CIE Automotive India Ltd (NSE: CIEINDIA) Q3 2026 Earnings Call dated Feb. 20, 2026
Corporate Participants:
Ander Arenaza Alvarez — Chief Executive Officer
Kiyath Jayaprakash Nair — Chief Financial Officer
Analysts:
Unidentified Participant
Apurva Desai — Analyst
Viraj Kacharia — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to CIE Automotive India Limited Q4 CY25 earnings 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. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Smith Shah from ICICI Securities. Thank you. And over to you, Mr. Shah.
Unidentified Participant
Good afternoon everyone. On behalf of ICICI securities, we would like to welcome you all to CIE Automotive’s Q4 CY25 earnings conference call. Today we have with us from the management team Mr. Ander Arnaza Alvarez, CEO, Mr. K. Jayaprakash, CFO, Mr. Vikas Sinhal, Senior VP Strategy and Mr. Oroz Lafuente, Business Controller. We will start the call with brief opening remarks from the management team about the quarter gone by. And then we’ll proceed with the Q and A session. Thank you. And over to the management.
Kiyath Jayaprakash Nair — Chief Financial Officer
Yeah, thanks Mr. Shah. I welcome all the participants as also our CEO Ander. We will present CIE India results for Q4 CY25 as well as full year CY25. We refer to the investor presentation that we had uploaded last evening. Let me begin with the section that provides an overview of the company. Page five shows the legal structure of the company where there has been a small change in CY25. BF Precision Private Limited which used to be a direct subsidiary of CI India stands dissolved by the Honorable National Company Law Tribunal, Chennai with effect from 5 June 2025.
Pages 6 and 7 provide details of Cie India’s geographic, technological and market wise segments. Plants in India accounted for 65% of the company’s sales and the rest of that 35% came from Europe and Mexico. There has been a revision in the way we report sales in these two geographies. For historical reasons the Mexican forging plant was clubbed under India. But after the capital increase subscribed by Galfor, Mexican activity became a subsidiary of Galfor Cie Galfor that is in Europe. So it is reported under Europe now from CY25 onwards. So consequently all the CY24 numbers that you see for India and Europe in the presentation have been restated accordingly.
So roughly the breakup of sales is 65% of for India which is now completely India and 35% coming from Europe and Mexico. Now the Mexican operations is very small, roughly about 3 billion rupees. Now as you can see, our India business is very diversified in terms of technologies and segments. In India we supply to a variety of segments with the segment wise dependence of our India sales in CY25 is as follows. Light vehicles 53%, 2 and 3 wheelers 23%, tractors 13% and heavy trucks 11%. In contrast, our European business is more focused on forgings which is 80% of European sales and and light vehicles which is more than 50% of European sales.
Now page eight provides a snapshot of our key product categories in different market segments including the emerging portfolio for electric vehicles. What you can see from the above discussion is that CIE Automotive India is unique as a large diversified auto components group with presence across many processes, product lines, locations and customers. Let me now proceed to the section on Q4CY25. The results of the India operations for Q4C25 are on page 10. Sales of INR 15.4 billion which were 12% higher year on year. The sales growth was slightly lower than the corresponding market growth. But we would request you to look at the larger picture rather than just the growth snapshot.
In this quarter there has been a steady improvement in the growth performance in the India operations over the last few quarters. The growth was 2% in Q3C24, 4% in Q4C24, 3% in Q1C25 and after that a steady improvement 7% in Q2C25, 9% in Q3C25 and 12% in this quarter. In fact, this was the highest quarterly sales that we have achieved in India. As discussed earlier, some of the new orders that have been delayed are coming back on stream. We expect this improving trend to continue into the next few months. And when we discuss our annual results, we’ll also talk about some specific reasons which attenuated our growth rate to an extent.
On an annual basis, the India operations achieved an EBITDA margin of 16.8% in Q4C 25 versus 17.1% in Q4C and 17.3% in Q3C 25. The drop in margin is due to two reasons. Energy tariff increase in Maharashtra state which reduced margins by 0.3% and the new labor code impact on gratuity which has a negative and one off impact. It’s a negative one off impact of around 0.8%. If we adjust for these two factors, the EBITDA margin for Q4C25 in India would be 7.17.9% in Q4C25 EBITDA grew 9% year on year EBIT 9% and EBT 12% in the Indian operations.
On page 11 we have the Q4C25 results for our European operations. Sales of INR 7.8 billion in Q4C25 are 21% higher year on year versus Q4C24 but there was an exchange rate translation impact of 17% and the real growth in sales in Euro terms was 4% and this is very much reflective of what is going on in the market. The EBITDA margin in our European operations in Q4C25 was 12.7% versus 14.9 in Q4C24 and 14.1 in Q3C25. Margin reduction was largely due to the one off restructuring cost at CIE legacy of Euro 2 million which amounted to approximately 2.5% over sales.
Adjusted EBITDA margin for Q4C25 would thus be above 15%. In Q4C25 EBITDA grew 3% year on year while EBIT shrunk by 9 and EBT by 1%. On page 12 we have the consolidated CIE India Q4C25 results. Consolidated sales for INR 23.3 billion 15% higher versus Q4C24 and fractionally higher. Sequentially EBITDA was INR 3.6 billion, EBIT INR 2.6 billion and EBT INR 2.6 billion higher year on year by 8%, 4% and 9% respectively. Let’s move on to the section on full year CY25 results. The full year CY25 results for our Indian operations are on page 14.
