Bharat Forge Ltd (BHARATFORG) Q4 FY23 Earnings Concall Transcript

Bharat Forge Ltd (NSE:BHARATFORG) Q4 FY23 Earnings Concall dated May. 05, 2023.

Corporate Participants:

Amit B. Kalyani — Deputy Managing Director

Subodh Tandale — Executive Director

Analysts:

Amyn Pirani — JPMorgan — Analyst

Gunjan Prithyani — Bank of America — Analyst

Kapil Singh — Nomura Group — Analyst

Mumuksh Mandlesha — Anand Rathi — Analyst

Pramod Amte — Incred Capital — Analyst

Mahesh — LIC Mutual Fund — Analyst

Aman Agarwal — Carnelian Capital — Analyst

Rakesh Roy — Omkara Capital — Analyst

Godwin S. Fernandez — N/A — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Bharat Forge Limited Q4 and FY ’23 Results Analyst Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.

I now hand the conference over to Mr. Amit Kalyani, Deputy Managing Director, Bharat Forge Limited. Thank you and over to you Mr. Kalyani.

Amit B. Kalyani — Deputy Managing Director

Good afternoon, ladies and gentlemen. Michelle, thank you very much for the introduction. Good afternoon, ladies and gentlemen, and thank you very much for attending our Q4 and FY ’23 analyst and investor call. This is Amit Kalyani and I have with me members of our finance and strategy, business and operations team. So, I’ll quickly take you through highlights across the board and then open up for Q&A.

So if you look at our standalone business, we’ve had a record sales of almost INR90,197 crores in Q4 ’23 and INR7,573 crores for FY ’23, this has been a growth of roughly about. 21% on sales and this includes the pass-through of raw-material and other price increases that we have received. In terms of tonnage, it was about. 11% Increase. Our exports were at 550 plus million; EBITDA margin that is for the year, EBITDA margin was 26.2%, which is a 100 basis-points sequential improvement was due to product mix; PBT, is of course impacted by the finance cost and exchange loss. We see a normalized interest outgo of about INR60 crores to INR65 crores per quarter based on the current interest rates.

Passenger vehicle revenues have grown about 53% to INR1,307 crores for FY ’23 on the back of a 71% growth in exports. Aerospace has now accounted for 11% of industrial exports and more than doubled from last year and we expect that this will again grow at a healthy double-digit, 30% 40% plus number this year as well possibly even more. In terms of new order wins in the automotive — in the standalone business we have new order wins of about INR1,500 crores across the component business, and industrial verticals and we have successfully seen certain businesses now transition from incubation to harvest space such as defense, which I will talk about much more and aerospace also is now on a significant growth path and we are confident that the goal we had set of getting to INR500 crores, INR600 crores on an annualized basis is now within reach of a few years with very profitable business.

In terms of ESG, we’ve made progress across the board on ESG. ESG metrics have substantially improved, our ratings have improved. We are now a part of the first movers coalition the SDG Global Compact and we have include — we have also been recognized by our global customer European customers for ESG leadership. In terms of our overseas subsidiaries, we had an EBITDA loss of INR49 crores in the Q4 versus INR63 crores of last quarter. Utilization levels are beginning to increase as production stabilizes. Our aluminum forging facilities, in fact, are booked and over booked and we can move towards profitability with price increase and with ramp-up of our business.

Based on the performance in the last four or five weeks, we expect Q1 to be significantly better, than Q4 in fact, I would say that the European business should be in the black in Q4, Q1 sorry Q1, and the US business, probably from Q3 but we will see sequential improvement in all the businesses including the aluminum business every quarter.

Coming to GSA, we achieved a revenue of INR438 crores in the first year. We have won orders in excess of INR400 crores and we expect this business to ramp up very substantially over the next two years. We have got across the board interest from orders from our existing customers of Bharat Forge and some new customers also because of our relationship and our backing of this business and our acquisition of the new unit in Coimbatore called ISML and will close in the next two weeks. With this, plus the capex that we’re doing in Coimbatore in GSA and in ISML, we will double our capacity — more than double our capacity from about 40,000 odd tons to more than 120,000 tons in the next two years and our revenues will also more than double from what it was in the first year in the next two years also. This will be a very profitable business for us and a very good acquisition and pave the way for us to create a new solid vertical, which will allow us to grow and service our customers, both existing and get into new products and segments as well.

