Alicon Castalloy Limited (ALICON) Q4 FY23 Earnings Concall Transcript

Alicon Castalloy Limited (NSE: ALICON) Q4 FY23 earnings concall dated May. 18, 2023

Corporate Participants:

Vimal Gupta — Group Chief Financial Officer

Shyam Agarwal — Chief Marketing Officer

Andreas Heim — Managing Director, Illichmann Castalloy

Rajiv Gupta — Head of Domestic Business

Veerababu Siddineni — Chief Operating Officer

Analysts:

Mayank Vaswani — CDR India — Analyst

Yash Dalal — Sushil Finance — Analyst

Raghunandan — Nuvama Wealth — Analyst

Rahil Shah — Crown Capital — Analyst

Aditya Chheda — InCred Asset Management — Analyst

Dixit Doshi — Whitestone Financial Advisors — Analyst

Rohit Ohri — Progressive Shares — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Alicon Castalloy Limited Q4 FY23 Earnings Conference Call. [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.

Mayank Vaswani — CDR India — Analyst

Thank you, Tanvi. Good day, everyone, and thank you for joining us on Alicon Castalloy Limited’s Q4 and FY 23 earnings conference call.

We have with us on the call today Mr. Vimal Gupta, Group CFO; Mr. Veerababu, Group COO; Mr. Shyam Agarwal, Chief Marketing Officer at Alicon Castalloy; Mr. Andreas Heim, Managing Director of Illichmann Castalloy; and Mr Rajeev Gupta, Head of Domestic Business of Alicon Castalloy Limited.

Mr. Vimal Gupta will cover the financial performance for the quarter, following which Mr. Sharma Agarwal will walk us through the operating highlights. In order to share the developments in both the global and domestic markets. Mr. Andreas Heim and Mr. Rajeev Gupta will provide insights on these areas. Following the comments from the team, our Group COO, Mr. Veerababu will give us a brief summary of the quarter gone by and cover the strategic imperatives. 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 maybe 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 — Group Chief Financial Officer

Good afternoon to all our investors. Thank you for taking the time out to sign our earning call. I trust that all of you have had a chance to review our earnings document which was shared on 16th May. As we have indicated earlier, 2018, 2019, was the best year in the last few years for the global auto industry. Our assessment is that the domestic industry has led the performance level of approximately 84% in the financial year 2023, of the level-set in 2018-2019. While the international auto industry is at about 88% level in calendar year 2022 of the base achieved.

At Alicon, our revenue performance in the financial year 2023 is around 130% of the benchmark that we had set in 2018-2019, clearly showcasing a different trajectory of performance when compared to global and domestic auto industry. This has been driven by the addition of new parts, as well as the new customers. Our growth and transformation steadily over the last five years has been validated as we have reported our highest-ever annual revenue of INR1,405 crore in FY23, even in the backdrop of significant volatility over this period.

The envisaged business transformation involves a strategic focus on multiple avenue for growth, which we have categorized into five pillars. These pillars continue to scale products in the IT business, addressing the opportunities from carbon-neutral technology, including battery electric vehicles, hybrid electric vehicles, fuel-cell and hydrogen cell technology. Opportunities from structural parts or technology-agnostic parts, which remain consistent, no matter which fuel technology is used to power the vehicle.

Non-auto business encompassing opportunities from sectors such as defense, energy, telecom, to name a few, where our competencies can be leveraged, enhanced customer wallet shared through value add and combining products to offer customer one-stop solution. The programs we have experiencing can be attributed to the execution of our growth strategy. We have dedicated substantial resources to reshape our business model, becoming a more flexible and diversified organization that capitalizes on our key strengths.

Our international team has been actively engaging with customers, fostering deeper discussions to leverage our expedite in design, research and development and value engineering. Our proven track-record validates the effectiveness of our processes and our reliability as a supplier. This is supported by the continuous increase in our order book and the acquisition of new and renowned clients.

Moving on to the highlights of our financial performance for the fiscal year ending 31st March 2023. Alicon’s best ever annual revenues of INR1,405 crores in FY23 were higher by 30% year-on year basis, significantly surpassing the industry growth. Revenue growth was driven by enhanced volumes compared to the previous year and start of production in certain new products. This positive trend was further supported by the improved contribution from our international subsidiary, Illichmann. We also posted higher ever EBITDA of INR157 crores, higher by 36% year-on year. The EBITDA margin for FY23 stood at 11.2% against 10.7% in FY22, an increase of 46 basis points. New parts added with higher value addition has contributed to structurally improved EBITDA margin, profit after tax of INR51 crores is higher by 130% on year-on-year basis.

I am pleased to share that our Board of Directors have approved an interim dividend of 50% equating to rupees INR2.5 per share. This year, we have witnessed an improvement in ROCE to 12.7% for the financial ’23 from 9.1% in FY22. Our long-term rating by credit rating agency CRISIL has improved from A stable to A Positive.

I will now run through the financial performance for the 4th quarter. Total income of INR321 crore was flat on a year-on-year basis compared to quarter four of FY 2022. Further, this was lower by 12% on a quarter-on-quarter basis from INR361 crores in-quarter three. In quarter four FY23, our plant in India and Europe operated at utilization level of around 65%. In the quarter, we witnessed a decline in Two-wheeler volumes as OEMs reduced production schedules in order to transition projects in line with on board diagnostics, that is OBD term norms. This one-time regulatory implementation had an impact on our performance during this quarter. Further, the volatility witnessed in last two to three years drove customer to increase the inventory as they moved away from Just-in-time strategy. With the normalization of global supply chain, customers have moved back towards leaner inventory levels and this year is spent towards lower inventory levels has resulted in one-time softness in volume this quarter.