Sales increased by 8% versus CY24 to INR 15.4 billion and this growth was actually double digit during the second half of the year. On an yearly basis the growth was close to the weighted average market growth, but it could have been higher. We would like to highlight a few reasons that reduced our sales growth. First, the restructuring of our business portfolio that we are carrying out at our aluminium and magnetics verticals. Second, the way we recognize sales for a few categories at our aluminium vertical wherein only the value add is being recognized. Q4 onwards. Third, in a couple of large customers some of the new platforms where we have a high share of business did not grow as expected.
For example in the CNG bike which did very well in Q4C24 but the corresponding sales in Q4C25 were much lesser. Maybe you know roughly about 10% of what was, you know, the in the corresponding quarter last year. In the next few quarters we have some good projects, both domestic and exports lined up for start of production and this should help our growth performance. The outlook for the Indian automotive industry is positive. The reduction in GST levied on the Indian automotive industry in September of last year led to an immediate jump in automotive sales across segments and we expect this positive momentum to continue in the current year.
The EBITDA margin of our Indian operations in CY25 was 17.5% versus 18.2% in CY24. The gratuity implication of the new labor code had a negative impact negative one time impact of INR 132 million that is about 13 crores in CY25. Please also note that CY24 margins were boosted by 0.4 due to the extra subsidy of INR 220 million received by the aluminium vertical in Q1C24. On a like to like basis, CY25 EBITDA margins in India were same as that in CY24 while sales grew 8% in CY25 EBITDA grew 4%, EBIT 3%, EBT 6% and PAT by 6%.
On page 15 we have the full year CY25 results for our European operations. Sales increased by 2% versus CY24 to INR 31.9 billion in Euro term sales declined by 6%. As can be seen on the table to the right, there was a small drop in production in both light vehicles and MHCB segments. The European forgings market, the largest vertical in Europe, continues to be weak on account of competition from China as well as India and also transition to EVs. This had a cascading effect with EBITDA declining 14%, EBT 22 EBITDA, EBIT 22 EBT by 16 and PAT by 13%.
Our European business showed its resilience by recording an EBITDA margin of 13.3% versus 15.7 in CY24. The CY25 EBITDA margin was lower by 1.5% due to one time restructuring costs at the Metal, Castello and Legaspi plants. So if you add that 1.5 to 13.3 we are more or less close to the 15% mark that we are targeting. PAT continued to be healthy at INR 2.1 billion in CY25 in spite of a second successive year of decline in net profits. On page 16 we have the CY25 consolidated results of CI. India sales were 91.2 billion which is 6% higher than CY24 growth trend accelerated in the second half of the year supported by Indian markets positive sentiment.
The EBITDA margin was 16% versus 17.3% in CY24, EBIT 12.1 versus 13.4% and EBT 11.9 versus 12.6. Of course there are exceptional costs that we have talked about earlier. The Consolidated PAT in CY25 is INR 8.3 billion, almost same as last year. But if we exclude the exceptional costs on gratuity in India and restructuring in Europe, consolidated PAT would have grown by, you know, roughly 3 to 4%. Next up is the section on balance sheet and cash flows. On page 18 you will see our abridged consolidated balance sheet which shows the healthy state of CI India.
Return on net assets is 18.4%, a tad lower than last year. A part of this is explained by Forex translation inflating our Euro assets, especially the goodwill on our balance sheet. Return on equity is 11.1% largely due to the cash on our balance sheet. Net financial debt has further improved and is negative INR 18.8 negative INR 18.8 billion versus negative INR 12 billion last year. We are actively evaluating organic and inorganic growth opportunities to utilize the cash on our balance sheet. The cash flows are shown on page 19. The company generated operating cash flows to the extent of 71% of consolidated EBITDA growth.
Capex was INR 2.3 billion concentrated mainly in India. Overall Capex was INR 3.8 billion which is within our non of 5% of sales as PAT has remained almost similar to that in CY24. The Board of the company has recommended dividend payout of Rupees seven per share which is same as last year. This of course is pending approval in the AGM schedule later in the year. We move on to the summary of our strategy on page 22. The market trends in the two primary geographies that we operate in India and Europe are strikingly different. The strategy adopted in these two geographies reflects these trends.
We are confident in the short and long term potential of the Indian automotive market. India is one of the priority global markets identified by our parent CIE Automotive. We will continue to invest in expanding our production capacity within India to cater to both domestic and export customers. The focus in India is on strengthening our customer portfolio, prioritizing high volume value added parts and developing a product portfolio for EVs. We have identified product categories that will drive growth in each of our business verticals. At our Bengaluru forgings operations, for example, we are developing low pressure fabricated fuel rails for petrol and CNG vehicles as well as large fully finished precision forgings for vehicle drivelines.
The aluminum business is developing competencies for different housings that will be used by electric two wheelers and electric four wheelers. The aluminium vertical is also planning to develop capabilities in high tonnage machined castings. The iron castings business is focused on increasing the proportion of machining in its portfolio and is adding capacity and technology for the same. The stampings business is focusing on high tonnage press panels which may require investment in new press lines. The gears and composite verticals are upgrading process technologies to cater to EV requirements among other projects. So you know there is a whole slew of growth projects which are planned.
On the other hand, the European automotive industry is dealing with uncertainty around transition to EVs and competition from cheaper Chinese cars. Light vehicle production in Europe is expected to remain stagnant in the next two to three years. In Europe we are focused on optimizing margins and protecting profitability and are adapting our manufacturing facilities to evolving volume requirements. We also seek additional business opportunities as the supply chain consolidates. While the pace of EV adaptation in Europe is slower than anticipated, the company is developing products for the EV platforms being launched. The next few pages after that present market statistics and forecasts from relevant sources, followed by the results submitted to SEBI in the prescribed format.
