Craftsman Automation Ltd (CRAFTSMAN) Q2 FY23 Earnings Concall Transcript

Craftsman Automation Ltd (NSE:CRAFTSMAN) Q2 FY23 Earnings Concall dated Oct. 17, 2022

Corporate Participants:

Srinivasan Ravi — Chairman & Managing Director

Analysts:

Joseph George — IIFL — Analyst

Abhishek Jain — Dolat Capital Markets — Analyst

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

TS Vijay Sarathi — Anand Rathi — Analyst

Sandeep Agarwal — Melody Investment Advisors (Palistar Capital) — Analyst

Dhaval Shah — Girik Capital — Analyst

Mukesh Saraf — Spark Capital — Analyst

Yash Agarwal — IIFL Securities — Analyst

Chetan Gindodia — AlfAccurate Advisors Pvt. Ltd. — Analyst

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Jeetendra Khatri — Tata Mutual Fund — Analyst

Darshil Jhaveri — Crown Capital — Analyst

Jyoti Singh — Arihant Capital Markets Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Q2 FY23 Conference Call of Craftsman Automation Limited. [Operator Instructions]

I now hand the conference over to Mr. Srinivasan, Ravi, Chairman and Managing Director from Craftsman Automation Limited. Thank you and over to you, sir.

Srinivasan Ravi — Chairman & Managing Director

Good afternoon, ladies and gentlemen. Thank you very much for joining this earnings call. It gives me a lot of pressure to address you again after one quarter. We have had a reasonable performance in Q2, in-spite of the large headwinds we had regarding the war, as well as the looming recession in Europe and U.S. We have, as a company, performed reasonably well because of our broad-based strategy about — and a good product mix, and a reasonable execution. I’ll just run you through the headlines and the highlights of this quarter and leave more time for Q&A.

Cost-of-sales for INR1,447 crore, vis-a-vis, INR1,000 crore on H1 last year. PBT of INR180 crore, comparable — which is 62% higher than last year, H1. PAT of INR116 crore, which is 61% higher. EBITDA of INR337 crore, which is 35% higher than H1 of last year.

I will just run you through the ratios, the financial ratios. Debt-to-equity has improved to the 0.58 times, debt-to-EBITDA is 1.08 times, EBITDA margins slightly reduced from 24% to 23%. EBIT has increased from 15% to 16%. PBT has improved from 11% to 12%. And comparing with the last financial year, PAT has improved from 7% to 8% now, current ratio is 1.16. Return on capital employed, pretax annualized for H1 is 24%, for last year it was 20%. ROE annualized is 20%, for last year it was 15%.

So I will also give the headline numbers for the segment-wise revenue. Auto Powertrain has clocked a revenue of INR726 crore, vis-a-vis INR524 crore over H1 last year. Aluminum Products INR368 crore over INR242 crore last year, last H1. Industrial & Engineering INR353 crores, comparable H1 for last year was INR234 crores.

The EBIT margins have shown some fluctuations, but I’ll explain that later. Auto Powertrain the EBIT has been INR188 crore, comparable H1 was INR148 crore last year. Aluminum Products has INR35 crore EBIT, comparable INR19 crore last year. Industrial & Engineering INR35 crore, H1 last year was INR6 crore. So overall our EBIT is INR229 crore for H1 comparable to H1 of last year was INR151 crore.

So, with this I will leave the floor open to question-and-answers.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] We have our first question from the line of Joseph George from IIFL. Please go ahead.

Joseph George — IIFL — Analyst

Thank you. Can you hear me clearly.

Operator

Yes,

Srinivasan Ravi — Chairman & Managing Director

Yes please.

Joseph George — IIFL — Analyst

Yes. So, you mentioned in your opening remarks about the fluctuations in the EBIT margin, again spend maybe a couple of minutes explaining the fall in EBIT margin in both the Powertrain and the Aluminum segment, that is the first question. And the second question is, your guidance of capex for the full-year, because if I recall correctly in the 4Q call of last year and the 1Q call of the year, you had indicated a number of about INR225 crore or so, whereas in the first-half itself I think the company has clocked a capex of about INR171 crore, INR180 crore. So what is the renewed guidance for the full-year. These are the two questions. Thank you.

