Ladies and gentlemen, good day and welcome to the Q2 FY23 earnings conference call of Sandhar Technologies hosted by Dolat Capital. 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 an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Jain from Dolat Capital. Thank you and over to you, sir. Thanks, Rutuja. Good morning, everyone. On behalf of Dolat Capital, I welcome you all in the second quarter FY 2023 conference call of Sandhar Technologies. From the management side, we have with us Mr. Jayant Davar, Co-Chairman and Managing Director, and Mr. Yashpal Jain, CFO of the company. We thank the management for providing us the opportunity to host the call. Now, I hand over the call to the management for their opening remarks, followed by the question and answer session. Over to you, Jain, Sir Thank you, Abhishek. Thank you, Rutuja, for putting this together. Good morning, everyone. As we sit today, at this time of the year, where the automotive industry is concerned, I think the fear and the theme of COVID is no longer being discussed. As you're all aware, the industry seems to be on a very, very solid footing. Let me break this up in a segment-wise understanding. The cars or passenger vehicles, as we call them, you are all aware, has a long waiting. In fact, the last month has been extremely good, and the traction seems to continue into the future. In the last couple of months, we have broken the all-time records of the pre-COVID year as well. I think there's good news all around. The only pressure now is to build more vehicles. There is a lot of waiting. In some cases, waiting, I understand, is over one year. It's good times ahead. Where two-wheelers are concerned, this was an area which was causing concern to everyone. From what I understand from FADA, and from what I understand from the demand pool of the OEs in this sector, things seem to be in a much better shape than they were a few months ago. I think there is positivity even in this segment. This segment has been confused in the past, on account of several factors. One is, if you look at it, post the Euro six jump, the cost of these vehicles had gone up by almost 30%-35%. There was obviously a lot of resistance, and that needed time to mute out and moderate so that people could get an understanding that this is where the new vehicles are going to be in terms of price. The second aspect obviously was also on account of the powertrains, whether it should be IC engines or electric or whatever other options that were being put on the table. I think that also is kind of sorted out. People who are going the electric route are going the electric route. Some of the traditional players that were very large in the IC area have also kind of shifted tone, and they are saying that they would be manufacturing EVs as well. They will take it gradually and slowly. We will then correspondingly look at how this entire thing has to be handled going forward. Where commercial vehicles are concerned, there is a little bit of volatility. Having said that, the number seems to be going up. Tractors, you're all aware, are doing well, especially in some of the bean makers. Construction equipment, again, is something which has been doing well. There is obviously going to be some change in the powertrain norms there in terms of Euro transfer from Euro 4 to Euro 6. On an overall summary, I would say that the auto sector right now is in a good year. There are some factors that are affecting the industry. While commodity prices have begun to moderate, and that is a good sign. There are, however, other inflationary costs that continue to bedevil this particular sector. Add to it the fact that the interest rates are going up. The inflation numbers are still high, not only in India, but around the world. There is still a lot of uncertainty on account of the war clouds that not only stay, but also hover at times between Russia and Ukraine. There are those geopolitical risks, as we said today. I would say where the automotive industry is concerned, a lot of the stress and concern factors are in the windshield, and we should be on a good way forward. That was my opening remarks. You have all probably seen the results that were declared yesterday. I'm very happy to take questions. And me and Mr. Yashpal Jain, who is here, will try to clear up any clarifications that you might have. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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. The first question is from the line of Resham Jain from DSP Investment Managers. Please go ahead. Yeah. Hi. Good morning, Mr. Davar. I have three questions. First one is, with respect to this quarter, where we saw that you saw a top line growth while margin hasn't come through. It has in fact gone down to almost 170 point- Sorry to interrupt. Mr. Resham Jain, we cannot hear you. This is the operator. Mr. Resham Jain, we cannot hear you. There is no response from the line. Participants who wishes to ask a question may press star and one. The next question is from the line of Abhishek Jain from Dolat Capital. Please go ahead. Hi, Sir. Congrats for the decent set of numbers in a tough time. Sir, my first question was regarding the gross margin that is continuously