We also noticed that issues with semiconductors are yet to be completely resolved, while availability has improved significantly since this challenge first emerged a couple of years ago. There are still constraints in sourcing of semiconductors by global and domestic OEMs. However, gross margin has improved and this was supported by decreased prices of major raw materials and a more favorable product mix. We believe that input prices have passed their peak and are likely to decline moving forward. Despite some delays, we have observed pass-through impact of previous input prices increases and a better product mix, leading to improved results. This has positively influenced our gross margins for the quarter which was. 51.6% in quarter four FY23 compared to 50.4% in quarter four FY22, higher by 118 basis points. In quarter three FY23, gross margin was 49.3% and the quarter-on-quarter improvement in gross margin is 230 basis points, or over 2%.

The improvement in gross margin did not flow through EBITDA margins due to increase in power and fuel cost as well as other overheads, which have increased in line with the inflationary trend due to the initial stabilization, requirement of new products which have deferred certain cost upfront for new products in this quarter. As the product throughput is stabilized and volumes are enhanced, the unit contribution from these new will improve in the coming quarters. There was also a settlement of one old claim from the customer which resulted in one-time expense in the quarter four. As a result, EBITDA was at INR33 crores in quarter four FY23 with a EBITDA margin of 10.3% as compared to INR39 crores with a margin of 12.1% in quarter four of FY22. On the CapEx front, we have deployed INR16 crores during the quarter and have deployed total of INR52 crores during FY23. Our value addition to net block has significantly increased from 130% in FY 2021 to 160% in FY 2023. In FY24, we anticipate a a CapEx deployment of around INR90 crores.

Coming to the outlook. Following our highest-ever revenue of INR1,405 crore in FY23, we are poised to take the business to a newer and aspiring to deliver revenue of over INR2000 crores by FY25-26. That is the over a period of three years. Our confidence stems from the new orders which we have received and the discussions with the customers on new technologies and solutions. Notwithstanding the EBITDA margin performance in this quarter, we are confident for an improved margin outlook despite the 7C framework of challenges identified by us, including the post COVID impact that keep shortage issue, cost of new product and development, the conflict between Russia and Ukraine, global cost based inflation, supply chain challenges, as well as the challenge from from the recessionary environment, we have improved EBITDA margin for the full-year.

The increase in EBITDA level in FY23 over ’22 demonstrate the positive impact of enhanced value addition and a richer product mix. As previously mentioned, our target over the next three to four years is to raise the EBITDA margin to 14% through a combination of both initiatives and cost-efficiency measures. In summary, we are focused on sustaining the momentum and work to improve the financial and operational performance in the coming financial year. Our primary focus remains on enhancing margins, return ratios and optimizing our working capital cycle. We are confident of delivering healthy revenue growth with strong profitability growth in the upcoming fiscal year.

On that note, I would now like to hand over to Mr. Shyam Agarwal, who will talk about operating highlights for the business.

Shyam Agarwal — Chief Marketing Officer

Thank you, Mr. Vimal. Greetings to all of you. During the quarter, domestic auto industry witnessed moderate growth of 0.6% on Y-o-Y basis due to the OBD issues as well as the constrained chip availabilite. Within this, the brightest spots were passenger vehicles which grew 13% and commercial vehicle which grew 7% on Y-o-Y basis. The improved growth in BD was driven by increase in high-end segment, greater tourism activity as well as new launches.

In the case of commercial vehicles and heavy vehicles, factors such as increased infrastructure strength, mining activity and logistics growth helped to drive volume. In FY22-23, Alicon has booked new order aggregating INR1,700 crore. With this, our total order booking has reached to INR7,800 crores. Which is executable over a period of seven years from 2022-23 3 up to 2028-29.

In last quarter, we have received further new orders from some of our global customers, like Jaguar and Land Rover and [Indecipherable] pertaining to products in the carbon-neutral business. The commencement of supplies for these orders along with the start of production across our aggregated order booking will contribute to increase in revenue momentum. All of you would recall that we had announced one of our largest order win for JLR EXL Holdings in August 2022. I am pleased to share that innovative solutions provided by Alicon in co-coordination with our European arm in close association with JLR R&D team has enabled project to progress on-schedule with the start of production plants in the next year.

From the strategy perspective, we are progressing well on our key pillars. Our value addition mix in key pillar did well in the 4th quarter as the share of carbon-neutral business stood at 9%, structural products stood at 8% and non-auto business stood at 8%. We will give a balanced growth with improvement in all segments despite a volatile market environment. Another focus area for our value creation approach is to increase the value addition mix from our products for four-wheeler and CV segment. In FY23, we were able to reduce dependence on Two-wheeler from 41% to 38%, and increasing the share of four-wheeler business prior 49% to 53%.

In carbon-neutral technology, our focus is on passenger vehicles, commercial vehicles and export opportunities as we see a greater scope for value addition in these area. We see good traction with the motor housing products for Tata Motors as they are dominating the passenger EV market in India. We are also seeing encouraging numbers in commercial vehicle segment. As a part, we had developed with Dana are facing promising demand continued government support to develop cleaner public transport options. We also supply parts for Three-wheeler products to Dana, which is again showing favorable demand trends.

The export business is doing well as we are focused on increasing wallet share on the back of development of parts for customers such as Danfoss, Eaton [Indecipherable] we are in discussion on new projects and nomination in coming quarters. Our major customer JLR in structural part business witnessed fluctuation in production due to availability of chips, but with their initiative to diversify supplies, we expect improved volumes from them in the current fiscal year. My colleague, Andreas will walk you through the further development in the structure part, while Rajeev will cover development in the ICE and the non-auto business.

