Alicon Castalloy Limited (NSE: ALICON) Q2 2025 Earnings Call dated Nov. 16, 2024
Corporate Participants:
Vimal Gupta — Chief Financial Officer
Shyam Agarwal — Chief Marketing Officer
Rajiv Gupta — Head of Business Development
Analysts:
Mayank Vaswani — Analyst
Umesh Matkar — Analyst
Jyoti Singh — Analyst
Amit Agicha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Alicon Castalloy Limited’s Earnings Conference Call. 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. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mayank Vaswani from CDR India. Thank you, and over to you, Mr. Vaswani.
Mayank Vaswani — Analyst
Thank you, Michelle. Good morning, everyone, and thank you for joining us on Alicon Castalloy Limited’s Q2 and H1 FY’25 earnings conference call. We have with us on the call today Mr. Vimal Gupta, Group CFO; Mr. Shyam Agarwal, Chief Marketing Officer; and Mr. Rajiv Gupta, Head of Business Development at Alicon Castalloy Limited. Mr. Vimal Gupta will provide an overview of the operating and financial performance for the quarter and half year, following which Mr. Agarwal will walk us through the operating highlights. Mr. Rajiv Gupta will then provide insights on domestic business and developments in the global markets. Thereafter, we shall open the call for the Q&A session.
Before we begin, I would like to point out that some of the statements made in today’s call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings documents that have been shared with all of you earlier.
I would now like to hand over the call to Mr. Vimal Gupta for his opening remarks. Over to you, sir.
Vimal Gupta — Chief Financial Officer
Good morning, and welcome to our earnings call. We appreciate you taking the time to join us on a Saturday. I hope you have had a chance to review the earnings document shared earlier.
We are pleased to announce that Alicon has achieved a record-breaking quarterly revenue of INR465 crores for quarter two, making the fourth consecutive quarter in which revenues have surpassed the INR400 crores mark. This growth has been contributed by segments of Passenger Vehicle [Technical Issue]
Operator
Sorry to interrupt sir, you are not audible right now.
Vimal Gupta — Chief Financial Officer
Now is it audible?
Operator
Yes sir. Can you please repeat your last line please?
Vimal Gupta — Chief Financial Officer
Yeah. So we are pleased to announce that Alicon has achieved a record-breaking quarterly revenue of INR465 crores for quarter two making the fourth consecutive quarter in which revenues have surpassed INR400 crore mark. This growth has been contributed by segments of Passenger Vehicles and Two-wheelers and supported by traction of Non-Auto segment. Revenues from both domestic and international market have grown, supported by our strategic focus on developing new technology platforms, expanding into new regions, and prioritizing value engineering and capability enhancement, all complemented by positive trends in our established lines of business.
Our business momentum remains strong, outpacing both global and domestic automotive industry growth. We are engaged in advanced discussions with a number of high-profile clients, including leading global OEMs and tier 1 suppliers, who are drawn to high-quality, competitively priced solutions we offer. Alicon’s differentiation is anchored [Technical Issue]
Operator
I’m sorry to interrupt you sir. We are not able to hear you. Ladies and gentlemen, the line for the management has been disconnected. Please stay connected while we reconnect them. Ladies and gentlemen, thank you for patiently holding. The line for management has been reconnected. Over to you, sir.
Vimal Gupta — Chief Financial Officer
So sorry for this disturbance. Alicon, the differentiation is anchored in our expertise in low-pressure die casting and gravity die casting processes that are gaining wider acceptance among our clients. Additionally, we are steadily transitioning from supplying ‘as cast’ products to providing ‘fully machined’ components, evolving from a casting provider into a solution provider. This shift will increase value addition and enhance our overall margin profile.
Our progress can be tracked through the three key metrics, the share of Passenger Vehicle and Commercial Vehicle in our product portfolio continues to rise, now accounting to 51% of sales in quarter two of FY’25 compared to 49% in quarter two of FY’24. Our customer base has evolved significantly, adding prestigious global OEMs and Tier 1 companies, reflecting Alicon’s growing industry stature. We continue to expand our client roster each quarter.
