Alicon Castalloy Limited (NSE: ALICON) Q3 2025 Earnings Call dated Feb. 13, 2025
Corporate Participants:
Vimal Gupta — Group CFO
Shyam Agarwal — Chief Marketing Officer
Analysts:
Mit Shah — Moderator
Yash Bharat Dalal — Analyst
Raghunandan NL — Analyst
Jyoti Singh — Analyst
Devang Shah — Analyst
Moksh Ranka — Analyst
Faisal Hawa — Analyst
Manas Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Alecon Limited 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. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Mit Shah from CDR India. Thank you, and over to you, sir.
Mit Shah — Moderator
Thank you. Good afternoon, everyone, and thank you for joining us on Alecon Castlore Limited’s Q3 and 9M FY ’25 Earnings Conference call. We have with us on the call today, Mr Vimal Gupta, Group CFO and Mr Shyam Agarwal, Chief Marketing Officer. MR. Vimal Gupta will provide an overview of the operating and financial performance for the period under review, following which Mr Agarwal will take us through the developments in the global markets and insights on domestic business. Thereafter, we shall open the forum for a Q&A session.
Before we begin, I’d like to point out that certain statements made in today’s call could be forward-looking in nature and a disclaimer to this effect has been included in the earnings documents that has been shared with you earlier. I’d like to invite Mr Vimal Gupta for his opening remarks. Thank you, and over to you, sir
Vimal Gupta — Group CFO
Good afternoon, everyone, and welcome to Quarter Three Financial year ’25 earnings conference call. Thank you for joining us today. We appreciate your time and interest in our company. I hope you have had a chance to review our earnings documents shared earlier.
Our performance in the 3rd-quarter was influenced by a volatile macroeconomic environment, which impacted demand across key segments and geographies, while we navigated the challenges with resilience, our overall performance was slightly weaker-than-anticipated, reflecting the thoughts reflecting the industry’s conditions, revenues for quarter three FY ’25 stood at INR393 crores compared to INR406 crore in-quarter three FY ’24 where top-line was impacted by subdued demand in key export markets with severe weakness in euro.
We also had some customer-specific incidents with a production shutdown at the India plant of a leading Japanese OEMs and challenges with one of our European two-wheeler OEM customer impacting the ability to absorb volumes of our. While demand for two-wheeler in the domestic market continued to be robust, it was not sufficient to offset the broader revenue impact. The macro-environment remains challenging with slowing of product growth and persistent inflationary trends. As a result, the GDP in real terms is set to slow across most major geographies, resulting in normalizing of growth happening post the COVID super-cycle.
In the context, USA is seemed to be holding up well, but there is sluggishness particularly in Europe where demand weakness persists. These trends are also considing with a slowdown in digital production, which is anticipated to have bottomed-out in-quarter three.
Turning to the financial performance, gross margin for the quarter came at 45.81%, making a decline of 543 basis-points from 51.24% in-quarter three of FY ’24. This was largely driven by shifts in the sales mix as a lower sales in the commercial vehicle segment and carbon-neutral products were not entirely compensated by the growth in two-wheeler volumes. We also made upfront investments in new technologically advanced plants imbibing robotics, automation and new edge manufacturing processes. As these units are yet to scale, the recovery of fixed-cost has been suboptimal impacting the gross margins for the quarter. Some of you may recall our discussions on the earnings call last quarter, where we had indicated that gross margins were softening due to the change in mix.
We have seen further impact of that trend this quarter along with the effect of some set of cost of further new projects. During the quarter, the EBITDA was INR35 crores compared to INR53 crores in-quarter three of FY ’24 with a margin of 9% versus 13% in-quarter three last year. The impact on gross margin from higher fixed-cost and adverse product mix had flowed into EBITDA. Depreciation rose to INR23.5 crores from INR20 crores, reflecting investments in machinery and tooling as well as automation and advanced manufacturing technologies. Pre-tax profit stood at INR1.05 crores compared to INR23 crore in-quarter three of FY ’24, while net profit for the quarter was INR78 crore versus INR17 crore last year. This is reflecting the impact of the adverse sales mix and the upfront cost of establishing new lines for which impact is evident on gross profit and EBITDA level too. For the nine months period, total revenue stood at INR1,298 crore, up 14% from the INR1,142 crore in nine months FY ’24.