Also in this business, we are focusing on green business model. So we are going to create a green foundry by which we have the least carbon footprint, the least emissions most recycling, and be a supplier of choice to all our customers. Coming to the defense business, I think this is the biggest inflection point for our company. A business that has been charged by our management and developed over the last 12 years. All the IP for this is home-grown and developed in-house has now converted itself from a incubation to a delivery business, we have a order book of export orders of over INR2,000 crores and we have already received AON for 300 guns of the ATAG. So that means that in this year, the order for the ATAGS will also be placed. Besides this, we have significant orders on protective vehicles, return systems and components, and consumables across the board, both in India and outside, and this business will also now hopefully cross $100 million in this year and move to significantly higher annual numbers going forward with a profit — very solid profitability and return ratios. So, a business that we all are looking forward to, I think the light, we have reached the end-of-the tunnel and there seems to be a lot of light and a lot of opportunity.

In eMobility, highlights are there on the torque side we’ve sold over 1,000 bikes, more than 2.5 million kilometers and we have zero recall, zero safety incidents, and no issues with any of the regulatory side or the incentive side, we are receiving incentives because every part of our vehicle is made in India, except for the batteries which are imported and meets all the local sourcing norms and requirements as per the Government of India. We continue to look at expanding our business, ramp-up a new plant was just announced start of production six weeks ago and we will steadily ramp-up production and across get to the capacity utilization of about 1,500 to 1,800 bikes soon and then get to 2,000 and then beyond that.

Our focus continues to be to build competency, deploy product in the market, learn from it and build a scalable supply model for components systems and aggregates in areas where we are not even present today. So this is a completely new area the two-wheeler and three-wheeler area where we want to supply components, subsystems, and powertrains, and solution provider.

In terms of outlook, I think ’24 is going to be a seminal year for the company as we pivot from just components to products or from tonnage to technology as this transformation and momentum gains over the next two to three years, the positive impact on providing both growth and stability to the top-line will be evident. There will be many more legs for our business to stand on and more growth drivers for its overall opportunity and growth. As we look ahead to ’24, we expect strong growth across revenues, profitability, and return ratio driven by a course forging business both in India and abroad and amply supported by other platform businesses such as defense, industrial, and e-mobility. We believe that many of the railing overseas aluminum business is behind us and we expect them to contribute to improvement in ratios for the consolidated entity.

For the standalone business, the FY ’24 looks to be another good year driven by growth in the end-markets globally, ramp-up of new orders won over the last two-three years, and increase in market share across-the-board. Thank you very much.

I think we can take your Q&A now.

Questions and Answers:

Operator

Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions]. We have the first question from the line of Amyn Pirani from JP Morgan. Please go ahead.

Amyn Pirani — JPMorgan — Analyst

Okay. Hi, thanks for the opportunity, and thank you for the opening remarks on the newer areas and new revenue streams. I just had a question on the. Legacy business, especially on the standalone. The domestic truck business quarter-on-quarter growth seems to be a bit behind what we saw in terms of the sales, and it looks like there has been a lot of pre-buy. So how what is the outlook for that in the next few quarters, are we at the end-of-the cycle, or do you think there is more left in this up-cycle?

Amit B. Kalyani — Deputy Managing Director

I think Subodh will answer that.

Subodh Tandale — Executive Director

Yeah. Yeah, hi, so we — can you hear me.

Amyn Pirani — JPMorgan — Analyst

Yes. Yes.

Amit B. Kalyani — Deputy Managing Director

Okay, so you’re right, we saw some pre-buy in the last quarter and we were able to cross the INR400,000 as far as that’s why the JIB [Phonetic] is concerned but at this point, at least as we see in Q1 and the projections for the next one or two quarters, we see reasonably strong demand continuing and based on what we see and what we hear and what we experienced. We — there could be a couple of factors, one is, there are no inventories in the system. I think the retail sales have also been strong because of the pre-buy. So there is an expectation that there will be some rebuild of inventories in the system, the demand seems to be reasonable as well given all the intra-push and all of that. For the next three-four months there is a strong projections from everybody. In fact, we are seeing demand higher than Q4 as well at this point, of course, we are monitoring this carefully, but for now, this is what we see. So we are not seeing any letdown from a demand point of view as we speak right now.

Amyn Pirani — JPMorgan — Analyst

That’s good to know, sir, and similarly, if you can give a comment on the trends in the global truck business, so you’ve hit a INR500 crore-plus revenue in this quarter. How are the production trends going forward in your business in the next few quarters?