Srinivasan Ravi — Chairman & Managing Director

Thank you, Joseph. Regarding the EBIT margins, on the Auto Powertrain, we have grown, but it was a slightly disproportional growth on — with material business and the other machining charges business. So, I think there is a small margin drop which is optical. In Aluminium business, on Q2 we had a sequential month-on-month drop-in the raw material prizes and normally we carry an inventory of eight weeks to ten weeks, 12 weeks with the raw-material or in processed goods, all put together. So we had to take a hit on the raw-material a little and so that increased the COGS and depressed the EBIT margins.

But overall, I think overhead absorption has been very good on the Industrial & Engineering business, plus also the steel prices being more stable, the bulk of the revenue which has — growth has also come from the Storage Solutions. So we have seen margin expansion on the Industrial & Engineering, so it has been a mixed bag. Overall, as a company, I think we are in-line with the margins whatever we had in the previous quarters.

Coming to the capex, last year we grew by 40% and now the growth also — it is almost more than 40%, so we had to do some little capacity balancing capex. And we had guided, yes, INR225 crore, INR250 crore in the region for the capex, we have already done INR150 crore.

In April of this year we received quite a sizable order for Aluminum business, which we didn’t expect to be done in this particular financial year, but customer needs the production to start in this financial year itself, in — at the end of Q4, so we had an additional capex of INR70 crore, which is underway. So we will — we are trying to control the capex in-spite of the unplanned capex of INR75 crore to INR275 crore, so we’ll be around INR275 crore this year. I think this is — capex will be vindicated by the situation that we had two years 40% the CAGR growth year-on year and we will leave some headroom for further growth if it happens in Q4.

Joseph George — IIFL — Analyst

Understood. Thank you. Just one follow-up. So, for this year, if you’re building INR275 crore, should we look at lower capex next year?

Srinivasan Ravi — Chairman & Managing Director

No, as it is, the plan is around the same level only, provided, we have guided the market for 20% CAGR. So in-spite of the 40% of what we are clocking now, we are hoping to clock 20% next year totally, but the base has become absolutely high, because we’ll be very close to around INR2,900 crore this year and then we are looking at a 20% — more than 20% growth. Then we need to understand that there will be some capex, but we are — if we grow at 20%, we will be still continuing the capex in the region of INR250 crores. And I want to also remind that the — our depreciation is hovering around the INR210 crore, INR220 crore in this region. So, the net block will not be increasing or the capital employed also will not be increasing, given the working capital we have, in-spite of the top-line growth we are able to manage the working capital situation, so overall debt also is under control.

Joseph George — IIFL — Analyst

Understood, sir. Thank you.

Operator

Thank you. We have our next question from the line of Abhishek Jain from Dolat Capital. Please go-ahead.

Abhishek Jain — Dolat Capital Markets — Analyst

Thanks for the opportunity, sir. Sir, can you give value addition, either of these segments in Q2?

Srinivasan Ravi — Chairman & Managing Director

Yes, I will give it. For Q2 of this year, the value addition for Auto Powertrain is INR232 crore, Aluminum Products INR68 crore, Industrial & Engineering is INR76 crore.

Abhishek Jain — Dolat Capital Markets — Analyst

Thank, sir. Sir, in the Powertrain business, more customers are now asking to buy material bit [Phonetic] size, so pure machining or the value additions will go down in the coming quarter, so this will impact your margin anyway?

Srinivasan Ravi — Chairman & Managing Director

No, this will not impact margins going ahead, there are products which are casting intensive, there are certain products which are machining intensive, cylinder blocks fully finished are machining intensive. So there, I don’t think there is any change there, but the tractor segment where the structural parts, the casting to machining prices are totally very much skewed, so there it may change, but overall, I think our value addition as a segment of the business has increased quarter-on-quarter also. But the — it is not equal, so that’s what I wanted to mention.

Abhishek Jain — Dolat Capital Markets — Analyst

And sir, first half capital production was strong and going ahead it will be muted in the second-half, so how do we see the impact on the Powertrain business margin, will it be — continue to be the lower side?

Srinivasan Ravi — Chairman & Managing Director

It’s already muted in Q2, because we are impacted a little earlier than the numbers which has actually sold-in retail or by the OEMs, so even in Q2 itself we are highly impacted on the tractor. I don’t see that number dropping very much in Q3, because already at a very low-level in Q2.

Abhishek Jain — Dolat Capital Markets — Analyst

Sir, and a couple of questions from the Aluminum Casting segment. Aluminium business now margin had gone down to — quite a strong growth in the top-line. As you mentioned that this is because of the inventory, old inventory. So going ahead, what sort of the margin do you feel and what would be the growth driver for the margin?