Gross margin was 47.91% compared to 50.6% last year, while EBITDA for nine months of FY ’25 was INR150 crores, a 7% increase year-on-year basis. The profit-after-tax for the period was INR37 crores compared to INR41 crore in nine months of FY ’24. Our capital expenditure for quarter three stood at INR42 crore, while for nine months of FY ’25, it was around INR140 crores with investments directed towards machinery and new product development. For quarter-four, we expect further capex of around INR20 crore INR25 crore aligned with our growth initiatives. As we started FY ’25, we had guided for INR1,800 crore in revenue targeting 15% growth for the full-year after a strong performance in the first-half in the earnings calls last quarter, we had indicated that we witnessed softening of demand in export markets of Europe and US as well as in the domestic market.
Like we are seeing across the industry with other players who are supplying to the markets of Europe and USA, there has been a sustained weakness in the demand in Europe as well as uncertainty around the evolving dynamics of tariffs and regulations that the new resign may introduce in the US, which has made buyers and OEMs adopt a cautious stance. Further for Alicon, there were some customer-specific disruptions this quarter 8% de-growth in commercial vehicle segment on a Y-o-Y basis. As we progress through the quarter, a few headwinds begin to emerge. The sustained decline in the CV segment took a bearing on the volume offtake by our customers. This was accompanied by challenges in our export markets too. Supplies towards CV products and to customer and euro are among the categories with highest value-add in our business. Thus, even as we have added volumes in our two-wheeler business, the impact of top-line was not — was only partially offset.
So the European market witnessed a sharp drop-in commercial vehicle segment in-quarter three compared to the same quarter last year. As recently in-quarter two, trends were projecting sustained demand and the fall in volume has been fairly sharp, taking the entire industry by surprise. We have seen slightly elevated pressure in supplies to commercial vehicle customers and in Europe, one of our two-wheeler OEM customers faced some challenges during the quarter. Following this, we have completely stopped production. As a result, they paused volume offtake of parts being supplied to them from our facilities in India as well as from Europe. Coming to the India business, supplies continued to a leading Japanese OEM this quarter with consistent demand for four-wheeler cylinder heads. In addition to that, Elecon has received one more cylinder-head business, which will give us additional sales starting from financial year ’25, ’26, right? Volumes to India plant of a European OEM continued to ramp-up and as we have steadily scaled-up volumes to this customer over the last couple of quarters, we are now in talks to enhance the volume further. This customer is making its Indian facility into an Indian manufacturing hub, which will serve the domestic market and from which engine will also be assembled and exported to Europe.
So we are now in discussion to scale-up the capacities to align with the second phase investment by this OEM, which will see them double the monthly volume offtake. Interestingly, all of the incremental volume will be for onward supply to global markets. And with this expansion, we will be catering the demand from the new region within Europe, thereby indirectly servicing markets that we have not been present so-far.
A leading Japanese OEM continued to witness strong demand for their four-wheeler hybrid models in India. After the plant shutdown in-quarter three, we anticipate the volume to pick-up in-quarter four. In fact, over the next two years, the expectation is that the monthly supplies of cylinder heads will increase by roughly 80%. So does the strong outlook for production from two Japanese OEMs have good focus on hybrids coupled with scale-up capacity in the European OEMs, India plant argues well for the PVC so for another leading European OEM after supply initial volumes for their requirements from our European plant, we are scheduled to ship production into our India operation.
For this, we have established a plant in India and have already successfully submitted samples with small lot supply set to commence shortly ahead of their upcoming launch in-quarter three of calendar year 2026. Our state-of-art automation plant for this OEM integrates artificial intelligence, robotics and IoT to set new benchmarks in precision efficiency and smart manufacturing. Featuring cutting-edge technologies purchased robotic arms for enhanced accuracy and safety, advanced digital process control for real-time optimization and machine intelligence for data-driven decision-making, the facility aligns with global best practices to meet the evolving demands for our customer and their product requirements., by embedding AI and IoT into our operations, we have significantly enhanced the productivity while reducing rejection rates, ensuring a more efficient and responsive manufacturing ecosystem.