under pressure. Is it because of the higher revenue from die-casting and cabins and fabrication business? Just wanted to understand what would be the key tailwind for the margin expansion going ahead. Okay. Thank you, Abhishek, for that question. Very quickly, I think that was the question that Resham was also trying to ask. Well, if you look at the margin drop, that margin drop is largely on account of the new CapEx that has been put. If you look at it, these are initial commissioning and other one-time start expenses of the new projects. That being one. The second thing is that the sale has started and revenue has started in some measure from these new projects, but the costing still has to be finalized with TVS for that matter. While the formulas and all have been worked out, that final call is likely to be done today or tomorrow, and we are hopeful that within this month we should be able to close that chapter. I would say that there is an aberration. I have Mr. Yashpal Jain, who will explain to you the losses that have been incurred on account of these new projects, and if it wasn't for these losses, what would the actual gross margin be? Mr. Yashpal Jain. Yeah. Like as we mentioned in presentation also on a half year basis, there has been an additional loss of INR 20.25 crore, I mean INR 20 crores on the downside, in terms of losses from the new project, which is on account of major significant initial costs that are not part of the capitalization. If we have to eliminate this, then our EBITDA comes to INR 61.71 crores, which is roughly 4.32% of our income, which used to be our profit in the past also. More or less we are on the track, sir. In the succeeding quarters, this impact of one-time expenses, I mean, charging of one-time expenses towards the new projects won't be occurring again. That's how we would like to respond to you, sir. In second half, these CapEx expenses won't be incurred. Most probably, the margin will improve by 200-250 basis points in the coming quarter? Definitely. Reason being, because it's a one-time. Many products actually, what happens is that the moment you start doing a draw work activities, internal sampling, the capitalization stops. The volumes actually they kick up after a certain period of time. In between there is an expense, but there is no revenue supported by it. These are those costs. Largely we have all the plants commissioned now except the Mehsana one which will be coming in the last quarter. More or less that won't be incurring much cost. Reason being the Mehsana samples are already capturing our Hosur existing facilities. That's how I see it. Okay, sir. Sir, during this first half, we have seen a strong revenue growth in the Aluminum Die Casting business. Just wanted to understand what is your plan for this business, and are you looking to shift your business from two-wheelers to four-wheelers and the EVs? Because many companies are getting a lot of the order wins in this business. If you can throw some light over there. Yeah, because like in first half the die casting has performed very well. It has even outperformed all other verticals also. We are very bullish, like in four-wheelers we are already getting through our Barcelona operation. In India also we are eyeing the four-wheeler segment and three-wheeler segment for die casting, and we see a major scope in this. Even we are working on opportunities to work on a cross-border basis also for die casting products. I mean, in the coming period of time, we are very bullish on the die casting business, and it definitely will see higher profits and higher volumes in this business. What is the current margin in the Aluminum Die Casting, Sir? Well, Aluminum Die Casting has given us a EBITDA margin of 8.5% in the current half year. Reason being there were some new projects also which were commissioned, new lines were commissioned. In the coming period of time, obviously it will cross in double digits in EBITDA. With machining, the margins will be even more, beyond 11%-11.5%. Okay. Sir, in the sheet metal business, you had a very high target of around INR 500-600 crores for FY 2023. Once I see the number in the presentation that is showing only INR 189 crores, kind of the numbers in the first half. Is it included revenue from another business or what? We are not able to understand it, Sir. No, Abhishek Jain, the thing is that if you see the SOP dates of various plants, that we discussed last time also, they have been little bit stretched based on the customer's requirement. All the sheet metal plants will be coming in the mass production from April 2023 on. In the current financial year, I would say in the current half year, there's not much of the sales value from the sheet metal business. We are actually under the testing processes. Three of the plants are under testing processes, one is under the construction process. The volumes will really start picking up from April 2023 on. In the next quarter, you will see a major footfall in terms of Hosur plant, Nalagarh plant and Halol plant. What is your revenue target from the sheet metal business for near to medium term, Sir? If you ask me for the current half year, we are targeting something INR 130 crore-INR 135 crore from