Ladies and gentlemen, good day, and welcome to the Ramkrishna Forgings Q1 FY 2022 results conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishant Vass from ICICI Securities. Thank you, and over to you, sir. Thanks, Liz. Good day, everyone, and thanks for joining us today for the Ramkrishna Forgings conference call. The management is represented by Mr. Naresh Jalan, the Managing Director, Mr. Chaitanya Jalan, Whole-time Director, Mr. Lalit Khetan, ED and CFO, and Mr. Rajesh Mundhra, Company Secretary. Now I'd like to hand over the call to Mr. Lalit Khetan for the initial opening remarks. Over to you, sir. Thank you, Nishant. Good evening, and thank you everyone for joining our Q1 FY22 earnings call. We hope all of you and your loved ones are keeping well in these tough times. I have with me Mr. Naresh Jalan, our Managing Director, Mr. Chaitanya Jalan, Executive Director, and Mr. Rajesh Mundhra, Company Secretary. I hope you have been able to go through the results update presentation we have uploaded on the stock exchanges. I will just give a brief update on the industry right now. The Indian government PLI scheme for automotive sector with an outlay of INR 57,042 crores is expected to spur manufacturing and growth for the whole sector. The scheme still awaits approval from the cabinet. As per reports, the incentive rates may range from 2%-12% of the incremental sales or revenue, depending on the product category and sub scheme. RKFL stands to qualify under the Champion OEM Incentive Scheme considering we meet all the prescribed criteria set out for the component makers. That is more than INR 100 crores from the overseas operations, at least INR 500 crores for overall revenue, and global investment of minimum INR 150 crores. Once the final scheme is approved, we will evaluate the same and share our plan to capitalize on this opportunity. Demand and consumption in the domestic auto sector remained subdued during the quarter. From the latter part of June 2021, normalization of economic activity restarted, and we expect a strong demand in domestic market in Q2 FY 2022. On export fronts, as per the latest data provided by the SIAM, total vehicle exports during the April to June quarter of the current financial year stood at 1,419,413 units compared to 436,500 units in the same period in 2021. Commercial exports during the first quarter stood at 16,006 units as compared to 3,870 units in the April-June period of the last year. Globally, markets are showing signs of resurgence. European truck market is continuing to recover with new registrations expected to boost registrations rebound by 18% this year after a 27% plunge in 2020. Supplier-side delays following disruptions and shortages will slow the upward trend. Order book suggests the recovery will last into 2022, full calendar year 2022. Additionally, U.S. new light vehicle and used fleet sales grew at 30% and 5% respectively compared to the same period in 2020. In view of above, we are confident about achieving good sustainable growth in near future in terms of top line in domestic as well as exports market and further improvement in overall operating margins on account of new order wins from existing as well as new customers and development of new products from existing customers. We have submitted all the information on financial performance for Q1 FY 2022 in the investor presentation uploaded by the company. Before starting question- and- answer session, I would like to request participants to not raise any customer-specific query during the call, and we will now open the floor for questions and answers. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, if you wish to ask a question, you may please press star and one. The first question is from the line of Dipen from DS Investments. Please go ahead. Yeah. Good afternoon, sir, and thanks very much for the opportunity. I had a slightly more macro question. Could you give us some further insights into how do you see the commercial vehicle market in India and also in the export market, panning out over the next two to three quarters. Specifically, you made a comment that your order book suggests that calendar 2022 should be a good year. If you could throw some more color on what exactly do you mean by that, and if at all you can provide some numbers in terms of order book, that will be great. Thank you. Thank you. I think regarding domestic market, like Lalit explained in his opening comments, that post opening from mid-June onwards, we are seeing lot of traction in the market. We are extremely confident that commercial vehicle as a whole industry should do well in second quarter. Going forward, in third quarter, there is a festive season, so we expect this whole year, rest of nine months, for commercial vehicle in India to do extremely well. Okay. In terms of export market, we are seeing lot of resurgence in terms of Europe and as well as the market in U.S. is extremely bullish going