While upfront investment in automation have led to higher depreciation and fixed costs in the short-term, which are not being fully recovered at present due to the low-volume in the initial phase, these advancements position us for the long-term scalability and operational excellence with an elevated margin profile as production volume increases. Now coming to the business wins. In-quarter three, we have added seven new parts from seven existing customers. This includes four parts from ICE segment, one part from structural and two-parts from the non-auto business, right? Of these seven parts added, five parts pertains to the domestic business and two-parts pertain to international business. In India, we have won business from the leading Japanese OEM for a product set to be launched shortly.
Traction with two-wheeler customer is strong for product category to ice technology. We have also won an order for the structural part for a leading two-wheeler supplies in India, right? The two-parts for the international business cater to requirements of marquee global customers in the non-auto segment. Looking ahead, our total new order booking stand strong, providing good visibility for future growth. On this note, we can open the floor for the questions.
Questions and Answers:
Operator
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 their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. We have the first question from the line of Yash Bharat Dalal from Sushil Financial Services Private Limited. Please go-ahead.
Yash Bharat Dalal
Hello, sir. Good afternoon to the management. So just a few questions from my end. Firstly, in terms of the margins, of course, they’ve been compressed this quarter. So I want to understand from the expenses, are there any one-offs in this quarter that we won’t be seeing in the coming quarters.
Vimal Gupta
So yes, if you see that the mainly if you review the results, so major impact has come from the gross margins, where this is due to the change in the sales mix where we have — we have seen the reduction in the volumes of the high-value addition parts and increase — some increase in the volumes from the two-wheeler parts where margins are low. That is the major impact. But when we are talking about expenses, so definitely as a company, we are taking lot of actions for further cost reductions. But one-time, yes, there is some costs we have absorbed due to the — some issues we have seen with one customer, is a global customer. So there we have to absorb a one-time cost there.
Yash Bharat Dalal
Okay, okay. And what is the impact of these development costs and your — for advanced technology and your new lines in Q3?
Vimal Gupta
Yes. When we are talking about this, so when we are talking — earlier we are discussing that the new — the EV parts, the EXS we are developing, so that development is in now full string and it is a very critical part. And due to that lot of what we call challenges we face in this development, right? So due to the criticality, so failures, rejections, all this and then we have to do a lot of experiments on that too for the development. So those costs are there.
Yash Bharat Dalal
Okay. And you had mentioned about your capex, what kind of capacity will it be adding?
Shyam Agarwal
So that I think this major capex is going on for the EV parts that developments are going on and hopefully because this will give additional approximately INR200 crores to INR300 crores, INR250 crores to INR300 crores in that range of energy capacity in the next coming two years.
Yash Bharat Dalal
Okay. Okay. And coming for — to your order book here, what is your total order booking for FY ’25 and your overall till-date if you could quantify this?
Shyam Agarwal
Yeah. So our order book is around INR9,000 crore as on today. So we have added in this quarter also the seven parts, which is almost INR500, which is almost INR500 crore turnover from the new order. So if you see this with the INR9,000 crores, so we have almost run-rate of — we have covered for next five years as far as our current turnover is.
Yash Bharat Dalal
Okay. Okay. Thank you. And can we still — you had mentioned earlier in your previous calls that of INR2,200 crore topline by FY ’26, does that still stand? And what is the outlook beyond FY ’27?
Vimal Gupta
So yes, we feel that because now we have to just keep our fingers crossed and how this — the geographical challenges we are seeing. So let’s see how the things are moving, but definitely, it looks difficult because now the numbers are softening in this year. And when what we were talking about, those were the original, I think three, four years back, we have took that target and due to some delays what we are seeing from the EV OEMs so maybe that we need to by at least one year.
Yash Bharat Dalal
Okay. So by FY ’27, okay. Okay. And just one last question. Could you please provide an outlook on your EV and export business
Shyam Agarwal
First, I complete the previous one. So we have our budget making exercise, which is going on and it will be completed by second week of the next month. So maybe in our next investor call, we will give you the more idea on the next year turnover. So that will be more logical from our side, Yash. Just to cover that. Yeah. What was your next question, Yash?
Yash Bharat Dalal
Just your outlook on your EV and export business.