On that note, I would now. Like to hand it over to Mr. Andreas Heim to throw light on the global business. Thank you, Shyam. A warm welcome to all of you. I will briefly cover the development on our international…

Operator

Sorry to interrupt you. Sir, your voice is not clearly audible. I will reconnect your line.

Andreas Heim — Managing Director, Illichmann Castalloy

Yeah, okay.

Operator

This is the operator. We have the line for Andreas connected. Sir, you may proceed.

Andreas Heim — Managing Director, Illichmann Castalloy

Yeah, thanks, and sorry for the inconvenience. Thank you, Shyam. A warm welcome to all of you. I will briefly cover the development on our international business. We are slightly emerging from the challenging situation witnessed in the calendar year ’23, ’22. Business in Europe are steadily adapting on the challenging circumstances in some moderation in input prices, including gas, customs are now starting to operate at higher utilization levels. This has lead to firmer indications for products being supplied by us with revenues from our European facility growing. 20% on a year-on year basis.

One of our key customers. JLR, has requested an increase in volumes for key part supplies. While semiconductor or availability remains a bit of a challenge, we see better availability for high-end car, which has reflected in improvement demand and income from JLR for [Indecipherable] Bosch, which is a Tier-one supplier has also done and added new customers for their offerings. One of their end-customer is introduced in the automotive with a requirement [Indecipherable]

In Europe, it’s [Indecipherable] resumed demand for two-wheelers, typical in volumes during the spring season it needs to improve demand for structural part from Two-wheeler customers like KTM and BMW. We anticipate this continue through the summer months. Further, with the easing energy cost, they had some for households from the sharp inflationary pressures which can lead to better customer demand. Aluminum prices has also softened on the reduced cost basket should help our customers in reducing prices of the final product.

Apart from the increased activity from customers which we had anticipated and indicated last quarter, we also achieved increased our customer interactions and are seeking to work with customers on product is various solutions and products with several of our customers across OEMs and Tier-1 are working aggressively on the technology developments.

The overall business contributed to 21% of total revenue during the quarter and 22% for each period respectively. Apart from the improved customer sentiment which we’re seeing, we are also moving ahead with new teams to reduce costs. We have received approval for the investment which will help us to reduce energy costs and remain more competitive.

On this note, I would like now to hand over Mr. Rajiv Gupta, who will cover the development in the domestic business for the quarter.

Rajiv Gupta — Head of Domestic Business

Thank you, Andreas. Good day, everyone. The Indian automotive sector experienced volume growth of 30% in FY23 on a year-on year basis. However, this growth was largely front-ended and in the latter half of the year. There was some softness in growth, especially in case of two-wheelers as it was affected by the regulations related to on board diagnostics pass the OBD. Fortunately, there was better traction of 25% year-on year in passenger vehicles and 29% year-on year in commercial vehicles due to reasons mentioned by my colleagues. For Alicon, the sales growth from passenger vehicle increased 52% year-on-year and Commercial increased 59% year-on year. The contribution from our domestic business stood at 78% during the year. Going-forward, in the auto IT business we are seeking to increase the portfolio of the critical parts. In case of Toyota, we anticipate volumes to increase towards the end-of-the current financial year with a strong market response with new launches of Hyryder and Innova Hycross. We are further in discussions with the market-leader Maruti Suzuki on addition of further cylinder-head businesses. Progress on these fronts will enable us to deliver on our strategy to enhance the passenger vehicle part in our revenue mix.

In he non-auto business, we have further supplied towards our order of the prestigious telecom project under Atmanirbhar Bharat. During the quarter, we were awarded a tender from the Department of Defense for supply of VUs for the battle tanks and cylinder heads for the heavy-duty defense truck, for which we will commence dispatch in the coming quarters.

On this note, I would like to now request our Group CEO, Mr. Veerababu to share his perspective on the performance for the year.

Veerababu Siddineni — Chief Operating Officer

Thank you, Rajiv. Good day, everyone. Our FY23 performance represents a consolidation from the disruption of the last two to three years. We have stabilized our operations and we’ll look to build-on the momentum. One of the key achievements in FY23 has been the significant level of order booking which will feed our growth in the upcoming years. As shared by the Vimal JI, our performance in FY22-23 about 130% of the level of financial figure 2018, 2019, which was the previous high for global and domestic industry. We will build-on this further with the balance of the growth in the business across our five pillars.

Our confidence is built upon building of client engagement by levering on research and development, design excellence and value engineering. We have demonstrated to our customers of our deep value that we can provide them as a supplier. Another important element that we are focused on the deepest footprints on technology. We worked on automotive certain process of our operation — automate certain processes operations. We have been highly proactive by working on advanced technologies, especially for the cooling solution for EV segment. Another area of focus is to provide innovative solutions for customers in the area of complex parts pertaining to the cooling solutions for motor and the E-axle for our traditional methods. We have also made progress in developing a 3D printing solution for sand mol, enabling our customers the ability to quickly convert design into protypes, thereby comparisons the product development lead time.

We are also exploring friction building, which is highly recommended application in the area of EV for strong and high-quality jags This technology-based solution has helped us differentiate ourself across the global landscape. We are also actively working towards increasing our sustainability footprint and have commissioned our capital solar plant in India, while installation of solar panels at our facility in Europe will be completed this year. These initiatives will meaningful transform our energy mix.

On this note, I would now request to moderate to open the forum for any questions or suggestions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Yash Dalal from Sushil Financial Services, please go-ahead.