Srinivasan Ravi — Chairman & Managing Director

I would clarify that inventory, inventory is not old inventory, for any company to work we need eight weeks to 10 weeks inventory because of the different operating segments and two different locations for manufacturing, plus also WAP is there, some finished goods for customers will be there. So we are around between — around eight weeks, it may be plus minus depending on the particular quarter, inventory is there. So, the pricing, now the mechanism is more straightforward where it is fair to customer as far as the supplier, it is moving very smoothly, so it is not a delayed impact so that when the price goes down, we get a benefit in the current quarter because we are billing at higher-rate and next quarter it will be down?

No, no, it’s not like that, it is happening more on the live situation. So we had — we have reduced the selling price to our customers in-line with the market price drop in Aluminium, which has dropped by around 10% approximately in the retail, when you look at the LME prices or the product prices, input raw material prices dropped by 10%. So that impact has slowly has affected us on the COGS a little, so it looks a little optically that we have not performed, but I think as a company — as a division, it is going in the same line as Q1.

Abhishek Jain — Dolat Capital Markets — Analyst

So, now 80% revenue comes from the two-wheeler side and —

Operator

Mr. Jain.

Abhishek Jain — Dolat Capital Markets — Analyst

Yes.

Operator

I’m sorry to interrupt, but you are not very clear. Can you lift the handset please.

Abhishek Jain — Dolat Capital Markets — Analyst

Yes, just a second. Hello?

Operator

Yes, sir, please go-ahead.

Abhishek Jain — Dolat Capital Markets — Analyst

Yes. So now in Aluminum casting business, 80% revenue comes from the two-wheeler only, which is only casting products, not the machining. As you will move into the more passenger vehicle and CVs, your margin will see sharp expansion. So, just wanted to understand what is the current mix and how do you see the mix ahead in Aluminium products?

Srinivasan Ravi — Chairman & Managing Director

I wish to clarify, 95% of our castings we machine it, whether it is two-wheeler, four-wheeler, commercial vehicle or industrial aluminum, it is 90 — more than 95% is machined and the product segment, today the two-wheeler business, as a segment, has come down totally. Two-wheeler is — approximately in the aluminum business is 68%. Passenger vehicles is around, very low, I think the low 2%, commercial vehicle is around 9%, and non-auto aluminum products is around 15%.

Abhishek Jain — Dolat Capital Markets — Analyst

So despite the improvement in the mix for the passenger vehicle, CVs, and non-automotive parts, your margin has not expanded and going ahead, you are also looking for the good orders for the export side, it’s basically for the battery, motor housing and all these things. So, what would be the margin visibility going ahead and the top-line growth?

Srinivasan Ravi — Chairman & Managing Director

The margin, the aluminum price we had to take an impact of 10% because this is a steep drop of aluminum prices, which if you look at the trend, it is the — quarter-on-quarter there is a drop of 10% because of we had to take the Brent, the margin looks depressed, actually the margins have been in-line with fuel, the operational margins at least.

Abhishek Jain — Dolat Capital Markets — Analyst

Okay. Thanks sir, that’s all from my side.

Srinivasan Ravi — Chairman & Managing Director

Okay.

Operator

Thank you. We have our next question from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go-ahead.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Hi sir, continuing on the Aluminum business margins, so what you’re indicating is that we had to give the 10% price reduction because of the change in the aluminum pricing LME, however we did not get that benefit and that actual shifting is, that’s the reason why margins are impacted?

Srinivasan Ravi — Chairman & Managing Director

See, the 10% is not all one single drop, it is month-on month drop, so overall, I think we have been impacted around 5% because of the pipeline inventory what we had. So the 5% is — on the raw material means is around 4% on the top-line, totaling.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay, so it’s mainly the decrease between the timing difference between what — when you realize the benefit versus when you passed on the benefit to customers, because of which margins are impacted.

Srinivasan Ravi — Chairman & Managing Director

Around the 3% to 4% it has impacted on the top-line.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Got it, got it. And secondly can you share the value add data for 2Q FY22 as well across three segments?

Srinivasan Ravi — Chairman & Managing Director

Can you come again, you asked for the value addition data for Q2 or H2, H1, I didn’t understand.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

2Q FY22, same quarter last year.