into FY 2022 also. Okay. Giving an absolute number of my order book, I don't think that is possible because it keeps on fluctuating month on month. I cannot give any number to the order book. We are extremely confident of doing well with the current scenario. Whatever we see that the whole year is going to plan out extremely well for us. Okay. If I understand from the investor update which you had given, that our overall capacity will be about approximately 180,000 tons. Currently, what would be the capacity utilization? Is it around 70% or so? By when do we expect to reach the full capacity? Can we go more than 100% utilization? I'm slightly new to the sector, so not very much aware about that. What is the maximum capacity utilization level which we can achieve, and by when do you think we should be achieving that? I think in first quarter, we had an utilization of close to around 70%. Yes. We never toned down our production levels, we kept on producing in spite the industry was not absorbing all things. We built up the inventory, looking into the pent-up demand going into future. Okay. In terms of utilization, going forward, in terms of capacity, I think as you are aware that we have added capacity in this quarter. Going forward, we feel by fourth quarter of this year, we should be looking at close to 90% utilization of the installed capacity. Okay. Is it 90% of 180,000 tons, approximately that much? 187,000 is annual capacity, but for a quarter, I think it is divided by four, and 90%. Yeah should be my utilization going into fourth quarter. Okay. Sir, any further impact which we expect out of the raw material increases? If at all, we can give some guidance about how should we look at the operating margin, EBITDA margin going ahead? In terms of raw material increases, it is not in our control. It is absolutely decided by the steel mill and the international steel pricing. We cannot predict what is going to happen going forward. In terms of policy, we have a pass-on policy with our OEMs with a one-month lag. We are able to pass on most of our price increases of steel till now, and we expect to do it in future also. Okay. We have achieved our highest EBITDA margins in the current quarter. We should be expecting the next year going ahead, we should be achieving somewhat similar margins, if at all, not the exact number? We tend to remain at these levels going forward. We expect our margins to remain stable and our outlook is extremely bullish. Okay. That's great to hear, sir. Thank you very much and all the best, sir. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is on the line of Abhishek Jain from Dolat Capital. Please go ahead. Thanks for opportunity and congrats for a strong set of number in tough time. Sir, there is a sharp improvement in the gross margin in this quarter. Is there any one-off related with past quarter under-recovery as iron impact was passed on in first quarter with 5% jump in domestic realization? No, no. See, Abhishek, there is no one-off item in our income statement, and it's a consistent revenue and consistent cost. It's only there is an improvement in certain realization, which is going to continue. I think this level is going to continue going forward. In the last quarter, you have mentioned that there was under-recovery in the export realization and that will be passed on from this quarter only. If there. That has materialized. That's not a problem. It has materialized. What would be the sustainable gross margin in the coming quarter? Will it be sustainable at this number, there won't be any price fluctuations? On the price fluctuation, it depends, because we can't comment on the price fluctuation, but whatever will be the price fluctuation, that's going to be passed to the customer. It's a matter of time lapse, one- month lapse, just a general time lapse. On the margin side, we are looking at right now what margins we have achieved, we would like to achieve margins in this range only going forward. Okay. There is a sharp jump in the employee expenses during this quarter. Is it because of the capacity addition or is it because of the hike in the salaries? It's a combination of that. There is some hike in the salary, certainly we have paid back the employees what we have deducted in earlier year, that also we have paid in this quarter. This is on account of that, we have paid some incentives to our employees also. That's why a bit high. Next quarter, you will see the normalized salary. Okay. In first quarter, revenue from the Europe has shown a strong improvement. Can you throw some light on it? Have you won any new business, or what is the reason? I couldn't get your question, Abhishek. Can you repeat it? Revenue from the Europe region has gone up significantly in the first quarter. Can you throw some light on it? No, Abhishek, I think we have already expressed in last several calls that we have won large businesses from Europe, and now this has started coming