Yash Dalal — Sushil Finance — Analyst

Yes, firstly thank you to the management for this detailed breakdown after of short-term you’re gone back. So just a few questions. Your vision was of INR2000 crore revenue and EBITDA margin of 14% to 15%. Are we on-track to achieve the same and when could we see this happen?

Vimal Gupta — Group Chief Financial Officer

Yes, Yah. So for INR2000 crores, we are targeting by 26, so next three years to achieve that level. And definitely as we were explaining in our previous con-calls also improvement in the margin. So we are expecting to reach around 14% in the year of ’25’36.

Shyam Agarwal — Chief Marketing Officer

And to add on, basically we will achieve the sale of INR2000 crore, we are quite confident because if we see the portfolio for ’25, ’26, we have noticed around 84% business that we have already secured. Now, this from the regular and the new parts what we’ve added. So for achieving, we don’t think there’s any worries. Further we are trying how we can materialize.

Vimal Gupta — Group Chief Financial Officer

So only balance is 15%, 16% is the balance, so that we are receiving lot of new inquiries, RFQs are there and lot of new businesses under negotiation with the customers. So we are fully confident that we will be able to deliver these numbers.

Shyam Agarwal — Chief Marketing Officer

And second point, Yah, we are planning to increase as per the strategy where we get good margins. One is to reduce our dependency in two-wheeler and enhance our contribution with passenger and commercial. Second is to increase our portfolio in the carbon-neutral, structural and also to some extent on non-auto parts where we have higher margins. And 3rd is to increase our portfolio in the global market, where we can offer solutions and we can leverage over a competitive are basically a high good margin.

Yash Dalal — Sushil Finance — Analyst

Okay, thank you. And so for this INR2000 crore revenue numbers, what it would be like the revenue mix for two-wheelers, four-wheelers, new technologies like EV hydrogen export and non-auto?

Rajiv Gupta — Head of Domestic Business

[Indecipherable] bucket. So two-wheelers would be around 31%, the passengers will be around 36% to 40%, commercial would be around 20% to 25%. Non-auto, yes, it would be around 6% to 8% something of that sort. And yes general chunk we are capable in Three-wheelers also because we see a good momentum picking-up especially three-wheelers in the EV space. And the good thing is, Alicon has also entered in the space on it’s now materializing through development what we did with. We do the different portfolio mix which we categorize. At this moment the visibility we see, we have already confirmed with our planning roughly around 20% to 24% with carbon-neutral parts, ICE would play around 60 to 65. Non-auto, I’ve already explained. Structure also is our area where we are aiming. And that is where we have ordered a parts with Jaguar in the passenger vehicle. These solutions are really appreciated now with other players also in this space. And yes, we are doing quite good in the two-wheeler high-end bikes. So the good thing is, yes, we have the effects. with our European base with parts developments through KTM, BMW, Ducati which we have added last year, but now even in India we are noticing the trend of high-end bikes are coming up and that’s the reason we are noticing the OEMs like REML, Mahindra and also Honda, they are coming up with absolutely non structural portfolio. This also will further enhance our portfolio. But yes, we are planning to keep this portion from 5% to 7% because this is the area where I’m going to mitigate or levers because be a Two-wheeler, be a hybrid, be a ICE or be a electric, this path will remain dormant. So this also is a area where I will aim to increase my portfolio.

Vimal Gupta — Group Chief Financial Officer

Yes, important is that with the change in the sales mix, how it is moving. So earlier Alicon used to be having more than 50% contribution coming from the two-wheelers industry. So this year we have gone down from 53% that was in the last year, sorry in ’21-’22, so that has gone down to 46% in the last year of ’22, ’23. And now as part of our planning, by ’25-’26, we’ll be in the range of 30% to 32%. So the contribution from other sides like passenger and commercial that is increasing that bucket.

Shyam Agarwal — Chief Marketing Officer

Thanks, Vimal for your explanation. Basically we are catering to increase our sales content per vehicle. Actually If you see our two-wheeler component ranges from 1 kg to say three or four depending upon the PC of the vehicle. But we have more opportunity when its slower passenger vehicle or even more fortunately when we explore. So that is what we are aiming to increase the sales per machine.

Yash Dalal — Sushil Finance — Analyst

Okay, thank you. Just a couple of more questions. Could you throw some light on the — you lost cost in Q4 due to these new OBD RD norms and what will be the impact of this in the next few quarters this year?

Rajiv Gupta — Head of Domestic Business

Just as we noticed, the OEMs are very cautious. They didn’t wanted to repeat their issues what they faced when there was a transition from BS4 to BS5. And that’s the reason we noticed this very early in-quarter four when they started. They reduced their numbers. So our impact was roughly around INR30 crores to INR35 crores. But this is one-time. What we know very well. This is just a one-time hit. Now on from April we have notice impact from the last two weeks of March, we noted the volumes have picked up and now the OEMs are planning to build this inventory.

Yash Dalal — Sushil Finance — Analyst

Okay, okay. And also what is the volume growth in FY23 and the impact on realization due to the fall in commodity prices?

Veerababu Siddineni — Chief Operating Officer

So the revenue growth, which we have mentioned in the press also, we noted it was around 30%. But yes, we noted. the commodity prices also have fallen down. And with that we noted the effect of roughly around 50 to 55 crores. This would be roughly around 4% to 5%.

Yash Dalal — Sushil Finance — Analyst

Okay. Also could you provide guidance on the growth expectation for FY24 volumes and revenue going-forward?

Vimal Gupta — Group Chief Financial Officer

That I think in the last meeting also we have given approximately now. At this moment, we are expected to grow by 15% the top-line.