Srinivasan Ravi — Chairman & Managing Director

Q2 FY22, okay. Value addition on Q2 FY22 was, on Auto Powertrain was INR88 crore; Aluminum Products was 79 — sorry, INR80 crore; and Industrial & Engineering was INR94 crore.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

And this INR94 crores is including — I mean, after excluding Aluminium and Industrial segment right?

Srinivasan Ravi — Chairman & Managing Director

No, no, it is reclassed already, so if you want apple-to-apple, Q2 to — Q2 FY22 to Q2 FY23, I’ll read the numbers in sequence. For FY22 Auto Powertrain was INR88 crores, and Q2 FY23 was INR146 crore, Aluminum Products Q2 FY22 was INR80 crore, Q2 FY23 was INR128 crore — Oh, sorry, sorry, sorry, I’m reading that wrong numbers.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Yes, yes, that’s what it looked like.

Srinivasan Ravi — Chairman & Managing Director

I was reading the COGS, I’ll read the value addition. Okay, Q2, on the value addition portion for Auto Powertrain, yes, it’s been INR203 crore and Q2 for this year is INR232 crore. Aluminium Products was INR61 crore last year, this year Q2 has been INR68 crores, Industrial & Engineering was INR42 crore and this year it is INR76 crore.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Got it, got it. And would you be having Storage Solution revenues for the second and last year?

Srinivasan Ravi — Chairman & Managing Director

Yes, we have the — you want the quarter-on-quarter or you would like to have H1 over H1?

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

2Q FY23 versus 2Q FY22.

Srinivasan Ravi — Chairman & Managing Director

Q2 FY22, I will not have it.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay.

Srinivasan Ravi — Chairman & Managing Director

I’ll read H1 in the last year and H1 this year. Okay Storage Solutions for FY22 as a whole was INR253 crore and Q1 FY23 was INR88 crore and Q2 FY23 was INR111 crore. And if you compare H1 and H2, H1 FY22 was INR134 crore and this year H1 FY23 has been INR199 crore.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

INR199 crore, okay, got it, got it. And are seeing increase in sales of automotive storage in this number or that is yet to see a material ramp-up?

Srinivasan Ravi — Chairman & Managing Director

Sorry. I think the line is not so clear or I think it is echoing, I’m not sure, I’m not able to —

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Sorry, just give me a second. So are we seeing increasing salience of automotive storage in this number?

Srinivasan Ravi — Chairman & Managing Director

Automotive storage, no. It is generally storage solutions across all segments, end-use segments, it is not automotive storage.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay, okay, got it.

Srinivasan Ravi — Chairman & Managing Director

Storage is negligible percentage.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Right, right. And lastly, would you comment on any new order wins in current quarter and till October, have you seen any major new order wins in either Powertrain or Aluminum side?

Srinivasan Ravi — Chairman & Managing Director

So we are getting continuous inflow of new customers and new orders, at the same time there is some attrition which is happening at the other end, the older projects are going out. So overall, net-net, I think we are having traction for growth. The timeline for each of these projects have different and it is linked to certain — sometimes it is emission, sometimes it’s new model launch, it is also related to strategy. So, I don’t want to talk about customers. Now we have taken for the company when we are looking at 20% growth next year, we are more looking at as a strategy that what is realistically going to come. We have to — we cannot add-up all the numbers of the customer projections and projected to — our investors, that will be giving a wrong picture. I think there will be some failures from customer side or there may be some delay in projects, so overall the traction is good enough for a 20% growth.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay, okay. And this — the aluminum order which we got in April ’22 for which we are putting up this capex, how big would be the annual revenues from this order?

Srinivasan Ravi — Chairman & Managing Director

We can expect for FY24 INR150 crore revenue, FY23 will be a transition period.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Fair point, INR150 crore on a full-year basis.

Srinivasan Ravi — Chairman & Managing Director

FY25 INR150 crore, FY24 will be a ramp-up period.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay, got it, got it. Great. Thanks and all the best, I’ll come back-in queue.

Srinivasan Ravi — Chairman & Managing Director

Thank you, Jinesh.

Operator

Thank you. [Operator Instructions] We have our next question from the line of TS Vijay Sarathi from Anand Rathi. Please go-ahead.

TS Vijay Sarathi — Anand Rathi — Analyst

Thank you. Thank you, sir. Sir, just want to understand, so you said it’s because of — with metals the margin sequentially has fallen. I just want to understand what kind of products that we actually source material and make it raw and then sell it out, or is it within the cylinder block and cylinder-head that there is some customer specification, some clarity on that, because this is — this we have experienced both in the first quarter, as well as second-quarter, both on a Y-o-Y basis and sequentially basis?

