CIE Automotive India Ltd (NSE: CIEINDIA) Q4 2025 Earnings Call dated Apr. 30, 2025
Corporate Participants:
Ander Arenaza Alvarez — Executive Director and Group Chief Executive Officer
K. Jayaprakash — Chief Financial Officer
Analysts:
Vishakha Maliwal — Analyst
Pratik Kothari — Analyst
Nitish Rege — Analyst
Devang Shah — Analyst
Jyoti Singh — Analyst
Nitish Rege — Analyst
Amar Kant Gaur — Analyst
Rajkumar Vaidyanathan — Analyst
Basudeb Banerjee — Analyst
Presentation:
Operator
Sam, it’s. Ladies and gentlemen, Good day and welcome to CIE India’s Q1 CY25 results conference call conference call of ICICI Securities Limited as a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Vishakha Maliwal from ICICI Securities. Thank you. And over to you ma’am.
Vishakha Maliwal — Analyst
Thanks Shruti. Good afternoon everyone. Thanks to CIE Automotive India limited Management for giving us the opportunity to host the call we have here. In the call the senior management represented by Mr. Ramdar Alvarez, CEO Mr. K. Jaitakash, CFO Mr. Vikas Sinha, Senior VP Strategy. Mr. Oroj Laforte, Business Controller and Mr. Swapnil for Target TJN Strategy.
Over to the management to take this ahead. Thank you.
Ander Arenaza Alvarez — Executive Director and Group Chief Executive Officer
Yeah, thanks Vishakha. Good afternoon everyone. And good morning to those who are.
K. Jayaprakash — Chief Financial Officer
Joining from Europe. I welcome all of you on this call as also Ander, our CEO.
We are going to talk about Cie India results for Q1C25. At the outset let me highlight a change in reporting we have made. On page four we show the legal structure of CIE India. As can be seen, the Mexican business is now a subsidiary of Cie Gal for Europe. Thus, from this quarter we are reporting the Mexican business numbers as part of European operations and not as part of Indian operations as was the case earlier.
All comparable numbers from earlier quarters have been restated. We now start with Q1C25 results for the Indian operations on page 6. Sales grew by 3% to Rupees 14,113 Million as compared to Q1C24 in line with the weighted average market growth. Please note that steel prices have gone down reducing 3% of our turnover this quarter.
There is a large discrepancy in market growth numbers reported for the light vehicle and truck segments as reported by IHS and siam. While we have traditionally used IHS in our reporting, we have presented both sets of numbers in the presentation. Nevertheless, we understand that the growth in the India business needs to be higher and we are taking actions to address this.
In Q1C25, the EBITDA of the Indian operations was Rupees 2,628 million, EBIT 2,090 million and EBIT 2,085 million. Thus, while sales grew by 3% year on year, EBITDA, EBIT and EBIT were largely flat. The one thing that we would like to highlight is the steady improvement in India margins in spite of the sluggish growth.
The reported ebitda margin in Q1C25 was at 18.6, which includes a one off mega subsidy benefit at the Zahira part plant of our Stampings business. Without this one off benefit, the EBITDA margin would be 18%. This is higher than the operating EBITDA margin of 17.7% in Q1C24 and 17.1% in Q4C24. So both year on year and sequentially.
Please note that the reported EBITDA margin for India operations in Q1C24 included a one off subsidy at our aluminium castings business and this 17.7% that I have given you now is without that subsidy. We now move to CI India Europe business. Results for Q1C25 on page 7 sales were rupees 7849 million which represents a drop of 19% year on year compared to Q1C24 this sales drop in Europe business is largely due to the slowdown in all segments we cater to in this quarter. European light vehicle demand is down by 7%, MHCV by 19% and there is a continuing. Slowdown in the US off highway market that metal castello caters to. Also, Q1C24 was a good quarter for sales in Europe and the Q1 C25 numbers look much lower in comparison due to the base effect. The extent of the continuing sales drop in Europe can be seen by the sales number in the last few quarters. Sales in our European operations were Rupees 9689 million in Q1C24, Rupees, 8375 million in Q2C24 Rupees 6650 million in Q3C24 Rupees 6489 million in Q4C24 and 7849 million in this quarter as we have reported. Of course the Q3 Q4 sales numbers are normally lower, so sequentially there is an increase. But we have to remember that Q3 and Q4 due to the seasonal effects are normally lower. In Q1C25 the EBITDA in our European operations was Rupees 1,088 million, EBIT Rupees 761 million and EBIT Rupees 646 million. That is an EBITDA margin of 14%, EBIT of 10% and EBIT of 8%. We are continuing to focus our efforts on maintaining our margins by adjusting our operations to the lower level of activity. The EBITDA margin in our European operations this quarter is 13.9 the 14% that we said versus 15.5% in Q1C 24 and 14.9% in Q4C 24. This slight drop both year on year and sequentially is due to the decrease in sales as well as some costs incurred due to restructuring that we are doing. The pain in Europe is expected to continue for at least a couple of quarters more. And now if we go to page 8 we will see the consolidated results which are a combination of the results in India and Europe. In Q1C25CI India achieved sales of rupees 21961 million EBITDA of rupees 3716 million, EBIT of rupees 2852 million and EBIT of rupees 27. 30 million or 273 crores while sales declined by 6%. Year on year EBITDA declined 10%, EBIT 12 and EBIT 10. Consolidated numbers are depressed by the performance of our European operations, but we have continued to deliver on margins in spite of of the drop in sales. If we eliminate the one off effects the consolidated EBITDA margin in Q1C25 is 16.7, which is the same as in Q1C24. In closing, we would like to state that we are cognizant of the challenges in our business and are renewing our focus on growth in India business, at the same time improving operational excellence and cost structures to maintain our margins. We will continue to focus on growing with our customers to take advantage of all the opportunities that come our way And with that we can 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 and answer 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 assembles.The first question is from the line of Pratik Kothari from Unique pms. Please go ahead
Pratik Kothari
With us. Just a continuation to your statement on the India business. Seeing that we are cognizant of the numbers which came in and we are taking actions. If you can elaborate more on that, what is it that we are planning to do and how are we solving for this?