Yash Dalal — Sushil Finance — Analyst

Okay. Okay, thank you so much.

Operator

Thank you. The next question is from the line of Raghunandan from Nuvama Wealth. Please go-ahead.

Raghunandan — Nuvama Wealth — Analyst

Thank you sir for the opportunity. Congratulations on a strong FY 23. My fist question was on the demand-side. So there are two factors which are likely to positively support growth for FY24. First one, you have a strong pending order book. Can you indicate roughly how much new orders can contribute to FY24 revenues?

And secondly, one of the segments which I am hoping that should contribute to the growth is exports, because semiconductor supply seems to be gradually improving and companies globally like Volkswagen, Audi there something about growth up to 15% in FY23. Even JLR has sided for 24% volume growth in FY24. So if you can throw some light on both these factors, new orders and exports.

Shyam Agarwal — Chief Marketing Officer

So yes, firstly for new order booking of you see, this year we are planning to book roughly around INR700 crores from the new parts what we’ve added. Well, basically contributed from the passenger vehicle and the commercial vehicle segment. So if you see the total roughly around — so major can be from the passenger and commercial vehicles and also from the structural part. And the EV bulk what we have added. But we have also global OEMs how they’re going to support the new business of what we have added, especially from Jaguar. One is a the auto win which we have declared in August 2022 last year. So this we are working very closely to multiply this affect. Further is, last quarter we added one more part with Jaguar. This this we have explored one more opportunity. Ideally we were focusing on our motor housings, battery housing, inverter housing and the axel what we added. So these were what we have added — what we were targeting. But we noticed especially for the high-end cars, there are some structural parts also as opportunities which we can materialize, which recalls for process what we are into. So this is a good business what we added in last quarter with a heavy weight of roughly around 3o EV part and also with the good volumes of roughly around 80,000 a year. So this is also is with our strategy which we are aiming. So that was one with whom we are planning to increase our portfolio. Second is in Europe, USA and also we now have started Japan.

And good this, also we noted in last quarter we entered to even the China with this portfolio. Apart from this, there are other players in Europe, which is now the home with the products are under development right now. One is [Indecipherable] into big parts which talks about capability and criticality what Elicon is able to deliver. So these are bit flywheel housing weighing from 10 to 30 KV. [Indecipherable] We’re in discussion of a big orders, one order yet in the last quarter which we have booked. Further, we have strong discussions of materializing other portfolio in EV space. So with this we feel we have got a good opportunity to materialize the developments what we have added particularly from the global businesses, apart from yes, domestic, which already is there, which you have noticed with examples like [Indecipherable]motor housings for Tatas, hen PSA also is picking-up, we are working on.

Veerababu Siddineni — Chief Operating Officer

So Raghu. We conclude all this. So what are talking about for the numbers of the next year, current year of ’23, ’24, so this 15% is we worked out based on the earlier schedules shared by the customers, especially the global customers, they we are more focused. So now hopefully, because they are in the process of revising their schedules. Whatever you are saying that they are now revising on the upward side all their schedules, like either we talk about Volkswagen or JLR. So hopefully maybe in the next con-call or very shortly we will be able to revise our numbers also based on their revised numbers we received in the coming months.

Operator

Raghu, do you have any further questions?

Raghunandan — Nuvama Wealth — Analyst

Thank you, sir for the comprehensive answer. In other words, assuming underlying industry gross anywhere between 5% to 10%, and the new orders coming in addition of schedules happening, can we expect the upside risk to our current expectations?

Veerababu Siddineni — Chief Operating Officer

We hope so. Unless until we get some information in writing or some confirmed news from the customers for us also difficult to revise the number.

Raghunandan — Nuvama Wealth — Analyst

And sir, just wanted to check with you. Just clarifying what you said, Two-wheeler FY23 the share was 46%, is that correct? How much orders for EV CV.

Vimal Gupta — Group Chief Financial Officer

Yeah, that it was correct, 46% the Two-wheeler and ’21-’22 it was 53%.

Raghunandan — Nuvama Wealth — Analyst

And can you share for the other segments also?

Shyam Agarwal — Chief Marketing Officer

It was 35% last year what we ended-up and the previous year it was around 28%. Even in the commercial also we got a increase of roughly around 5% and toughing around 21% to 22%. The other neutral also we noted have increased. It was roughly around 7% and more they have added with the value addition. So I believe we are more of service towards the value addition what we are able to generate from these segments. So on value addition even the contribution was on a higher side. If we see non-auto, it was around 7% and technology-agnostic was around 7%.

Vimal Gupta — Group Chief Financial Officer

So here clearly you can understand that how the case mix is changing from the year-on year-on year basis and that is as per our our that we have planned earlier.

Raghunandan — Nuvama Wealth — Analyst

Absolutely, sir. And in terms of the investment in FY23, that was mainly relating to the captive solar plant, right, some INR27 crore kind of investment.

Vimal Gupta — Group Chief Financial Officer

Not for that. The total project value was because it is on a partnership basis. So our investment was 5 crores rupees for the equity here. That investment is for our maintenance CapEx, then new projects of PSA, there we have made a huge investment and the machining side as well as because new customers like Toyota or Maruti Suzuki or some other new customers are coming up. So they are testing requirement and are very-high. So we have to invest on that side.

Raghunandan — Nuvama Wealth — Analyst

Got it, sir. Just the last question before I fall back to the queue. Q4 you said that there is a one-time expense which was relating to, one was with preference to a customer where a claim settlement was done. So how much was the one-time impact in Q4?

Vimal Gupta — Group Chief Financial Officer

So that is around INR3 crores, so that comes to around 1% of the sales. So there was one issue was going up for last three-four years, so one-time settlement. So still not concluded. But we have made a provision for that.

