes in every vehicle, whether it is electrical, nonelectrical. My component will go there. And regard the gasket business is concerned, we have done a full study of how the two-wheeler -- it's going to come in the PV space. So it is going to first come in the scooter than come in PV and commercial. They will come in buses or government buses but something more than that. I -- we'll see long-term intrastate buses it will never come. Intrastate transport it will come. Plus, as you are aware, India was not -- India is not powerful -- power surplus country, a lot of power shortages also. So it's not like Netherlands, Sweden, et cetera, where -- not China where the power is surplus. Surplus power is available at a bit cheaper rate. In India, we know it's not there in the summer season. We are facing -- power industry is facing power but up to 10 hours per day. So -- and this is also facing power cuts of 6 to 7 hours per day in Gurgaon. Now if we take the two-wheeler market, in the two-wheeler market, what we have found that Indian two-wheeler market in FY '22 -- '20, 150,000 units of EV was sold. In FY '21, the volume dropped to 140,000. The study which we have done according to KPMG because KPMG is also -- we do a lot of work with KPMG in various matters, strategic matters, et cetera. But according to KPMG study, 7% to 10% of overall 2-wheeler market, including 2% motorcycle, will get converted into EV by '25. So -- and how much are the scooters? 3 lakhs. We are selling the scooter volume by -- we feel that by 2025, the scooter volume will be only 1 lakh -- just a moment, sir. Okay, by 2-wheeler 141,000 two-wheelers will get converted. That's all. It's a nominal number, but it will -- so much noise is there. But we are not -- in India, who are making EV scooters. Honda is making scooters. TVS is making scooters. Suzuki is making scooters. We are not in TVS. We are in Suzuki. We are in Honda. Honda, my turnover is around -- of JV. We are not directly in Honda. JV turnover is around INR 30 crores per annum, INR 35 crores, INR 40 crores. Out of INR 30 crores, INR 25 crores that is including motorcycles. INR 30 crores of two-wheeler we have only INR 10 crores. INR 10 crores [Foreign Language] JV. The sale is 40% of JV. Plus, we are also -- as a group, we are also exploring because we -- I can enter into a battery vehicle [Technical Difficulty] companies are coming for batteries. And technology is so fast changing, I don't want to put money in a space which is moving very fast like mobile, what happened to cameras. So we have to put money where, I want to put money in a business where [Foreign Language] it will be dear.

The number what Mr. Navin is saying, like our forging business, for example, right? Whatever we do, I mean investment we made there, so you are part of every supply chains. And your EV motor scooter only for B2B, the Zomatos, FlipKarts or Swiggys, but intracities, intrastate, still long way to go. One more statistic I will leave with you. In India, out of 1 lakh people, only 100 people have motorcycles. That's it. So that has to also go up. So they will all exist. We manage to be around it. It's -- still, India will need 20 million to 24 million motorcycle, scooters going forward. They will make it. So plus real competition because government is giving subsidies, state government, central government, till what time? Till when they will give subsidy, tell me? India has no spare money, now you know that. They are doing infrastructure, et cetera, whatever they are doing giving to farmers, et cetera, by increasing the petrol prices. That is -- money is coming from those -- there -- from where. Because without subsidiary there is -- you know that. Without subsidy, things will not run. Till what time, let's see. So what I should say is long-term sustainable.

Sir, my next question is to Mr. Anuj. Sir, because of your last 4, 5, 3 years, very high effort on adding new products, new customers, you are drawing a lot meeting customers. But during this 1, 1.5 years, that has stopped. But yet, we are luckily or with your past effort, we are getting reasonably more new customers and more orders also. So what is your strategy and your agenda for next 2, 3 years, what you would like to do more towards new product development and new customers or existing customers and scaling up? Any thoughts on your efforts next 1, 2, 3 years?