Shyam Agarwal
Yeah, yes. So as you know, the EV is not doing good globally. You know that we have taken lots of new order from the EV and currently we are seeing the demand is not very good in India and also on the export market. But we are very hopeful that in one or two years, the demand should pick up. And there we will see the good numbers from the EV for which we have put lots of efforts from our side and also lots of capex investment which we have done. So right now, if you see what we are getting just a minute I tell you, expect up. So EV currently covers 18% of our total turnover right now. And if we see the export, export is around 30% of our total turnover.
Yash Bharat Dalal
Okay. Okay. Okay. That’s it. Thank you for that.
Vimal Gupta
Thank you, Ash. Thank you. Thank you Yash for your questions.
Operator
Thank you. The next question is from the line of Ragunandan NL from Nuvama Research. Please go-ahead.
Raghunandan NL
Thank you, sir, for the opportunity. Can you help us in understanding the mix on a YTD basis for Nine-Month FY ’25, what would be the share of two-wheeler, four-wheeler commercial vehicle and how was the same mix last year?
Shyam Agarwal
Yes,. So two-wheeler currently contributes 40% of our turnover if we see and passenger vehicle around 38% and commercial vehicle around 15% of our total turnover. This is I am saying cumulative till quarter three.
Raghunandan NL
Thank you. And can you give a comparison versus last year?
Shyam Agarwal
Yeah. Yeah, last year to this year, if we see the two-wheelers. So last year the contribution was 42%, which has reduced to 40%. So passenger vehicle, which was 32% last year, now it’s 38% and commercial vehicle, as you know, globally it is coming down. So last year it was 20% and this year it is 15%.
Raghunandan NL
Understood. And specific for this quarter, how much would be the two-wheeler
Shyam Agarwal
This quarter — quarter three, it is 36%, the two-wheeler contribution, and sorry, it is 43%.
Raghunandan NL
Got it, sir. Thank you. So in terms of exports, the share of export has gone down to 24 versus 28 last year. Within exports, what would be the rough share of Europe and North-America and how much has been the decline in both these regions YTD.
Shyam Agarwal
If you see Europe contributes Europe and UK, they contributes almost 65% to 70% of our export and 30% 35% is USA. But if you see in the decline side, so we have seen more decline in Europe if as compared to the USA.
Raghunandan NL
Understood. And as you indicated that it’s better to be cautious as of now, but what is the sense you’re getting based on your interactions with customers, how long do you think the weakness can continue and when do you expect a recovery? And relating to that, you are obviously working on strengthening your presence in overseas markets, negotiating order wins, hiring more people in marketing and also diversifying into new segments. So if you can give some thoughts as to how you see this segment pan-out over the next one to two years.
Shyam Agarwal
Yeah, Ragu, if you see the macro-environment right now, so we are seeing the worst was quarter three, if you see the global indicators. So we are seeing there should be a recovery in the global market as well as in the domestic market. Here we see the faster recovery or the holding will be more in the North-America, which while the euro build — still takes some more time, the sentiments in Europe is still weak as compared to the North-America. And if you see in the segment, so if we see like commercial vehicle will still be affected in Europe. And while the recovery will be more — much better in the North-America in the both commercial vehicle as well as in the passenger vehicle. If we see in the technology front, so we are seeing the hybrid will still do good in India. As well as we are seeing in North-America, the demand for hybrid is much better as compared to pure EV vehicles. However, everybody is anticipating there is a natural transition from ice to hybrid and then hybrid to EV. But I hope this should be more prominent in — after three to four quarterly later.
Raghunandan NL
Understood, sir. Vimal, sir, if you can indicate, you referred to that some upfront cost incurred relating to new lines. How much should be the quantum and is that likely to repeat in the coming quarter
Vimal Gupta
It is a decent amount because approximately we can say that it is in the range of INR4 crore to INR5 crores that we have lost for the development for the new projects. And definitely in the coming quarter also, maybe there will be improvement because no, once we start, then there is a huge impact of the cost and then slowly we start recovering that and the improvement in our operations, right? And we hope — there will be definitely decline in-quarter four, but the further impact we will see on continuous quarter-on-quarter basis.
Raghunandan NL
Understood, sir. So these are certain overheads, fixed-cost, which you have upfront started taking, and as the ramp-up happens for the new orders that fixed-cost absorption will happen.