CIE India’s approach has been to attain an optimal balance across growth, investments and returns. The company expects that its mix of organic and inorganic growth strategy will help it meet the aspirations of its stakeholders. Sorry for a slightly longish opening remark, but now we can proceed to Q and A. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press R and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue participants you may press Star and one to ask a question. First question is from the line of Nishit Jalal from Access Capital Ltd. Please go ahead.
Unidentified Participant
Yeah hi Grafno and thank you for the opportunity and congress on good set of numbers in India. Two questions from my side. First is around India. Can you talk about a little bit about the new order wins which you have talked about that some of it got deferred and are panning out now. Even if you can’t name the clients I would understand. Maybe just give us some color around how big those orders were, what led to the delays and how should we assume this to ramp up over the next few quarters? Just trying to understand how meaningful these orders are and how much can it lead to a stronger growth in our business over and above the industry growth.
So some details on what got differed and anything on New Order wins that you can talk about. My second question is in Europe, I think in the last few quarters we saw restructuring around MetCastrilo and now we have seen in one of the PV names. So just wanted to understand how are we looking at this business and are there more cost that we will need to incur over the next one to two years to restructure European business to kind of, to kind of align to lower volumes? Because your commentary or IHS commentary around European PV industry is negative for the next two to three years as well.
Right. So these are the two questions I have. Thank you.
Kiyath Jayaprakash Nair
So New Order wins. I’ll talk about, you know, in the opening remarks when I talked about some of the projects that we are highlighting in our strategy section, I think those are the ones that are coming on board, some of which will require newer capacity also. But from, from the earlier, the main area and which was delayed to an extent was Cie Hosur which we have talked about. It’s a very excellent plant that we have but we took a little bit more time to fill that up. So now it should be reaching full capacity in the coming quarters.
And that’s a pretty significant large number plant that we are talking about. Of course the other start of production which is not delayed, but we are talking about some large export orders in our iron castings business that we should, you know, start, you know, around the middle of this, middle of this calendar year. But in terms of the New Order wins, some of the things that we talked about and you know, like the low pressure fabricated fuel rails, we are talking about inner races at our Bengaluru forgings. We are increasing our share of business in the races where we already have very high share of business there.
Aluminum is developing a whole set of portfolio. We talked about the portfolio restructuring that we are doing and we are definitely looking at a lot of new parts in our aluminium HPDC business. Some of it still under discussion, but there we are definitely looking at. But that may not fructify this year. That is true in aluminium. The others that we have talked about are for this year, gears and composites. Of course, you know, they are, they are growing quite, you know, quite well. Stampings is growing quite well. You know, we have got, you know, a lot of press panels that we would require.
It may also require bit capacity or maybe you know, debottlenecking for capacity addition. So those are the things. So as I said, if you see how much it can add, of course we don’t make forward looking statement but I would certainly say if you look at the trend that I highlighted, quarterly growth trend, hopefully it will continue in that direction. You know we are talking about the numbers precisely in the last three quarters. Our growth numbers were in the last three quarters, 7, 9 and 12. Hopefully that arithmetic progression can continue. So that is what I would say on India, on Europe and any other thing that Ander wants to add.
I request Ander to join.
Ander Arenaza Alvarez
Just to be specific on the new project allocation. Last year in calendar year 25, we got new businesses for a value of 8.7 billion rupees per year. Yes, rupees per year in India and around 2.1 billion rupees per year in Europe. In India, approximately 10% of these new businesses are for EVs, 90% are for internal combustion engine. That’s the share that we we got last year. And what I think it’s important to say is that in this moment we are opening and we are expanding our plants in most of the verticals. We are planning to expand our composite business.
We are expanding also stamping business, we are expanding the aluminum business. So let’s say that there is a huge ramp ups coming up. Iron foundry is also, as Vikas explained, we will start ramping up the new project for an export program to us in mid of the year. Approximately the SOP will be in June. So the expectations are really, really good. Okay. Probably is the best time. And I think that everybody knows that the automotive industry in India now is having a boom. Especially after solving the tariff issue with us. I think in a proper way with this 18% tariff that was negotiated between Mr.
Trump and Mr. Modi. So I think that is we have eliminated one certain point that we had in the in for the exports. Also the free trade agreement between Europe and India will boost the demand of Indian components, especially in certain technologies like forging and iron casting. So I think that is also a very good move. And on top of that, the GST reduction that the Indian government accomplished last year, last September is now paying his fruits and is coming the demand and the boom of the demand is coming. So we are very optimistic on the future.
We see that the trend is positive and most of the businesses are recovering. And in fact we are adding capacity in A very fast mode in order to cope with the demand that our customers are claiming. So that would be my message on the future. You know that I’m usually very conservative. In this case I can say that India is in a very good path and the country is doing well. And automotive sector in India will be one of the winners in 2026 for sure. Okay. And coming back to the European question. Yes. This 2025 we had two restructuring activities in Europe. One was done in Metal Castello during, I think it was Q2, 2025. After this restructuring, the restructuring is finished. I mean the company and the manpower capacity is adapted to the new demand scenario. We are waiting for the growth on the next years. But okay, right now we are perfectly aligned with the current capacity. So there is no any additional restructuring expected in metalcast airload in the next quarters. Okay. In the next few few years. So that’s for us is solved.
And the profitability of Meta Castello is now again in the profitability that we had before the downsizing of the business. Okay. So Metal Castello, we can say that it’s closed. Regarding the legacy plant, we made this first restructuring activity and now we are waiting for the market behavior. Okay. In Legazpi we made a big bet on electric vehicle components. You know that unfortunately the electric vehicle, let’s say share is not, is not going up in or is going up, but slower than expected. So we are waiting for this, let’s say growth, electric vehicle growth to come in Europe.