into our income statement and it is going to continue to grow. Europe is going to be significant contributor in top line going forward. This is only some highlights which has come into this quarter, but this is on a continued basis, Europe is going to continue to grow. What is your revenue target from Europe in FY 2022? No, we don't have any guidance in terms of FY22. Basically, our intent is that in export side, Europe is going to be a substantial portion. Earlier, only our substantial portion of contribution from exports was coming from North America. Now Europe is going to become a substantial part in our income statement. Okay, sir. Sir, during your total capacity for press line has gone up to that 107,200 tons after adding the new press line of the 7,000 tons. Total capacity addition in first quarter is stood at 24,650. Is it for the 6,300 ton press line or 12,500 ton press line? No, Abhishek. We have added hollow spindle line last year in December. 10,200 ton was for that account, but we have worked it for only one quarter. That's why in the result we have seen it 2,550, but it was 10,200 added last year and 17,000 ton on account of new 7,000 ton press line, making a total 107,200. Is it for the heavy press line or the 600 ton press line? 7,000 ton press l ine. 7,000 ton. Okay. Sir, you have also mentioned that you have forayed into the road and the mining segment in domestic markets. What is the revenue visibility you're looking from this segment? From mining segment, we do not expect a huge revenue, but we have just made a significant entry. This is going to show in coming quarter, this is going to slowly become a significant and a growing business going into FY 2023. Okay. You are not expecting any significant business in the mining segment in FY 2022? No, we are already doing in mining segment, we are doing an annualized business of close to around INR 40 crores-INR 45 crores. This is going to increase by 10%-15% in this year, but this is going to become a significant business in FY 2023. Okay. Sir, in last quarter, you have also mentioned that you have won the business of around $25 million annualized business from the LCV business. When it will start to reflect in the P&L, it is only in FY 2023? It is going to be in FY 2023. Okay. We have already mentioned in that call that this year we are going to give samples and field trials, and next year this is going to be a business in income statement. Okay. My last question is related with this gross and the net debt in your books at the end of the first quarter FY 2022. Gross and net debt. Okay. Yeah. FY 2022, its total net debt is around INR 1,100 crores. INR 1,100 crores. Okay. That is the net debt. That actually has marginally increased due to higher utilization on account of working capital because there was very less domestic sales and there was much higher export sales. That's why little bit increase due to working capital utilization. It will again come down in upcoming quarter. Sir, your CapEx plan for FY 2022, considering this taking the benefit of the PLI scheme? Once the PLI scheme will be out, then certainly we will work on that and examine that in the final detail. We will decide on the action plan as per PLI scheme. Right now, for this year, we are going to complete our pending of the last year projects. That's INR 60 crores on that account, another INR 20 crores-INR 25 crores on the maintenance, and another little bit on the machining side. We will be doing around INR 100 crores of capacity this year. Okay. Thanks, sir. That's all from my side. Thank you. The next question is from the line of Aditya Makharia from HDFC Securities. Please go ahead. Yes. Just a couple of questions. Firstly, on the debt, what is your plan to deleverage? We are about INR 1,050, INR 1,100 crores, as you said. What's the level you are comfortable with? Secondly, in the U.S. with regards to the Class 8 truck sales, is the semiconductor shortage out there over? What is the CY21 or CY22 U.S. Class 8 sales number you think is realistic? Thanks. In terms of debt, I think we have already guided in the last call that we are looking at reduction of debt on the annualized basis of close to around INR 75 crores-INR 100 crores in this year from internal accruals. In terms of Class 8, we cannot predict. Whatever right now we get the sentiments that there should be 270,000-290,000 for the full year in calendar year 2021. Calendar year 2022 also looks to be robust, and at these levels only it may continue. Okay, is the semiconductor shortage an issue out there? What we understand is the fleets are running full, the new truck deliveries is delayed for some reason. New truck deliveries are delayed because of semiconductors as well as the supply chain issue being faced because of the sudden surge post-COVID. Okay. Fine. Thanks. Thank you. The next question is on the line of Mitul Shah from Reliance Securities. Please go ahead. Yes. Thank you for taking my