Our investments in design, R&D and value engineering have positioned Alicon as not just a supplier of build to print component but as an innovative solution provider recognized for technology and design excellence. Based on strategic initiatives undertaken, Alicon has transformed substantially from 2018 to 2024 in the following manner: In 2018, we were heavily reliant on Two-wheeler customers. Today, we have a well-diversified portfolio including Passenger Vehicle and Commercial Vehicle. Our customer base, once primarily domestic, now includes major global names and leading Indian OEMs that have themselves scaled significantly. Our product portfolio has expanded beyond Cylinder Heads to include a range of critical components. This diversification has improved our margin profile from 8% to 9% in 2018 to around 13% at present with ongoing efforts to enhance it further.
Turning to our financial performance for quarter two and First Half of ’24-’25, we achieved revenues of INR465 crore representing a 22% increase from INR382 crore in quarter two of FY’24. This growth was fueled by the scaling up of production for new parts, notably for Passenger Vehicle customers. There has been a recovery in volumes of two-wheeler too.
The gross margin for quarter two of FY’25 was 47.55%, down by 253 basis points from 50.07% in quarter two of FY’24, reflecting the change in our product mix, which saw a bit of moderation in sales of Commercial Vehicle segment offset by strong pickup in volumes of Two-wheeler segment.
Employee costs rose by 5% year-on-year, driven by salary increment, higher minimum wages, and new hires aligned with our growth. If you compare employee cost for quarter two of FY’25 with quarter one of FY’25, you will notice that this has declined 5% quarter-on-quarter basis. The reason is that the high-cost temporary hires in our European operations have completed their tenure and we are back to regular staff levels in Europe.
The EBITDA for quarter two of FY’25 came in at INR57 crore, up by 21% from INR47 crore in quarter two FY’24. With a margin of 12.2% compared to 12.3% last year, higher volumes of Two-wheeler products and reduction in higher value-add products for Commercial Vehicles has impacted the sales mix this quarter. This moderated the gross margin and in turn has impacted the EBITDA margin. We are pleased to share that despite these factors, the impact on EBITDA margin is modest 9 basis points. On a sequential quarter basis, we have seen that the EBITDA margin moderated from 13.2% in quarter one to 12.2% in quarter two of FY’25. This is again due to the shift in product mix resulting in an impact on the gross margin which has flowed through to the EBITDA margin. Compared to quarter one of FY’25 EBITDA of INR58 crore, the absolute EBITDA of INR57 crore in quarter two
Signals another strong quarter.
Finance costs increased by 11% year-on-year to INR11 crores driven by higher borrowings and 9% sequentially from quarter one of FY’25. Depreciation rose by 26% to INR23 crore reflecting investment in machines and tooling. Pre-tax profit, the PBT, grew by 20% year-on-year to INR23 crore, up from INR19 crore in quarter two FY’24. The net profit, the PAT, for quarter two FY’25 was INR17 crore, a 16% increase from INR15 crore in quarter two FY’24.
For H1 Financial Year ’25, total revenue reached INR905 crore, up 23% from INR737 crore in first half of FY’24. Gross margin was 48.8% down from 50.2% in H1 FY’24. EBITDA for H1 stood at INR115 crore, a 32% increase year-on-year. And the profit after tax for H1 of FY’25 was INR36 crore, an increase of 49% year-on-year basis compared to INR24 crore in H1 of ’24.
Our quarter two capital expenditure totaled approximately INR54 crore, and for H1, capex is around INR100 crore. Focusing on Machinery and new product development, for FY’25, we anticipate capex of around INR150 crore, underscoring our growth initiatives.
Coming to our earlier guidance of INR1,800 crore for FY’25, targeting 15% growth. We are seeing signs of softening of demand in India as well as in markets such as Europe and USA. We are closely monitoring the situation and will update on this in quarter three as we get more clarity on OEM schedule.
Despite the cautious tone for the immediate future, we remain excited about our prospects bolstered by ongoing client discussions. While current sentiment around electric Four-wheelers is subdued, we are well positioned in Hybrid technologies with promising engagements with domestic leaders like Toyota and Maruti.
With that, I will now turn the call over to Mr. Shyam Agarwal for the operating highlights of the quarter.
Shyam Agarwal — Chief Marketing Officer
Thank you, Mr. Vimal. Good morning, everyone.
I am pleased to share that we once again achieved our highest ever quarterly revenue in quarter two, marking the fourth consecutive quarter with revenues surpassing INR400 crores. Alongside a 22% year-on-year revenue growth, we also posted healthy increase in both PBT and PAT. This performance underlines our strong momentum as we progress through Financial Year ’24-’25 on a solid trajectory.