So if the volumes come and we, let’s say we are able to produce for these different carmakers these components, we will probably in a good shape. If the electric vehicles delays anymore, perhaps we will need to do some additional activity. So it will depend on the market evolution, especially on the electric vehicle.
Unidentified Participant
Thank you so much for the detailed answer and positivity around India business. Just one last follow up on India’s aluminium casting business. Right. We obviously since we’ve acquired this company, the last three, four years it’s been more like flattish or a low single digit growth. Right. We acquired it with one big customer so just wanted to get a sense aluminum castings and industry seems to be doing well. Have you been successful in adding more newer customers or getting more orders? So should we expect growth to revive in this vertical as well? Because this is something which is which the expectation is that this segment as a whole is going to become big over the next few years.
That would be my last question. Thank you.
Ander Arenaza Alvarez
Yes, we expect to grow in this vertical also. We are already Adding additional customers. We have in fact added new customers and we are entering into a bigger tonnage components, I mean higher added value components that we are launching. I mean we are now in the investment phase and we expect to start the production during calendar year 26. I mean I would say in the Q3, Q4 of calendar year 26. So that, that is a fact. Also we are working with other customers to add new products to our portfolio and we will probably launch a new factory for these products.
So yes, we expect that the aluminum business will go up. You know that till now our performance was not very good because in terms of sales, because we were. We are mainly dependent on Bayats, I mean on two wheeler and also with these CNG programs that did not succeed and we were caught on that CNG drop. Okay. But in the near future we are expanding our portfolio, we are expanding our customer base and we expect to have a great aluminum division in, in India with further factories even.
Kiyath Jayaprakash Nair
And in aluminium, as I pointed out, there was a little bit on the sales recognition side also. So cumulatively between CNG and that there was a significant drop on the growth side because of that. So otherwise as Ander pointed out, we are very optimistic about aluminum and looking at a lot of additions. Of course, course we are considering a lot more than Ander has talked about. But. But we’ll come back at the right moment on what further we are. We are doing there.
Unidentified Participant
Okay, thank you and all the best for the future.
Kiyath Jayaprakash Nair
Yes, thanks Nishidi.
operator
Thank you very much. A request to all the participants. Kindly limit your questions to two per participant and rejoin the queue for a follow up question. Next question is from line of Kapoor Desai from Kodak Securities. Please go ahead.
Apurva Desai
Hi. Am I audible? So yeah. Hi team. So I want. I just had one quick question to ask you. So in your balance sheet you. It was. I noticed that there was this net loans given during the quarter to the tune of 2.3 billion. Could you share a bit more light on that? And that is the only question that I have.
Kiyath Jayaprakash Nair
Can you just repeat jp, you know like he couldn’t catch it fully. So on the balance sheet, what is the issue?
Apurva Desai
So. So you have a line item regarding net loans which were given during the quarter. It was during. So I’ll just tell you the numbers. So it was 2.3 billion during the quarter.
Kiyath Jayaprakash Nair
Yeah, I get the question. Yes. So we have good cash generation in Europe and our loans and we invested within the group at a good market rate. So we had a good cash flow in Europe where We reduced our debt as well as we were able to deploy the surplus in loans within the group.
Apurva Desai
Okay, so. So was this related to just the Europe entity? Is that so?
Kiyath Jayaprakash Nair
Yes, it is entirely new.
Apurva Desai
All right, all right, thanks a lot. Thanks a lot. I’ll drop back.
Kiyath Jayaprakash Nair
Yes, thanks apurva.
operator
Thank you very much. Next question is from the line of Ganesham from Unified Capital. Please go ahead.
Unidentified Participant
Thank you for taking my question. I just want to drill a little bit more into what makes it was saying if you could just give us a quantitative sense of these new orders that have been slow that you expect to ramp up because the divergence between industry growth and CIE’s growth in India has been material. So that would help. And also what was the extent of the impact because of the change in aluminium reporting? If reporting was not changed, what would have been the growth in the India business? Thank you.
Kiyath Jayaprakash Nair
You know, if you see, we would cover whatever is the, you know, you are saying that the difference at least in Q4 was quite material. Otherwise over the entire CY25 the difference between the market growth and US would not be that much in Q4. It was, as I said, a large part of that explanation is due to just two factors. One is the impact of sales on the CNG bike as well as this change in reporting. That would account for, I would say a large part of the discrepancy between the market growth and US in India.
You know, let’s not get into assigning actual numbers around that because you know, that’s a part and parcel of business. But the point we are trying to say is it’s not that, you know, that there is a sudden loss of business or anything like that. That’s as far as your, you know, the explanation with market growth is concerned on your second thing around new orders, I think, you know, to be very simple, simply Andrew talked about the order book addition and generation in CY25. But normally that is the rate at which we add orders in India.
Anywhere between the 8 billion to 10 billion of new orders we almost add every year. So, so there has been no slackness in addition of new order books. In the new order book it has been in this range. If you refer back to our commentary at the same time last year you will hear the same thing. The numbers were pretty much, I think around the same number. Maybe this year is slightly higher. But that’s the case. We add about 8 billion to, you know, 802,000 crores every year. So that addition is there in which areas we have just talked about Both in the opening commentary and the question that Nishit had asked.
And Ander has specified almost all verticals. If you look at this in, he mentioned almost all verticals where we are growing, except maybe magnetics, where, you know, we may be requiring, you know, some, you know, like either enhancement in capability or enhancement in capacity that that may be required. And it includes. We are considering a whole slew of options, including, you know, debottlenecking brownfield green fields. Of course, you know, our preference would be to do it as quickly as possible, so between the first and the second options. But, you know, we are considering all options.