Srinivasan Ravi — Chairman & Managing Director

This is related only Aluminum Products. Aluminum is the basic raw material we to buy, so there the prices have dropped so that has impacted all the Aluminum Products.

TS Vijay Sarathi — Anand Rathi — Analyst

Now, I’m talking about the Powertrain division where there has been more — less of machining and more of with metal. Just wanted to understand is there any different product category apart from cylinder and cylinder blocks that has impacted –?

Srinivasan Ravi — Chairman & Managing Director

No, we have lot of parts, we have transmission parts, gearbox parts, we have other — also structural parts are also there, everything. And also, what you need to take into account is the commodity prices have gone up, so that itself will — depress the numbers, EBITDA numbers, only the top-line will go up.

TS Vijay Sarathi — Anand Rathi — Analyst

Okay, so this we have witnessed both in Q1 and Q2 on a Y-o-Y basis, does this situation continue even going-forward, how do we understand that?

Srinivasan Ravi — Chairman & Managing Director

Because commodity prices has settled at a higher-level now.

TS Vijay Sarathi — Anand Rathi — Analyst

Okay. And with respect to Aluminum business, so we — so this INR125 crore that you said in FY25, this is over and above the peak revenue of INR650 crores that you would reach based on your existing capacity, am I right sir, or this is included in –?

Srinivasan Ravi — Chairman & Managing Director

Already the run-rate on the Aluminum Products as a whole, we have clocked INR196 crore revenue in the last quarter. So we are already at a run-rate of around INR800 crore.

TS Vijay Sarathi — Anand Rathi — Analyst

INR800 crore, okay fair enough, okay fine. Okay, fair enough. Right, sir, thank you.

Srinivasan Ravi — Chairman & Managing Director

Thank you.

Operator

Thank you. We have our next question from the line of Sandeep Agarwal from Melody Investment. Please go-ahead.

Sandeep Agarwal — Melody Investment Advisors (Palistar Capital) — Analyst

Hello?

Srinivasan Ravi — Chairman & Managing Director

The line is not clear, please could you –?

Operator

Yes, he is just checking.

Srinivasan Ravi — Chairman & Managing Director

Disconnect the speaker or something like that.

Sandeep Agarwal — Melody Investment Advisors (Palistar Capital) — Analyst

Hello, can you hear me?

Srinivasan Ravi — Chairman & Managing Director

Yes, now, we are able to hear you?

Sandeep Agarwal — Melody Investment Advisors (Palistar Capital) — Analyst

Proper?

Srinivasan Ravi — Chairman & Managing Director

Yes.

Sandeep Agarwal — Melody Investment Advisors (Palistar Capital) — Analyst

Okay, thank you. Sir, what is our net-debt and the cost of borrowing. And what is our plan to reduce it?

Srinivasan Ravi — Chairman & Managing Director

The cost of borrowing is, I think very, very competitively we are borrowing, thanks to our lenders, bankers and also financial institutions. Whatever we call, we look at financial cost, is also the other — as per Ind AS standards, the lease rentals what we are paying is classified as depreciation and financial cost, as per accounting standards. That is why the financial cost looks high. I would say 70% is actual financial costs, 30% is related to interest and depreciation classified in Ind AS. And the borrowings, if you look at it sequentially quarter-on-quarter, the borrowings is same.

Sandeep Agarwal — Melody Investment Advisors (Palistar Capital) — Analyst

Okay, sir, I just want to say that, if you share any presentation, Investor presentation of such details, so it will be more beneficial for us to understand a little better. Thanks.

Srinivasan Ravi — Chairman & Managing Director

I think the borrowings are quite straightforward. I think there is a term borrowing and there is a short-term borrowing. Overall, I think it is sometimes changing a little, but overall it is set around INR720 crores now.

Sandeep Agarwal — Melody Investment Advisors (Palistar Capital) — Analyst

Yes, thanks.

Operator

Mr. Agarwal, yes, thank you. We have our next question from the line of Dhaval Shah from Girik Capital. Please go-ahead.

Dhaval Shah — Girik Capital — Analyst

Yes, hello, hi sir. Great set of numbers. A couple of questions from my side. Sir, firstly, if you can spend some time on high-end precision products, what sort of traction are you seeing? This goes to — a lot goes to the capital goods industry. So what traction do you see there? That’s my first question.