This quarter’s performance is more impressive when viewed in the context of a decline in the global automotive market. In Q2, global production was lower by 4% on Y-o-Y basis. In the same period, the Indian automotive market has reported an increase of 9% in overall vehicle sales, driven by the recovery in Two-wheeler sales despite a decline in Passenger and Commercial Vehicle segments. Against the decline in the global market and modest single-digit growth in the India market, Alicon achieved a solid 22% increase in sales. This includes 59% Y-o-Y growth in the Passenger Vehicle segment, a 19% rise in the Two-wheeler sales and 28% growth in sales to the Non-automotive segment.
Contribution of the CV segment has declined, aligning with the segment’s overall volume reduction. This quarter saw continued momentum with Maruti Suzuki driven by an increased ramp up in Cylinder Head supplies to support an additional model and the commencement of deliveries to their Gujarat plant. As anticipated, this resulted in higher volumes supplied to Maruti Suzuki.
At the beginning of 2024, we initiated the supply of Cylinder Heads to Stellantis India. With a successful ramp up in quarter one, I am delighted to report that this momentum continued into quarter two with a further scale up in volumes. Consequently, quarter two marked our highest ever supply volume to Stellantis, significantly surpassing quarter one level. Toyota maintained its steady demands for Cylinder Heads for their Four-wheeler hybrid models. Toyota has planned a new TNGA line capacity expansion from January 2025, for which in-house line modification has been planned in November. The modification will require shut down for a brief period in November, but the line expansion will result in higher volume requirements from quarter four onwards. The strong performance of hybrid models from both Maruti and Toyota coupled with scale up of volumes in Stellantis has enabled the growth of 59% Y-o-Y in the PV segments.
In our European operations, the Battery Housing product for hybrid vehicles that we are supplying to Samsung, a Tier 1 supplier, is progressing well. This product is supplied to three different vehicle models and volume has stabilized after ramp up in quarter one.
Last quarter we highlighted a development project for Volkswagen Autonomous Driving Initiatives. With ADAS technology set for widespread adoption across the automotive industry, this venture positions us to tap into a high growth market segment. Our success in delivering a precise design and specification on the first attempt has earned high praise from Volkswagen. The Volkswagen R&D team has recommended us for future power
Development activities.
We have positioned ourselves to capitalize on the large trends, defining the auto industry today. Today, we supply nearly 90 components to the EV industry with our European plant providing a strategic advantage in advanced tech capabilities. Our expertise in thermal engineering has set us apart exemplified by the e-Axle development for Jaguar and Land Rover. While electrical vehicles have witnessed early success and generated lot of buzz, there are now some concerns over charging availability and range as well as battery replacement and resale value. As a result, Hybrid Vehicles have now started to catch up in terms of interest generated due to their position as a practical bridge between traditional and fully Electrical Vehicles.
In the first nine months of the calendar year 2024, Hybrids recorded higher sales growth than EVs in key markets like Europe, USA as well as in India, driven by consumer preference for their flexibility and compatibility with existing fuel infrastructure. infrastructure. A global automaker like Toyota has invested significantly into Hybrid
Production, positioning Hybrids as a pivotal growth segment in the automotive industry and in India. Marty Suzuki among the leaders to incorporate this technology. With a strong portfolio towards this segment, we are well positioned to capitalize on this trend also.
Another element of our growth strategy is to increase the share of customer wallet. We are doing this by pursuing more contracts for end-to-end fully machined parts. As the proportion of ‘as-cast’ parts reduces in favor of fully machined parts, there will be greater element of value addition. Our customer value proposition is rooted in technology-driven innovation, powered by our state-of-the-art Advanced Technology Center. Equipped with
High-end machines and driven by a team of 20 researchers, the Center spearheads R&D, delivering ground-breaking, cost-effective and eco-friendly products and processes.
Recent additions to our technology capabilities includes: The state-of-the-art cold core box manufacturing facility at our Shikrapur Plant in Pune, enabling the production of high precision components that meet stringent industry requirement and strengthen our market position. Integration of robotic arms into production processes, enhancing precision efficiency and safety while ensuring consistent quality and improved output. Integrating advanced digital process control across our operation, leveraging machine intelligence to enhance precision and efficiency on the production floor. These controls provide real-time data and actionable insights, enabling smart decision making and aligning our processes with global best practices to meet the evolving needs of our customers and products. We have added AI and IoT into our operations, which has contributed to productivity enhancement as well as reduced rejection rate. This helps in optimizing manufacturing processes, making them more efficient and responsive to real-time data.