new businesses. When I say 130, it means new businesses, which includes the Halol, Hosur and Nalagarh plants, right? We are targeting something around 130 and maximum we have planned exceeding INR 400 crore from these sheet metal projects. And- In addition to our existing plant, which is generating roughly INR 150 crores. That means the next second half FY 2023, you would be able to get a revenue of around INR 330-INR 340 crores from the sheet metal? If we include the old one, it will be around INR 300 crores. Thank you. What kind of the margin can we expect from this business, Sir? At EBITDA level, we are trying to 5%-10%. Okay. 10%. Yes. How is the margin in the Cabins and Fabrication business? We have seen a very impressive growth in last couple of years. On a margin front, how is it picking up right now? Because the utilization level has improved significantly. Can you give some guidance, Sir? Production has gone up. Earlier it was hit by the commodity increase. As we know, the price settlement used to take six months from OEMs. Now gradually the prices are stabilizing. We'll be seeing again a good form of margins in the coming half year in the C&F business, Cabins and Fabrication. Can you give some guidance on the margin in this particular segment, Sir? Roughly we have closed at around 8% EBITDA in this, in the first half. We expect to improve it further in the next half. Thanks. That's all from my side. Sure. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Kumar Gaurav from Dolat Capital. Please go ahead. Hello. Hi, sir. Thanks for giving me opportunity. Sir, my first question is in two-wheeler segment. Recently, you have launched many extra variant there of your existing variant. Are you benefiting from this? I mean, have you seen any increase in share of business from Hero? Hero's volumes are more or less, they are constant as of now. We are launching the model, but the volumes are remains to be constant in Hero, and we are maintaining our share of business in terms of sheet metal as well as in locks and mirrors, our proprietary business as well as sheet metal business. There has not been any dip or a significant increase. Reason being, Hero is at a constant level. We are launching the product. Okay. It is yet to pick up in the market. As and when it increases, obviously our volumes will also go up proportionally. Okay, Sir. My second question is in ADC segment. Sir, could you indicate the order win, any new order win in ADC segment? Well- Yeah. Right now we are catering to nearly all the OEs, which includes Honda, TVS and Hero, Royal Enfield, and these are the regular orders, I would say. Because in addition to that, if you remember, we have got one machining business from TVS that is also a part of the casting business. That will be coming to commercial by January 2023. The volumes are increasing, and we are targeting new markets and new customers also in four-wheelers and commercial vehicles also. We have also just received the order from Denso. Yes. That is growing. In all, we are very, very bullish on the ADC business, including the casting business and the machining business. In the machining business, we are moving 35 lines from TVS into our own facility, and this will become a substantial forerunner for us, not only for what we do in India, but also for export in the future. Okay, Sir. What is our current capacity utilization in ADC segment, Sir? Well, if you ask me, because it depends on part to part basis, there cannot be an exact number. We are at, I mean, we have a sufficient capacity available in case of surging the demand. That's what we can say, yeah. It won't be impacted, we would be able to cater to the demand. We do not need any major capital expenditure. Whatever increase in volumes is likely that we see, whether with Denso or with other businesses, they can be managed either within the existing capacity or with incremental capacity increase, which could be one machine. It's not setting up new plants. Okay, Sir. Sir, my next question is on CapEx and debt side. I think our H1 CapEx stood at INR 133 crore. What is the full year guidance, Sir, for CapEx? Yeah, sure. I'll just tell you how the CapEx will be moving on. We have a working model. In the first half year, if you see in the cash flow statement, we have done a CapEx of close to INR 133 crores, right? Right. At the same time, we have generated a cash from operating activities of INR 106 crores. Roughly 23 crores we have gone for the incremental borrowing in the first half. This is how we have managed. To complete all our projects, we require to incur an outflow of around INR 296 crores as of now, as on date, to complete all our major seven or eight projects that we have in the pipeline. Right? Right. We are expecting to generate cash of around INR 120 crores in the next half. Another INR 24 crores, we'll be getting a cash subsidy in the month of March, which has been confirmed by the government of Romania. We will have an internal FCF of around INR 144 crores in the next half year against INR 296 crores. If you deduct that, INR 296 crores minus INR 144 crores, our incremental borrowing will be INR 152 crores. Current borrowing level, if I say it is somewhere around, if I say current