CIE Automotive India Ltd (NSE: CIEINDIA) Q1 2026 Earnings Call dated Jul. 22, 2025
Corporate Participants:
Vikas Sinha — Senior Vice President- Strategy
Ander Arenaza Alvarez — Chief Executive Officer
K. Jayaprakash — Chief Financial Officer
Analysts:
Vishaka Maliwal — Analyst
Rajas Joshi — Analyst
Pratik Kothari — Analyst
Basudeb Banerjee — Analyst
Priya Ranjan — Analyst
Jyoti Singh — Analyst
Devang Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the CIE India’s Q2 CY25 Results Conference Call hosted by ICICI Securities Limited. 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 Ms. Vishaka Maliwal from ICICI Securities Limited. Thank you. And over to you, ma’am.
Vishaka Maliwal — Analyst
Thanks, Nidhi. Good afternoon everyone. Thanks to CIE Automotive India Limited Management for giving us the opportunity to hold the call. We have here in the call the senior management represented by Mr. Ander Arenaza Alvarez, CEO; Mr. K. Jayaprakash, CFO Mr. Vikas Sinha, Senior VP Strategy. Mr. Aroit, Defense Business Controller and Mr. Swapnin Sodagar TGM Strategy.
Over to the management to take this ahead. Thank you.
Vikas Sinha — Senior Vice President- Strategy
Yeah, thanks. Vishakha, this is Vikas. I welcome all of you on this call who is also our CEO. I will present CIE India results for Q2 C20, C25 and H1. The first half of C25. We start with the legal structure on page four of our presentation. We would like to mention a change in this where we have completed the formalities of liquidating bill forged position and it has ceased to exist.
We now move on to Q2C25 results. We start with the India operations which is on page 6. In Q2C 25, India business sales were at INR14, you know, 14.5 billion which has grown at 7% year on year versus Q2C 24 and marginally higher on a sequential basis. The growth is also higher than the weighted average market growth among the various segments. The market growth in Q2C25 for light vehicles and two wheelers was sluggish. It was below 5%. But tractors and trucks recorded healthy growth with the prediction of a good monsoon. Market is expected to remain steady if not better than this.
But we’ll need to watch out for issues that may have negative impact. Like the potential tariffs from the US Government or the impact of restriction on rare earth magnets by China. So steady. But of course with a wait and watch attitude. That’s how we look at the market going forward. Now the EBITDA margin in India for the quarter was 17.5%. Just marginally lower year on year and sequentially. This is largely due to product mix issues. We should also note that the reported EBITDA margin of 18.6% in India in Q1 C25 included a one time government. Grant at our stampings business and without that you know the India Q1 C25 EBITDA margin was roughly about 18%. On page seven we have the results for the European operations of CIE India. In Q2C25 sales were at INR8.3 billion which are down year on year by 1%. But that includes a positive exchange rate effect of 7% without the effect of raw material prices drop. Also, the real drop in sales volume in Europe was 4% in Q2C25. This is an improved performance compared to the double digit reduction in sales that the European business experienced in the last three quarters. The quarterly sales also improved on a sequential basis. Now this is because there has been some improvement in the market situation with the light vehicles market being down only 2% in Q2C25. The reduced base effect has also played a part in this improvement. But overall the market situation in Europe continues to be difficult. Now we know that the second half of the year is normally worse than the first half due to seasonal factors, so that is something we’ll have to keep in mind. The EBITDA margin in the European business for Q2C25 was 12.5%. Now this includes a one time restructuring cost at Metal Castillo without which the margin would have been closer to 15%. We have been taking proactive corrective actions to adjust our operations to the difficult market conditions and this is a reflection of that. On page 8 we see the consolidated CIE India Q2C 25 results. Consolidated sales were INR23 billion, a 4% growth over Q2C 24 EBITDA INR3.6 billion at a margin of 15.7%. EBIT INR2.7 billion at a margin of 11.9% and EBIT INR2.7 Billion at a margin of 11.8%. The first half H1C 25 results for our Indian operations are on page 10. Sales increased by 5% versus HFC 24 to INR28.7 billion. The EBITDA margin was 18 EBIT 14.3, EBT 14.5 and PAT 10.8. Given the prospects of a good monsoon and the upcoming festive season, we expect H2 to be better than H1 in India. On page 11 we have the H1 C25 results for our European operations. The impact of declining vehicle sales and slowdown at metric Castello has contributed to 11% drop in sales for INR16.2 billion. EBITDA margin in H1C25 in Europe was 13.1, EBIT 9.1, EBT 7.9, and PAT 6.2. On page 12 we have the H1C. Consolidated results of CI India sales were INR44.9 billion which is marginally lower by 1% versus H1C24. The EBITDA margin was 16.3 EBIT 12.4%, EBT 12.1% and PAT 9.1%. On page 14 we see the abridged consolidated balance sheet which shows healthy state of CIE India return ratios have reduced marginally mostly on account of lower sales on a consolidated basis and restructuring costs in Europe, but they continue to be healthy. The cash flows are shown on page 16. The company generated operating cash flows to the extent of 76% of consolidated EBITDA. Capex is being monitored closely and growth capex for the first half of the year was INR0.7 billion largely focused on projects in India. Catch outflow on accounts of dividend was INR2.6 billion due to the dividend payout of Rupees 7 per share. Going forward, we are confident that we can utilize future opportunities and face future challenges with agility. We believe that, you know, we are well prepared to face any situation going forward. And now we proceed to Q and A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question group assembles. The first question is from the line of Rajas Joshi from Chris Capital. Please go ahead.