Moving up the value chain, we are now working on highly complex HPDC parts with the aim to shift the process architecture into LPDC, highlighting our exceptional design and technological prowess. Transition from High Pressure to Low Pressure Die Casting, enhancing structural integrity, detailed precision and material efficacy, meeting diverse customer needs while advancing sustainability goals. In fact, we are striving to enhance sustainability through multiple initiatives. Transitioning products from HPDC to LPDC reduces power intensity and minimizes waste, while our new model plant and automated facility optimize resources. Alongside water conservation efforts, we have diversified our energy mix. With solar panels at our India and Europe plant now generating one-third of our energy from renewable, we aim to increase this to over 50% by next year, further enhancing resilience and cost efficiency.
With that, I will now hand over to Rajiv Gupta for his comments. Thank you.
Rajiv Gupta — Head of Business Development
Thank you, Mr. Shyam. Greetings to all of you.
In quarter two FY’25, Global Auto Industry witnessed 4% Y-o-Y de-growth in volumes. Within this, there was 1% growth in North America and South America markets, de-growth of 25% in Middle East and Africa, and Europe volumes declined 4%, China de-grew by 6%, South Asia down by 3%. In the contrast, the Indian auto industry reported a healthy performance with 9% volume growth driven by the Two-wheeler segment. Analysis of the growth by segment indicates 12.5% growth in Two-wheeler segment on a year-on-year basis, 0.7% de-growth in the Passenger Vehicle segment on a year-on-year basis, and 13% de-growth in the Commercial Vehicle segment on a year-on-year basis. Auto volumes would have been better in quarter two, but the Shradh period negatively affected sales. Despite the weakness towards the end of the quarter, Two-wheeler sales posted growth of 12.5% with the momentum continuing from earlier quarters. Within this, scooters’ growth was 16.3% Y-o-Y, while motorcycles grew by 10.7%. This growth was largely driven by recovery in the rural market and increased financing penetration.
For quarter three FY’25, the market outlook remains positive bolstered by ongoing
Rural recovery and expectations of festive season demand along with expected off-take from the wedding season sales. In the Passenger Vehicle segment, Utility Vehicles continue to witness favorable momentum. Further, the segment around EVs is somewhat subdued, while demand for Hybrid vehicles remains strong. Having built up offerings for Hybrid vehicles, we are well positioned to take advantage of this
Trend.
In quarter two FY’25, the retail volumes of Commercial Vehicles declined further due to the seasonal slowdown around monsoon and is expected to improve slightly in Q3.
Coming to the business wins: In quarter two, we added 13 new parts from five existing customers. This includes fiveparts from the carbon neutral segment, seven parts from ICE and one part from the Structural Business. Of these 13 parts added, six parts pertain to the domestic business and seven parts for the international business.
The seven parts of the international business cater to requirements of marquee
Global customers like Scania, TACO, JLR, Daimler and Honda cars. This includes another order win for a structural part for Jaguar. This is a significant win with around INR850 million over a lifetime. We expect the balance in our product mix to improve further as all of the new business that we have won this quarter is supplying parts for a four-wheeler, which we aligned to a strategy of focusing on a higher value path.
The global business contributed to 23% of the total revenue during the quarter. Further, 94% of our business is from auto and 6% from non-auto customers. During quarter two FY’25, Alicon booked new orders aggregating INR37 crore. The new business added is aligned to a strategy of higher value and as it is all towards the four-wheeler part supplies. With this, our total new order booking has surpassed INR9,000 crore, which is executable over a period of six years from ’23-’24 upto ’28-’29.
On this note, we can open the floor for questions.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Umesh Matkar from Sushil Financial Services Limited. Please go ahead.
Umesh Matkar
Yeah, thank you very much, sir, for giving us the opportunity. So, my first question would be the gross margins were down 200 basis points. If you can elaborate on whether there was a change in the composition?
Vimal Gupta
So, Umesh, the main reason we have explained that there is a decline in the Commercial Vehicle because the change of the sales mix. Because the Commercial Vehicle where we are having the higher margins and major contribution for our exports, there we have seen some softness. And on the other side, there is an increase in the sales of Two-wheelers. So, where the gross margins are lower. So, that is the main reason for this some decline in gross margins.