K. Jayaprakash
Now you’re talking about growth in India or like.
Pratik Kothari
Yes, growth in India, Yes.
K. Jayaprakash
As far as the margins are concerned, of course, we are quite proud of what we have done on the margin front in India and in spite of that, it is improving. So we have really, you know, we are quite happy with the situation there. As far as the growth is concerned, yes, we are more or less in line with the market. We need to grow faster than the market. That is the question.
As we have always highlighted, we are waiting for some of our orders to kick in. There have been some uncertainty all around. But in terms of specific what we are focusing on and of course it takes a bit of time to kick in. We are making sure that with our anchor customers, we get more and more chances.
The other orders we already have, as we have already said, every year we have an order book. Every calendar year we generate an order book anywhere close to between 800 to 1000 crores. So the order book is there, it has always been in how that order book converts into sales.
What we have observed is that this conversion is always better with anchor customers. And therefore we are along with the order book that is already there, we are focusing our attention on our anchor customers. So this is really how we are trying to rectify or bolster our situation as far as growth is concerned. Yes,
Ander Arenaza Alvarez
If you allow me, because one comment from my side. This is Andre speaking. Okay. This regarding. This is regarding also the organization of our company. So we have reinforced the business development teams and we have had now business development head for all the verticals and we are using the. Synergies that we have in different verticals with all the customers. So we are now working on that. We see that we are already having certain success on this new commercial activity that we are deploying. And one good sign of this new organization, and let’s say the outcome of this new organization is that in the first quarter of this year, in this Q1 25, our new orders allocation has been higher than our internal budget and our internal target. So we are talking about 3.5 billion rupees of new orders that we are already, we have already allocated. Okay, so those are. This is another view of this growth strategy that we are now launching in our company.
Pratik Kothari
Correct. Last call didn’t make a statement that we have put up capacity, but lot of orders were getting delayed, be it hoser or aluminum casting, etc. Any signs of pickup there or that delay continues?
Ander Arenaza Alvarez
No, the delay, the mainly the delay is coming from specific projects that we are having from electric vehicles. And as you are aware, the growth of the electric vehicles is not yet arrived. It’s still a little behind than expectations. And that’s why those projects are not yet picking up. Okay. We expect that slowly and that’s what all the indicators say, that they will go ramping up in the next quarters. So that’s our expectation.
But right now there are still certain delays and we have also some internal combustion engine projects from some customers that they are having difficulties launching their program, their internal programs. But they are telling us that we should be prepared because they are expecting to ramp up in a very short period of time.
So overall we say that we think that the new projects will come, the electric vehicles will come a little bit later. The rest of the projects that we are working on, they will pick up, we hope that they will pick up soon. So we are quite optimistic on that front. We think that in India we should grow faster, as Vika said in his speech. And that’s the expectation that we have.
Pratik Kothari
So this one out of curiosity, I mean, so usually an Indian OEMs will have a couple of suppliers for any product that we supply. So for any of our division, I mean you can take casting, stamping, forging, would our pricing be in line with the peer who would be, would be the second source or the third or we might be the second source. Is our pricing in line with what others do? And then this 18, 19% margin that we make is all a function of internal efficiency?
K. Jayaprakash
Yes. Pricing would be in line. Sachet, we need to be competitive with our customers. In our business, there is no scope of charging a premium. So we are competitive. So most of our margins comes from operating efficiencies.
Ander, I’ll hand it to you because I’m sure you have much to say on this.
Ander Arenaza Alvarez
Yes, no, no, I fully agree. That was the answer I was going to give. I mean, the prices that we are offering to the market that we are getting from our customers are exactly the same than our peers. I mean, of course there are small variations in certain moments and in certain products we can be a little bit more competitive.
In certain products our competitors can beat us in pricing. But overall, the prices that we are offering to the market that we are getting are exactly the same than our competitors. Of course, our task is to be competitive and our source of competitiveness is our internal efficiency and let’s say the best production processes that we are now trying to implement in our Indian plants. Okay.
In all the verticals we are working with our European colleagues. We have people working with us and making the technology transfer. And this is our main task. You have listened to me several times to talk about the efficiency because that’s my, my, let’s say, my main view of how we should work in India because generally speaking, what I see yet is that our efficiencies in our Indian companies are below our efficiencies in Europe or in Mexico, for example.