borrowing is INR 567 crores, right? Right. We will be around INR 700 crores. Because thing is that in the new project, TVS will revise their payment terms from 45 to 15 days. Thirty days of working capital benefit we have got. That will ease us of working capital pressure for other projects also. Working capital, we won't be increasing any limit. We'll be managing. In fact, we have a target to reduce the working capital utilization by another INR 20 crores in the next half. We'll be landing something around INR 690-700 crores at the end of March 2023. This is our debt we are targeting. Coming to the next, how we are going to repay. Next year, we are targeting a cash generation of close to INR 200 crores. Straight away, the breakup of this INR 700 would be around INR 300 for overseas, INR 400 for domestic in the next year. Out of this INR 700 crores, INR 200 crores roughly will be the working capital. Term loan remains to be INR 500 crores. We are in a very comfortable position to pay at least INR 200 crores in the next succeeding financial year. This is all. Okay, Sir. Okay, thanks. That's from my side, Sir. Thanks. Thank you. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Resham Jain from DSP Investment Managers. Please go ahead. Yeah, hi. Am I audible now? Sorry. Yeah, you are audible, Resham. Good morning. Okay. Good morning. Sir, overall, I think on the balance sheet side, CapEx and growth, you did mention about it. Philosophically, if you can explain, because over the last two years, we saw a lot of challenges at the industry level. I think things are coming back. Going forward, I think as of today, if I look at your debt to EBITDA ratios and all, it has been probably might be at the peak of your CapEx cycle. Going forward, how should one think about the overall debt levels which company is comfortable with? Out of the total CapEx which you have done till now, let's say over the next two years, what kind of revenue and EBITDA you can generate out of it? If you can just explain more from the trajectory perspective. I'm not asking for any specific numbers, but just from the trajectory perspective. Sure. Resham, like to address your question. In terms of debt, as I explained, sometime back, we are targeting a total debt of around INR 700 crores at the end of the current financial year, right? Which may be around INR 200 crores of working capital, which keeps on circulating depending on the business, INR 500 crores of term loans. The debt mix would be around INR 300 crores overseas and INR 400 crores India. Overseas, we are paying a borrowing rate in the range band of 1.6%-3.25%. This is the kind of interest that we'll be spending. Average rate comes to around 2.5% for the overseas borrowing. Another INR 400 crores. Out of INR 400 crores, we have INR 100 crores of working capital, INR 300 crores would be our term loan debt. Next year, with the new project coming in with our existing business, INR 200 crores of cash we can easily generate. I'm just giving a very tactical response to that. We will left with a term loan of around INR 100 crores, and another INR 100 crores for working capital. This is how we plan to manage our debt, and that will be a very reasonable level for us to manage. Because although overseas may be something around INR 270-INR 300, I mean, the outflow in terms of interest would be very, very minimal amount. Even if you take a higher rate of 3%-3.5%, it won't go beyond that. This is one thing. Secondly, once all the projects are coming into the mass production that we expect from April 2023, because it takes time to get samples tested, QAPs by the customer and all other models. We expect barring the machining business because it is on a job work basis. You can't see a bigger turnover, but in the case of sheet metal and Romania together, we expect a turnover of in the first year itself, something around INR 500 crores. Machining we are targeting as per the customer estimate, it can be around INR 77 crores. This is the type of revenue that we are looking in the coming financial year from the new projects. Other things remaining equal, no major incidents happening in the economy or geopolitical conditions. Going forward, what kind of debt to EBITDA you will be comfortable with going forward is my question. Because, I'm specifically asking this because what has happened is that last five years we have seen all kind of events in the industry. It might be, I don't know, it may be prudent to have a right level of debt. I was just asking from that perspective that what will be comfortable levels for you guys? Yeah. I'll answer in a way like debt we are comfortable as I responded, and we have a very structured plan to pay off the debt. Secondly, as far as margins are concerned, if you see our figures, there has been a one-time cost of INR 5 crore on account of Romania because job work has started over there. There are license costs, etc. Yeah. Total INR 20 crore of losses have been piled up on account of the new projects. If you take the EBITDA for overseas, it is around 14% with a net profit margin of double-digit. I mean 5%, 5.5% net profit margin overseas. That kind of margin will continue even in the Romania business. This is one set of answers