question, and congratulations on a good performance. Sir, again, follow-up on a gross margin side. In terms of raw materials per kg, sir, if I do that calculation based on your volumes, then it comes INR 74 per kg compared to past many quarters it was in the range of INR 81-INR 85. Can you throw some light how come this, instead of increasing it because of the commodity inflation, it has come down significantly? See, all depends upon the product mix. There is no reduction in raw material prices. Raw material prices are constant as per the last quarter only, and it was consistent. I don't have an exact number how you derive this number of INR 74 right now, but certainly it is inconsistent with the prices what we have in the last quarter. See, if you are comparing value or value per ton in terms of sales and cost, it may not be the benchmark because product mix may differ quarter- to- quarter, and real issues are also different. It may have a different value. Raw material prices have not gone down, so it should remain consistent with the last quarter only. Sir, I'm not taking anything from the revenue side. I am taking purely raw material cost given by you in the P&L and dividing it by volume given by you. Okay. I think you have production value, correct? Right. Abhishek, if you look at last quarter also, last quarter my production was more and the raw material pricing there, probably, sir, is wrong. Last quarter, my production was 37,000 tons and my cost was INR 272 crores. This quarter it is 35,000 tons and cost is INR 263 crores. Almost it is in line. How you are deriving a 10% difference, I don't know. Okay, sir. I'll take it off line. Yes, because it has been very consistent with the last quarter, so I think there is some error in your numbers. Sir, my second question is again on a working capital loan. You indicated it has gone up marginally. Can you give those numbers roughly how much was it in last quarter working capital loan, how much it has increased? I think the last quarter to this quarter, the working capital margin numbers has been increased by around INR 30 crores. Whatever because long-term debt we have paid around INR 20 crores, that also has been drawn same amount on account of continuing CapEx loan. Sir, last question. On the margin side, as you reported historically high margin. Sir, this again a quarter wherein your export volume is nearly half of the total volume. Can you indicate that export margins are sizably higher than the domestic and that is the reason these are the margins? I think, Abhishek, like we have expressed in earlier questions also, and in the past also, we have said we are always working on improving the margins and this is going to be consistent with the future earnings. It is not that the export has higher margins, it is basically the product mix which derives the profit, and we are driving in terms of product mix to earn better margins going forward. Yes, sir, this is Mitul Shah. Lastly, again, just reconfirmation. Earlier we indicated non-auto segment revenue would be somewhere in the range of INR 300 crores in next two years. Still we believe that we can do in FY 2023? Yes, we still believe because I think post-COVID things are working out well within domestic industry, and things are coming up very fast. We feel that going forward, whatever we have commented, we will be able to achieve by FY 2023. Thank you, sir. All the best. Thank you. A reminder to the participants, anyone wishing to ask a question, please press star and one. The next question is on the line of Viral Shah from Enam Holdings. Please go ahead. Yeah, thank you for the opportunity, sir. Sir, just a question on the debt. I think we said our debt is around INR 1,100 crores, and we plan to reduce it by around INR 75 crores this year. Well, is this number the peak debt that we will see despite of growing export where we have a large working capital cycle? Can you just throw some light on the debt side? Have we seen the peak debt, and how confident are we of being able to reduce our debt numbers from here on? Viral, by and large, I think we are there at the peak level, depending upon certainly this quarter performance, it may be five, four here and there. As the domestic demand is going to improve from here on, the cash flow certainly on domestic side is much better. When domestic sales improves, cash flow improves, and draw down levels will certainly go down. We are very much confident of reducing debt from here on, as we are hopeful that there is an uplift in the demand in domestic market. Sure. Sir, second question, I think you did allude to the fact that your production volumes on a quarter-on-quarter basis were largely kind of constant despite a sharp drop in CV production volumes. Can you just throw some light why so? Why did we keep our production levels at an elevated level? We actually felt that there is going to be a last time post-COVID when the market suddenly, because of pent-up