Rajas Joshi
Hello. Am I audible?
Vikas Sinha
Yeah, go ahead please.
Rajas Joshi
Hi sir. Thank you for the opportunity. So just a bit more. Could you elaborate on the growth outlook for the second half? As you mentioned, to be better, any segment you see would be growing faster in underlying industry specifically for India business and additionally has European business stabilized. Now
Vikas Sinha
I’ll talk about India and then I’ll request Andrew to talk a bit about Europe. In India, of course you see that four wheelers and two wheelers are roughly around 3 to 5% growth. Tractors are doing well and probably will continue to do well because of the monsoon situation. Tractors and trucks, that is how we look at it, I think. It’s not that there is one segment or the other which is driving this group overall. Our, you know, we had talked about some of our order book was delayed. I think what we are, you know, what you are seeing is a gradual coming back, you know, of that, that order book, you know, it has whatever delay was there is now getting addressed that, you know, that is the main factor other than the market growth. The market growth is steady. There is nothing dramatic happening around the market growth. That’s on India. On Europe. I’ll request Andre to give you a better flavor.
Ander Arenaza Alvarez
Hello, good afternoon everybody. This is Ander speaking regarding European market. We can say that the European, let’s say both passenger car and commercial vehicles markets are quite weak. They remain weak. But we think that these values that we have now will know go down further. Okay, so let’s say that we are now in the valley of the sales. We can expect that the market will continue in this level during next one or two quarters. But our customers are already saying that they expect a certain recovery by beginning next year. So say that. Okay. They were also saying this six months ago and this did not happen. So let’s say that the market will continue weak and will continue in this level. That’s our expectation for at least in the next two quarters.
Rajas Joshi
Okay. And in the last quarter you’d mentioned that order received the highest order inflows of around 350 crores. How has this trend been this quarter?
Ander Arenaza Alvarez
Regarding the new order book.
Rajas Joshi
Yes
Ander Arenaza Alvarez
The new order book that in the first quarter was Quite strong with 3.5 billion rupees of new orders that we allocated at this moment we are around 6 billion rupees in the first half of the year. So we continue this trend. So the order book is quite, quite healthy and we continue getting new businesses from the customer. So on that side everything is on track.
Rajas Joshi
And just on exports from India. So when do we expect our India plus our export business growth to reach double digit? Do we have any large export order in the India business currently in a pipeline which can contribute to growth faster than the market?
Ander Arenaza Alvarez
Our export rate is not big, it’s around 12, 13%. But it’s the export rate that we have in this moment. This export rates let’s say that are under certain scrutiny because of the tariffs that are not yet clear. So in the. I would say that until this tariff issue. Not clarified. We will not see these figures going up. Then also there is one important position from CIE as we are a global multinational and we are located in all the regions and our global strategy is to be local to local. We try to supply in each region what is consuming in each of the regions. So the export rate and export products that we now are focusing on mainly are on iron castings or gears, where we don’t have much more capacity in the rest of the regions. Okay, just. We have gears only in Europe and we have only gears, sorry, castings in Brazil. So that’s the approach. We will continue growing the export, but is not our main strategy.
Rajas Joshi
And capex in 1H has been relatively low. Should we expect a lower CapEx for CY25 or you know, higher CapEx in second half to meet the 5 to 6% of revenue CapEx?
Ander Arenaza Alvarez
Yes, we are controlling the CAPEX because of the, let’s say, weak situation of the market. But in the second half we will, we have a lot of, let’s say, new projects, as I mentioned about the new orders that we allocated. And the CAPEX will revamp. So we will be close to this 5% in the complete year.
Rajas Joshi
Okay, and how do you see the margins of all the medium and Europe?