So I think we have room for improvement and we are working on that. So that’s the task. Of course. Now what we want to do is we want to get more efficiencies and offer these efficiencies to the customers to be more competitive and to gain more market share.
K. Jayaprakash
Pratik, anything further?
Operator
The line for the current participant has dropped off. So we can go ahead with the next question. The next question is from the line of Nitish Regal from Chris Capital. Please go ahead.
Nitish Rege
Hi. Thank you for the opportunity. My question is for Ander. So you know, and for the India business, for tenant India business, we have underperformed our peers over the past six quarters and you know, what corrective actions are we planning? To take, you know, specifically on getting the growth back. You know, while there are negative surprises such as, you know, order delays, you know, just part and parcel of our business, you know, which can impact some business vertical. But you know, overall growth has been impacted and you know, why weren’t other, let’s say stack for chains, you know, other parts, you know, growth in the other parts also impacted services.
K. Jayaprakash
Now, you know, we. Andrew just answered, but I’ll summarize. There are two main things we are trying to do. One is of course we have pointed out in the that we have no dearth of order. You know, our order book is very good. Last year also we did close to thousand crores in new order generation. This quarter has been exceptionally well. As Andrew pointed out, Rupees 3.5 billion. So there is no issues around order book. The issue has always been conversion of order book into actual sales where many projects are delayed. Especially the ones that we had for exports to EVs that Ander has pointed out.
Some of them are coming back slowly. There are some ICE projects also delayed. What we have noticed is that the order book to sales conversion is best for anchor customers. So our first plan of action has been to refocus on them and, and try and see if we can exploit all kinds of synergies with customers who are big with us. That’s the first.
And how are we doing it? And I explained that we have just made a change in our organization as far as how business development is done. We have a new business development head, Kunal, and the focus is to get synergies with our existing customers, the bigger ones, as much as possible. And that’s how we plan to go ahead.
The last thing Andrew did mention that our source of competitive advantage is our operating efficiencies. And we’ll continue to focus on that because our firm belief is once your operating efficiencies are in place, you are competitive vis a vis your competitors and the growth will eventually return as long as you are competitive.
So that’s what we have been doing and that’s what going forward we are going to do. But the key thing is we are trying to refocus our attention on how business development is done and get as much synergy as possible in the organization. Yeah,
Nitish Rege
Okay. And secondly, you know, any progress on M and A now that we are sitting on 13 to 1400 crores of cash
K. Jayaprakash
Nitesh, you know that we keep working on M and A at any given point of time. We are always looking at opportunities. But M and A, we will publicly announce whenever we are at a stage where there is something to something to announce. But as I said, MNA is an integral part of our strategy and we keep looking for MNA opportunities.
Yes, we are amazing. That there is cash on our balance sheet and it’s a good thing. The reason why we keep some cash is because we are a foreign owned, foreign operating or you know, operated company and therefore we, we cannot take debt for doing M and A activities in India and some cushion of cash is there for that purpose. Yeah,
Nitish Rege
Okay, thank you. I’ll fall back on the floor if I have any more questions.
K. Jayaprakash
Yes, thank you so much.
Nitish Rege
Thank you.
Operator
All right, the next question is from the line of Devang Shah from Asset C Meta Investment. Please go ahead.
Devang Shah
Yeah. Hi, good afternoon sir. So you address right now, you know, for our last participants about you know, growth related aspect. So sir, I just want to understand first thing the root cause that is you know, the you know, order book is not transmission into you know, revenue, the execution delay or decision making delay. That’s one thing. So then I will go to my next question plus just make me understand about this thing. Sir first.
K. Jayaprakash
Yeah, sure, sure. That is, look, most of it is program delays. It’s not execution problem from, from our side. Most of it is, you know, for example there have been some EV orders that we have for exports. You know, some of those EV orders, the project itself has been pushed back because as you know that there has been a little bit of loss of momentum as far as the EVs are concerned across the world. Not just in India, across the world you are seeing that in Europe where the EV penetration is stagnating around 12, 13%. In the US also it is stagnating a little bit. Plus even on normal orders there have been a lot of uncertainties. Also you see in India the passenger car market which was doing exceptionally well has come down to the range of 4 to 5% growth which it was going. Of course some companies are growing much faster including Mahindra, which is good for us. But most of this order book delay is due to program delays, not from our side. Okay, so that’s
Devang Shah
So just you know my understanding is correct it’s some kind of deferment by your client. So that’s why you know it is being delayed. Although you have been given an order book but they differing because of some kind of, you know, their demand or some kind of thing is delayed. That’s why sir, my understanding is correct sir.
K. Jayaprakash
Absolutely. Your, your understanding is correct
Devang Shah
Sir. To then you know, what you perceive to be as far as you know, demand environment. As you already highlighted in the last quarter that we may see some kind of pickup in a, you know, second half in a Europe and as far as India is concerned. So we may see some kind of, you know, growth trajectory is concerned because last year there was no negative we have seen. So what you perceive, sir?
K. Jayaprakash
India, we are seeing good traction in the tractor market. Two wheelers continue to do reasonably well. It is not, you know, the base is now higher. So the growth is. But it is a reasonable growth that is available. Passenger cars have fallen behind a little bit, but still there is growth. So in India, there is growth opportunities. It will keep coming back. It will come back.