Umesh Matkar
And sir, do you expect the composition to change going forward?
Vimal Gupta
Yes, definitely, because you know that Auto industry, some softness is there in the export, especially the U.S. market, what we are seeing in the Europe
Market. So, hopefully, maybe next to one or two quarters I think there will be some softness. After that, we are seeing a good recovery.
Umesh Matkar
Okay. And what would be the impact of U.S. CV and global EV slowdown on us?
Shyam Agarwal
Mr. Umesh, thanks for the question. On the Commercial Vehicles, if you see the more impact is in Europe and little bit impact in the USA, if you see for the
Commercial Vehicle. So, there we are seeing some of the customers or rather all the OEMs, they are seeing that the demand is not there. However, new Euro norms are coming in 2026 and 2027. So, there will be a pre-buying because the cost of the vehicle will increase, so there may be impact that pre-buying may come in the next year. So, we are hoping, and we are keeping a close watch on the ADI release, which comes every month from all OEMs. So, we will keep a track and maybe in the next con call, we will be able to give you a much clearer picture because by the time of the next concall, we will be having the yearly projections also from the European customers.
Umesh Matkar
Okay. Thank you. And sir, what are the new logos added, or contract signed during the quarter?
Shyam Agarwal
Yeah, as Rajiv has explained in the con call, so we have added the new businesses from Jaguar and Land Rover, then Scania, then TACO. So, these are the new customers from where we have got the new businesses.
Umesh Matkar
And any view on like beyond FY’27, if you can give us and also INR2,200 crore, what kind of business plan we are shaping up? Any color on the same, if you can give us, that would be very helpful.
Shyam Agarwal
Umesh, very good question, actually, but I tell you, we will be in a better shape in the next con call, because we will be compiling all our yearly projection for
The next year and the forthcoming year. Secondly, you know that lots of global events are happening, like the election in the U.S., the softening of the Europe and the U.S. market, then the tension in the Middle East. So, global market is very volatile, and we are seeing the government spending in India is also down in this financial year. So, we also expect that something should come in the budget. So, maybe we will have more inputs, more detail for you in the next con call.
Umesh Matkar
Okay sir. Sir, Middle East, there are some issues going on. So, is there any impact that we are having on the business, and are we seeing it that reducing it?
Shyam Agarwal
Umesh, I tell you, it is having the impact, no doubt. We can see sometimes the freight cost to our Europe and USA customers, that keeps on changing, and as
Well as the lead time for the freight, what we are supplying, that increase or decrease. So, it impacts the businesses with respect to exports that we are
Seeing. And also, these things impact the cost of the fuel. The crude rate increases with the tension in the Middle East, you know very well. So, these things are having the impact, and more confidence of the customer comes when there is peace globally. So, we see it should improve as victory with the Trump, he already said he will work for the peace globally, including Russia, Ukraine. So, we are keeping our fingers crossed for a better global
Environment.
Umesh Matkar
Sir, our medium-term goal of attaining 15% EBITDA margin and 20% ROCE is on track. Or is there any change in this?
Vimal Gupta
No, we are on track and the target is clear. Only that is due to some little bit softening in the market that for short term, there is an impact we are seeing. But definitely because as per our order book, the kind of business is we have already booked and the kind of margins these businesses are having. So, I don’t see any impact on that in the coming years.
Umesh Matkar
That’s good to hear. Sir, what is the contribution from High Pressure Die Casting in H1?
Vimal Gupta
No, we are not in High Pressure. We are doing Low Pressure, Gravity and some Sand Casting.
Umesh Matkar
Okay. And will new parts starting production in Q3, Q4 offset overall slowdown in EV and CV?
Shyam Agarwal
Umesh, as you know in the automotive industry, when we acquire new businesses, the implementation period for the new product is one year to one and a half year. So, it is having the development lead time, then productionization, then the PPAP from the customer. So, lots of activities are there. So, if there is an
Immediate drop in the sales, you cannot cover up with the new businesses. However, we have a new business, you know, bookings are there and there is
A pipeline with which the SOP of the new products will come. So, it is very difficult to say whatever softening is there, it will be covered up because it
Depends in which sector it is coming, whether it is a high volume, high value. So, lots of factors are there. So, generic statement we cannot make, but we understand the intention of your question. So, we always work to reduce the impact of the market softening with the addition of new products, new customer, new segments. So, we will keep on working on that, and we will keep you posted on that.