Amit B. Kalyani — Deputy Managing Director

As far as global business is concerned, if I look at the US, in particular, then the demand is still holding on, the production levels have not changed over, they’ve been pretty constant over the last 18 to 20 months and that continues, right now. I think in previous calls, we have also explained that the backlogs are still reasonably healthy. And as a result, truck builds continue. There are some challenges that the market is facing relative to supply chain, it’s not just semiconductors, it’s a couple of other things as well. So there is a certain up-and-down from that point of view, but somehow we are seeing production steady. And as a result, we are also seeing our demand is steady. We are also seeing some growth, in fact, like in India as well because we are seeing improvement in market share across the board and that is also a factor as far as Bharat Forge is concerned.

We see a similar condition in Europe, where the demand is holding reasonably strong, of course, in Europe, also there are some supply-chain factors that are affecting build, but by and large, the OEMs are still managing to build one way or the other. The expectation is rest of this year also will be reasonably strong like in the US and there is a strong optimism for next year as well to remain at similar levels. Although, now we have to monitor this literally month-by-month.

As far as we also play in South America, we are seeing some small declines in South America, but then in our case, we are going from relatively small base to a higher base. So for us, we see this as an incremental our business really. So overall, this is the view that we see of the world.

Amyn Pirani — JPMorgan — Analyst

Great, thanks.

Amit B. Kalyani — Deputy Managing Director

As far as the commercial vehicle is concerned.

Amyn Pirani — JPMorgan — Analyst

Yes, thanks thanks for the detailed answer. So it seems that we are still in a supply-type situation and demand really is not so much of a concern at this moment.

Amit B. Kalyani — Deputy Managing Director

Yeah, I would say demand is stable and we are catering to a stable demand, but we are also seeing growth because of market share.

Amyn Pirani — JPMorgan — Analyst

Great, thanks a lot. I’ll come back in the queue.

Amit B. Kalyani — Deputy Managing Director

Thanks.

Operator

Thank you. The next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.

Gunjan Prithyani — Bank of America — Analyst

Yeah, hi, thanks for taking my question. My first question is on these overseas subs-losses. Now, if I recall, last quarter you laid out the utilization in the new plants in the US is about 20%, 25%, could you give us a little bit more color on where we are in terms of utilization rate and what’s really ailing the business, is it the operating leverage being low or is it just the cost have elevated so much that it needs renegotiations with the customer base. A little bit of color as to how we should see that.

Amit B. Kalyani — Deputy Managing Director

Very simple. There are two issues, one is we have to ramp up production and we have to increase prices, okay? The prices have on average gone up by anywhere between 25% to 30%, in some cases even 40%. So we need to get that price pass-through. And the second is, we need to grow our topline. So those are the two issues.

Gunjan Prithyani — Bank of America — Analyst

And where are we on the utilization like versus [Indecipherable]?

Amit B. Kalyani — Deputy Managing Director

We are close to 50% now. So that’s not really a bad level. So the issue is the price. Please understand. When your production increases and your cost is not recovered, you have a bigger problem but we are now got cost recovery from several customers, few are pending and that will all get closed out by about another month and a half or so.

Gunjan Prithyani — Bank of America — Analyst

Okay sir, by the second half of this fiscal, we should see the — this business.

Amit B. Kalyani — Deputy Managing Director

We should see black numbers in this next quarter. US I’m very hopeful, the quarter after that.

Gunjan Prithyani — Bank of America — Analyst

And how about the medium-term target, that is the low-teen EBITDA margin [Speech Overlap]?

Amit B. Kalyani — Deputy Managing Director

That still remains, that still remains. Mid-teen EBITDA margins still remains.

Gunjan Prithyani — Bank of America — Analyst

But that’s something that we should be looking at for next year once the full year?

Amit B. Kalyani — Deputy Managing Director

Next year area maybe towards the second half of next year, yes.

Gunjan Prithyani — Bank of America — Analyst

Okay, got it. My second question is on defense. No, clearly you this is one business which is surprising positively in terms of the way the order book is building out. Now can you just share as to how we think about the revenue scale-up where we are right now in F ’23 and do you see this going to INR1,000 crore, INR2,000 crores, some guidance at R&D revenue?