Raghunandan — Nuvama Wealth — Analyst

Got it. So ideally, this should not continue in the coming quarter.

Vimal Gupta — Group Chief Financial Officer

Yeah, this is as one time settlement.

Raghunandan — Nuvama Wealth — Analyst

Got itt. Thank you so much. I’ll fall back in the queue.

Operator

She. Thank you. The next question is from the line of Rahil Shah from Crown Capital, please go-ahead.

Rahil Shah — Crown Capital — Analyst

Hello sir, good afternoon. My question is on the global business. You said you are looking to increase the portfolio, correct. So currently it is at 22% now. First. I wanted to ask, is this global business, is it in general a better business compared to domestic, let’s say for margins and profitability.

Shyam Agarwal — Chief Marketing Officer

Yes, because if you see now, one is domestic business have become more a commodity. There are lot of other players also. Now with so much of competition in domestic market, the buyers are very price sensitive. So they are like the players who are able to get a lower rate they will immediately shift to that supplier. So that we have noted. Unlike previously where we noted the OEMs were looking for a long-term partnership. And also as we are moving ahead with new technologies with new spend on R&D, we have also noted this must more in this space, particularly segments like two-wheeler and so on. And that’s the reason now we are shifting to more complex and critical and bigger and bolder path and that also we see a bigger possibility when we touch DOT. I believe you see the and passenger in Global its a huge number compared to India also. So that’s the reason we are trying to add more with the global this business. And with that, we are now they are increasing our travels also.

So on our global customers to bring this to increase and thereafter convert it into opportunity because we know very well. This is up starting with, be a OEM, be a Tier-1, we are aggressively working on new development via EV with advance technology when we talk about timing. And suppliers who is regular or very close can definitely grab this opportunity rather than who is just to have exploring the opportunities I think along from the customer.

Vimal Gupta — Group Chief Financial Officer

Just to conclude your questions. One is that was in India the Alicon presence is on the higher side. So what we can conclude that the maybe the business in India at saturation for those market maybe based on when industry grows. So on that basis we can see the growth or some new parts are coming up, but maybe some more opportunities in that EV segment. But on the global side the market is huge and our presence was vey small. So everywhere we have the opportunity. So based on this we see the big opportunity on the revenue side as well as definitely the margins are better than we made a comparison with the domestic market.

Rahil Shah — Crown Capital — Analyst

What can this number be of the split? From 22%, how much can you — so much you’re targeting, the split of revenue between global and domestic. Its currently at 22% of total revenues on a yearly basis. So how much you think we can scale-up.

Rajiv Gupta — Head of Domestic Business

We are ready to increase it to around 40% to 42% by ’25-’26.

Rahil Shah — Crown Capital — Analyst

And this FY24 topline you said 15% growth. But what about EBITDA margins. Currently at 11%, how much — what is your feeling about that?

Vimal Gupta — Group Chief Financial Officer

At least minimum 1%. growth we can see in the coming year.

Rahil Shah — Crown Capital — Analyst

Okay, okay. All right sir, no problem. That’s it for now. Thank you and all the best.

Operator

The next question is from the line of Aditya Chheda from InCred Asset Management. Please go-ahead.

Aditya Chheda — InCred Asset Management — Analyst

Hi, thanks. This is Aditya from InCred. So sir, what is the right way to look at this order book of INR7,800 crores. I’m assuming most of your execution is in FY25’26. So if you can explain how the order book will translate into revenues and how is it divided into recurring order book on new order wins etc.

And the other question on the margin expansion is that with this structural change in the business/so many mix for you. Is it the right inference that most of the margin expansion would be from the gross margins. And third question is on the capacity utilization as being close to INR2000 crores and most of the current CapEx being in maintenance and machining. Isn’t right inference that we would be offsetting close to 80% capacity utilization. And if yes, how are you thinking about adding more manufacturing capacity going ahead?

Shyam Agarwal — Chief Marketing Officer

First, the order book, Yes, with the rate success till now on new orders, we see better opportunity to book around 7,800 sales over seven years. If you talk about contribution, roughly around 33% would be from the EV parts where we were aiming. So that’s a good sign. Again, with the recent parts what we added, specially the big orders, around 6% to 7% would be from [Indecipherable] If we see that in terms of the segment bucket, about 30% to 54% will be from passenger vehicles. And that is which you have noted like the Toyota, the new launches what they have done, Hyryder and Hycross, is far better than anticipated at even though it is now asking us to increase the capacities as that of financials. So that’s good sign which we want to make.

Also PSA, you have noticed they have launched their vehicle. A good one with good competitive price. So this also we are trying to matterlike and this was even before domestic as well as the global business followed by Jaguar, the business is what we are success. A good trend will be there. And yes, commercial if we talk about. Till now roughly around 20 plus what we have developed with them. Few being very complex and complicated. This will help us with this opportunity And this is roughly 18% to 22% of the total order book what we have done on this area. Also, would it be — if you see this what we have booked roughly around 50% is from the global business. So that is also a factor, which will help us to increase our portfolio.

What was your next question?

Aditya Chheda — InCred Asset Management — Analyst

So with this structural change in the business mix, is it right inference that most of the margin expansion which we you are alluding to, that is [Indecipherable] would be from gross margins?

Vimal Gupta — Group Chief Financial Officer

Yes, we can see that at the end it will come from the gross margins.