But as I said, our key thrust area is if, you know, the order book is not turning into sales, can we get more orders, especially from our existing customers? And that’s the reason why. So the strategy is simple. If my order book is not turning into sales the way I want it to be, let me go and get some more orders. And that you will get quickly only from customers that you know well, that’s why, you know, Andrew did mention that, you know, the business development head has been tasked with exploiting these synergies. So that’s about India. Now Europe is a very different story. And Europe, the pain will continue for some time.
So on Europe, I’ll ask Andrew to give a more detailed answer, but before he gets into Europe, I’ll request Andrew to talk about, you know, why these orders have been delayed. And it is more on the programs and not on our execution to assure everybody that it’s not our execution. That is the issue here, Ander.
Ander Arenaza Alvarez
Yes, absolutely. Because, I mean, the reason of the delay of these programs is, is not on cie. Okay. These delays are coming from two main reasons. Okay. One, the main reason is that most of our. These programs that we were expected to launch were electric vehicles programs that have been delayed. Some of them were to. We were expected to export to us and also now in the US let’s say the slowdown of the electrification is, let’s say, stronger than in other regions in Europe, the electrification is stagnant and the electric vehicles share is approximately 15%. So it’s zeroing, but just 1, 2, 3%. No more than that. It was expected to grow to up to 25% this year. And this will not happen. So this delay in the electrification is affecting us. This is one reason.
Second reason, as Vikas explained, certain projects from big projects that we were awarded and we invested to start the SOP in beginning 2024 were delayed and they are now ramping up. We were expecting to sell, for example, for a particular engine, we were expecting to sell 20,000 sets per month. And we are now still at 7,8000 sets per month. Okay, so this is the situation. The customers are saying that in the next. Two, three months, they will ramp up to double the current output to 15 and then they will jump to 20,000 per month. So these are the kind of things that are happening. I would say that this is just a temporary slowdown that we have had. And in the meantime we are working in new programs, we are working in the market to improve our market share or to add new products to our portfolio. And that’s the activity we are having. Okay, so in India we are quite optimistic for the future. And I think that the company, generally speaking is doing well. I know that this weaker sales than expected is creating certain concern, but I think in the mid term, long run, I think the company will succeed and will continue growing. And of course, as in the previous question someone asked about the M and A activity, we are also working on the M and A activity. So our clear strategy is to grow in India both organically and also inorganically. So the debt of CAE to India is, I would say probably is our main bet in all the companies. So in that sense our shareholders can be sure that we will continue trying to grow and to develop the business in India. Then coming back to Europe. In Europe the situation is much more, let’s say, difficult. You know that the European market is stagnant with this year we will see a drop of approximately. In the light vehicle market, we will see a drop of approximately 5%. 5 to even to 7%. That is the expectations that we have. On top of that we have this tariff war that is now on the table and could affect with additional drop. And probably this will have a negative effect in the total amount of car production in Europe. So then the situation was weak and probably will be a little bit weaker in the next quarters. So that’s the expectation. So we still expect to have a weak market in Europe. And what we are now trying to do is to adapt our companies to this scenario, to maintain and to protect our margins as much as we can and be ready when the ramp up comes, that we expect that probably we will see certain recovery by the end of the year on. And also for the next year we see that in Europe a little bit the behavior of the market is a little bit different than in India. We see that there will be a consolidation of the market in several suppliers are struggling. So we will see that we can win also from the consolidation of the market. So that’s our view on, on Europe and also in India.
Devang Shah
Thank you. Very satisfactory you know, explanation you have given. So on that explanation I have a one question. So by considering these facts, we are in just Q1 of current year, you know, CY25, how we have to evaluate the growth trajectory every quarter. You know, it would be, you know, better to get an idea as far as, you know, demand environment and then we can get a certainty as far as growth of this particular calendar year.
Or you have anything, you know, that’s been forecasted by you as far as either consolidated overall revenue growth for the calendar year 25 or if you have a, you know, segregation of an Indian related growth, how it would be continue to unfold, you know, you know, at a single digit. And what would be the European growth if you have been forecasted anything for this calendar year or it would be, you know, every quarter we have to evaluate and then conclude.
K. Jayaprakash
We don’t make forward looking statements. So that is a policy that we strictly follow. So we have not made any forecasts or any statements as far as our overall C25 numbers are concerned. We can talk about the markets, as Andrew pointed out, the markets in Europe.
Let’s talk about Europe because from a market standpoint Europe is in a difficult situation. I think in Europe you are going to continue to see this pain in the market for the next two quarters at least. Let’s be prepared for that. That’s why Ander has clearly stated that our strategy in Europe is to restructure our operations so that we maintain our margins. We have to match our costs to the prevailing volumes. So that is what we are doing.
So in Europe we do expect pain for the next two quarters as far as India is concerned. Now India we know that for example in Q1 the car market as per SIAM grew about 5%, as per IHS about 1%, the two wheeler market about 6 to 7% that the tractor and trucks have done reasonably well. They are double digit, but I guess they will moderate.