Amit B. Kalyani — Deputy Managing Director

I think we should be above $100 million this year, that is our goal. And obviously, next year we want to grow that quite substantially because this year till December we will have production happening in our existing facilities and our new mega plant will be ready by January-February of next year of FY ’20, I mean, January 20 — January-February of ’24, so by March-April of ’24 that facility will be ready for production and that will be a quantum jump in our capacity, we will have almost three times as much capacity as we have today.

Gunjan Prithyani — Bank of America — Analyst

And in terms of profitability, it’s fair to assume that it won’t be dilutive at the, I mean at the console level, when the revenue starts scaling up?

Amit B. Kalyani — Deputy Managing Director

I think it will be positively surprising for everyone is the difference. These are our products. These are not something that we are not contract manufacturing or someone else’s IP that we’re doing.

Gunjan Prithyani — Bank of America — Analyst

Okay.

Amit B. Kalyani — Deputy Managing Director

So we control the IP, we control the entire value chain, so I think we will have a good control over the numbers as well.

Gunjan Prithyani — Bank of America — Analyst

Okay, got it. Just last one from me. This whole inorganic and acquisition is something which is totally we’ve made small acquisitions, but it seems like there is also a talk of making large acquisitions on the defense side. Any thought process around how will we approach inorganic opportunities which streams it would be it will help us think through because I mean, that’s something that clearly came as a surprise to us.

Amit B. Kalyani — Deputy Managing Director

I don’t know what you’re talking about, but we’re not looking at any large opportunities. We will only look at opportunities, which are platform opportunities like JSA which provided us complementary business area where we could A, enter some new segments, and also provide products and services to our existing customers. So one of the things that we will do is look at bolt-ons to JSA like we have with ISML and many others so that we are able to grow our capacity there, leverage the strong management and technology that we have in increasing our revenue and profitability fast. There is no plan at all of buying any — anything else complicated or anything else, for sure. I’m definitely not going to buy anything outside of India. I think India is the best place for manufacturing and the whole world is coming to India. So this is where we will look at acquisitions and growth going forward.

Gunjan Prithyani — Bank of America — Analyst

Got it, thank you so much. That’s good to hear.

Operator

Thank you. The next question is from the line of Kapil Singh from Nomura Group. Please go ahead.

Kapil Singh — Nomura Group — Analyst

Yeah, good afternoon, sir. Just a follow-up on defense. This $100 million that you’re talking about. This include artillery guns as well, right?

Amit B. Kalyani — Deputy Managing Director

So this is our total revenue. In rupee terms will be over $100 million. This will include everything that we do in defense including artillery guns. Yes.

Kapil Singh — Nomura Group — Analyst

Okay. Can you also let us know, how the defense orders are done — guns orders will roll in going ahead, is there, every year there is AON issue. How does?

Amit B. Kalyani — Deputy Managing Director

Right now, Kapil, there is a AON for 307 ATAG gun. The RFQ will come out very soon and then the whole order process will go through but the guns are approved. They have finished all their trials and they are ready for induction based on the process being completed.

Kapil Singh — Nomura Group — Analyst

And sir, this 307 will be over what period?

Amit B. Kalyani — Deputy Managing Director

That is over a four-year period from the first year of supply.

Kapil Singh — Nomura Group — Analyst

Okay. And then rolling basis and every three or four years update to come on this, right?

Amit B. Kalyani — Deputy Managing Director

See, the total requirement is huge, okay. This is only a initial order.

Kapil Singh — Nomura Group — Analyst

Understood. Secondly, can you share an update on the industrial business, both in India and overseas? Also the oil and gas business, what is the outlook there?

Amit B. Kalyani — Deputy Managing Director

Oil and gas business outlook is steady, it is better than last year. Industrial business is growing. Thanks to a lot of boost of the renewable energy sector and The Make in India and China Plus One, a lot of those companies are moving into India, plus the fact that India is the only country where infrastructure development is taking place at such a pace. I think India is the place to be for industrial sector and this is where a lot of growth is going to happen. We expect to continue double-digit growth in the industrial sector as overall including both forging and casting.

Kapil Singh — Nomura Group — Analyst

Okay, thanks a lot, sir.

Amit B. Kalyani — Deputy Managing Director

Thank you.

Kapil Singh — Nomura Group — Analyst

Wish you all the best.

Amit B. Kalyani — Deputy Managing Director

Thanks.