for the margin. Secondly, for machining businesses, we are having a clear contract with the customer of 8% margin on the total turnover value. EBITDA roughly will be, I mean fluctuating. It will be from day one, it will be about double digits. As far as sheet metal is concerned, we are targeting 10% EBITDA in the first year for the new projects. Okay. Okay. Got it, Sir. If you average out all these business models because machining, you will see a lesser sales figure, but at the same time we have a confirmed EBITDA, I mean, interest and taxation reimbursement of INR 21 crores. If the value goes INR 100 crores, the% might come down, but if the value remains INR 50 crores, then INR 21 crores divided by INR 50 crores, you see a very high level of this, I mean, the EBITDA. That's all. On an average basis, we will be surely in a double-digit EBITDA in the next year. We have taken many steps to integrate our operations also and to rationalize our costs also. That impact will come over a period of time, another six-seven months from now. Okay, perfect. All the best. Thank you. Thank you. Thanks a lot. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Abhishek Jain from Dolat Capital. Please go ahead. As there is no response from the line, we'll move to the next question, which is from the line of Arjun Khanna from Kotak Mutual Fund. Please go ahead. Sir, thank you for taking my question. Just on the lines of the question of the earlier participant, if we look at the business, obviously we've faced through a number of difficult circumstances. We seem to be pretty confident of the future, but we don't know what may come through. In light of this, if we look at our debt levels, it seems to be on the higher side. How do you characterize our business prospects going forward in terms of CapEx, et cetera? Would you wait to see the income flowing from this side pay down debt before we undertake further CapExes? Because we seem to be into a number of lines of business at this point of time in the automotive space. Arjun, thank you for that question. Well, we are, let me just say we are very conscious of the projects that were taken up. There are two things that I want to bring in line. One is that all the new businesses that have been set up, all the investments that are going right now, which will conclude within this financial year, are all measured out with 100% capacity utilization. These are not businesses which will mature over a period of time. These are businesses that have been taken. As soon as we are ready, the entire lines are going to be consumed. These businesses will start throwing out margins from day one, which are positive margins. You know, typically, when you set up a new plant and you grow capacity from 10% to 20% to 50%, there is that lag that happens. Unfortunately for us, all these new investments are fully mature investments that will throw out money from day one. That's your answer number one. From the debt perspective, like we said, our margins have dropped on account of, like I mentioned right in the beginning, because of one-time initial commissioning costs and other start-up expenses. Also the fact that when these plants are set up, you would appreciate the two or threee months due date for the customer to, like Mr. Yashpal said for QAPs and for quality establishment. Those losses at the rate of about INR 20 crore happened in the last quarter, the results of which you are seeing, which have dropped our margins. I think going forward, as we mature, as the units come into full line maturity and production, gonna happen very quickly, we will take care of that. Yashpal said that we will generate close to about INR 200 crore of free cash flow that will go into debt repayment in the next year itself. Next year, our domestic debt, we will be left with about INR 100 crore of term loan and about INR 100 crore of working capital, which I think is extremely manageable and under control by the organization. That's what I want to leave you with, in terms of debt. We are quite comfortable with how we are managing debt. You see the opportunities that came during COVID was something that we did not want to pass by, and these are going to show great results for us going forward. Sure. On the lines of business, essentially we seem to have a position across components. We seem to be more horizontally inclined by having a small amount of revenue from a number of components, apart from our historical proprietary products, where we actually have a higher share in locks, et cetera. Just wanted your thoughts on that. Well, let me talk about our segment diversification in that sense, Arjun. You know, we already dominate the wallet share of the products that are manufactured by us, especially in the two-wheeler segment. If you look at our locks, we are the largest lock producer. If you look at mirrors, we are the largest mirror producer. If you look at our sheet metal tools, we are the largest in the world. If you look at our cabin business, we are the most diversified in the entire country. It leaves us with less option than for us to look at diversification in other areas to grow our wallet share, and that's what we've been doing. Corresponding to your last question and