Umesh Matkar
Okay. Sure sir. Thank you very much for answering our questions. and wish you all the best.
Shyam Agarwal
Thank you, Umesh. Thanks.
Operator
Thank you. [Operator Instructions] The next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Jyoti Singh
Yeah, thank you for the opportunity, and sir, congratulations on continuing to maintain a top line above INR400 crore. And sir, my question is on the revenue mix side. Like on the PPT, we have given 94% in the auto and 6% non-auto. So, if you can explain segment wise?
Rajiv Gupta
So, we have noted in the last quarter, the contribution mix, Passenger Vehicle were around 38%. Then Two-wheelers were around 43%. Commercial were
Around 12%, and Non-auto were around 6%. So, we have noted this, there was a movement, particularly in Passenger Vehicles when we compared with
Last year quarter two, we noticed a growth of 69% in the Passenger Vehicles. Even we noted a Two-wheeler increase of 19%. But as Mr. Shyam explained, we noted, I mean, you all know the downfall of market, especially for U.S. and Europe for the Commercial Segment because we are mostly into exports when we talk about Commercial. We saw a dip of around 21% in Commercial, and that would be one of the factors why even our gross margins were on the lower side than what we anticipated.
Jyoti Singh
Sir, just wanted to know, like earlier we changed our strategy to diversify more on the Passenger Vehicle compared to Two-wheeler, but now because of the
Rural recovery, another factor which is supporting Two-wheeler. So, now what is our strategy like CV also not doing very well. So, now what our strategy going
Forward? And how much we are confident to maintain that INR2,200 crore target by FY’27?
Shyam Agarwal
Jyoti, thanks for this question. So, our strategy is very, very consistent, and we are focusing more on the four-wheelers, especially on the Passenger
Vehicles, Commercial Vehicles and also more focus on the export businesses. As mentioned by Mr. Vimal in his speech, we are also focusing more on high value addition with shifting from ‘as-cast’ to ‘as-machined”part. So, our endeavor is there. However, as you mentioned correctly, we have seen in the last quarter, the sales in the Commercial Vehicles and the Passenger Vehicles were not good, and we have seen the decline. So, to fill up the idle capacity, we increased our share of business for the Two-wheelers. So, those options are already available with us if we have to fill the idle capacity. But the long-term strategy will not change with the performance of the market in the one quarter. We are very much consistent with our thought process and the strategy, which our Group has defined that we have to increase the top line, but we have to maintain a very healthy bottom line also. So, our strategy will be quite consistent in that.
Jyoti Singh
Thank you, sir. And sir, on the margin side, what is our target? And how we are targeting on the margin side, if you can guide us?
Vimal Gupta
So, margin side, what we are doing that, first of all, definitely there is an impact on the change in the sales mix, but continuously one is that we are
More focusing like what we are talking about. So, we will see further improvement in the sales of Passenger Vehicles. We are having a good margin. And second is now due to the seeing the global issues, all these things, the market pressures, so, in-house this, the cost reduction, those activities also started to reduce the cost. So, maybe we will see the impact in coming quarters, quarter three and quarter four, how the costs are going down as well as maybe some improvement in the gross margins. So, that is the way we are working to improve our margins.
Jyoti Singh
Thank you, sir. If you can guide me on the market share side with the Cylinder Head and other part.
Rajiv Gupta
Can you just repeat the question?
Jyoti Singh
Our market share on the Cylinder Head and new part side, if you can explain?