demand, went ahead of prediction. We were caught off guard, and we were not able to sufficiently utilize the opportunity for higher sales. This is the time when we thought that it is better prudent to keep on producing, and in case there is a pent-up demand, we will be able to make good the market and utilize that opportunity to be on the upper cycle of the market. Sure. Sir, can you provide an update on the Amtek acquisition? It is still in NCLT, and we are still getting dates. We are not able to get an update or any confirmation from the judiciary right now. We don't have any timelines as of now by when we expect things to get materialized. Okay. Just last point on electrification, sir? Sir, do you foresee on the CV side, there could be kind of an upsurge in electrification or maybe hydrogen fuel cell technology in the next two to three years? If so, how does that impact our company? I think our sales are not measurably into any engine components, so I don't think we will be able to be affected majorly or any way by electrification or in terms of hydrogen vehicles. To just keep you updated, we have already started on working on EVs also with lot of OEMs. We have just very recently received a significant order book for EVs from existing OEMs to start producing and supplying them. As and when this sector starts developing into EV, we will also significantly make inroads into it. Sure. Thank you so much. Thank you. The next question is from the line of Abhishek Shah from Valcore Capital. Please go ahead. Hi, sir. Thank you for the opportunity. One is, sir, you mentioned that you are just confirming, you mentioned that by Q4, you're looking at 90% utilization on the 1.87 lakh metric ton capacity. Is that correct? Yes. Right. Sir, that's assuming, say Q3 we did about 30,000 tons volume. Where do you see that incremental growth coming from, and what will be the domestic and export split in that? Just to follow up, just trying to understand where do you see incremental demand coming from? It is extremely difficult to say what is going to be the premix in terms of export and domestic. As you know, we have already said that the current market scenario for CV was sluggish, and we expect the demand to come back in these coming quarters. We expect with this capacity, we will be able to sufficiently utilize the current demand, which we feel that is going to come back to the industry in next coming quarters. Right. Sir, higher domestic volumes, do you expect the margins then to sustain at these levels, at 23%? I think with the utilization improving. Okay Obviously the fixed costs are going to come down significantly. We are extremely bullish that our margins are not only going to sustain, we are going to do better in terms of margins going forward, if the capacity utilization improves. Understood. That's all from my side, sir. Thank you. Thank you. The next question is from the line of Dipen from DS Investments. Please go ahead. Yeah. Sir, I had a follow-up question. As far as the electric vehicles are concerned, do we currently supply to any customers for their electric vehicle? If at all we have any plans about how to proceed on those lines, if you can just throw some more color on that, sir. Thank you. I think I just answered to a question previously, that we have just received a significant order for electric vehicles from an Indian OEM. Okay. This is our first entry into electric vehicle which is concerned. While we are working with a lot of customers on offshore in terms of electrification and components for electric vehicle. In terms of making any equipment or making any assembly, we are right now not there. Yes, we are going to be part of assemblies for EV going forward, and you will be able to hear in these coming quarters for RKFL getting into significant businesses with offshore and domestic customers for EV. Okay. Sorry, sir, I missed it and thank you so much. Thank you. All the best. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Faisal Hawa from H.G. Hawa & Co. Please go ahead. Hello. My question is that, how do you feel that, in four to five years, what will be the kind of turnover of the revenue that we should expect? What are the kind of investments we'll need to make for the company to be really sustainable and in a high-growth phase? I think in the high growth phase and I think with the capacity utilization improving, I don't know about what is going to happen after five years. As far as company is concerned, we aim that in next two years, company should be looking at close to around, at least in terms of achieving a top line, at least 50%-60% growth on annualized basis from here on. In two years hence, the strategy or the DNA of the company will remain same only, to really grow faster? I think strategy is very simple. We continue to grow with the market. We are working both on content of the vehicle as well as getting into new geographies and new varieties in terms of automotive