Ander Arenaza Alvarez
Okay, the margins you show that in Europe we have been affected negatively because of the first, because of the drop of the market. We see this, this drop think that this minus one that you saw in the second quarter is supported by the 7% of the currency increase. I mean the depreciation of the rupee that helped us in 7%. Otherwise the drop was around 8%. And also we have had this restructuring activity in metal Castello. So that’s the. That’s why our margin has been negatively affected. We consider that we can be in recurrent margins in Europe around 14 to 15%. That’s what we see the future.
And regarding in India, we expect also to improve slightly the margins in the next quarters, thanks to the growth that we expected. Because we think that with a good monsoon and the festive season coming, we can expect certain recovery on sales and higher recovery and that will support our margins too. So let’s say that we are. We can be optimistic or. In India and let’s say that we will continue suffering in Europe.
Rajas Joshi
Got it. Just one last clarification. So our exports from India will also include castings and magnets apart from magnets.
Ander Arenaza Alvarez
Yes, yes. We export cuttings, we export gears, we export magnets. Yes. For certain customers. We, we export also aluminum castings, small parts. So yes, we, we are exporting. But as I told you that in average we can be around 12, 13% of our total turnover is exported from India
Rajas Joshi
Castings. Are we seeing any traction because of the China plus one, Europe plus one kind, you know, benefits flowing from there?
Ander Arenaza Alvarez
Not from that. I mean in the captains, what we are getting benefited is that this is a technology that is not being developed in the rest of the, let’s say in US or in Europe. It is not, let’s say really evaluated business. So we are exporting and we are starting to export for American customers in a good way. So we expect to grow importantly in the cast iron exports in the next, I would say from the beginning next year. Okay. So in that sense we will have a good opportunity to grow and to grow our exports mainly to the US.
Rajas Joshi
Okay, thank you. That’s all from my side. I’ll call back. Please have more questions. Thank you.
Ander Arenaza Alvarez
Thank you.
Operator
Thank you. Ladies and gentlemen. Anyone who wishes to ask a question may press star and one on their touchstone telephone. The next question is from the line of Pratik Kothari from Unique pms. Please go ahead.
Pratik Kothari
Hi, good afternoon sir. Last quarter in our India business we had made this comment that we had appointed new head of business development and also we were kind of refocusing back on anchor customers versus the tail that we kind of were trying to target two, three years back. So some color, some highlight how the team is progressing.
Ander Arenaza Alvarez
We have started this activity. We have the new business development head working properly and also contacting all the customers. We have settled in weekly review with all the CEOs and the business development heads. So we are actively working on that. So. So I can say that we are very positive, we are very optimistic with these activities that we are having and we will see results soon. Okay. In fact, I am also personally involved in all these weekly meetings and also I’m personally involved visiting the different purchasing directors of all our customers. So I think we are doing this commercial job and we are trying to be much more active on this commercial role that in the past we were not so active. So I think that we will see the results in the next. Okay. You know that it has a period of, let’s say developing period to get the orders, make the launch the new lines, make the validations and start the sop. That it takes around one year, one and a half years, but the activity is there. And let’s say that we are very, very happy with the, at least with the first fruits that we are getting from the market.
Pratik Kothari
Correct. Fair enough. And just wanted to double check, I think Vikas made a statement in the beginning saying that the order book which was getting delayed for the last year or two is kind of getting sorted out. Just some more comments. You can expand on that India business.
Vikas Sinha
I mean we have talked about that, we had talked about that. Basically Cie Hustle, which is, you know, getting in place, there were some specific customers. So they’re all getting sorted out and we are, you know, we are basically on track now. So that’s that, you know, that is the main area, you know that that will help us get back on the trend that we are talking about.
Pratik Kothari
Right, right, correct. So this is the EV part that you’re dealing with.
Vikas Sinha
No, no, no, not EVs. No, these are not EVs alone. You know, so we, you know, we were talking about two wheeler crankshafts at ciosur. We are talking about common rail, we are talking about inner races. So these are all, you know, new, new developments that we had done at ciosu. So these were completely new product developments that we had done. And this includes both domestic and exports as well as ICE as well as EVs. So it is not exclusively EVs. There are certain other EV orders which are there at other places. But specifically around these areas there were, for example at aluminum there were some EV orders but you know, for four wheelers, but that continue to be muted. You know, what is happening on the four wheeler EV side in India. So, you know, so really the major focus is ciozur getting. Back on track on the order book. That is where you will see, you know, this trend going forward.
Pratik Kothari
Like you mentioned, like Anders mentioned, anecdotally, even we hear that Europe kind of is talking about turnaround wheat in cv, the kind of spends they want to do. But from a comment, just want to make sure that this is all in 2026 is when everyone expects it. There’s nothing on ground or in schedule for next six months that things are changed.
Vikas Sinha
Of course there is. I did mention that in Europe we are looking at the base effect. Also. You have to remember that Q1 of C24 was very good in Europe. So that was also distorting the base a little bit. So you are seeing the base effect. But if you look at it in euro terms, Q1 and Q2 have been fairly similar. You know, that is. That is what it is. But so we are not out of the woods as far as Europe is concerned. Your question, what will happen in C26?