So I would say that, yes, order book is not an issue. Now coming back to your question, can we be how much with relation to the market growth rate in CY26? Again, I would say, let me not directly answer that question, but again to Nishit, I had tried to point out that if you look at our growth trajectory, every quarter we have been improving and I think we’ll keep on improving. You know, if you can allow me to end my end, my answer there, that would be that, you know, we would be improving.
Unidentified Participant
That’s very clear. And just one last question is incrementally, are there any areas where you’re seeing a degrowth or weakness or is it your view that most of the weakness is already in the business? And how do you sort of mitigate the foreign exchange volatility? Do you have any ongoing headwinds? Thank you.
Kiyath Jayaprakash Nair
No on where the weakness is there. In our opening remarks, I said that we are going through restructuring in our aluminium and magnetics business. I think magnetics business, obviously it’s a very small business and I think when our annual report comes out, you will see the sales number there. It’s a very small business, less than 200 crores. But yes, it faces a lot of competition from Chinese suppliers as well as, you know, a lot of technology changes that are happening there. So we have to up our game as far as magnetics is concerned to be, to be more competitive.
In fact, on a global basis, we have to do that aluminium. Ander has talked about, you know, how we are looking at product portfolio changes, how to meet the requirements of our anchor customer better there. So we have worked a lot, you know, and I think you could have heard from the optimism in his voice about that business because the team has worked really hard for the last two or three years. And as I think you or the previous questioner had pointed out, the aluminium business was a little stagnant for a couple of years and I think that was the time spent in restructuring some of the operations.
It is fully done. Answer is no. It is always an ongoing process and but you know, we are at that stage where we can feel confident about, you know, placing a lot of bets on capex in that area, which we will, which we will do in aluminium now because as you have pointed out, aluminium business will certainly have certainly a good future in India given, you know, electrification, given lightweighting and everything else. So not just two wheelers, I think four wheelers will also be a good area for that business and that is certainly what we are looking at.
Unidentified Participant
Very clear. Thank you. And all the best.
Kiyath Jayaprakash Nair
Yes, thank you so much.
operator
Thank you. Next question is from the line of Pratik Kothari from Unique pms. Please go ahead. May I request it unmute your line and proceed with your question. The line for the participant dropped. The next question is from the line of Kush Nahar from Electrum pms. Please go ahead.
Unidentified Participant
Thank you for the opportunity, sir. So my questions, my first question was if you could tell us how much is your manufacturing capacity that we have in Europe versus India And I’m gonna follow up on that that as a strategy. Do we see some capacities being shifted to India since like you mentioned, we are seeing a very strong domestic growth over here. So we are faster to market in that way. And also exports because of the trade deals that has already happened with EU and us compared to, you know, having a manufacturing setup in Europe where costs are comparatively higher.
Ander Arenaza Alvarez
So, you know, as I said in my opening remarks, Europe is largely forgings and gears for, for us, you know, almost 80% of Europe is forgings and 20% is gears. And in India, you know, we are looking at capacity addition in every area. You know, iron castings, aluminum, magnetics, stamping. So you know, those have, you know, like the one area where there is an overlap is forgings. And I think gears, Ander pointed out, is now doing quite well in Europe after the restructuring. We are back to the pre restructuring margins also which is pretty much, you know, high double digits.
So that, so the question is around forgings and we do think, you know, Andrew did mention in his earlier remarks that forgings and iron castings are two areas where you do see, you know, a lot of, you know, churn happening from Europe to other emerging, emerging nations. It is not necessarily India, it can be other places also. These are those two areas and we will consider, you know, what can happen in forgings. A lot of it depends on what the OEM wants, but I will ask Andre to opine on that.
Ander Arenaza Alvarez
Yes, no, and just to give you some more details because the question done by the investor is accurate and is well done. Okay. We are moving and we are planning to move certain capacity from our European sites to India. We are executing this plan. I mean, probably by April we will start moving some pressures, fully automatized pressures, also some gear production cells that we will transfer from our unit overseas to India. So we are doing this activity and we are on top of that, we are increasing our capacities in India. I told at the beginning that we are expanding our factories and we last during this week, in the different operational reviews that I had with each of the verticals, we approved certain factory expansions in composites, in stampings, in aluminum.
I mean, we see a lot of activity here and we are preparing ourselves to increase our capacities to, let’s say to take the advantage of the growth that is coming. We have already the orders from the customers. We, I think we are preparing everything. And my message would be that we could have done this before. That could be the one of the questions from the investors. And the answer is yes, but we decided to do it in the same way, in a conservative way I would say, with the proper teams in place, with the capacities, with the technology so we can, we will not fail to our customers in all these ramp ups that are coming.
So we are quite confident that we are a very solid company, very reliable company and that’s what we have been trying to do. And we will see this growth coming steadily and we will see also improvement in, in our margins in the company. So we are quite satisfied, I mean the board, our board yesterday was also satisfied with the evolution and with the security that we are giving to them. So that’s the approach that we have. And coming back to your question, yes, we are transferring certain capacities that makes sense to India to increase our potential capacity here to cope with the demand.
Unidentified Participant
Right, sir. So just one follow up on it. So just want some clarification. Since this EU India FTA has happened, so since we already have a presence in Europe in certain way, so once we shift it, do we see that our wallet share with our existing customers and onboarding new customers have become easier because since we already have a presence and then we have a cost arbitrage also to offer to the customers?