Aditya Chheda — InCred Asset Management — Analyst

And 3rd was on the capacity utilization where we are close to…

Vimal Gupta — Group Chief Financial Officer

Capacity utilization, we can’t calculate theoretically like this, the way you are calculating because you know the diesel part depends on the price, criticalities, so we need some different type of machines maybe further some bigger size of the cutting machine some different process requirements from the customer. So on that basis we have to invest. And from where we have to automations. And we are explaining that now every 100% is coming, we are getting the machined parts. So we have to invest for the CNC machines also. So on that basis the utilization of 80% definitely, but we are expecting because overall utilization when we are even that cannot go beyond 82%, 85%, because 15% to 20% we have to keep for the business allocations. So we can expect that utilization maybe around 75%, that we can assume.

Aditya Chheda — InCred Asset Management — Analyst

Got it. and sir on the execution of this order book. So what is the right way to think about it. Whether more [Technical Issues] FY25-’26 or how should we think about revenues flowing from this on the execution side?

Vimal Gupta — Group Chief Financial Officer

So the important is that’s what Rajiv explained. That out of INR2000 crores, 85% business is already we are having the orders. S only now 15% that we can convert into around INR300 crores. So lot of new business deals are under discussion with various OEMs, especially on the global side. So I think grow there should not be any issue to deliver INR2000 crores by ’25, ’26. And definitely like earlier this Raghu Nandan he was talking about the additional, maybe surpass our projection. So they may also happen. But we can’t do at this moment. Totally depends on the schedules and how the market behaves in the future.

Rajiv Gupta — Head of Domestic Business

And if you see, that’s the reason that we don’t want to be dependent on a single customer. And that’s the reason we are with several customers with quite portfolio among different segments, different regions. When we talk about exports also, we have done with US, with Europe. UK, we added a major chunk. And now we are exploring further to increase in Japan and few opportunities which we explored in last quarter with China.

Vimal Gupta — Group Chief Financial Officer

One important point I would like to add about — we are more focused on the where we are having the higher-margin side because when we are talking about INR2000 crore and it is easy for us to even deliver more. Maybe we can talk about nearly INR2,200 crore also. But we are focused on what kind of part we are doing. So just for your information, last one year, the number of parts we have reduced from I think by 150 parts, under 90 to 315. So approximately 175 number of parts we have reduced from over bucket.

Rajiv Gupta — Head of Domestic Business

So we’re just trying to materialize and capitalize our resources on a efficient way, where even we can increase our portfolio with focused customer and getting good margins thereafter with the service what we provide. So that is what which we are aiming to support our customer base with, because if we are going to touch upon we need alternative. Definitely, we would not be able to support equally to all our customers. That is the reason where some of these strategies and we have noted this act was quite well and we need to show to materialize even the mobile effects in coming years.

Aditya Chheda — InCred Asset Management — Analyst

And my last question is on the working capital. This year also we have seen close INR60 crores has been structured working capital and with INR90 crores of CapEx for FY24, how is the cash-flow position considering — looking at high-double digit growth for the next couple of years. So this INR40 crores increase in that, how do you think about the funding position going ahead?

Vimal Gupta — Group Chief Financial Officer

So-far this year like based as per our budgeted cash-flow planning, so hopefully we’ll be able to reduce our debt by the end-of-the year. And on the other side when we are talking about the increase in the working capital. One part is that there is increased growth in the top-line by 30% that has a impact. There are some issues like when we are talking about some inventory correction by the customer. So we build p the inventory, so you could see that some increase in the inventory at the fund. So that will be utilized in the coming months. As well as some capital debtors are there, because lot new products we have developed and the purchase was done for the tooling. So that maybe they started making the payment. So hopefully next six to eight months we will be able to realize that amount also, that approximately around I think 40 crores to 45 crores from the customers. So we are expecting by end-of-the year by March ’24, we should be able to improve particularly on the working capital cycle as well as on the debt side.

Aditya Chheda — InCred Asset Management — Analyst

That’s it from my end. Congratulations on growth year.

Rajiv Gupta — Head of Domestic Business

Thank you, Aditya.

Operator

Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors. Please go-ahead.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Yeah, thanks for the opportunity. First, couple of question is regarding the revenue target what we are having, let’s say 15% growth and 1 percentage increase in the margin. If I see over last three quarters performance, the revenue is going down, let’s say INR377 crores in September, then INR360 crores and INR320 crores. Some of that may be also because of the reduction in the aluminum prices. So when you are factoring in 15% growth from the FY23 revenue, I mean are you factoring in, let’s say, if the aluminum prices go down further or this kind of growth you are anticipating due to the visibility of the order book. So how do we read this?

Vimal Gupta — Group Chief Financial Officer

That is a good question. First of all, we have already factored this commodity prices. So nothing — we’re not banking on the higher commodity prices. And like Rajiv had explained, the new order book. So in this year there is for further increase in the previous set of the il what new orders we have disclosed in the last two to three-year. So those are the main growth drivers for us.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. So you are confident of growth because last three quarters we have been seeing the revenue coming down.

Rajiv Gupta — Head of Domestic Business

Yes, so even we have base what the researchers are talking when the growth of the market for global as as the Indian automotive. What we have understood is almost all the regions globally are talking about an increase. The good time for us is, Europe, as the energy cost has come down and also the Russia-Ukraine war is about to come down. So we are hoping a good opportunity from our European location. This will support our exports to Europe and also a good opportunity to multiply for our [Indecipherable] That is one. Second is on the new parts what we we added, new parts and the new business also what we added will improve and this will multiply our sales thereafter.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Second question is regarding this order book what we give. So, let’s say, when — so, this order book from a client must be some rough estimates of, let’s say in FY26 we must be having some rough estimate that this much will be their volume. So, but it does impact some times due to the recession or any slowdown in the economy. So what kind of makes deviation from the order that client give one can expect?