Let’s see what happens. You know, like right now, the market situation in Europe continues to be difficult and therefore you are seeing a whole lot of restructuring activities that we have done, especially at Metalcastelo. We have presented that. So, you know, whether the market will turn or not. We are not 100% sure at this point of time. So we continue to assume that the market in Europe will be difficult and we will, you know, continue to focus on restructuring, profitability, etc. So that’s how we are looking at Europe under. If there’s anything more you want to add.
Ander Arenaza Alvarez
No, you explained perfectly because that’s, that’s the situation. Unfortunately, that is the situation. We can, we cannot be very optimistic in Europe. Let’s see if there is a certain revamp next year that we all hope, but not sure yet. I mean, we are not very optimistic on that.
Pratik Kothari
So just last on this Metal Castillo restructuring, what did we do? What was it about?
Ander Arenaza Alvarez
Yes, in Metal Cartello. As you know, the Metal Cartello is working mainly for off highway vehicles and commercial vehicles that are in a very, very, let’s say, low market situation in this moment. During all these months, we have been applying temporary layoffs. That means that the workers are out of the company some period and then they come back. So we rotate the workers in that process. The workers, they lose part of the salary and is paid by the government. This activity is supported by. By the government. But it’s painful for the workers. It’s painful for the management also. Because it’s very difficult to. Sorry. To organize the production. Okay. So as this let’s say low volumes on the market continues and we expect that this low trend will continue. We decided to make voluntary dismissal scheme. So we offered some money to the workers to exit the company voluntarily. And we did this very smoothly. Agreed with the unions and everything was done perfectly. And in June 30 people left the company. Okay. Now the total amount of workers in this moment are about 170. We were 200 now 170. So the temporary layoffs will be reduced importantly. So the company will be better aligned to the new real market conditions. That’s what we did. And we expect to recover again the margins that we have before this situation.
Pratik Kothari
Thank you. And all the best.
Ander Arenaza Alvarez
Thank you.
Vikas Sinha
Thank you.
Operator
Thank you. The next question is from the line of Basativ Banerjee from clsa. Please go ahead.
Basudeb Banerjee
Thanks. I joined bit late. I might have missed. Sorry for repeating. Maybe just going by the pnl your standalone other expense look quite on the higher side. Any one offs in that or any specific reason?
Vikas Sinha
No, but there was some from material to other extent.
Basudeb Banerjee
Okay. But overall also margin got impacted slightly on a sequential basis
K. Jayaprakash
In the standalone and. Yeah. In India it is as Vikas explained. It is more to do with the mix. We have more of growth and samplings. So. So that’s the only reason there nothing. I mean we should be back at our normal margins.
Basudeb Banerjee
Second thing sir. If I look at the presentation in the consolidated cash flow statement working capital variation showing 590 crores of cash outflow which is consuming more than the operating cash flow. So any specific reason or this will reverse back how to look at it?
K. Jayaprakash
Yeah, yeah, yeah. So that we did in December discounting with Mahindra. The summer we did not do in June. And that’s the impact there. It will reverse if we do it again in December25. That’s the only reason.
Basudeb Banerjee
Yeah. Because from 1,200crore net cash it has come down and. Capex management is pretty fine. So that’s why this is the main reason behind that.
K. Jayaprakash
Yes, yes.
Basudeb Banerjee
And last but not the least like if I look obviously it is beyond your control to some extent but last time when India business or standalone business or double digit growth was some 19 quarters back. So with the launch pipeline, your discussion points with various manufacturers, any outlook on the growth revival for standalone air core India business?
Vikas Sinha
If you’re looking, of course you are seeing a steady improvement in growth performance in India. You know last two quarters we were mostly around the 3 to 5% mark. This time we are roughly around 6.5 to 7% mark. It will keep on increasing. To your question around double digit growth. Look, you know, if the market situation improves a little bit, you know there was a question around the markets of the base market right now, two wheeler and four wheeler which accounts for roughly about 70 to 75% of our business.
You know they are at roughly about, you know, 3 to 5% or maybe 3 to 6% growth that we are looking at. If there is a bit of improvement there which is very much possible given the festival season is also bunched up this year, you know, largely around October. So yeah, you will see improvement. Double digit is hard to, you know, make a conjecture given the, the base. The base itself is a little, you know, not that strong. You know I’m not complaining about the market in India. It is doing okay, steady, but it is not doing fantastic. So that is, that is the situation.
If that improves then we can, you know, you know we could be at the double digit that you are talking about right now. Let’s see if we can keep on steadily improving upon this. I think that is what we are focusing on.