Ander Arenaza Alvarez
Yes, what we are doing is as we have the customers in Europe and the customers are approaching us in India, we are negotiating with them the proper way to get the advantage of Indian Cost and also get the advantage of our reliability being close to them in Europe. So yes, we are working with them on that. During some period they were reluctant to work in that way. I mean making this mixed solution. Now looking at the geopolitics, looking at the risks that they are having, especially with all what’s going on with tariffs, with wars in the war in Ukraine, the different logistic issue difficulties that are happening in the world.
They are very, very keen to work in the way that we were proposing. So we think that our proposal is a win win proposal where we use our capacity and our lower costs in India but we give them the safety and the assurance of the proper delivery and lower risk in the deliveries and of course in the quality because we can react immediately from Europe. So I think our position is probably the best in the market and we will take advantage of that.
Unidentified Participant
So just last question, if I could ask.
operator
Sorry to interrupt your question. I will request you please come back for a follow up question.
Unidentified Participant
Sure.
operator
Thank you. Next question is from the line of Pratik Kothari from Unique pms. Please go ahead.
Unidentified Participant
Yes, I thank you. Good afternoon. Because this aluminium recognition change, this, this happened in Q4 alone or was it for the full year?
Kiyath Jayaprakash Nair
Largely in Q4. But the impact is for the full year of course.
Unidentified Participant
Okay, correct. Because if we look at see tractor contribution, I mean while tractors industry has grown at 15, 20% we see a 20,000 odd flows has gone to 800. What explains that? What, what happened is
Kiyath Jayaprakash Nair
where are you seeing tractor degrow?
Unidentified Participant
So last year tractor was about 18% of our revenue mix. It is 13 right now.
Kiyath Jayaprakash Nair
You know, I don’t think tractor has degrown. I, I, you know, I, you know possibly, you know we can check the number. It’s about how those are approximately proximate breakups. I think tractor as a proportion has come down a little bit but I think there, there might be some more revenue recognition. I don’t think tractors has come down. In fact in Q4 the tractor growth, market growth rate in production was higher than the 20% and in fact it was closer to 30% and our growth rate was even higher than that. So that is tractor is not a problem for us.
In fact tractor was a severe firm us in Q4.
Unidentified Participant
So that’s not, I meant for the full year but. And you stand by this comment that had this aluminum recognition and CNG not been there we would have seen industry, our weighted average industry growth which is
Kiyath Jayaprakash Nair
about 20 that you know, like, you know, I don’t want to get into very definitive statements, it would have been much higher.
Unidentified Participant
The reason to ask is because the underperformance for now seems very, very material. I mean 21 weighted in the average industry versus 12 for us. So, and this is at times when we were expecting the older orders to start and hence we should have done even much better than industry. And so it’s a very negative surprise, honestly. And hence this question,
Kiyath Jayaprakash Nair
of course, you know, like the gap, you know, that we are talking about, I think largely has come from that area, but it will definitely not explain the full thing, you know, that’s, you know, more for our relevant weighted average, it will be closer to 17, 18 for us, us. And that gap would have been closed to a very large extent because of these two reasons. You know, they were very material. Let me put it this way, you know, like definitive numbers. Let’s, let’s not get. It was very, very material. Let’s. Let us put this, put it this way.
I don’t want to make any excuses saying this is the reason why that growth has happened. We do recognize that we need to do more growth. There is no question about that. And that is the reason why we would rather emphasize on what are the new projects and new capacities that we are looking at rather than, you know, just trying to explain this and that. Yes, it did make a difference, but, you know, that’s part and parcel of the business. So yes, it explains. The reason why we are giving that explanation is only to give an assurance that, you know, we are not doing something wrong or, you know, there is not anything drastic that is going on, you know, which, you know, which might occur to some people, you know, everything is alright.
In fact, our new order book, capacity additions, the condition of our plants, all of them have improved significantly. Our ability to serve the customer, everything is way better. As I said, you know, some of the new plants that we are inaugurating are really world class. So that is the only reason why that explanation is given. But I would rather emphasize that new orders are there, new orders are picking up, we are considering new capacities, some are being added, some are being considered and some will be considered. We will also look at inorganic growth opportunities, whatever we can.
As Anders said. Could some of this have been done a little earlier? Maybe that question will always remain. That is a criticism we will happily take. But, but I would rather focus on this and rather than trying to explain this or that there, you know, like, yes, it’s very material, you know, the number for Q4.
Unidentified Participant
Correct. And lastly, on Europe, I mean, while we say that we have betted heavily on ev, but I mean if you just look at data, EV for the first time in December crossed gasoline vehicle sales in Europe. I think There was a 50% growth back then. So is it this Chinese EV which is being sold which we don’t cater to and hence we are not seeing any growth. EV is doing well in Europe in general, so
Kiyath Jayaprakash Nair
it is doing relatively less well on a small base. Obviously you will see growth but you know the EV penetration in Europe if you look at it between CY24 and CY25 is 13 to 16%. So there has been an increase. So there is no denying that fact that there has been an increase but that increase is much lesser compared to what we, you know, what would have happened, the number of platforms, etc. That have been launched. In fact one of the reasons why the European auto industry is struggling is because of the large investments that a lot of these OEMs have made in the new EV platforms and the new norms on the ICE engine side on emission and so on.
And a lot of investment have gone through which are yielding no result. In fact the, you know the, the market numbers for production numbers as far as IHS is giving us is really stagnant between 16 to 17 million for the next maybe till F30. Now IHS is reputed to be conservative so hopefully some pent up demand will come at some point of time. But nevertheless that’s why the auto industry in Europe is struggling. Now to your question on whether evolution is fully. Yes, you are right. You know like Chinese have their own supply chain and everybody is struggling because of that. You know, if the Chinese become bigger in the European market then obviously we’ll have to make double the effort of entering them because they are OEMs.