So if we are looking at a number anywhere between 5% to 7% growth in India from a volume perspective on an overall basis, that is something that we are working towards. Of course this quarter we had a little bit hit on the steel price but that’s how you have to look at the market in India. Say for example, anywhere between 4 to 7% would be the growth. It is lower than what we have been experiencing in the last few years. But that’s the scenario in India. In India you still have growth. It’s lower growth than earlier. And our job is to be ahead of this growth. And all that we are talking about is to be ahead of this growth. That’s how I would say. But we don’t make any forward looking statements.
Devang Shah
Yeah, that sounds satisfactory. And last question sir, before you know concluding any kind of, you know, tariff related, you know that can affect the, you know, your US related export related aspect. So any kind of headwinds over there.
K. Jayaprakash
So as far as Ander, can I take this or you would like to take this?
Ander Arenaza Alvarez
Oh, I can take it because. Because the impact of the tariffs in our business is. Is very, very low. Okay. I would say that this is negligible. Just to give you certain some figures that. Only 3% of our sales in India goes to us. Okay. That’s the approximately in the first quarter we are talking about 400 million rupees or something like that.
In all the cases except a minimum, just minimum customer, small customer, sorry. In all the cases the impact of these tariffs in our account is zero because our sale condition is either s work or is fca. So the tariffs are charged to the customers. Okay. So the customer should pay those tariffs.
So the impact on our accounts is zero in India. Regarding Europe. In Europe also both in Metal Castello and Bill Force Mexico that as big as Spain now is included in Europe. In our European region, all sales that we are doing to us in Metal Castello is approximately 40% of the sales. And in Guilford, Mexico it’s also about 40%. The impact in our accounts is zero in all these cases. Also all the tariffs because of the conditions of our sale conditions, the duties are charged directly to the customer. It’s not our responsibility.
And finally in cie fortunes we have one particular customer that is with approximately EUR10 million per year sales. I mean just it’s a minor impact of approximately 4% of our total sales in Europe. In the CE forging Europe that we are now negotiating with the customer because. Because this is selling directly to them and the duties are impacting us. But as you know also that there’s news today in the paper that US Government will not apply any duty to the car makers that are producing the casin in us. And this is the case in our case in CA. This 10 million euros goes to one customer, specific customer is fourth. And so we expect not to be affected. So globally speaking, the main problem we see with the tariffs in our business is the negative effect that could have these tariffs in the market, the slowdown in the market created by this tariffs uncertainty that is now in the market. So we can say that the impact is negligible or almost zero and the only potential impact is the slowdown that could create, especially in Europe.
Devang Shah
Okay. Okay, thank you so much for giving a very good explanation. Thank you so much.
K. Jayaprakash
Yeah, Devang, one more thing. As far as tariffs is concerned that, you know, depending on the tariffs, India’s competitiveness may go up vis a vis, you know, other countries. So that also we have to monitor. But as Ander explained, there is so much uncertainty around this tariff policy is that we have to just wait and watch. We don’t have any direct impact, but the indirect impact is something we have to worry about. The markets in US Europe itself may come down and India’s competitiveness may actually go up or go down compared to what tariffs are applied to countries like China, Vietnam, Turkey and so on and so forth.
So we have to wait and watch.
Devang Shah
But sir, just to add that thing, then it will be some kind of opportunity for also to you because you know, you can also, as you were saying, you have hired some business development head as well. So you can also look for the other market as well. Sir, will it be possible?
K. Jayaprakash
Yes, yes. If I compete. If India’s competitiveness increases, obviously, you know, there will be a chance to all good companies. So look, as far as our exports are concerned, if you look at our annual report also, which we have clearly highlighted that there are certain areas like iron castings and gears where we do see, you know, our opportunities in exports going up.
You know, exports is a complicated issue. There are many factors. You know, the supply chain risks are involved which you know, like companies are very, very wary about all supply chain risks which you know, which have been there in the recent past. So there is a move towards local for local. But at the same time, you know, certain, you know, certain processes will have to be outsourced because of climate policies and so on and so forth.
So wherever our competitiveness. Goes up, we’ll have an opportunity. We have identified iron castings and gears where we think we’ll have more opportunities. And if this tariff policy helps improve our competitiveness in these areas, we’ll definitely benefit out of it. Yeah.
Devang Shah
Yes, yes, yes. Thank you so much.
Ander Arenaza Alvarez
Yes. Yes, sir. One comment from my side because there is also an additional trend that we are now perceiving in the market. Especially for due to the this geopolitical tensions that we can see in the market is that some of our American customers, they are trying to move or they are analyzing to move the production they have in China to other countries like India or Korea. So this trend is also there. So this can be also an opportunity for us to increase our business.
So we are analyzing that. And some of the customers are already studying and requesting the quotation for this movement too.
Devang Shah
Yes, that’s quite satisfactory. Thank you so much and wishing you all the best.
Ander Arenaza Alvarez
Thanks Devan.
Devang Shah
Thank you very much.
Operator
Thank you. And the next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Jyoti Singh
Yeah, thank you for the opportunity. My question is basically on the tractor side like how is the overall industry is doing and what are our outlook overall on the tractor industry side and how we are doing it. And so earlier question on the tariff. So also we are going to benefit on the tractor side because of the tariffs going forward.