Operator

Thank you. The next question is from the line of Mumuksh Mandlesha from Anand Rathi. Please go ahead.

Mumuksh Mandlesha — Anand Rathi — Analyst

Thank you so much for the opportunity, sir. Sir, can you just share some outlook for the construction equipment for the overseas market, sir?

Amit B. Kalyani — Deputy Managing Director

I don’t have the construction equipment outlook. I know that we are a supplier to that sector across various different components and field and our business is growing quite dramatically. I don’t have details of which company is growing and which geography, maybe Subodh has that maybe he can add something to that.

Subodh Tandale — Executive Director

Amit, you’re right, there is no such specific benchmark, but we deal with pretty much everybody in that segment in the construction and mining segment globally, and currently, we are seeing very strong demand, which again is a factor of the strength of the market to some extent. So for us, growth in, let’s say either market share or acquisition of new business. So it’s a combination factor but that segment for us is growing quite well.

Amit B. Kalyani — Deputy Managing Director

One more thing, that will start happening in the near future is you will start seeing capacity is being created in India to service India and to export from India.

Mumuksh Mandlesha — Anand Rathi — Analyst

Right, sir. This quarter PV revenue was lower sequentially in both domestic and exports market. Any reason for that, sir?

Amit B. Kalyani — Deputy Managing Director

Sorry, sorry. Can you say that again?

Mumuksh Mandlesha — Anand Rathi — Analyst

The PV revenues were lower sequentially this quarter in both domestic and exports, sir.

Amit B. Kalyani — Deputy Managing Director

So there is no such there is no structural issue here. It is as I mentioned earlier, there are some challenges that the OEMs are facing in supply and again, it’s not just semiconductor, it is a combination of various, various different things, it is a combination of buyers, it is a combination of other parts and so on. So there are some demand adjustments going up, but there is nothing which is a structural problem right now, they are still expecting, for example, the US to blow, above. Apart from this year, Europe is going to be steady at Nielsen growth in India as well. So we should be able to make it up. That is not an issue.

Mumuksh Mandlesha — Anand Rathi — Analyst

Right sir, thank you so much for the opportunity, sir.

Operator

Thank you. The next question is from the line of Pramod Amte from Incred Capital. Please go ahead.

Pramod Amte — Incred Capital — Analyst

Yes, thanks. Amit, this is with regard to the EV component. Any update on two of the plants you are supposed to start and also incremental customer orders in a similar space.

Amit B. Kalyani — Deputy Managing Director

So we have received. One plant has started, which is the two-wheeler contract manufacturing plant. First month was the month of April. The other plant will start in middle of June. And in terms of our power and control electronics we have supplied samples for testing to — for OEMs in the country and we should see feedback, probably by June, once the testing is complete, so we have delivered. These are not prototypes. These are beta samples. So they are 20 to 30 in number. These are significant volume for clean testing.

Pramod Amte — Incred Capital — Analyst

Okay. Is it relatively behind schedule and any reason for the same from customers or from your side?

Amit B. Kalyani — Deputy Managing Director

The customers are also developing products. So it’s going through its own product development and debugging cycle. When you’re developing EVs as related to IC components, the challenges are very different and all OEMs when they’ve gotten into this sector have faced these challenges.

Pramod Amte — Incred Capital — Analyst

Okay. And the second one is related to some of the tie-ups or the investments which we have made in the EV space. Do you see a risk of mark-to-market downwards in case the funding scenario tightens for your International entities? And how do you see through in the last three-four years of your investment experience in this business, is it more like a one-off, which comes back or how do you looking to via technology absorption from the same is much bigger than the investments, which.

Amit B. Kalyani — Deputy Managing Director

Yeah, that’s exactly the point we are not investing as a financial investor. In every case, we have got the, let’s say, the rights to access the technology and manufacture component, subsystem systems subject to obviously paying them some royalty where needed but we are using this whole process to assimilate the technology and knowledge and develop a larger product profile or product network for ourselves for this sector because I believe that the EV sector is not a sprint neither is it a marathon. I think it’s a series of sprints because there is a reset taking place every 12 to 18 months in terms of technology, in terms of new technologies, regulations, new developments in the battery technology, in sensor technology, in motor technology. So one has to remain agile in that in some base foundation technologies. And then adapt to what is happening.

Pramod Amte — Incred Capital — Analyst

That’s interesting. And the last one is as you’ve talked about these new business initiatives.