We don’t know neither CIE at the parent level nor we in India know them or you know it will be a new OEM that we’ll have to accept and then they will also have to be open to the idea of developing a supply chain in Europe and so on. So that’s a long drawn process. So Chinese presence will obviously make life little more difficult for everybody in the supply chain. There is no doubt about that. And therefore, you know we are considering what we are considering of, you know, like what Andrew, just talk about greater synergies between Europe and India subject to what the OEMs feel.
Because at this point of time even European OEMs are willing to consider out of the box solutions which they were not willing to consider even five years back. So the situation is a little different from India and it will be managed differently. So to your question, yes, Chinese are making an impact. We don’t have a presence with the Chinese OEMs. And yes, their growth does pose a risk to us. There is no doubt about it.
Unidentified Participant
And drop in.
operator
Sorry, I will request to please come back for a follow up question. Sure, thanks. Thank you. I request to all the participants kindly restrict to two questions per participant. Next question is from the line of Viraj from Simpl. Please go ahead.
Viraj Kacharia
Yeah, thanks for the opportunity. A couple of questions. First is on the European operations. So if one is to understand say the cost base, you know, for us and competition in Europe, you know, so if we are at 100 and you know, the kind of margins we are, where would they be at, you know, and in relation to that, how is the consolidation played out so far? So, you know, in terms of new wins we got, is it from competition or any color you can give on that. And then the related second part of the question is if one has to understand the similar cost base to a facility from India or China, how does the dynamic work, you know, between the two,
Kiyath Jayaprakash Nair
you know, very three, three big questions like what is our cost base compared to competitors in Europe? No, we are. CIE is one of the most efficient producers in Europe. Not just what is part of CIE India, but in general, you know, parent CI Europe is perhaps, you know, like I cannot produce any study to prove my point, but perhaps the most efficient producer. Because if you look at the margins and the numbers that CIE generates in Europe, I don’t think there is any other competitor which is as efficient as them. That’s one point. Now your next question was cost vis a vision, India and Europe.
Now that’s a really complicated question because yes, India, there are some costs which are low, some costs which are high. For example, if you look at power costs now, power costs are not very low in India. You know, there are states where the power cost is low, but there are states where it is extremely high. So, so it depends again, it depends on, yes, labor cost is low, other costs are also low in India, but then you have to add logistics and so on and so forth. So frankly the difference will be there. But that difference will depend whether we are efficient in India or not.
You know, that is a point that Ander has been making for the last seven, eight years. Now that yes, if India has to or Indian manufacturing has to take advantage of any of these labor cost advantages, efficiency is most important. If the Indian plants are not efficient. It is not going to happen. Some of the best exporters from India are actually efficient. They don’t export on, on the basis of just cost difference. They are actually efficient plants. So that was the second, you know, second part to your question. And the third part, what was that? I think you’re talking about shift.
How do OEMs view the shift?
Viraj Kacharia
Yeah, just to understand the consolidation. How is that played out? So is that reflected in our new win consolidation?
Kiyath Jayaprakash Nair
We do expect consolidation to happen, but consolidation takes a little bit of time. You know, like consolidation will certainly happen. You know, the average production of automotive or, you know, cars in Europe, light vehicles in Europe used to be in the range of 19 to 22 million per annum. And this, I’m including Russia. Normally we report without Russia, but I remember the numbers with Russia. So those are 19 to 22 million post till about 2019 after. But after Covid, everything changed. I think after that they have been hovering in the range of 15 to 17 million units.
15 to 16, 17. It’s mostly 15, 16. So now if you see such, you know, a 20% reduction in production or 20, 25% reduction in production, obviously there will be stress in the supply chain and there will be consolidation. But consolidation takes time because, you know, the consolidation actually happens when the production goes out of, you know, it is completely scrapped. That will take some time before that happens. But we do see some consolidation will happen. And to your point, when it happens, we will definitely gain. As I said, CIE is one of the most competitive plants.
We have some of the most competitive plants in Europe. So we’ll gain, we’ll certainly gain as long as it remains in Europe. Of course, as I said, some of in forgings and iron castings, there will be a shift out of Europe also. So as I said, yes, it will happen. Some of it will come to, you know, our plants in Europe and some of them will shift out to other emerging markets, depending on which is the most efficient country for that to produce. So it, you know, like, let me say it is very uncertain, you know, and that is the reason why there is so much stress andor is putting on protecting profitability in Europe.
If you look at our investor presentation also, that is a point that we are stressing because of this situation, which is uncertain. You know, somebody asked about Chinese competition, you are asking about consolidation. We are talking about change in norms, euro 7 and all that. We are talking about electric vehicle. So these are very big changes that are happening in Europe and I think that’s the reason why we are stressing so much on protecting profitability before we talk about, you know, whether we can get this extra business or that extra business. No extra business will come because we, we are good company.
But over and above that there are a lot of other factors. So in Europe we need to wait and watch. India is much more straightforward, much happier situation. So you know there’s a huge contrast in strategies between the two geographies.
operator
Yeah, thank you. Thank you very much. So the line for the participant drop. Next question is from the line of Rajesh Joshi from Cruise Capital. Please go ahead.
Unidentified Participant
Yeah, thank you for the opportunity. Am I audible?
Kiyath Jayaprakash Nair
Yes, yes, go ahead.
Unidentified Participant
Yeah. So first question is on capex. Given the demand outlook and where we are currently standing with regards to capacity, what’s the CAPEX figure for the CY26B?