Rajiv Gupta — Head of Domestic Business

Last year we anticipated roughly around — to book around INR500 crores from the new order wins and we just checked. We have closed roughly around for INR440 cores to INR450 crores. So this was roughly around 85% to 90%. I mean, it all depends upon how volatile the market is. And [Indecipherable] which we noticed because of the OBD, because some of the launches were affected with the regulation from the government and for some instance we see even that what initially the OEMs were targeted, in some area we noted it was shifting by a quarter and so. But yes, the good thing is we are able to achieve at least 85% to 90%. But going-forward, we anticipate this will be more than 90% of hit rate to achieve that.

Shyam Agarwal — Chief Marketing Officer

And secondly on the customer projection was the DLT. So he also see which all customers give us what schedule in the past and how much is the actual pickup by those customers. So whenever we change our business plan, we factor those numbers and then only we make to our business plan. So we generally go more realistic when we make our business plan.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. And just last one question you mentioned that we are seeing the Three-wheeler EV also picking up. So, in three-wheeler EV, is it ICE guys are aggressive or do you see when the new players are also coming just like the two-wheeler.

Shyam Agarwal — Chief Marketing Officer

It is both the cased. If you see the current ICE player who has also developed the EV vehicle, so, that are doing good and also new players are coming. So it’s a mix, but it’s still our thinking is whatever were the earlier ICE players, they will do good in the EV place.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay, okay, That’s it from my side. Thanks.

Operator

Thank you. The next question is from the line of Rohit Ohri from Progressive Shares, please go-ahead.

Rohit Ohri — Progressive Shares — Analyst

I just had two or three questions. The first one being related to the EBITDA margins. If we see that over the last 9, 10 years we have been at an average of 10.5% EBITDA margins. So what are these factors that give us this confidence that going-forward we will try to reach around 14% or maybe that kind of range of EBITDA margin in the next two to three years or so.

Vimal Gupta — Group Chief Financial Officer

And this as I explained that major impact is coming from the change in sales mix. So because you know that to, always there — it’s very difficult to negotiate or to work with the Two-wheeler because the commodity prices are going up. So now just shifting the main shift of the business from Two-wheeler to the passenger as well as the commercial vehicles. That is one. And on the other side we are moving towards the global business. So we are negotiating the good prices from the customers when we made a comparison from digesting customers in India. So there is a major opportunity to improve our margins, as well as the second is that the growth trend. So definitely the economy of scale that benefit we should get.

Rohit Ohri — Progressive Shares — Analyst

Okay. My next question is that if you consider the customer order book anticipation versus the real-world that as to what we work with our capacity, what exactly is the [Indecipherable] assuming that if the order book is INR100, then what sort of conversion can we do over like US time?

Vimal Gupta — Group Chief Financial Officer

Not understood business conversion, converting into the sales you’re talking about?

Rohit Ohri — Progressive Shares — Analyst

Yeah converting into sales revenue.

Vimal Gupta — Group Chief Financial Officer

This is what were talking about the order book it depends on what we are giving based on the schedule [Technical Issues] orders from them –, has already given the purchase order. So only the lead-time depends on the part and when there is a launch of the vehicle. So IT maybe one year or maybe some customers like JLR, so they generally go for the two years lead-time. And there is a increase in the volume year-on year they go. So all our notebook what we are discussing or we are declaring in in this con-call, so it is based on the schedules we receive from the customer.

Rohit Ohri — Progressive Shares — Analyst

Okay. So is it fair to assume that going forward you can grow at around 18%, 20% kind of CAGR growth over the next five years or so.

Vimal Gupta — Group Chief Financial Officer

Hope so with your blessings.

Rohit Ohri — Progressive Shares — Analyst

But then, do we have the capacity because last time I believe that we spoke about this greenfield…

Vimal Gupta — Group Chief Financial Officer

We cannot directly correlate with the order book and the existing capacity because it depends on the capacity and the kind of machine depends on the products. We are maybe 50%, 60% of the common things so we can utilize like the melting or casting but some different department for individual products. So that too, there we have to invest.

Shyam Agarwal — Chief Marketing Officer

And Rohit, also as a part of the operational improvements we also go for more capacity utilization by increasing the number by putting more load on the machine going for the higher-grade part. So those improvements also we do so that we can generate more revenues with the same capacity.

Rohit Ohri — Progressive Shares — Analyst

So I understand that part, we are reducing certain parts while getting newer parts every year, but then the thing is that we think that going-forward you’ll be making use of the property which is [Indecipherable] because the greenfield are projects which were there in the past it was delayed and it was a blessing in disguise that it got delayed, but then going-forward the things that you will be investing into this greenfield CapEx.

Vimal Gupta — Group Chief Financial Officer

At this moment, we have not planned because you know that when we go for the greenfield project, we have to start with the huge investment as well as on the fixed-cost side and then around that location, I don’t know maybe need three to four years. So we are more focused on how to increase our output or improve our capacity from the existing facilities. So even for the INR2000 crores what we are talking for ’25, ’26, our plan is to deliver from the existing facilities.

Rohit Ohri — Progressive Shares — Analyst

That helps a lot. Thank you sir. Thanks a lot.

Vimal Gupta — Group Chief Financial Officer

Thank you very much.

Operator

Thank you. This was the last question for today. I would now like to hand the conference over to the management for closing comments.

Vimal Gupta — Group Chief Financial Officer

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 of CDR India. Thank you once again for taking the time to join us on this call and we look forward to investing next quarter. Thank you very much.

Operator

[Operator Closing Remarks]