Srinivasan Ravi — Chairman & Managing Director

And the traction is not picked-up to the extent what we expected you know because of the current headwinds in the global economy, we would have seen it going better. But overall, the current set of customers, current set of products, everything is doing well. We are adding more product portfolio there also, there will be some time delay between that, the gestation period will be there before we can scale-up. So, overall, we’re seeing a good traction in the Industrial & Engineering segment. Overall, inclusive of the precision sub-assemblies and products in the contract manufacturing side.

Dhaval Shah — Girik Capital — Analyst

So, here almost everything are we exporting in this?

Srinivasan Ravi — Chairman & Managing Director

Mostly we are exporting this.

Dhaval Shah — Girik Capital — Analyst

Okay, and if you could tell which would be your top three or top-five products, and what is the breakup of this INR90 crores, what will be — can you help us better understand the number?

Srinivasan Ravi — Chairman & Managing Director

Export, I think per quarter is, we are clocking around INR40 crores, INR50 crores, something like this. INR40 crores on the Industrial & Engineering segment, right.

Dhaval Shah — Girik Capital — Analyst

Okay, so INR40 crores, out of INR90 crores is exports?

Srinivasan Ravi — Chairman & Managing Director

Yes.

Dhaval Shah — Girik Capital — Analyst

And what we’re exporting in that? What is the product in that INR40 crore?

Srinivasan Ravi — Chairman & Managing Director

We are exporting major to North America, to Europe and to also Japan, each of the customers are different, the end usage is different. Somebody is in wall manufacturing, some are gearbox manufacturing, one is in oil and gas, the other is in printing, the — another is carton box manufacturing, so it is quite diversified requirement. As a contract manufacturer, we are making products to their design and also we are making fully finished machines also, tested here and we ship it to the end-customer, so it is too diverse.

Dhaval Shah — Girik Capital — Analyst

Okay, we — the level of the engineering and the details which we go into, which is our strength, is that the same or it’s a little low-end working in higher end in this business?

Srinivasan Ravi — Chairman & Managing Director

No, the entry barrier is extremely high, and there we are not having any competition here in the — from the Indian market. And our diverse engineering time and capability, design capability and our manufacturing infrastructure is required to do these sort of high-end sub assemblies, we need to have the know-how also. So when we are making this equipment and shipping across the world, we don’t have much competitors anywhere in the world.

Dhaval Shah — Girik Capital — Analyst

Okay, okay. So what visibility would you have, say, over next, FY23 up and ’24, what should be the size of the business?

Srinivasan Ravi — Chairman & Managing Director

This business has been steady, it has not been growing exponentially, could have seen from our export revenue overall. We have not been adding customers aggressively there, but now I think there is some chances of adding customers now, but there will be a time gap between product development and to actual revenues, so we may see a gap of one year.

Dhaval Shah — Girik Capital — Analyst

Okay, okay. And sir my question on the Aluminum side, so we had this order from Peugeot Motors, so which was — so has it started the process this year and then ramp up in ’24, ’25, so how is that going?

Srinivasan Ravi — Chairman & Managing Director

See, it is — product development is going on-time, infrastructure is getting set-up. We’ll be giving samples from Q4, the customer requires four, five months for testing the product. I think the production will start by Q3, if not in Q2 of next financial year, and we will get — I think 30%, 40% of the revenues we should be able to clock during the next financial year, subject to approval.

Dhaval Shah — Girik Capital — Analyst

Okay, sir. Because you were supposed to do some INR50 crore revenue in the FY23 out of this order. So that’s can be delayed, okay.

Srinivasan Ravi — Chairman & Managing Director

For FY23, we were thinking that they will not go through the full product testing cycle but I think the customer is cautious, even though the product has been tested and it’s coming from a different source, they want to go through that. So they are asking for four to five months testing period, so we cannot actually really do, we are ready, we will be ready [Speech Overlap].

Dhaval Shah — Girik Capital — Analyst

Great, sir. Now lastly, this entire — this demand destruction, which we expect —

Operator

Mr. Shah, sorry, you are not clearly audible.

Dhaval Shah — Girik Capital — Analyst

Yes, yes, okay. So the last question is that, this demand destruction which we expect into Europe, so are we experiencing anything right now in — so you mentioned in your high-precision there is a log that the momentum of order is not very-high, but in this Aluminum component and Powertrain, do you see impact of this problem in Europe.