segment. Okay, sir. Thank you so much. Thank you. The next question is from the line of Mitul Shah from Reliance Securities. Please go ahead. Yes, sir. Thank you for giving me opportunity again. I have question again on the LCV side, sir. What is the status currently and what is the outlook on that side? Are we similarly bullish the way we are positive on the Class 8 and domestic MHCV? We are extremely bullish into all the segments of the commercial vehicle, whether it is a light vehicle or whether it is heavy vehicle. We are working extremely efficiently on both the markets, we are getting new businesses as well as increasing our content in existing business also, in terms of share of business and new component. We are extremely bullish. If you see by our what performance we have given in the first quarter, while most of the industries in India were on a shutdown basis and there were practically zero sales, we have been able to clock a significant sales in domestic industry also. That is basically only because that we have improved our content per vehicle as well as share of business per vehicle. Sir, secondly, on the export side, can you indicate any major addition of client from North America or any, apart from this Europe, any other country? No. As of now, we have nothing to inform. I think already we have given a press release few weeks back regarding our order win for Europe, and we do not have any new information to share with the investors. Okay, sir. Thank you. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Sagar Parekh from Deep Financial. Please go ahead. Yeah. Good afternoon, sir. My question is again on the gross margins. I'm still not able to understand. You gave a clarification, but can you again help us understand? If I look at your last quarter's raw material cost, that is raw material consumed and stock adjustment put together, that was about INR 264 crores in March 2021. If I look at June 2021, which is the current quarter, your raw material cost is about INR 162 crores. Correct. Yes, carry on, Sagar. Yeah. Basically, I'm looking at about 11% improvement in gross margins sequentially. Could you clarify how that happened? That's a pretty big jump. On the realization front, I understand that your realization increased quarter-on-quarter by 7% and 9% on domestic and export side. On the absolute cost, how did it come down, is what I'm trying to understand. It certainly depends upon the product mix, Sagar. Certainly on the export side, lot of heavier product has gone, and that gives us a little better margin on the raw material side also. That has yielded in this kind of a margin. This could be the sustainable number? If I just take on the percentage terms. Sagar, it is going to remain nearby in terms of what Naresh earlier said. See, we are expecting improvement in capacity utilization. Right. Certainly, export and domestic mix may change in upcoming quarter a little bit. Export is going to remain strong. We are also looking to improve on the export numbers also quarter on quarter. With that, we are extremely confident of achieving similar kind of margin or we may improve upon that. Okay. Just to clarify this European OEM order that we won of EUR 15 million, that will start from FY 2023, right? Yes. Okay. It starts from FY 2023. This quarter's European numbers do not include that. That is from the earlier orders that we got. Earlier order wins, it is there in the current income statement, and gradually, this is going to grow over next couple of quarters. EUR 15 million new order book, this year, samples and field trials are going to happen, and this is going to completely come into the new order book next year. Okay. How big do you think can Europe become? Right now it's about 25%-26% of export sales. I think as a company, we are estimating or we are working on basically 50/50 in terms of Europe and North America exports. Okay, perfect. Basically, that is the intent we are working with. Sure. Just last question from my side, we have guided for INR 75 crores-INR 100 crores of debt reduction for this year. You have also said that next nine months are looking very promising both on export and domestic. Your margins are also going to improve. Even if we do INR 450 crores-INR 500 crores of operating profit, and then so you will have significant cash flows, right? What am I missing? It is just the increase in working capital that will lead to lower debt reduction because your CapEx is also just INR 100 crores. I think basically Lalit has already answered to this question. Basically, when domestic sales improve, the inventories are going to go down, and that is going to create cash in the books to pay off the debtor. We are looking at reduction of short-term debt going forward from 70- No. Why only INR 75 crores-INR 100 crores? Why not more, is what my question is? You would make much more cash flows then. See, Sagar, it depends upon certainly cash flow, and if there is a cash