K. Jayaprakash
As far as tractor forecasts are concerned, they are looking reasonable for this year. You know, tractors have done very well in Q1 overall and so has Mahindra. And going forward also we clearly see, you know, not as good as the 11% number that we have seen in Q1, but we would see a growth, I would still think A growth around 4,5% in tractor market going forward in the on an average for the next few quarters. That’s on the tractor side. On the market what we expect,
Do we expect anything on exports on the tractor? I think we do export a few components for tractors. You know, like turf tractors is a good customer of ours. But we have to see on that, you know, we have not, you know, fully evaluated. I think there are. But the tractor market is doing reasonably well domestically.
Jyoti Singh
Okay, sir, are we getting good order book on that side? If you can just talk on that
K. Jayaprakash
Order book around
Jyoti Singh
Tractors.
K. Jayaprakash
Tractors, as I said domestically it is a very reasonable situation for tractors. For us, you know Mahindra is our main. We have Mahindra and John Deere in India as our main tractor customers and they are both doing well.
Jyoti Singh
Okay, thanks. As earlier mentioned that we are seeing visibility after two quarter end of this year. So can you guide because I, I gone through the Volvo call also. So they are seeing the market share increase on the east side. So. So any visibility we are seeing, I know a lot of uncertainty is there but still if you can give us little bit highlight on that.
K. Jayaprakash
Highlights on the EV market.
Jyoti Singh
Yes sir.
K. Jayaprakash
No EV market. As you know we have explained, I think worldwide there has been a bit of a stagnation. In India, of course we are seeing the two wheeler EV penetration going up in four wheelers. Of course we have had some very good launches, especially Mahindra and we are looking forward to the ramp up of those models. I think they will do well. You know we have very, very good reports as far as those two EV models from Mahindra are concerned.
I think even on two wheelers you have some good launches. Bajaj has done so. So yes, there will be steady improvement. The fact, the point that we are making around EVs is not that it is not going up, penetration is going up but it is not going up as dramatically as was NB5 say maybe two years back. So that’s the only situation.
But the EV market in India is making steady progress very clearly. You are seeing lot more new models, Hyundai has put some new models. So as you also pointed out there are other companies who are putting in models and they are all reasonably good models. So as long as you have good products in the market, the market will improve. So that’s how we look at it. We have enough orders in the EV space also. No, we’ll be happy if the products do well.
Jyoti Singh
I know you mentioned you don’t write ma’am, but your audio is not clear. Yeah, so like you mentioned about this, you’re not giving the forward outlook but it’s at least some visibility as per the CIA point of view because last few quarters nothing, you know, on the betterment side. So if you can guide us a little bit on the margin and top line margin is easy to guide.
K. Jayaprakash
Jyoti, we said that in India we are close to 18% now. We will be there and we hopefully will improve. Of course the improvement will be steady. So on the margin side we can say confidently about that in Europe, as we said, if you see there has been very big drops starting from Q3, like more than double digit drops. In Q3, Q4, and Q1.In spite of that, our margin is 14% this quarter, and that’s the whole thing. And this includes some restructuring costs. So we are trying to. Hold our margin as much as possible in Europe around this number, which is what we have said. So on margin, it is very clear what that we can state. It is not even a forward looking statement. It’s probably as far as we are concerned, it’s a reality. As far as sales is concerned, what we said that probably the weighted average market growth in India this quarter will be in the range of 4 to 7% and hopefully we can beat that. We have not been able to do that in Q1, but we hope to do that in the next few quarters. Q2, Q3, Q4 we hope to do. We hope to beat the market a little bit as far as Europe is concerned. On the growth side, we are seeing next two quarters. At least the pain will continue as far as the sales is concerned. So this is the best I think we can summarize, Jyoti. Hopefully that should be enough.
Jyoti Singh
Thank you so much.
K. Jayaprakash
Yeah, thanks, Jyoti.
Operator
Thank you. The next question is from the line of Nitesh Rege from Chris Capital. Please go ahead.
Nitish Rege
Thank you for the follow up. My question is again for Ando. So just wanted to get a better understanding of what specifically we are looking at, you know, in an M and A asset, given that there have been around 10 to 12 deals in our industry over the past 18 months, most around a 10x EBITDA multiple. And, you know, we’ve not been able to, you know, crack the M and A puzzle for us.
Ander Arenaza Alvarez
No. Okay. We cannot disclose the different operations that we are analyzing in this moment. But the idea we would have is to reinforce our presence in the technologies where we are now working. I mean, all the gears, aluminum castings, composites, I mean, all these businesses where we are present, that’s one of our targets. And also second target that we had and we mentioned several times, is to include some plastic company because this is the only technology that we have missing in India.
I mean, we are present in all CIE technologies in India except the plastic. So that is also one of our targets. But we are actively looking for companies that should fit strategically, should fit also in terms of, let’s say, future evolution and synergies with our current businesses. And of course, the pricing is another subject that we need to discuss because in certain cases what we think is that the multiples are too high.
But okay, we will analyze and we continue very active on this field. Okay.
Nitish Rege
Okay, thank you.
Ander Arenaza Alvarez
Thank you.
Operator
Thank you. The next question is from the line of Amar Khan Gaur from Access Capital. Please go ahead.
Amar Kant Gaur
Hi. Thanks for taking my question. I had just one question regarding the profitability in the European business where we have seen sequentially more than 20% kind of growth but still the margins have gone down by hundred years. You talked about certain restructuring activity that is happening there. Could you quantify that a little bit more?