Vimal Gupta
Secondly, you see that because now this is — you must-have seen that Alecon is having the biggest capex in this year in his — the history of last 20 years. And we are now developing the most critical part for the EV also. So these are the challenges we are having initially.
Raghunandan NL
Understood, sir. And in terms of business ramp-up in FY ’26, you referred to two Japanese OEMs, one European OEM, there is also one UK OEM. So like what is the kind of a you know SOP that can get added for FY ’26 based on your current understanding?
Shyam Agarwal
Yeah. Yeah,, so I’ll just highlight on that. So when we mentioned the new volume addition from the Japanese OEMs, so there we see a good traction on that. And I think with both the Japanese OEM, as I have mentioned in our con-call also, we see the volume will be picked-up almost 80% to 100% in next one to two years’ time. So that kind of a volume we are seeing. And same way for the European customer, whatever volume we are supplying, we are adding the capacity and the volume will be double by end of this year. So that kind of a volume, we are working on that. And as Mr Bimal mentioned, because of these addition in our capacity, we have done lots of capex, which is the highest in the history of Elecon, if you see. So we are seeing that from this quarter onwards, we will see the good performance from Elecon. Sequentially, it should improve on quarter-on-quarter basis.
Raghunandan NL
Got it, sir. Thank you very much. I’ll fall-back in the queue.
Operator
Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets Limited. Please go-ahead.
Jyoti Singh
Hi. Yeah, thank you for the opportunity. Sir, just wanted an idea on the order book side is that we plan to supply for Nata Motors, if you can highlight
Shyam Agarwal
Sorry, JD, your voice was not very clear, if you can repeat once again.
Jyoti Singh
Yeah. Sir, if you can give us idea on the order book that we have for the Tata Motors. So what update on that front
Shyam Agarwal
Okay. So, generally we don’t — we avoid with the specific customer detail on con-call. So maybe we can take your call offline. So specifically to the customer, we would like not to answer in this con-call.
Jyoti Singh
Okay. And sir, how is the margin we are seeing from the new
Operator
Ma’am, but we request you to change the mode on your device because it echoes a little in-between.
Jyoti Singh
Yeah, sure. So just an idea on the new business side, how is the margin we are seeing from the new business
Vimal Gupta
Generally, when we were explaining that when we are finalizing the new businesses, we always look for the better margins and the ROCE. So on that basis, we are finalizing. And yeah.
Shyam Agarwal
Also, I will — I would like to elaborate a little bit on this. So if you see the — whenever we take the order, it depends in which category we are taking, whether it is a two-wheeler, four-wheeler, it is a domestic export and what is the criticality of the parts. So based on that, the prices, the margins are decided and also it also affected by the competition, right? So generally, if it is more critical part, which we are expert to develop, we charge higher-margin, but if it is a very simple part for the two-wheeler, of course, the margins will be less. So it is as per the market demand and the criticality of the part, the margins are decided.
Jyoti Singh
Okay. Thank you, sir. And also sir, as we have a major revenue mix from India and — but a lot of issue that is going on the Europe and the US. So how is the demand we are seeing from the India business comparatively Europe and US
Shyam Agarwal
If you see like in India, we have grown by 6.6%, while Europe and USA, we have seen the de-growth. So of course, we are seeing the higher demand from India, not only in this quarter and also in the next quarter onwards that the demand from India will be higher. But as you will also appreciate that we also have to do the risk mitigation. And that was the purpose that we have developed more part for the Europe and for the USA and also for the various technologies like EV. We were the early movers in the EV. We developed lots of parts. But somehow EV currently is not doing good. But in future, of course, it will do good. And there we will see the fruits, what efforts we are putting right now or the capex we are putting. So we are very hopeful that in future, we will see a higher-performance, much better performance in terms of the top-line as well as for the bottom-line.
Secondly, we are also working on the skill level of our pupil. And also as Mr Bimal told, we are putting lots of efforts on the smart factory, which we have put in for the robotics, IoT and the AI, the use of AI. So that will also give us much better performance in the coming quarters.
Jyoti Singh
Okay. Thank you, sir. And sir, last question on the like geography side, side is not doing very well for us and for other OEMs. So are we planning to shift any plant to India?