Basudeb Banerjee
Sure sir. And last question, like with regulatory changes, premiumization happening and cash on books, so any new specific area product you are looking at like for example ABS to become compulsory for all two wheelers. So that will open up a huge window for other manufacturers to target. So any such specific product you are looking to add to the revenue and scale it up with balance sheet being pretty much clean.
Vikas Sinha
Basudev Again, to answer your question, specific area we are not saying just because there is an ABS we will do this product but in each of our areas we are definitely looking at and that is the reason why in response to Pratik’s question, I had talked about what we have done specifically. At Cie Hosur which you know was lagging for some time. Well, if you look there, the product categories there are completely new. You know we are talking about you know two wheeler crankshaft which is a very complex crankshaft for Royal Enfield. We are talking about common rail which we have developed from scratch. We are talking about very complex inner race that we have developed for you know a large oem. So you know these kind of activities will continue. Ander mentioned a very big, you know export order to the US in iron casting area that is also, you know, so these are all new product development that we are doing. So and in response to you know more stringent technology or manufacturing technology requirements. So we are looking at that. But you know it’s not that we choose an area like ABS and now we’ll do ABS parts make that. But in every area we are definitely looking at upgrading our product offering. In Gears we have always talked about, you know for EVs a very specific profile grinding requirement is there. We are investing a lot there. So in every area we are definitely looking at these kind of, these kind of products. And because not only growth one, you know, you are right one aspect the growth will come there but more importantly it will help help retain our competitive advantage. You know like for existing parts the competition keeps on increasing, it never decreases. So there is always a risk of more pricing competition in existing, you know, in existing areas. So this is something we keep looking at it And you want to add something to this or like
Ander Arenaza Alvarez
You cover it perfectly because it’s okay
Basudeb Banerjee
And surely to the last point of the US export order. Hope all these tariff issues are resolved in the pricing and it won’t be any margin dilutive supply as such
Vikas Sinha
For this particular order. Yes it has been done. Of course going forward there’s always an uncertainty. But as far as this order is concerned everything is settled.
Basudeb Banerjee
Thanks Vikas and the team. All the best. Thanks.
Operator
Thank you. The next question is from the line of Priya Ranjan from HDFC amc. Please go ahead.
Priya Ranjan
Thank you. Just couple of question one is just two extension of what Vasu was talking about the new product development. So whenever you talk about the new product development itself the client start we have been doing since ages. In a races may be complex but we have been doing since ages. So what are the new products area where you want. To enter or you have the capability to enter or we will be just improvising on the existing product line or the new segment on that product line. I mean until, unless we move into the really new segment of the product lines. I mean within the metal color, within the metal metallurgical forms. I mean some. So maybe like say Camsor maybe there are multiple parts within the engine also. I mean we have never heard that we, we want to enter that. I mean so how, how should we look at, I mean the product development approach of the company?
Vikas Sinha
You know, you know it’s a good question that you are asking. So it has to be a mix of both. You know, the things that I’ve talked about. The two wheeler crankshaft that I’m referring to is very different. You know, the moment you see it, maybe in the next invest, you know, like annual presentation we’ll put the photograph of that particular crankshaft. You’ll see it is completely, you know, different from what you would expect a crankshaft to look at. So it is a, you know, it is something we are quite proud of. So you will have, you know those kind of, you look at gears, for example, you know the EV gears are completely different from ice gears.
So yes they are gears but they are different. So they are, you know, completely, you know the precision requirements are completely different. Even the size etc is different. In fact make very good money on EV gears. So to your question, yes, they are an improvisation as you said on existing gear, but a very strong improvisation. New areas. Yes, we are also evaluating especially in aluminum castings, stampings. If you remember, in stampings we had done value add in terms of welding that we started to do welding plus stamped which was a major thing that we attempted.
And some of the product categories that you talked about in forgings, we will also look at that. So it’s not that we are not looking at completely new product categories, we are looking at that. But certainly of course, as I told you, it is not just about new product categories. We also want to secure our competitive advantage in our area. So it is very important for us to keep on improving our offerings even in our existing areas. So to your question, yes, right now we have more to offer in our existing categories, but you will hear more about the others also going forward.
Ander Arenaza Alvarez
And also because allow me just to make a comment because most of all these new product activities are confidential. Okay. We cannot show our technical. Technology and our ideas to the rest of the competitors. And of course we sign the non disclosure agreement with our customers so we cannot disclose them. So allow us to keep them internally because this is mainly our know how and we need to protect it against our, the rest of the world and the rest of the competitors.
Priya Ranjan
Yeah, I agree, I agree. I mean this is confident, I mean say last four, five years. I mean how much is the new product development contribution in your top line?