Amit B. Kalyani — Deputy Managing Director

Even if you read what the CEO of the largest Japanese company said after he took over, I think it was very profound to learn the admission made by someone that strong and that powerful that making electric vehicles is not like making cars. And that is — anything like I didn’t say unlike making cars, it is like making a computer or making a cell phone or something like that because it’s more about the electronics, the control systems, the software embedded systems, the vehicle is the box, which all that goes. So it’s that which is the unlearning that needs to be done in order to go forward, and the challenges in the sector and the opportunities in this sector are two sides of the same coin. So we are going to have to be agile, be nimble but at the end of the day EVs are going to be the future. I don’t think 25 years from now, there’s going to be more than 20%, 25% of combustion engines.

Pramod Amte — Incred Capital — Analyst

Okay. Yeah, thanks for the detailed answer and interesting perspective. One more question is considering that some of the verticals took some time to fructify like aerospace or defense. If you have to look at three years or five years down the line as we continue to get some from your exposure to CV. Where do you see CV as a proportion will be for you, it might be three or five years down the line.

Amit B. Kalyani — Deputy Managing Director

See, Pramod, It’s a very difficult question to answer because in CV. Sorry, in CV electrification of CV takes place and we get the market share that we want and we believe that we have the potential to get. We may have a very strong growth in that.

Pramod Amte — Incred Capital — Analyst

Okay.

Amit B. Kalyani — Deputy Managing Director

So if you remove EV then it may be different, although if you include EV, I think that we have a growth opportunity.

Pramod Amte — Incred Capital — Analyst

Okay.

Amit B. Kalyani — Deputy Managing Director

Significant growth opportunity.

Pramod Amte — Incred Capital — Analyst

Sure, got it. Thanks and all the best.

Amit B. Kalyani — Deputy Managing Director

Yeah.

Operator

Thank you. The next question is from the line of Mahesh from LIC Mutual Fund. Please go ahead.

Mahesh — LIC Mutual Fund — Analyst

Hi sir, thank you for taking my question. My — most of questions have been answered, just one query. Sir, what kind of growth we expect in Indian truck market for this financial year?

Amit B. Kalyani — Deputy Managing Director

Subodh?

Subodh Tandale — Executive Director

See this. I’ll just give you a longer answer for this. Till Q3 the market was supposed to operate, last Q3 last year the market was supposed to operate somewhere in the region of about 63, 70, let’s say 375,000 TIG [Phonetic]. And suddenly, Q4 was pretty good, the last four months are pretty good. And then we ended up with 405, which was originally the projection supposed to be for this year. So our expectation right now is, it will be with them, single-digit growth is what we expect from this level. but this is also considering the significant growth seen in the last, I would say, three months, but overall demand for the next two to three years or three years. Generally, we expect it a positive side. This is our view.

Mahesh — LIC Mutual Fund — Analyst

Sure sir, thank you so much sir.

Operator

Thank you. The next question is from the line of Aman Agarwal from Carnelian Capital. Please go ahead.

Aman Agarwal — Carnelian Capital — Analyst

Thank you for the opportunity, sir. Just one question from my side. If we see a slowdown in the CV segment in the US in 2024 calendar, how do you see your aluminum forging operations getting affected due to this?

Amit B. Kalyani — Deputy Managing Director

In which sector, sorry.

Aman Agarwal — Carnelian Capital — Analyst

Sorry, sir.

Amit B. Kalyani — Deputy Managing Director

Sector US PV.

Aman Agarwal — Carnelian Capital — Analyst

US PV, commercial vehicles, sir.

Amit B. Kalyani — Deputy Managing Director

We don’t have any aluminum exposure to commercial vehicle, it’s only to passenger cars.

Aman Agarwal — Carnelian Capital — Analyst

Okay. And sir, like to our US exports if we see a slowdown in 2024 calendar year. Like any indication, we are having with the OEMs about the orders for 2024, sir?

Amit B. Kalyani — Deputy Managing Director

Subodh?

Subodh Tandale — Executive Director

Yeah, see 2024 at this point is not considered to be. It’s not supposed to decline. We are seeing we are actually seeing projections for small growth, If not, the two main study. So that is the forecast, but again nowadays with the volatility, you have to monitor this every month or every quarter. So we’ll see how it goes but at this point, they’re not predicting any significant decline at all.