So I think if you start -- I mean the work that we did pre-COVID when one could travel and meet people, now that has moved to a Zoom calls and Microsoft Teams meetings. Obviously, it's not the same. But I see now it is again starting. Like I'm getting feel that again from some OEMs that they want to start meeting. Slowly, slowly, slowly, that will happen. The customers have been developed over the years. There's are a lot of potential out there. We have not even scratched surface in terms of the opportunity that we have, be it customers in the U.S., U.K., Europe. There's a lot of scope. In forging, there's scope to go into heavier components, machine components. In gasket, there's scope. We are working right now on a few projects till the year 2028. That's going to come. That's a very large project that will come our way. And we are looking at adding a few more customers also in Europe in the passenger vehicle space. Heat shield, as you know, the futuristic product, we're starting with the Indian OEMs, which starts somewhere in January next year. We're talking to global OEMs. So I think we have a very good customer base, and with this customer base, we can still look at achieving double-digit growth in the next 2 to 3 years. I'm very, very sure about that. Talking to OEMs, what next, what's the future? Where do you want to go? So one is lightweighting. For that we put up the alumina heat sheet like. That's one. I have a meeting plan with some OEMs for over the next 2 weeks, critical meeting after a long, long time. We'll talk to them. At the end of the day, the OEM guides us what to do. We only guide you. So we have enough order books going forward. There is a lot of scope. Next 2 to 3 years, I don't see a problem at all for double-digit growth. I don't see a problem. But we continue our endeavor, and we will on every front looking new customers, new products, we have eyes, our earns are opened and we are just guiding. When we had call with our partners in Malaysia last week, there's a new open out there for a global carmaker, the Volvo trucks in Sweden is a new account for us. The U.S. aftermarket has been a blessing to us. They're operating there also. So we're -- we have not given up we are on it. We're on the job.

We have the next question from the line of Apurva Mehta from AM Investment.

Yes. Congratulations on a great set of numbers.

Thank you, sir.

Really, Really surprised to see such numbers. So my question was on the JV side. Is there any possibility to explore this JV and bring new products from this JVs? Like MMT is a very big player. And can we explore getting new products from them or getting new customers, helping them -- helping us to get new customers or outsourcing stories from all these 3 JVs? So is there any possibility to grow these JVs into like a big JV like...

Yes, sir. You are absolutely right. In MMT, we are now looking at full suspension. Now we are making components of suspension. Now full-front suspension model, we are looking at that. When the things improve and the number is there, we are approaching Indian OEM as we have already targeted. And we -- because we started -- we explored this possibility in Maruti also. For Maruti price were ridiculous, because we don't want to post any loss because it is not a lot of CapExs also. So we are now -- I gave on base OEM on that. Number one. We are in the process of -- we are already in talk with management of Magneti Marelli for localization of their components, which we make here and they buy locally from Italy and that European belt. We are already working, but things are working, but make up by this year in Europe where mindset is little different. To change their mindset, it takes a lot of time and COVID thing, but as you know COVID is also there for more than 1 year. Things are a little bit delayed. It's not stopped, please. It has been delayed. I think, hopefully, when the things open up within next 6 to 9 months, we should get a very good news from that front also. Now coming to this, now Marugo. Of course, as we are -- as my JV -- if you see my JV scope of products, lot of products are there. But since the company is -- because of COVID, et cetera, low utilization of all these, we are just making that let's the thing -- let's this come, capacity utilization goes up because of new orders plus buyback. Marugo has started a buyback. Buyback last year was around INR 4 crores to INR 5 crores. This year will be INR 9 crores, and going forward, INR 12 crores to INR 13 crores. Export buyback will be there by Marugo Japan from this JV. And by -- and we have a lot of new products like Indian molds, et cetera, but part of our product portfolio will be to develop over a period of time. Definitely we'll do that.

I also like to add one more thing. Yesterday only we had renewed our Marugo -- day before yesterday. Marugo is talking about this new kind of hoses that are flexible. You've heard the comment about ethanol mixed fuel. So new opportunities coming out there. So we will not leave anything unturned. I will repeat it to you, both Marelli Talbros and Marugo Talbros remains potential to double turnover next 2 to 3 years, it will happen.

And regards that JV, sorry, it will not have anything there because there will be no buyback, et cetera. The company will supply to 2 main companies like Hero MotoCorp, 70%; and Honda, 100%. The way we will grow -- the company grow, but the bottom line will be very, very healthy. This year, the top line will not grow because new BFX gasket, which we have developed, but we have developed in local raw materials. We used to buy this raw material from our JV partner, imported. Now with the local raw material, my common margin has gone up drastically. My imported -- my sale price also come down by 20%. In the old days, this cash flow is INR 46. Now it's INR 38. But my margins are very, very good, here. Like if you see when the volume goes up, definitely we'll see. And EBITDA here also this quarter is also 20% plus of that JV.