Ander Arenaza Alvarez
Okay. Yes. In the European business, you know that we have had this slowdown in the. In the business. So we are adapting the company, the size of the company to the new volume scenario. We have been doing that with temporary layoffs in the last quarters. Then what we have done is we have put in place now additional activities and we have retirement programs for people that is above 60 years old. And we are trying to get a voluntary agreement with them to pre retire with these people.
And also we are setting up certain voluntary retirement or dismissal schemes for the people who is willing to leave the company. Let’s say with the economical agreement. Okay. So with certain amount of money. So these are the kind of things we are doing smoothly and all these activities are going on. Especially we have done first steps in metal Castello plant also. We are trying to do it in our CAE forgings. So those are the activities that we are now in place and we will see the effect in the next quarters.
Amar Kant Gaur
Okay, thanks. I’ll get back with you.
Ander Arenaza Alvarez
Thank you.
K. Jayaprakash
Thanks, Amar.
Operator
Participants, to ask a question, please press star and one on their touch to the telephone. The next question is from Rajkumar Vaidyanath, individual investor. Please go ahead.
K. Jayaprakash
Yes, Rajkumarji, go ahead.
Rajkumar Vaidyanathan
Yeah, yeah. Sir, thanks for the opportunity. Sir, you just mentioned recently that due to the evolving cabbage situation and India banks of the trade deal with the US we’re seeing some opportunities there. So I just want to know whether those opportunities are immediate. Or will be kind of clear in the meeting terms.
K. Jayaprakash
Rajkumar. Of course there could be. There could be. You know, it finally depends on what is the kind of trade deal that emerges. What we are saying is as a country we are competing. Auto component Exports is almost 20% of the entire turnover of the auto components business in India. And we are competing with other countries. China, Vietnam, Korea, Turkey, Brazil, Mexico, of course, which is a very large player. And depending on the tariff, India’s competitiveness may go up because some other countries might have higher tariffs, may or may not have the final deal as to emerge.In that case there could be some opportunities.
What we have already been saying is that there are some specific areas like iron casting and gears where there are already opportunities in export and if that happens, they might increase. So that was the point we are making as far as your question. Whether they are immediate, any, any order, it takes 18 to 24 months or 18 to 30 months in the case of exports orders because there are, you know, a lot more, you know, development steps to be done. So that that is the kind it would take to hit your pnl.
So it’s not as if you get an order and it gets into your P and L In the next three months it takes about 18 to 30 months. On the export side, domestic orders might be 12 to 18. But that’s how it is.
Ander Arenaza Alvarez
Because just one additional comment on that is that due to the uncertainty, that current uncertainty that we have with the tariff application, I think until this tariff definitive tariff application is defined and is clarified, I think there will be no decisions from the customers. Okay.
So we need to first clarify the tariff environment and then the companies will make the decisions. What we see now in the market is that as there is a big uncertainty, everybody is waiting for the definitive solution that is not yet on the table. You know that I think all the countries are negotiating and every week we receive different news on that.
So I think in the next weeks, months, I think we need to wait until we see the definitive solution for the tariffs.
Rajkumar Vaidyanathan
Okay, thank you sir. Thank you for the detailed refinery. So just one more question. Just on the margin part, I think you kind of mentioned that due to the 3% reduction in speed prices, the margin kind of. Appears to be muted. So is it fair to expect your margins to improve by 100 to 150bps from the current level in the upcoming financial year?
K. Jayaprakash
JP JP that 3% is for domestic, not for overall. And as far as margins are concerned, you know we know that steel is a pass through. It just affects your the quantum of sales. So if the steel prices goes down for the same volume, your revenues goes lower by that. But the EBITDA remains the same.
So in fact if your sales goes down, your margin will go up as just arithmetic, numerator denominator. So that’s about it. So the steel price has nothing to do with efficiency. It is a pass through what we are talking about 18% margin in India, about 14% margin in Europe. And in India we do expect the margins to go up through operating efficiencies and nothing to do with the steel price. Steel price goes up and down. The effect of numerator denominator would be separate. So that was the point we were making.
And as far as Europe is concerned and there is explained a lot of restructuring is going on. We are trying to hold on to this 14% in spite of, as was pointed out, very big double digit drops in sales for the third quarter in section. So that was the discussion. The steel prices, the effect will be separate. It is not an operating efficiency issue. It is just a numerator denominator issue because steel is the pass through.
Rajkumar Vaidyanathan
Okay. Yeah, I just got it said. My question is would you expect the margin to go up further? That was the question. Given that the efficiency programs are increased, you are continuing to work on your efficiency parameters. So is there a scope for improvement in margins particularly on the msc?
K. Jayaprakash
Yes, in India there is scope for improvement but there won’t be any dramatic improvements in margins. There would be steady improvement. If you just a few minutes, a little bit. Back in today’s conversation, Andrew did mention that Indian operations in the CIE universe relatively we are worse off than Europe, Mexico, etc. And that’s the reason why we think that our operating efficiencies can further improve.
But given where our current margins are, the improvements will be steady. There won’t be any dramatic increase of you know, 1%, 1.5%. Not like that. There will be, you know, steady improvement going forward. That is what we are saying.