Vikas Sinha
When you say new product development you are not including things like what we just spoke about. You are just looking at, you know, completely new areas. You know, like for example, completely new categories. You know right now that’s not readily available. Priya Ranjan but you know, let me go back and check internally and I’ll and I’ll revert to you.
Priya Ranjan
Sure, sure. And in terms of what is this ramp up you are expecting from the casting order which you talked about about the Europe and sorry the US casting orders and how do you see the wrapped up etc. And secondly in Europe are we looking at getting more business because the market is shrinking. So at least retention of the top line should also be one of the areas to at least protect your top line and margin. So any thoughts on that?
Ander Arenaza Alvarez
Yeah. So regarding the cutting program, we expect the ramp up to start in the first quarter on 2026. That means so. And we expect to vary at probably full rate at the end of 2026. Okay. That’s the ramp up we are expecting. And regarding European market, you are right. I mean we are now in the protection mode because there is a huge capacity installed in the in Europe for all the components. So there is a kind of fight on for the existing volumes. But I think there is also a very, very important fact is that a lot of companies in Europe are in very, very bad financial shape.
Okay. The amount of bankruptcies that we are seeing is quite, it’s terrible. I mean the companies are suffering a lot in this moment. So the customers are approaching us in order to consolidate the market and to be sure that they have a sound and a solid supplier. So we see there an opportunity. So let’s say it is that the risk is the lot of capacity that there are in the market. The positive side of this is that there will be a consolidation. So we expect to be the winners in this consolidation. So this is already happening in the market and we will see this to happen in the next quarters. So that’s how we see the European market. So we think that we will maintain our current situation for sure in the next years.
Priya Ranjan
And for Metal Castello, I think the. So your thought process of some of the orders which. On which we have established or we have expanded the capacity or the capability etc. Is not happening, is it? What your base case assumption now
Ander Arenaza Alvarez
In Meta Castello, we made a big bet for, for electrification. So we, we enter into this very big electricity vehicle program and unfortunately this electric vehicle program is idled. I mean it’s delayed. And we expect that in the next two, three years nothing will happen on that. So that was our main, let’s say, problem in Metalcastelo because our growth was based on that program. And this is not happening. Then after Trump winning the elections also the electrification in the US will probably slow down. That’s what we expect. So these products will come. That our view will come, but will come later. So now we need to navigate in this weak market situation. And that’s what we are now trying to solve. Entering into other customers and offering our capacities to the different customers both in Europe and us.
Priya Ranjan
Sure. Great. Thank you. Just one last question is on the mid. I mean the, the magnet side, what is, what is your usage of rare earth etc and how do you see this finding out that division
Vikas Sinha
We don’t do rare earth magnets, you know, we don’t have access to any raw materials. Of course, for doing rare earth, you know, you’ll have to make some process changes like heat treatment etc, which we can evaluate. But we have no access to rare earth raw materials. So all our magnets are non ra. But even there we are facing a lot of competition from China in that area. So it is one area which is a focus on improving our business there in terms of profitability etc to become more competitive in that area. So we have to really pull up our socks in the area of magnets. One, we don’t have access to rare earth raw material and two, even in our existing areas we are facing very strong competition globally. So that is something that, you know, we are putting. Focusing on in this year and in fact we have made a lot of changes in those areas beyond of course in Q2 the margin drop that you are seeing a little bit. A very small portion has also come from, you know, whatever we are trying to do at magnets but going forward we should be much better off competitively in that area.
Priya Ranjan
Sure. And this last question, question from the ender. There is a lot of talk about the defense expenditure increase in Europe. I think then I mean the armored vehicle and the other segment of the defense will also, I mean the land based system etc will also, or even the airway system will also come into picture. So are we thinking in that line also that we can be a defense supplier in. I mean are we actively pursuing that opportunity?
Ander Arenaza Alvarez
Yes, we are in contact with the Spanish government on this in Spain. You know that all these defense activities are driven by the government. So we have had several meetings with the Spanish government on this subject offering our capabilities and we have been talking to them. We have had certain programs, we are going to produce certain components for the defence. But it’s not a big business. Let’s say that as the volumes and the CDS on the defense are very, very low on a small cds those products does not fit perfectly to our long CDS production lines. So we are going to do some small things in defense but it will not be, let’s say important and will not be significant in our portfolio. We were expecting something more but it will not be the business that we will develop strongly in Europe. Just some products and small products where we can have certain capacities but. But not more.
Priya Ranjan
Okay, great. Thank you.
Vikas Sinha
Thank you. Yeah, yeah, thanks.
Operator
Thank you. The next question is from the line of Jyoti Singh from Ariant Capital Market limited Please go.
Vikas Sinha
Yeah, please go ahead Josie.