Sir, on the forging side, where do you see -- because now currently, we are at; INR 250 crore like a run rate. And we will be -- our peak capacity around maybe around INR 250 crore to INR 260 crores. So we have to expand on the forging side also. So where do we see in 2, 3 years, these numbers of forging to be?

This year, we are, of course, the ways things are, there we should cost for INR 200 crores as opposed to INR 167 crores last year. Going forward, within the next 2 years, it can cross INR 300 crores, maybe. And we are adding machining and as of now closing price is required, we'll add that. We have space for that. We are making a new building. We'll ship all my colleagues, machining lines in that building. We are making a positive feed structure. So my machine space will be there in the main plant for adding more presses.

Okay. And on the heat shield side, I was a little -- if you can talk about on the technology side of heat shield, and where is the global technology currently and where we are? And is there any possibility of a big breakthrough if we're getting technology or getting big orders from these OEs? Because this is a very huge market overseas also. So any thoughts on that?

Till the time, we can't physically go to Europe, to U.K. and do a technology day on this product, it's a bit tough. I mean earlier on, you could go and convince certain engineer at Jaguar or a BMW or a Daimler or all those, look, are we able to do this, this, this to the vehicles, gradually it will reduce the weight. So that we are still waiting for borders to open up. At the moment, we're working on the Indian market. We got a breakthrough with Volvo Trucks. And I've given a mandate to our team that they must add one European carmaker ASAP. But for that, we need to do a tech day. Tech day cannot happen on Zoom. Plus also, sir, let's start making some -- like we want the model from Maruti for 1 to 2 heat shield, we want all from Hyundai. Let me deliver the products commercially. Let me showcase that for the clients. Let me set up the line. I think the line will be set up by January, February of this year, next year. And after 1 year, I will bring a machine of 4 to 5, machine is there for making nimbus material sheets. Now I will get from Korea fully nimbus at present for 1 or 2 years. After that, I will buy the locals and make my own nimbus. Then we can -- let's do slowly, slowly because lot of technology is there, tool making capability has to be identified. It has to be -- we have to learn a lot of stuff from our collaborators, and our collaborator is coming here. I think by the -- before the end of this calendar year, he will be with us for 2, 3, 4, 5 months. We will learn a lot of things processes, et cetera. Let -- something will be settled, and then, of course, it will go.

Okay. Great. Great. So on the technology front, we are satisfied with our partner, and he is having all the technologies that needs...

Yes, yes. Too good.

Okay. And on the gasket side, on the export front, what -- when we were seeing a lot of -- because over the -- globally are now shutting down their IC plant, and there will be a huge opportunity on the gasket side also because a lot of people will be closing down the gasket plant also. But there will be an aftermarket sales going for next 5 years, 10-year kind of thing, and there will be a lot of opportunities there also. Are we trying to explore that opportunity?

For that, we are there already. You will see the thing -- how the growth has come in first quarter despite of local OEMs not being available to us. And that growth in gasket out of INR 86 crores we have done, INR 17 crore is export only.

So gasket exports are all 19%.

In the first quarter.

It will be 12%. So there's a lot of operating exports are going on. We've got a lot of contracts that are ongoing. We'll get commercial in '23, '24, '25. So 100%, sir, the vision that we give you for gasket, it will happen.

Okay. Okay. Sir, on the margin front, where we had this kind of a little bit of a hit from the raw material side. So over the next 3 quarters, can we get back the lost margins which we are there on the raw material side? And...

It will average out over a period of a year.

We have the next question from the line of [ Dipen Shah ], an investor.

Yes. Congratulations on a very good set of numbers. I think talking after Apurva, he doesn't leave too much for questions. But just had a couple of things. In terms of our JVs, we have a large dependence on Maruti, and Maruti has been making some noises about having a lower production current year. If you can give us some more color on how do you see this spanning -- or at least Maruti and a couple of other large customers panning out over the next 2 to 3 quarters. And what probably should it do to our growth levels for the current year?