Rajkumar Vaidyanathan
Okay, thank you.
K. Jayaprakash
Thank you Rajkumar.
Operator
Thank you. The next question is from. The line of Vasudev Banuji from clsa. Please go ahead.
Basudeb Banerjee
Thank you. Hi, because just wanted to understand as under highlighted 5,6% potential Europe car market decline this calendar year. But out of your European business of crankshaft etc, catering to say Barino etc, how much of those cars are exported to us? Because if the tariff issue remains so there can be demand elastics impact and subsequent production reduction other than core Europe market lower car details.
K. Jayaprakash
Ander, will you take this?
Ander Arenaza Alvarez
Yes, yes, yes. The export that we have from from Europe, especially in the crankshaft business is approximately only 10 million euros per year. Okay. So it’s approximately 4% of the our forging sales. Okay. So the impact is very, very low.
Basudeb Banerjee
Understand that what percentage of the crankshaft supplied by you to the end OEM are actually exported? I’m not saying CI actually exporting to us, but
Ander Arenaza Alvarez
Yeah, it’s, it’s very, it’s minimal amount. Okay. It’s in, in terms of the crankshaft exported to the US can be approximately this what I told you about 4, 5%. No, no more than that.
Basudeb Banerjee
Okay, so. So bulk of the crankshaft supplied by CIA is consumed for cars sold in Europe only. That’s what you want?
Ander Arenaza Alvarez
That’s right. That’s right. So the European cars or cars produced in Europe exported to us are only 900,000. Okay, 900,000 cars per year. So it’s not a big amount. Mainly Hyatt cars, Jawar, Land Rover or Porsche, Audi, Mercedes, all these kind of cars that are exported to the US Luxury cars.
In our case, we are selling directly to us this 4,5% of our transfer directly. But as I told before, what we expect is that as we are selling to American car makers and the cars are produced in US directly, then what we expect is that the impact of the tariffs will be zero in this case, as the US government said yesterday. Okay, so that’s the view that we have regarding the impact on sales because of the, let’s say drop of. Of this potential exportation from Europe to us. It’s. We can say that it is absolutely minimum. Sure. Second thing, because like in good days, annualized revenue for metal Castello used to be what?
Basudeb Banerjee
90, 100 million total. What is the level now?
K. Jayaprakash
No, no, not 100 million. It was 75 million. That was
Basudeb Banerjee
Including the Ellison transmission order.
K. Jayaprakash
That is a separate matter. I’m saying what they have done maximum was roughly about 75 million euros. Right now it will be, you know, closer to 55 to 60. 50% of that number. So 50 million. 50 million.
Basudeb Banerjee
Yes.
Operator
Thank you. Ladies and gentlemen. This is the last question from the line of Satik Kothari from Unique pms. Please go ahead.
Pratik Kothari
Thank you. Again. One of the exports from India, if you can share some numbers, how did it pan out this quarter?
K. Jayaprakash
Roughly exports as far as C24 number is concerned, we have roughly around from India 13 to 14% in that range. This includes both direct and indirect exports. Indirect exports include things that we supply to those production offices in India which then they export. So roughly about 13 to 14% for us it is between that amount in India.
Pratik Kothari
Correct. In the annual report just published there’s this auditor remark for CI Aluminium Casting India Ltd. Seeing that it’s an. I mean there could be an incentive or external pressure to meet expectations resulting in revenue being overstated or something. So just one comment. What is this regarding any.
K. Jayaprakash
Which phase is that now? We will try and we have our annual report. Do you have the page number readily available. This is the auditor’s remark on the consolidated results.
Pratik Kothari
No, no. The annual report. This is page 224 of your annual report.
K. Jayaprakash
Page 220. So JP is here. We’ll answer. Just. Just give. Give us a 30 seconds. This is about the key accounting matter, no? Yes. Mentioned by the auditor is why it is a key audit matter. So they arrive at key audit matter for every year. And for India they have considered revenue as a key audit matter because they think sales revenue is a key parameter for the people working in the company. And therefore they emphasize more in checking whether the revenue numbers are correct or not. There is no overstatement or a potential overstatement. It is just that in their audit procedures they emphasize more to check on this aspect.
Pratik Kothari
Usually when we read revenue as an audit matter, the statements which are made are different than what has been made here and hence the question. Usually revenue as an audit matter I think is across many, many or almost all companies. But what has been made here seem different and hence the question.
K. Jayaprakash
Yeah, they have mentioned about as there could be an incentive of pressures to meet expectations. But since, I mean the auditors are stating here about the emphasis they have given for checking the revenue numbers.
Pratik Kothari
Okay, sure. Thank you.
K. Jayaprakash
Thanks Prudik.
Operator
Thank you ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you. And over to you sir.
Ander Arenaza Alvarez
So as usual I would like to thank you to all the participants for the interest in our company and also for their trust and the well directed questions they made. As always. So my gratitude to them for their participation. Also I would like to thank to all CIA India team for the great work done in all these months and days that we are working hardly. And I would like to thank all of them because of their commitment to the company and we expect to deliver even better results in the next quarters. Thank you very much.
K. Jayaprakash
Over to you, Visakha,
Vishakha Maliwal
On behalf of ICICI Securities Limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.