this one, I am very happy to say that from our perspective, at our given snapshot time, we see no further investment for a considerable period of time going forward. We have no more CapEx that is in line to be spent in the next year, for example. And therefore we look at debt to be paid off very, very quickly before we move into any other segment. For the moment, the diversification is kind of complete. In our existing lines of business also, we have made investments to upgrade our technologies, smart technologies, for example. If you look at our smart locks, for where we've already got the orders for some of the major customers, and some of them should be coming in shortly, this will deliver us a 5x take on the revenue that comes from our traditional locks. That is going to become active starting next year, financial year 2024. You will see. All of those investments are already included. I don't see any further capital investment of a large degree coming in next year, and we will pare down the debt that we have taken so far in the subsequent years. Sure. Sir, my final question is, in the first quarter conference call, you spoke on how in the third quarter you'll decide on JVs going ahead in terms of JVs to take a look at where we want to scale up and otherwise. How has been the journey till now? Because, since inception, we haven't quite seen. I'm glad you asked this question, Arjun. Our helmet business, which goes under the name of Sandhar Hanshin, has witnessed a turnaround. It's become EBITDA positive on an overall basis, but also on a monthly basis it's become PAT positive. That's a very happy news for you to see. We will see on an annual basis in March 2023, we will be positive on a PAT basis for the entire year as well. That's on the helmet business. Winnercom Sandhar and Sandhar Hanshin are already PAT positive as we speak, with both registering sales of over INR 35 crore each. Sandhar Hanshin Technologies registered a sale of INR 27 crore and has already so far been PAT positive to the tune of INR 1 crore, and these numbers will grow very, very quickly from here on. This is in regards to four. Sandhar Whetron is EBITDA positive, and we expect the business to grow in 2023, 2024. In the case of Jinyoung Sandhar, where our half year registered sale is INR 24 crore, here and in the case of Kwangsung, while the margins have become EBITDA positive, the foreign exchange fluctuations have kind of hit us. And therefore we expect those. What we have done is we've reached out to our JV partners and suggested that some of the imports that happen in these particular JVs should be converted to Korean local currency of KRW instead of U.S. dollar, where we believe that the fluctuations are minimal compared to the volatility in the U.S. dollar. We are expecting positive responses there. Therefore, I'm very, very happy to say that where the joint ventures were eating away a lot of money, that will not be the case going forward. Sure. Do we project a breakeven in the overall, in terms of run rate for fourth quarter? Should we see no negative drag? Is that the right understanding? Well, in all the other cases, like I mentioned, Sandhar Ampere, Winnercom Sandhar Hanshin, Kwangsung, Whetron, it will all be neutral, or better. Where these two cases are concerned, it depends largely on the exchange rate fluctuations, and we have to see. For a large part, I would say from an operational level, all of them are now positive. Sure. How much further CapEx we would need apart from the loss funding for these JV projects? We are not looking at any more CapEx in these [wind mills]. Sure. Thank you. Wishing you all the best, Sir. Thank you. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Abhishek Jain from Dolat Capital. Please go ahead. Sir, the company is quite aggressive in EVs right now. What is your plan to expand your business in the EV segment? How much is the current order book with you? What all products are you going to introduce in EVs? I think in the presentation it's already been marked on the EV segments that we are getting into. One is the EV segment that we've already started supplying with our present rate or present portfolio of components. There are some that are specifically being designed for the EV industry. If you look at what are the new products that have already been developed so far, which are compatible are the electronic steering column locks, the foldable keys, the tire pressure monitor system, USB, the auto foldable mirrors, keyless smart locks, ambient air pressure sensors, CBS mobile holders, mirror with turn indicators. These are all that are in resupply mode right now. If I go forward, these are being now supplied to Ather Energy, to Ampere Vehicles, to BGauss Auto, to TVS, to Matter Energy, to Ola Electric, to Revolt Motors, to Lectrix EV. These are the customers that are being targeted. Also three-wheelers and four-wheelers of Mahindra & Mahindra, Tata Ace are all being supplied with our consistent range. The next line of components that are specific for EV, which is the hub motor. We are proto ready now. Our performance validation should be complete by February 2023. We expect the ICAT approval to happen in July 2023. The mid-drive motor, again, proto