Vimal Gupta
Judi, generally if you see, we are in the business of B2B, okay. So when we are supplying the part is going to the OEMs. And there, if they change the source or change the location, it needs lots of PPEP activity, the vehicle validation, lots of costs are there, right? So some of the customers do, but these practices are very less in the B2B businesses, considering the long-lead time for the development and the validation cost, right. Of course, as you know, India is a leading cost country. And because of lots of geopolitical issues, lots of OEM wants to source out of India. So we see the sourcing, of course, will increase out of India, but the resourcing is always a challenge considering the cost which is needed for the validation and the development of the.
Jyoti Singh
Okay. And sir, how much like currently capacity utilization across the plant, if you can give us the average
Shyam Agarwal
Yeah, Joti, currently, we are running if we specifically see the quarter three, so we are running at the capacity of around 70% to 75% 25%.
Vimal Gupta
Yeah. Because you know, we have dedicated facility for different, different parts. So some parts which we have developed, but it’s still in the ramp-up phase. So there the capacity utilization will be less. Some of the parts which are running in the full swing, the capacity utilization more. So if you see on the average term, it will be around 70% to 75%.
Jyoti Singh
Okay. Okay. Thank you so much. Thank you very much.
Operator
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Thank you. The next question is from the line of Devang Shah from Mehta Investment Intermediates Private Limited. Please go-ahead.
Devang Shah
Hi, good afternoon, sir. Sir, though, as far as EBITDA margin is concerned, as you were saying because of one-time expense, we have seen some kind of decline in margin and it was somewhere close to 9%. So moving forward, will you be come to your original territory of EBITDA margin with your new product mix somewhere close to 12% to 13% kind of range from coming quarter onwards and for coming years?
Vimal Gupta
Yes, definitely. I mean. This is the short-term jug that we can say that we got in-quarter three due to the change in the sales mix and maybe some one-time costs. So then you will see quarter-on-quarter the improvement and very soon that we’ll catch-up the numbers.
Devang Shah
Okay. And sir, what is the — as we did a heavy capex this year, what is the capex plan for next year
Vimal Gupta
I think that will be good that we — this discuss in the next — our call because at this moment, we are in the process of finalizing our budgets for the next year. So maybe and mid of March, we will be able to finalize it. So that will be the right time to give some idea about that.
Devang Shah
And sir, initially, you have mentioned that you are finalizing your budget. So as far as revenue growth and trajectory also, so you are going to highlight from a next con-call or next after the next quarter results after you finalize your budget?
Vimal Gupta
Yes. Yes.
Devang Shah
Okay. And last question, sir. Any kind of generally we are seeing that like I read somewhere because we are exporting some kind of auto incidiary to US as well. So because of such kind of tariff war emerging so-far started, do you feel there is some kind of opportunity also emerge from the global market, especially from a unit. And if I’m wrong — if I’m wrong, then also correctly, sir, if something is being misunderstood might be.
Shyam Agarwal
Devang, very right question. We are also keeping our finger crossed. We are seeing with the lots of things right now that tariff war is going on, new tariffs on the — some countries that is going on. Hopefully, India has a good relationship with the US. So hopefully, we should be benefited. But let’s see how it moves on. Maybe in one or two months’ time once we will see more clarity, then we will be able to answer you in a better shape.
Devang Shah
Okay. Thank you, sir. Thank you.
Operator
Thank you. Thank you. The next question is from the line of Mook Sharanka from Aurum Capital. Please go-ahead.
Moksh Ranka
Hello. Sir, I used to follow the company from 2018. We used to be exclusive supplier to HR and we — we were the ones who like the first designed their product. So are we — do we have any plans for supplying aluminum casting for their new models or also they are setting up a capacity which is close to our plant. So will that be a possibility in future?
Shyam Agarwal
You are talking about Toyeta, if not very clear.
Moksh Ranka
I’m talking about Energy
Shyam Agarwal
Okay. Mok, we actually — if you see, we are not pushing more sales for the two-wheeler considering the margin pressures and especially on the EV, right? So we are focusing more on the PV side, the commercial vehicle, that’s why if you see the contribution for the different segments, so we are you putting more focus on the PV and the CV. So currently, the two-wheeler EV is not our focus area
Moksh Ranka
Okay. Okay. Okay, that was my only question. Thank you.