level, that INR 75 crores or INR 100 crores is what's our target right now. That's on the conservative basis, or I will say optimal basis. If we have more cash, certainly it will go on only reducing working capital debt only. Okay. Are we actually factoring in any Amtek acquisition during this year in our INR 75 crores-INR 100 crores? Let's say if it happens, then will our debt reduction target further go down? Amtek acquisition is altogether separate from all decisions because right now we don't have the clarity on that. Once the clarity will be there, then we will comment upon that, including the debt number. Right now, we are not considering that in our any of the statement. Understood. This interest cost of INR 18 crores-INR20 crores kind of quarterly run rate will continue for this year also then? Yes. Okay. Okay, sir. That's it from my side. Thanks and all the best. Thank you. A reminder to the participants, anyone wishing to ask a question may please press star and one. The next question is from the line, Nishant Vass. Please go ahead. Yeah. Hi, thanks for the opportunity. Sir, could you shed some light in terms of the progress in the domestic non-auto business? How are you seeing that play out, specifically like categories like railways? Any sheds or updates on that? I think, Nishant, in terms of railways, we have had a very high numbers, because of COVID, we do not see any great improvement. It is a pleasure for us to inform that we have received development orders for manufacturing of shells for locomotives, and we will be supplying, and each shell is costing close to around INR 80 lakh. We have received an order for close to around eight pieces, this requirement from Indian Railways is close to around INR 250 crores. We will be supplying this development order in the third quarter of this year. Post that, we expect significant business next year for manufacturing of shells for locomotives from Indian Railways. In terms of further other non-automotive business, we have entered a segment which was missing in our portfolio, that was tractor. We have made significant inroads in this quarter in the Indian tractor industry, and I think, going forward in next two quarters, we should do significant business from tractor, and next year it is going to be again 8%-10% annualized business for us from tractor segment. Sir, in the same concept on non-auto exports, are you seeing some improvement in your category in terms of offering? Yes. We are seeing good traction in oil and gas, and locomotives in our offshore business. I think it is very nascent right now to comment on what we will be able to do, but whatever indications we are getting from the oil and gas industry, I think we should do a significant business in this year as well as next year in oil and gas. As you are aware, because of the high oil prices, CapEx has again started in the oil and gas sector, we are extremely bullish going into next two quarters. Maybe second quarter may not result in a significant business, but the second half of the year, we are going to do a significant business in oil and gas. Okay. Thanks for that. Sir, the second question is more in terms of what would you think would be, because obviously your capacity sometimes is tangible and obviously it's a function of production. Sometimes tonnage is not the right reflection, and in some categories, utilizations have been higher than 100%. How should one think about your potential peak utilization on the space versus capacity? Nishant, I think peak utilization can be somewhere between 88%-90% of the capacity we have declared. That is going to be the peak, beyond which we will need to do further CapEx to augment further capacity. Okay. Fair enough. My third question is more in terms of previous cycle to this cycle. How would you put your say, without naming any customer in terms of categories, how do you think your content per vehicle is likely to evolve through this cycle vis-à-vis the previous cycle? In terms of also potentially, will that be positively impacting your gross value add? Just some directional points on that. Nishant, we do not see anywhere the volumes to return back to what was there in 2018 near future. Whatever was the pre-COVID level, if that also happens, we will be, I think, significant contributor to both in top line and in the bottom line from the domestic industry. I cannot put an absolute number to it, but in terms of content, whatever improvements we have done, if pre-COVID level also comes, then also we will be able to do significant business more in the domestic industry. Sir, in terms of content per vehicle for exports, we presume between previous cycle and this cycle, there should be improvement. That is the right assumption, I suppose? That is already showing in the balance sheet, Nishant. I think if you see our historical numbers, I think in terms of quarterly exports, we have done the highest ever exports in this quarter. Obviously, in