is done. We expect ICAT approval by April 2023. The motor controller, we expect proto readiness in the next month. Again, we are expecting that by March, April 2023, these will also be ICAT approved. DC controller, this is something that has been working on since November of 2022. We expect that in a month or two we will get ICAT approval. EV chargers, we expect ICAT approval by May 2023. The battery management system, which we are working on, has for the moment been put on hold, and we expect ICAT approval to be given in the February of 2024, and ICAT approval also in the same month. That is the overall context and summary of what we are doing in the EV space. What revenue are you targeting of from FY23, especially from the EV segment, from existing products as well as the new products? I did think we gave this number at the last scenario. Abhishek, like if you ask me, like in from overseas operation, like we are expecting a turnover of INR 400 crore, right? It's all supplying to the four-wheeler segment, which includes EV and non-EVs both, right? Another 2%-3% of our domestic is going for the EV companies. That's how it is split. Okay. Thanks, Sir. Sir, my next question is related with your contribution from the two-wheeler space. It still is a very high of 57-58%. The passenger vehicles and CVs is only 40%. What is your plan to move from two-wheelers to four-wheelers to winning new business, especially in the Aluminium Die Casting or in other business like locking system and a regen system? Well, Abhishek, to be honest with you, we don't have a very strong work in place where we say that we will only take four-wheeler orders and we will not take two-wheeler orders. Therefore, because we've been in this space, like I said, smart locks will probably quadruple the revenue in locks over a period of time because the value of each lock is that much higher. Now, obviously, if it goes to two-wheelers, that revenue will continue to grow. Die casting, again, is something that happens both for two-wheelers as well as four-wheelers. Obviously one cannot differentiate. I'm not saying that there is a drastic change that is changing in the portfolio of two-wheelers versus four-wheelers versus construction equipment or highway equipment. All I'm saying is that we are fulfilling orders that come our way through any of these segments. Our intent is to grow on the value add of each one of them and margins on each one of them. Every business that we take should have a very adequate level of profitability for us to grow. We are not so taken in by our dependence on two-wheelers or four-wheelers at this point of time. Sir, in a particular Aluminum Die Casting business, many companies are winning new business in the EV segment from the exports. Like the battery housing and motor housing and all. Are you looking to get those business, if you can shed some more light over there? Yes, Abhishek, I'm very happy to say, and I think Yashpal here referred to it, that with the onset of our machining business, now this would mean, like I said, 35 lines, 300 new machines that will be used in these two segments. Most of the exports that happen from India happen in a machined form. You have seen some of the companies that they carry huge a big multiple of their valuation that goes towards the machine parts. While we were machining earlier, but this new facility will take us to a new level, which will open doors for exports in a big way, where the value add is much, much higher. We are now very keen and very happy that this business will start on a full-fledged basis, and you will see the results of it in the next quarter. What is the current proportion of the machining in total revenue, and how much it is expected to increase and how this will get the benefit in the margin? Well, like I said, like Yashpal here also said, the new business that we've taken for machining, we are taking only on job work basis so that we don't get saddled down with working capital. Just the machining business, which is on job work basis, has been calculated in the first year to be worth INR 77 crore and a margin of something like INR 21-22 crore on an EBITDA basis that has been agreed upon. Those are the numbers. Obviously it will open many, many doors for us to be able to grow, not only from a company that does casting and basic machining to very deep precision machining that we will be doing in the future. Okay, Sir. Sir, in a locking system, what is the current proportion of the keyless locking revenue? I think it's about 20%, right? 20% is the locking revenue share of the total business. How much is the keyless or smart locking system revenue? Well, at this point of time, smart locks are still to start. We are starting, I think, in this next quarter with some EVs, but our major line will come from Suzuki. That begins in 2024. 