Srinivasan Ravi — Chairman & Managing Director

Sorry, maybe not sent the right message. When some of the segments are growing in H1 at 40%, I have to — in the relative terms, the export order is not growing at that level, that’s what I meant on the momentum side totally. So it is — the storage business is from carrying bulk of the momentum in the Industrial & Engineering business is what I wanted to mention, but we are growing, even on the export side, we’re growing.

Dhaval Shah — Girik Capital — Analyst

Okay, thank you, sir. Yes.

Operator

Thank you. We have our next question from the line of Mukesh Saraf from Spark Capital. Please go-ahead.

Mukesh Saraf — Spark Capital — Analyst

Yes, sir, good evening and thank you for the opportunity. Firstly, sir, on the Powertrain segment, could you just remind us of the revenue mix there, sir, how was it, indeed probably this quarter or the first-half, between CVs, tractors, construction equipment, etc.?

Srinivasan Ravi — Chairman & Managing Director

Yes. I will talk for H1, that may be better we will give a better number instead of having that. It is INR385 crore for commercial vehicle.

Mukesh Saraf — Spark Capital — Analyst

Okay.

Srinivasan Ravi — Chairman & Managing Director

Off-highway is INR150 crores. Farm sector INR125 crore, and passenger vehicle is INR66 crore.

Mukesh Saraf — Spark Capital — Analyst

Right, right. Thank you for that. And secondly, the power costs in Tamil Nadu have gone up, so given that we do — we are in a — power intensive, how is that expected to impact us or how much is revenue impact in this quarter, because we do have presence here.

Srinivasan Ravi — Chairman & Managing Director

Maybe we can readout the power cost as a company, right now we’ll not be able to give it in — for Tamil Nadu.

Mukesh Saraf — Spark Capital — Analyst

No, yes, as a company.

Srinivasan Ravi — Chairman & Managing Director

I think 60% of the power we consume is in — more than 60% is in Tamil Nadu, you’re right, 40% is rest of India.

Mukesh Saraf — Spark Capital — Analyst

Right.

Srinivasan Ravi — Chairman & Managing Director

We’ll dig out those numbers please, Priyanka [Phonetic]. You can ask the next question meanwhile.

Mukesh Saraf — Spark Capital — Analyst

No, I mean, even — so even if the number is not readily available, just want to understand the impact of this hike in power tariff in Tamil Nadu. So, I mean is there an impact or are we having same mitigation efforts such as sourcing, environmental, etc., so anything like that?

Srinivasan Ravi — Chairman & Managing Director

Sourcing, we are renewable, we are weighing the options, yes, we are thinking whether to go for captive or whether to go for third-party, because the wheeling charges and other cross-subsidy everything, all put together, I think it is becoming an economic spend, governments are changing policies regarding cross-subsidy. So it might not be viable for us to take a long-term contract with any of the service providers. And getting into this third-party power purchase agreements for the future might not be viable, because carbon credit, we will not get it, and maybe getting valuable also in the future. So power and fuel, when compared to the whole of last financial year, where we were, as a company-level, we were INR112 crores, we are at INR70 crore for this first half of this year. So I think, efficiencies of scale, I think pro rata, we are still keeping the almost the same percentage if we look at it.

Mukesh Saraf — Spark Capital — Analyst

Got it, got it. And just lastly, sir, in the past you have mentioned about the EV segment within two-wheelers for the Aluminum business that you have, you had mentioned about kind of looking at that and probably looking to enter that segment, so how are we placed there, given that a lot of the OEMs are expanding capacities, such as TVS for example. So, how are we looking at the Aluminum business for EV, two-wheelers?

Srinivasan Ravi — Chairman & Managing Director

Early this year we got orders from new startup EVs. We got orders, yes, some are under development, some are already we are in a trial production now. But overall the numbers are little not very appealing for financial results. So, it’s a long way off for a minimum economic scale of this business to be fruitful as a company. So whatever revenue we have seen this INR190 crore odd in Q2 on Aluminum business, it doesn’t carry any EV portion of it. So we have factored in EV sales only next year, even though we are going to start from Q3 onwards.