Jyoti Singh
Thank you sir. So basically I wanted to understand what is current capacity utilization we are having and also like we talked about on the new product side. So if we can give little bit deeper knowledge on the content part. Per vehicle if there is a much increase from the existing product. So that will help us to understand better for the future recovery. And also like you mentioned, H2 will be better than H1 led by the industry growth. So apart from the industry, what are products and what all OEM that we are expecting good demand that will lead to better growth and because also we wanted to understand more on a growth perspective.
Vikas Sinha
Yeah, thanks Jyoti. I’ll try and answer the last of your questions first. You know, capacity utilization. I’ll refer you back to Ender on new, you know, first, where are we expecting again, you know, to reiterate, it is some of our own order book that is going to get us a boost the market. The reason why we are saying H2 market will be better than H1 market is purely because of the festive season. That is normally what you expect. The market itself is at more middling kind of situation in India. But of course we are looking at our order book ramp up new product development. We talked about that in the previous with Basudev, with Pratik and specifically with Tre Ranjan.
We had specific discussion around what kind of new products that we have done. You know, so these are, you know, the ones that are ramping up. It is, and a lot of it is something that we have developed. Specifically we talked about two wheeler crankshafts for a particular oem. We are talking about shafts, we are talking about inner races, very complicated inner races, common rail, also some products and aluminum and iron casting gears, the new gears for EVs that we have developed. So these are the specific areas that we have developed and they are going to go up. But it is based on the order book that already exists. So there is, you know, the new order book situation under explained.
We are close to 6,6 billion Indian rupees this year itself. So normally about you know, thousand crores of new order booking we do every year. So it’s, you know, the growth really depends on how those, you know, order book, you know, ramps up. So that is really around, you know, new product development, new orders and so on. And why we think we’ll do better than the market going forward. That is number one in the reverse order. Then you talked about, you know, wallet share. Now that’s very, very difficult to, you know, spec because we are in many areas, you know, you know, let’s put it this way, you know, if you look at our forgings business, for example, From Chakan, we do crankshafts largely for light vehicles and tractors. You know, that is, you know, you know that area that was also referring to that we have been leaders in that area for long. So we have very high share of business. More than, you know like more than 50%, you know, not more than 50% in that area, you know, there. So that, and that is why, you know, whenever new models come, we are the first choice for most customers in, in that area more than wallet share. What is happening is we are looking at making a more complete, complicated, you know, products in these areas so that we retain our competitive advantage so that that really is safe. For example, our Fujin’s business in Chapin. If you look at Billforge again we are into four wheelers where we make driveline parts. Again we are very, you know, our share of business is very strong. So here we are looking at, you know, adding newer customers be it in the two wheeler space where again we have very large, large share of business. So you know, at Billforch for example, we never used to do two wheeler crankshaft. So we are good at crankshaft but we never made two wheeler crankshafts. We were doing races and retainers for two wheelers. So we have developed this two wheeler crankshaft which has helped us diversify a little bit. In fact now that will become one of our major product offerings at you know, at Billforge. So what I’m trying to say is we have a twin challenge. Not only have to have we to retain our strong share of businesses in, in some of the areas where we have been market leaders for wrong for long and we are doing that by doing, you know, by improving our offerings in terms of precision and so on and so forth. And the other is, as Priya Ranjan was pointing out, maybe we can do that a little better is to you know, get into newer customers like, for example, two wheeler crankshaft. Here we have added a new customer as well as a new product offering in our area. So that is what we have done in Billforks. Say for example, you go back to aluminum castings again there Bajaj is our anchor customer. And you know, we try and participate in whatever activity they do. We don’t lose orders with Bajaj. We try and make sure that we don’t lose orders with Bajaj. But steadily we. Have increased. You know, at the time of acquisition, Bajaj used to be 75 to 80% of our aluminum, you know, aluminum business. Today it is down to 60 to 65%. Not because we have neglected Bajaj. We have developed other, you know, other players, nidec, GPM and so on. So that, you know, there are other players that we have developed. So this is the focus that we do defend wherever we are in a, you know, a market leading situation by becoming, by offering more precise parts and try and see if we can keep on adding at least new customers, if not completely new product offerings. And this is what you know, Priyaranjan was referring to. Can you do the latter part more? Yes, we’ll focus on more and hopefully going forward we’ll give you better, you know, you know, you know, better news around that also. But we are doing that. Like for example, the two wheeler crankshaft was a completely new part. We never did two wheeler crankshaft before. We are doing now. So that is on your second question on, on wallet share. What I’m trying to say is wallet share. I cannot do a direct answer but we are cognizant of what we are trying to do. No, defend our share of business and try and see if we can add new customers first in our existing product categories and even newer product categories. It is number, your number two category, you know, number two question. And your first question was around capacity utilization. I’ll ask Ander to, you know, to talk a bit about capacity utilization. Both in India and Europe
Ander Arenaza Alvarez
This capacity utilization is different in each of the verticals. Okay. Unfortunately in Europe we have a lot of capacity free capacity. We can say that we could have 40 or 50% of capacity free in this moment. But in India as an average we can say that we are around 75, 80% of capacity. So we could produce 20% more with the same facilities that we have then in certain specific machinery or technologies we need to invest. That’s what we are doing now. So we will adapt our capacity to the demand and the customers. Okay, so that’s the, the way we, we manage the capacities.