So of course, you are right. My 2 JVs are -- my Magneti Marelli is 40% dependent on Maruti, and my Marugo is also 45% dependent on Maruti. So they are showing a decline of 10,000 to 15,000 vehicles per month due to -- but statements I read in the papers where semiconductor issues. But it's not a major amount for us I think so. If you convert it to rupee terms, it's nothing. It basically comes for INR 50 lakhs, which is not as much amount. But we have balance 50% what is there, we are growing that business. Tata Motors vehicle is very healthy growing. They are talking crazy numbers. Of course, the Marugo buyback has started, Marugo, other customers like Daimler doing very well. There's other Japanese customers are there, export has started. So a little bit impact is there, not major impact to be very fair. But overall, we will -- I think what we are hearing from one of our European customers, carmakers, to whom our Magneti Marelli is exporting also individual components, but they are still not bothered. From October, November, they will catch up, catch up in such a way that it will be difficult for us to match that. By year-end, everything will follow for [Foreign Language].

Okay. Okay. Okay. Yes. And sir, it was heartening to hear that you are doing a INR 10 crore CapEx in both forging as well as the gasket business. That probably gives us some insight into your visibility for the current year as well as mostly in the next year. So I think, sir, with this INR 20 crores of CapEx which we are doing, any further CapEx which we are doing in the JV sir?

JV, at need base CapEx is there. Definitely we will do a CapEx for the future businesses we are getting. Marugo, we did a CapEx of INR 1 crore already we have done in this year already completed. And Nippon maybe some minor CapEx will be needed.

So sir, with this current year CapEx, and we are talking about a double-digit growth for the next 2 to 3 years, should this CapEx be sufficient to carry us through the next couple of years?

Sir, whatever CapEx we'll do this year, okay, that will take years, most probably 80% of the requirement of next year.

Okay. Okay. And sir, from whatever you have spoken about the electric vehicle, should we understand that whenever you go for electric vehicles in a big way, the forging business should be the first mover in that? Because that probably could be a product-agnostic kind of a business and there you can probably take us to whatever other companies. Is that the right understanding?

Yes. Maybe also there. Before this applies quotient. The quotient will be there in the car, any car.

Also, heat shield is in only hybrid cars.

[Foreign Language]

Okay. Okay. Okay. And sir, lastly, just in -- for the current year...

Just one question. What do you think what happen to electrical as per you?

No. No, sir. From whatever you said and for whatever we have read, by maybe 2030, maybe 10%, 15% of the population of vehicles could be electric, so that is not a big thing. But for a company like us, if we have to look at a new area and if there is something which comes up from an electric vehicle manufacturer, I think it will be a good thing for us to grab the opportunity because looking at our size, if we get a new electric vehicle manufacturer for us, then it could be a good amount of addition to our product portfolio even if it is not from our current portfolio. So I think maybe forgings could be a good business where we can actually switch into electric vehicles, if at all, and that could open up a new area of business for us. So maybe that was what my understanding. But in the overall scheme of things, I currently agree with you that it may not be a very big part of the overall auto industry over the 5 to 7 years at least.

No. But we totally agree with you. That is what the story is. All the multiples of companies that are [Technical Difficulty] which are associated with electrical supply chain, it is mandate. So we are also working on that. It takes some time as you know we are applying now for the first time to hybrid electric vehicles globally. That's a good number of INR 30-odd crores as Navin mentioned to you, plus Tata as well. And also, don't forget all the future orders too that we are getting from global carmakers are talking EVs. So our chassis business, our rubber business, suspension business, our forging business is all there. So we are par of it, but yes, we will definitely discuss more offline on this.

Sure. Sure. And sir, lastly, from whatever you have said, should we understand that the first quarter revenue should be the base, and we should grow over that in the next couple of quarters or in the next 3 quarters?

I think we should be that -- if things improve, definitely we'll grow. There's no reason for not doing so.

The next question is from the line of Ravtej Singh from Malabar Investments.

Congratulations on a good quarter, which is well ahead of at least what I had in mind we will do this quarter. So just to get a few things straight. How many days of production did we lose in this quarter? And would it be possible to quantify the impact of that on our revenue? That's my first question.

Sure. Because if Maruti was closed, Hero was closed, Honda was closed, and I think the impact in the gasket business will be around INR 7 crores to INR 8 crores. In forging, I think it was -- no impact was there. In the Magneti Marelli, that was around INR 4 crores to INR 5 crores, and in Marugo, that was around INR 1.5 crores to INR 2 crores. And in Nippon, it was around INR 3 crores to INR 4 crores. That I can say, broadly.