Aman Agarwal — Carnelian Capital — Analyst

Okay. Thank you for the answer, sir. It was really helpful.

Amit B. Kalyani — Deputy Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Rakesh Roy from Omkara Capital. Please, go ahead.

Rakesh Roy — Omkara Capital — Analyst

Hi, sir. Sir, any highlight on the domestic industrial business cycle like the mining sector, roofing business?

Operator

I’m sorry to interrupt, Mr. Roy, there is a slight disturbance which is coming with your voice from your background. So could you please go to a quieter place and take the call?

Rakesh Roy — Omkara Capital — Analyst

Hello. Yeah, am I audible now?

Operator

Thank you, sir.

Rakesh Roy — Omkara Capital — Analyst

Yeah, my question is, can you highlight on the domestic business for FY ’23, if they stay domestic industrial business, like how is your mining business for FY ’23 like for tractor.

Amit B. Kalyani — Deputy Managing Director

See, tractor industry was at an all-time high in ’23. ’24, I think the projections are yet to be out but obviously, it was the highest-ever production of tractors in India. So everything is relative. Even if the production is down 5% to 10%, 15%, it’s still a very-high number. I’m not saying that is what they’re projecting, but on the other side on the construction and mining sector those sectors are booming in India, everybody is increasing capacity plus a lot of companies are moving production to India. So I think India will become a major export hub for that equipment at least for for countries like Africa and for Australia and Southeast Asia, etc.

Rakesh Roy — Omkara Capital — Analyst

Sir, just one last question, sir is the mining — domestic mining revenue contribution for in total industry is how much, sir?

Amit B. Kalyani — Deputy Managing Director

I don’t have that number, but probably about 10%.

Rakesh Roy — Omkara Capital — Analyst

Okay, sir, right. Last year if I’m right, sir for FY ’22 is 400 ZR, sir for domestic in construction and mining.

Amit B. Kalyani — Deputy Managing Director

I don’t have the numbers with me, I’m sorry.

Rakesh Roy — Omkara Capital — Analyst

Okay. Sir is the export side same — in the export side, sir, you said oil and gas business is stable. So this year’s number is on AON basis is flat.

Amit B. Kalyani — Deputy Managing Director

Sudodh?

Subodh Tandale — Executive Director

Yeah, same as last year, it’s going to be steady, it is going to be steady, yes.

Rakesh Roy — Omkara Capital — Analyst

Okay. I think can you highlight on, especially for export market investors are, for aerospace business how are we doing and what is for FY ’23.

Amit B. Kalyani — Deputy Managing Director

Aerospace has done very well. Aerospace has grown more than 100% and we expect that aerospace will continue to grow and it will grow at more than 50%, 60%, or maybe 30% 40%, 50% this year also.

Rakesh Roy — Omkara Capital — Analyst

Right, sir. Okay, sir. Thank you.

Operator

Thank you. Ladies and gentlemen, this would be the last question for today, which is from the line of Godwin S. Fernandez, an Individual Investor. Please go ahead.

Godwin S. Fernandez — N/A — Analyst

Thank you. Thank you for taking the question. There was a joint venture that we announced with cargo for manufacturing of speed trains in India. Can you kindly put some color on that and the future — future prospects on the same.

Amit B. Kalyani — Deputy Managing Director

So we did not announce joint venture, Mr. Fernandez. We have signed an MOU with them to explore the opportunity of setting up a joint venture to supply to the high-speed rail system in India. So we are working through the necessary technicalities to understand the competitiveness, the production capability, transfer of technology, etc and we should shortly have a conclusion on this.

Godwin S. Fernandez — N/A — Analyst

Thank you.

Amit B. Kalyani — Deputy Managing Director

Thank you.

Operator

Thank you. As that.

Amit B. Kalyani — Deputy Managing Director

Sorry.

Operator

Sorry, sir.

Amit B. Kalyani — Deputy Managing Director

Go ahead, go ahead.

Operator

As that was the last question for today, I would now like to hand the conference over to Mr. Kalyani for closing comments. Over to you, sir.

Amit B. Kalyani — Deputy Managing Director

Thank you, ladies and gentlemen, for your interest and your questions in our company. I look forward to your continued support and engagement with us and if anybody has to ask some other questions, please get in touch with our investment — Investor Relations team and they will direct your questions to the right people and get you the required answers. Thank you very much and have a nice weekend. Bye. Bye.

Operator

[Operator Closing Remarks]