2024. Where the manual and the other business put together over a period of two and a half years is about INR 500-odd crore. Are you not supplying any components in iQube or TVS iQube? Any components to? TVS iQube. We are supplying to iQube, but those are normal locks. Those are not smart locks. Those are what we call four-in-one locks. Nobody started using smart locks as yet. What is the difference in the content per vehicle in the locking system, a smart lock versus the normal lock? The manual lock would be anywhere between INR 350-INR 450 rupees. A smart lock begins at INR 2,000. Okay. Sir, you have also- Actually, a new order that we've got, which is for Honda scooters, which is the new motorcycle which is being launched now, the 100 cc motorcycle which is being launched from Bangalore, which is going to be their mass production, and we are sole suppliers for that particular product. That will begin from next financial year as well. Okay. Sir, in locking system, you are only supplying to the Honda cars in the four-wheeler segment. Are you looking to get business from the other players? We have already got business from Tata, and we are also now very close to closing with two others, the names of which obviously I can't announce right now. This would be very high-margin business because of the change in the mix. Yes. Okay. Sir, my last question is your revenue guidance for FY 2023 and 2024, and what is your margin guidance for FY 2023? Yeah. For current year, we are expecting to grow something around 24% above from the last year's figures. March 2022, you can take a 24% up to cycle something between 2,800 and 2,900 in the current year. Right. That on a sales basis is the target. Next year with the new projects coming up, another year targeting a 30% jump on the total volume side. There is a 30% jump on the volume side, but On the value. On the value in the next year. Next year with the revenues from the new projects adding up to our existing business. Next year the sheet metal prices will correct because of the fall in the metal prices. Will it impact? That time has to see how the cost trend goes in the next year, whether downwards or upwards. Yeah, that will not have a significant base because all our business is new. Values are building from new businesses, not from the price of the componentry that comes. And, uh, The margins then will go up even higher in case the value falls. Oh, great. What is your margin target, for FY 2023? Obviously, we target for FY 2024 a double digit. FY 2023 is still like, as I said, INR 20 crores of the initial losses we have that pressure. We are expecting to grow something of, you know, in a good mode of around 9% at the aggregate level. It can be up also depending on the fourth quarter performance. You are talking of the extraordinary expenses of INR 20 crore. Is it, yeah, incurred in first half. It is incurred in the first half. On an annual basis, in any case, it's going to hit the P&L account, even if annualize that. This INR 20 crores will always remain. Part of it may be recovered, but some cost is a cost. That is the initial setup when we set up the plant, the licenses and all other things, the interest sampling and testing costs, QAP costs, that is a capital one-time cost. The activity pressure with the new projects like Mysore again will be coming into picture in fourth quarter. This pressure will continue for the new projects. That's why I said as per April 2024 or 2023 onwards, we will see a streamline in our business with all these activities being finished off. All these costs are shown in the other expenditure or in RM cost? No. It's negative in P&L, yeah. It goes P&L to the appropriate head. If a machine is a material cost, that will go to the material cost. If it's a job work expense, it will go to job work expense. The proper head is there as per the accounting norms. Okay. Sir, in the last mile, R&M expenses, how much was the one-off expenses in this quarter? Regarding? Can you comment? Sir, in RM cost, how much was the one-offs in this quarter? One-off, in the RM? You mean what is the impact of RM? The RM cost has gone up significantly. Is there any one-time expenses which has taken in this? Okay, okay. Okay. I think that's about 4% or so. Yeah. If I remember. Yeah. It's about 4%. I think it is. 4%. Initial 4%. It has gone down because, initially we need to build up some components, supply few on the sampling, testing. That's all. It's around 4% impact is there. During that there is no other material impact. Okay. Thanks, Sir. That's all from my side. Thank you. Thanks. Thank you. Participants who wishes to ask a question may press star and one. Anyone who wishes to ask a question may press star and one. As there are no further questions, Participants who wishes to ask a question may press star and one. As there are no further questions from the participants, with that, I would now like to hand the conference over to the management for closing comments. Well, thank you once again to all the participants today and all the questions. We are excited about the future, like I said, the next quarter and very, very excited about the next, year, where we believe that we would have stabilized as an organization, with no extraordinary kind of CapEx and a streamlining of our operations. We are also quite bullish on the macro, state of India, and we believe that we will be able to take full benefit of whatever is coming, for all of us to see, hear and absorb. With that, once again, a big thank you. Wish you all a very happy new year and God bless. Thank you. Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.