Jyoti Singh
Okay, thank you so much.
Vikas Sinha
Yes, thanks.
Operator
Thank you. The next question is from the line of Devang Shah from Asit C. Mehta. Please go ahead.
Devang Shah
Yeah, hi. Good afternoon, sir. So by listening, you know, you know, the, the way you are seeing about, you know, new product development and innovation and that is going to have some kind of growth in a future. So I would like to have one question that you know, can we expect that downside from here on will be. You know. You know, we can say that it is a. Bottoming out phase because as mentioned that we are going to have some kind of, you know, stable possibility of H2 in a European business. And we, we have, you know, somewhere growth, H2 would be better for India. So as far as your performance is concerned, we may see, you know, it’s been bottoming out as far as worse is concerned. And secondly, that we may see somewhere close to, you know, and some kind of, you know, better show as far as, you know, close to, you know, you know, high single digit kind of growth as far as revenue is concerned in this particular calendar year.
Vikas Sinha
You know, like let’s not talk about what, you know, exact number you know will emerge at the end of the year. Yes, we expect H2 to be better than H1 in India because one, the market itself normally is better because of seasonal reasons. Some of our order book is ramping back and you are clearly seeing that, you know, an improving growth performance over the last few quarters. So that that’s going to happen. Europe, you know, H2 in Europe is normally worse off than H1.
You have to remember that August you have three weeks and in December almost 10 days. So normally H2 is lower by 15% from a market perspective itself compared to H1. So you have to keep that in mind. That is the reason why on Europe we have to, we cannot lower our, you know, lower our guard as far as the European results are concerned. H2 will, you know, by seasonality H2 is normally worse off than H1. So we have to keep that in mind. So to answer your question, what the overall year will look like.
Yes, because of high double digit drops in, in Europe we have seen an impact over the last 2, 3/4 on our consolidated result. That impact will certainly be lower largely because of the base effect. You know, the H2 last year was also particularly bad. So you will have less impact on that. But overall what the number comes like, you know, let’s not speculate on that. Yes, in India it will be better and hopefully in Europe it will be more stable kind of situation is what we think it would be. But let’s see, you know, let’s not speculate on a, on, on an actual number you would want to add anything towards
Ander Arenaza Alvarez
You. You explained it perfectly because. Thank you.
Devang Shah
Yeah. Okay. And second question, the way we impacted, you know, marginally because of our European operation as far as EBITDA is concerned moving forward, sir, you expect that on a consolidated basis we will have a normalcy. As far as our EBITDA margin is concerned, somewhere close to 15%. Kind of on. Console level,
Vikas Sinha
India is still at 17.5% in spite of, you know, the product mix issue. And I think JP did mention that we expect India to, you know, be around that 17 and a half to 18 kind of margin that we are talking about. In Europe this time we were at 12.5%. But if you take away the one time expense around Metal Castello for or, you know, and Ander explained that we have been reducing people on a, on a large scale, you know, almost 30 out of 200 people have been reduced at Metal Castello.
If you take that out, that particular expense out already close to 14 and a half to 15% when it comes to Europe. And that we think unless and until there is a drastic reduction further, even though the market is very low in Europe at this point of time, we don’t see a big impact, negative impact on our margins on either India or Europe. In India we hope to improve a little bit in Europe. I think the recurrent EBITDA in Europe will be closer to 14 and a half to 15% even in these market conditions. And anything specific you want to add there?
Ander Arenaza Alvarez
No, it’s okay because it’s perfectly explained.
Devang Shah
Okay, sir. Understood sir. So thank you so much and wishing you all the best.
Vikas Sinha
Yes, thanks.
Operator
Thank you very much. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Ander Arenaza Alvarez
Okay, so thank you very much to all the participants for the good questions and for the interest in our company. We hope that we answered properly and you have now a better knowledge of how our company is deploying. And we expect to continue having the confidence and the trust in our company in the next quarters and next years. And I also thank to all our CIE India team, thanks for their commitment and the good job that they have done in all this period. And I expect to continue showing good results in the near future. Thank you very much everybody.
Operator
Thank you on behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.
Vikas Sinha
Yeah, thanks guys. Have a good day.
Operator
Thank you.
Vishaka Maliwal
Great, thank you.