terms of geography, in terms of making inroads into new arenas, we have done considerably well. Fair enough. Thank you all, sir. Thank you. The next question is from the line of Khush Joshi from Kitara Capital. Please go ahead. Yeah, thank you for the opportunity. Sir, can you just explain some of the inroads which you made to the South American markets? Some flavor for that. I think, in South America market, it is not a new inroad. I think three years back, we were doing significant business. In 2017, we were doing significant business for Brazil. Because of the currency impact, that business had gone, and we had no businesses for last three years from them. Now post-COVID, because of the surge in the market, that business has come back again. We have a confirmed business plan for them for next three years. What was the business you were doing in 2017 in Brazil? I think it was close to around $5 million, and this is going to be $5 million for next three years for us. Annually? Annually. Okay. My second question is with respect to passenger vehicles, what traction you made there? No, we have already entered into passenger vehicles segment, but right now our components are on field trial, and right now we have not made any significant entry. I think going forward, it will take at least two quarters to make significant into passenger vehicles. Okay. Thank you so much for the wishes. Thank you. The next question is from the line of Hitesh from Aksa Capital Advisors. Please go ahead. Hi. Thanks for the opportunity, Sir, it's quite heartening to learn that you have been winning new business, and I think the wins that you're talking about, these are just not the organic growth that you're targeting, but I think it's also the content per vehicle. Just trying to understand what is driving these order flows towards, in the sense, how are actually you dislodging some of the leaders who are already catering to that market. What is driving that change? If you could help us understand that. I think I'll not be able to comment that we are taking somebody else's business or not. For us, it's a new business and it is a new component and new area which we are entering, and as well as new geographies. We are bidding for each and every business and opportunity which we are getting, and that's the way we are getting into new businesses. Whom we are dislodging or why we are dislodging, it's up to the buyers to comment. We cannot comment on that. Are these new wins for the newer models or are they even for the existing model of vehicles that is coming in? It is both existing requirements and as well as new requirements. Because of the difference in the steel prices, both in India and the overseas market, is it because of that that we are getting an edge in terms of pricing that we are quoting with our customers? I cannot comment on that. We are not looking at international pricing. We are working with domestic steel industry. We are working clearly on that. We are quoting as per our norms and our overheads. I don't know or I cannot comment right now why. It is up to the buyer to make his decision on what savings he is having. I would basically only be happy that I get the business and I continue to supply and get more and more entries into new geographies and new arenas. Sure. What would be the typical tenure of these wins that you generally have from the overseas customers? It is three to four years. Okay, great. Just one last- Some contracts are four years. Sure. Just the last thing, the railway order that you were mentioning about eight shells for the locomotives, is that for the freight locomotives or is it for the passenger locomotives? It is for electric locomotives, both used for freight as well as passenger trains. These are being manufactured by DLW and CLW in India. There are two basically locomotive manufacturing companies in India, and they manufacture and India is converting the entire requirement to electric locomotives, and we have started manufacturing shells for these locomotives. Got it. Sure. Thank you. Thank you. A reminder to the participants, anyone wishing to ask a question may please press star and one. Participants, if you wish to ask a question, you may please press star and one. As there are no further questions, I now hand the conference over to the management for the closing comments. Thank you, Lisa. We would like to thank everyone joining on the call today. We are confident of continuing the new growth momentum by capitalizing on the uptrend in domestic and international automotive sector. Increase in content per vehicle along with new customer addition would enable us to maintain optimum capacity utilization of our enhanced manufacturing facilities. For any further queries, we request you to get in touch with SGA Investor Relation Advisors or you're also free to get in touch with us. Wish you a very pleasant evening. Thank you. Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.