Rajiv Gupta
Okay. On the Cylinder Heads, yes, particularly Four Wheeler, there is definitely a movement. This was also noted in the results. One is yes, the volumes what
We are adding up at Maruti with the upcoming launches and also now addition to one location that has added to our sales opportunity. Second, also we
Explained on Toyota where even they are going to come up with, they are talking about capacity expansion. So, there is also an opportunity. Third is the
Stellantis. There was momentum in last quarter. Volumes are picked up. So, that will also add to this bucket. And now what is happening when we are supplying to these OEMs to domestic as well as global, a lot of companies have recognized about the capacity capability of the volume what Alicon can deliver. So, enquiries have increased in that area. So, we would like to, going forward, definitely we see an opportunity to add further businesses with existing as well as some new customers in this domain. And talking about the new business, yes, basically as we have aligned our strategy where we have defined very clearly which segments, which market, which customers to tap and we have delivered few of the niche parts in past. So, this is now demonstrating our existing and prospective customers. Also, what we have done is a lot of parts are of critical nature, a lot of parts are critical than the original ICE traditional paths where even we talk about very low wall thickness compared to what traditionally people were manufacturing in the process of Low-pressure Gravity. One example I would like to share with you is the Volkswagen Automation part. It is a very critical part of 1.2 meter weighing around 18 Kg which Volkswagen has given another opportunity to excel how Alicon is. And we have delivered this part in the first sample. A very good sample was submitted to sample and to their surprise, we have maintained the wall thickness which is ideally being achieved within a HPDC process. So, this gave a lot of recognition, and they have shared the appreciation mail to us, and now even they are talking about adding new other opportunities with the group company and other players in this space also.
Also, secondly, we are working aggressively on automation. So, in the last quarter, we have added six new robots in existing line because whatever parts
We are adding, it’s critical in nature, bigger in nature and even now we have already submitted the samples of such critical parts and in the coming quarters, we are working on the SOP of those parts. So, these parts will demonstrate that Alicon has come to a certain level of manufacturing when you talk about critical parts, and we are quite confident these products, once going SOP will give an opportunity to add business with existing and add new customers in this space. So, that is how we are working on new business going forward.
Jyoti Singh
Thank you so much sir.
Operator
Thank you. [Operator Instructions] The next question is from the line of Amit Agicha from HG Hawa & Company. Please go ahead.
Amit Agicha
Good afternoon, sir. Am I audible?
Vimal Gupta
Yes.
Amit Agicha
Thank you for giving the opportunity and congratulations for good set of numbers. Actually, I joined the call late, I apologize for that. My question was with
Respect to the capex guidance for ’25 and ’26.
Vimal Gupta
So, actually, for ’24-’25 already given INR150 crore, so maybe ’25-’26, there will be further addition in the capacities for the new businesses. But it will not be the range of INR150 crore or maybe INR200 crore, but expectation is between INR90 crore to INR100 crore.
Amit Agicha
INR90 crores to INR100 crores?
Vimal Gupta
Yes.
Amit Agicha
And any revenue guidance with respect to like focus on the international market?
Rajiv Gupta
Yes, definitely. This will be more towards the critical parts, what we added. Like, for example, we explained, we have worked actively on automations, adding robots, because whatever parts now we are adding, it’s of higher weight, like a Jaguar part, which we have developed in the past. The short weight of that part is 30 kg, and it’s with a high volume. So, we know very well, in a conventional way, with manual operation, it’s not possible. So, we are working actively, and these are very critical parts, and also to add precision and increase our manufacturing capabilities on that ground. So, going forward, investments definitely will come up in such projects, where we can offer solutions and more with automation.
Vimal Gupta
So, mainly, what we are seeing that, when we are moving towards the bigger parts, more critical parts, so somewhere we have to invest in our new
Equipment to handle those, and more automation. So, for that, we need additional capacity.
Amit Agicha
Understood. Sir, the guidance for ’25 given was INR1,800 crore, am I right?
Vimal Gupta
Yes.
Amit Agicha
And for ’26?
Vimal Gupta
For ’26, now, that’s why we are saying that maybe in the next quarter, we will be able to give more clear picture, because we will have more clarity from the
OEMs, when they will give the full-year volumes, because there is no consistency. We are seeing some softening in the market, in the global market. So, that’s why, at this moment, it looks a little difficult to give guidance for that next year.
Amit Agicha
Understood. Sir, last question was with respect to the blended interest cost on the borrowings that we have.
Vimal Gupta
And for the capacities, we need debt, but if you see on the other side, even after having this, the addition of INR100 crore capex during the six months, still there is no big increase in the interest cost. So, maximum we are managing through our Internal accruals. So, definitely we are focusing on this.
Amit Agicha
My question was interest rate. The blended interest rate on the total borrowings.
Vimal Gupta
Total is in the range of 9.5% in the range.
Amit Agicha
9.5%. Thank you sir. That was helpful, and all the best for the future.
Vimal Gupta
Thank you.
Operator
Thank you. [Operator Instructions] Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Vimal Gupta
Thank you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call, and we look forward to interacting next quarter. Thank you very much.
Operator
[Operator Closing Remarks]