Kiyath Jayaprakash Nair
We’ll have to wait for that. It is too early for that. But it will be higher than last year for sure.
Kiyath Jayaprakash Nair
Okay. Secondly, on margin expansion journey it seems to kind of have flattened. Where do we go from here in terms of margins?
Kiyath Jayaprakash Nair
Margins where in India or Europe?
Unidentified Participant
Both, so to speak. India. Specifically
Kiyath Jayaprakash Nair
margins in India under said will improve this year there were some specific issues that we have talked about. There was tariff increase, increase and then, and then, and then there was the gratuity, you know, you know the impact of gratuity which, which was about 130 million odd impact of tariff was also substantial. So there was some diminution in margins in India because of that. But other than that in India Ander mentioned that we are going to improve. That should not be an issue in Europe. We are looking at protecting wherever we are at this point of time.
Unidentified Participant
Understood. And lastly with regards to growth rate, just wanted to get some sense on a strategy to break into non anchor customers. So be it for example like TVS or Honda or Toyota, just our strategy break into those kind of customers with their near have a lower exposure or no exposure, should we say. And secondly on opportunities outside auto, right We’ve seen, you know, our peers, some of them have now begun to get exposure in let’s say industrial powertrains or defense. So how are we looking at all those opportunities
Kiyath Jayaprakash Nair
as far as you know, the other companies that we are talking about, I’ll not get into names as I said, you know we have four anchor customers roughly that we talk about. M and M is actually two customers, auto and tractors. And then we have Bajaj and we have Maruti. So together they are good account for close to 50% of our business in India. And then there is a set of 10 to 15 customers who are in the range of anywhere between 1 to 5%. The largest among the lot will be Hyundai Kia followed by Tata Motors and then we have many such customers where we are trying to grow.
Of course Hyundai, Kia, Tata Motors is our focus for growth. There is Royal Enfield where we are growing. Then there are some exports that we are talking about, you know, business that we are talking about where we are, we are growing. So our focus is to grow these among these 10, 15 customers, at least a few of them so that they become much more, much larger for us. And that is, and we are getting a lot of traction there. You know, a lot of frankly our order book is not just with these customers, it is with other, you know, other people.
Among the ones that you named, yes, we are moving ahead with a few of them, not all. So we as I said, you know, like on the non anchor side also we don’t have an issue per se. You know, it is a question of how fast we can grow. On your question on non auto, no defense and industrials we are not, we are not considering, you know, it’s a very different business as far as we think, you know, the way the business model is, it is very, very different. We have some non auto business but largely, you know, in small composites and L and T is a very big customer for our customers.
Composites business of course we include tractors in auto and not in non auto including even off road is we include in auto only like you know customers like JCB and Caterpillar. We consider them as part of auto. So those are, you know like Caterpillar is definitely a very big focus customer for us in our gears business both in India and Europe and it will be a growing business. So other than these, I think the non auto that people talk about, defense, etc. No, we are not defense oil and gas. No, we are not considering that.
It’s a very different business model as far as we understand. And as I said, we have our hands full in our existing areas where there’s ample opportunity to grow at a good margin and that’s why we would rather focus on that.
Unidentified Participant
Thank you for this answer. And last one, sorry on strategy, right. I mean in this call and earlier elaborated that you’re planning to move some productions from Europe to India and on Capex otherwise as well. There seems to be a positive outlook on this call. Just want to give a sense on it. Has there been any change in strategy with regards to either manufacturing for Europe from India now or on Capex as well. A bit on that, please.
Kiyath Jayaprakash Nair
You know, like manufacturing in India was always a priority. You know, what Andrew did mention was we could have done some of the things that we are trying to do now a little earlier, but I don’t think there was any lack of priority or lack of Capex for India. I think we have enough Capex available for India. That’s not the point. The project should be good. So as far as that strategy is concerned is not about focus, focus on India was there, it is still there and will continue to be there. India is, as I said, in a happy spot, in a good spot at this point of time.
And it will remain a priority for CIE. As far as CapEx is concerned, it was more about evaluation of projects rather than evaluation of the geography that we are concerned. And now we feel more confident and therefore you will see much more capex happening in India. But again, as I said, we will invest it in a very prudent manner. I understand we require new projects, but these projects will be made on a prudent basis that will continue to do that. So I don’t think strategy has changed as far as India is concerned. Now the other question that you asked is in terms from, you know, like coming from Europe to India or India to Europe, etc.
Of course, you know, those opportunities are opening up. The domestic opportunity is also quite large and those will also open up. As and when they open up, we are happy to take those. Look, it is, you know, a lot of rethinking is going on among the European OEMs also. And as and when that happens, we are happy to take it. But as of now there are enough opportunities everywhere. Domestic, export, everywhere.
operator
Yes, thank you very much Rajas for your questions. Ladies and gentlemen, we will take that as a last question. I would now like to hand the conference over to the management for closing comments.
Kiyath Jayaprakash Nair
Okay, so thank you very much for the interest in our company, for the well directed questions you made and we hope that we answer properly. I just wanted to say that we are very optimistic on the evolution of the company in the near future. We all know that the automotive sector in India is now in a very good shape and we will be able to demonstrate that in the next quarter. So from our point, I would like to send a optimistic message to the investors and to the people and of course, as always, I would like to thank to our team in India that is doing a fantastic job and they will be the great executors of this growth that is to come.
So thank you very much and see you next week or next quarter. Sorry.
operator
Thank you very much on behalf of ICICI securities limited. That concludes this conference. Thank you for joining us. And you may now disconnect your. Thank you.