Operator
Thank you. The next question is from the line of Faisal Hawa from H.G. Hawa. Please go-ahead. Sir, we are talking of this order book of around INR8,000 crores — sorry, it’s INR9,000 crores now. Is there some deadline to the orders being completed? A nd would it be a right expectation that in three years from today, at least our revenue will be doubled from what it is today
Shyam Agarwal
Thanks for the question. But you know, for the revenue guidance, as Mr Bimal said, we are in the middle of budget preparation. So maybe in the next call, we will be in a better shape to give you the idea on our revenue for the next year and onward. However, as we have mentioned in the con-call, we have a strong order book and we will see a good growth in the top-line as well as in the bottom-line. But right now, it’s very difficult to give you the numbers on that.
Faisal Hawa
But there must be a deadline to these orders, it like some perpetual orders.
Shyam Agarwal
Yeah, it is for the five years till 2028, ’29.
Faisal Hawa
Okay. So we have to complete them by then.
Shyam Agarwal
Yes, absolutely.
Faisal Hawa
But it will not be very nice — very regular uniform progression of the orders being completed. In some years, we may have some very good execution also. In some ways, the call-offs may not be so good.
Shyam Agarwal
No., if you see like this is for the — mainly for the OEMs in the automotive market. So generally a project for any OEMs, it is the life of five years — seven years like this, okay. So when we get any order, it is for the lifetime of the project, right? Okay. So it will be a consistent supplies from our side and there will also be the end of production for some of the products. So we will get the new businesses, we will supply for the new models and some old models that will discontinue. So it is like it will go. So it is based on the product life-cycle that we will have
Faisal Hawa
One customer — is there one customer which who is contributing to almost more than 20% of the order book today?
Shyam Agarwal
No,. We have very, very balanced our customer portfolio. And right now, none of our customer contributes more than 20% of our turnover.
Faisal Hawa
And sir, there was this project within the company to increase the ROCE and ROE of the organization. Have you made any kind of progress on it? And if not, how soon can we expect some progress on this?
Yash Bharat Dalal
Some progress is going on maybe if you see year-on-year last four, five years. So there is a continuous improvement in the ROCE and definitely this is on and quarter-on-quarter basis, maybe this is the worst quarter we have seen in this quarter three. But after that you can easily see that there is a continuous improvement in the ROCE.
Faisal Hawa
Thanks a lot, sir. I appreciate you answering my question.
Operator
Thank you. We have a follow-up question from the line of Joti Singh from Arihant Capital Markets Limited. Please go-ahead.
Jyoti Singh
Yeah. Thank you for the opportunity. Sir, just a clarification on the guidance side. We are keeping INR1,800 crore INR2,200 crore for ’25, ’26 or any changes on that side?
Vimal Gupta
Joti, for 1,800 that in my speech, I’ve already explained that maybe some — we will not be able to hit the exact number, maybe some decline in this because this certain decline in the CV demand quarter three. And for next year, the guidance, so we are just finalizing our budgets. So that we’ve explained that in the next con-call that we will be able to give the more clarity on this.
Jyoti Singh
Okay. And also sir, we are doing any changes in our strategy because earlier like till now we are focusing more on the PV side, but still Q-on-Q mix has been changing and more favourable to wheeler. I know demand is good from the two-wheeler side, but still we are shifting again on the two-wheeler side. So what’s your view on that side
Shyam Agarwal
Joti, our strategy is for the long-term. It is not for the 1/4 or the two-quarter, okay. It may happen in 1/4 or two-quarter, one particular segment can do good. But we define our strategy on the long-term. And in the long-term, our firm belief is that if we focus more on the passenger vehicle or the new technologies like hybrid or the EV, there we will get more fruits in the future. And with that, we are working. So right now also, we don’t have a change in any strategy to put more focus on the two-wheeler. Of course, two-wheeler is important to cover the fixed costs so that we are doing. But our ultimate gay plan is to put more focus on the passenger vehicle, commercial vehicle, EV hybrid and the export market. So those are our focus areas.
Jyoti Singh
Okay. Thank you, sir. And sir, on the — like can we talk a little bit on the Mahruti side with the new plant Gujarat, how is the progress is going? And also the — how is the order execution that is going on? If you can explain on that side, it would be helpful
Shyam Agarwal
Okay. Okay. Okay., I would say like Marti Sujuti, as you know, they are the leading four-wheeler company in India. And we have a very good MEK1 relationship, very strong relationship with all Japanese OEMs, including market security. So I would say in this call not specifically for one customer, but we have a strong relationship and we are seeing that very good volume growth we will see in the coming quarters with all OEMs and also with the markets.
Jyoti Singh
Thank you, sir.
Operator
Thank you. Participants, you may press start and one to ask a question. We have the next question from the line of Manus Jain from JUS Enterprises. Please go-ahead. Yeah, hello. This is Manus here. So just looking across the prior quarters for last orders from FY ’21 to FY ’24, what — and we had given similar product mix in FY ’21, ’22 and still our gross margin and EBITDA margin was at least around 10% to 11%. So what — I mean, what is explaining this? I was trying to the data from all the angles, but I still can’t understand how we have gone to 8%. Within the worst of times we were there around 10% to 11%. So there is something I want to management to at least help us understand what led to this is such a bad fall.
Vimal Gupta
You know mainly the raw-material cost is going up when you see — made the comparison for the last three, four years. So when you’re talking about from ’21, the prices of aluminium have gone up, but not the value additions not grown in the same proportion. So automatically, the ratio goes up of the raw-material. And as a percentage, the margins goes down. And when we have built-up in the last year, last two, three years, we have started building up the margins based on the bringing the new businesses from the commercial vehicles and the passenger vehicles. So that is the main reason that we have built-up and reached up the gross margin of 51% — more than 50%, right? And when we go to the two-wheeler or maybe that mix also, when we are talking about it is not likely only two-wheeler and four-wheeler. In the four-wheeler also, there is a mix. So where some parts, especially the commercial, we are having a very good value addition, the gross margins. So that has given a big hit when we saw that approximately how much 30% decline in this — in this quarter. So that has given a major impact.
Manas Jain
So when you’re saying we had 5% fall in the CV volume, so when we compare as a percentage to the sales, so that 5% had the severe margin impact. Is this — is my understanding right? It had such a severe impact one quarter-on-quarter.
Vimal Gupta
So it is not 5%, 30% I’m talking about commercial vehicles. And then the where the export two-wheelers were having the good margins. So that is — there is a slowdown.
Manas Jain
Okay. And also, I mean the second question where we said that Toyota there was some shutdown to which we had an impact on that too. So what will be that impact and will it flow-in the next quarter if there is — I mean, if the equity starts again?
Shyam Agarwal
Yeah, okay. One less. So for this particular customer, of course, there is a year-end shutdown is there and in-between they stop the production to increase their capacity, okay. So now that shutdown is over and from this quarter, from January, we are seeing the regular offtake from their side. And with their plan, you know we are — we are seeing that demand should further increase in next two years’ time, we will see the 80% increase in on the volume front from this particular customer.
Manas Jain
Okay. Okay. But what was the impact this quarter just for bookkeeping purpose
Shyam Agarwal
We generally — Manas, in this con-call, we don’t give the specific number for particular customer. We can discuss it offline. Thank you.
Manas Jain
Okay. Fair enough. Thank you.
Operator
Thank you. Ladies and gentlemen, we will take that as a last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Vimal Gupta
Thank you. As we have shared, we remain confident of an improved performance going-forward. Our deep engagement with customers and the growth plans they have indicated, indicating providers comfort that we will see increased volume from quarter-four onwards with our process expertise, backward integration in design and engineering, combined with focus to enhance manufacturing capabilities with addition of newer technologies, our focus is on strong execution of the orders on-hand. We also believe the quarter three marked the bottom of the secularity in the industry and that there will be an improvement in export markets of Europe and US as well as an enhanced demand environment in India. This will ensure that our revenue and margins performance will improve going-forward starting with a sequential improvement in-quarter four and further building up into FY ’26. Our association with MK positions us well to optimize the opportunities ahead. I hope we have been able to answer all your questions satisfactory. Should you need any further clarification 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
Thank you. Thank you. On behalf of Alicon Castral Oil Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.