Mukesh Saraf — Spark Capital — Analyst

Okay, okay. So we are not aggressively looking to expanding into that segment because of you have made that in the — maybe a few in the past as well, so how — the volumes might not say that, but that kind of continues as well —

Srinivasan Ravi — Chairman & Managing Director

We are aggressive to take critical parts. We don’t want to take simple parts on a commodity pricing and plus at automotive pricing we need automotive numbers, volumes. And if it is the volumes are getting split-up with the 10 to 20 players in that same automotive price, we stand to lose, so we have to pick out the winners, we have to pick out the volumes, we have to get the pricing also right, which may be is much higher than the — which we need to be — it needs to be higher because of the lower volumes. So there is a challenge there. So we want — don’t wanted to get a big development cycle, we are developing a lot of EV parts, but all parts put together, and when we are looking at their volume, it doesn’t change the top-line too much. So we are very careful about how much focus we are giving towards the current state.

And models also are evolving, because these models have been designed in a way in the beginning and now when it comes to cost, many models are getting redesigned for cost-effectiveness by the startups. I think is the mature companies will do very good design to start with itself, you can see their cautious approach, which I really appreciate. And I think the market will mature in the coming years.

Mukesh Saraf — Spark Capital — Analyst

Right, right. Great, Srini. Thank you for the opportunity, thanks.

Operator

Thank you. We have our next question from the line of Yash Agarwal from IIFL Securities. Please go-ahead.

Yash Agarwal — IIFL Securities — Analyst

Hello.

Operator

Yes, sir, please go ahead.

Yash Agarwal — IIFL Securities — Analyst

Sir, firstly congratulations on a great set of numbers. Just a couple of questions. For FY23, you factor in a tax rate of 35% on account of the MAT implication. So from the next financial year, I assume that we fall-back into the 25%, 26% bracket, am I correct on that?

Srinivasan Ravi — Chairman & Managing Director

You’re correct, absolutely correct. Still we are having some MAT credit even post Q2, but in Q3 we may change our situation or we may take a change in Q4 to write-off the MAT credit which will have no impact on the P&L, but we may go to the new tax structure. So we are weighing cash outflow versus the total benefit to what we have. Today, all pointers for that, we are likely to move to the new tax structure in the current financial year itself.

Yash Agarwal — IIFL Securities — Analyst

Okay, got it. Secondly, on your guidance of 20% revenue growth in FY24, is it on a value-added basis or a reported revenue basis?

Srinivasan Ravi — Chairman & Managing Director

Yes. I would always say 20% on a value-add basis, because top-line can be different with the product mix what we have and the commodity prices. I’ve been always advocating the value-add fortunately.

Yash Agarwal — IIFL Securities — Analyst

Fair enough. That’s it, thank you.

Operator

Thank you. We have a next question from the line of Chetan Gindodia from AlfAccurate. Please go-ahead.

Chetan Gindodia — AlfAccurate Advisors Pvt. Ltd. — Analyst

Hello, sir. Congratulations for great set of numbers. Sir, with respect to Aluminum segment, so while the Aluminum price was going up consistently during last one-and-half years, we were impacted because of — in terms of taking hit on the margins, but now that the Aluminum price is coming down, so we had assumed that we would be benefiting at least for some period in terms of margin expansion, because there is generally a lag in passing on to the customer, but we are seeing exactly the opposite. So we have been impacted both on the rising commodity and the falling commodity also. So, can you explain a bit on this?

Srinivasan Ravi — Chairman & Managing Director

Thanks for the question. I think this is — it needs to be explained thoroughly before we — we’ll clarify — I’ll clarify this. Last year, last financial year I would say, it was with some of the customers on a trailing quarter, the trailing quarter Aluminum prices were applied on the next quarter. So when the prices are continuously increasing, we were hitting a lower selling price when compared to the what we are paying. So we managed to and also the customers an entire market changed to a real-time pricing, that is the average of the current quarter or the monthly correction on pricing, both are the same, fundamentally both at the same. So that is the real-time situation where we do not have big changes from — for a longtime.

Suppose the prices have gone down in this quarter, whatever inventory we are carrying only is having an effect, it’s not having a residual effect in the — going into the next quarter totaling, but this average is a big problem totally, overall. So I think the Aluminum prices are at a level which it was, I think, three years ago or two-and-a-half years ago. I think the — it is — now if it is going to increase, we may get some little benefit in one quarter, maybe a very partial benefit, which will, again, like this we may have some positive operation and then a negative operation. But last-time it was — to give one number — add a number to it, from INR180 a kilo, the alloy price went up all the way to INR285 within a year’s time, and every quarter we are — we face the music [Phonetic].

Chetan Gindodia — AlfAccurate Advisors Pvt. Ltd. — Analyst

Got it, got it. Sir, secondly, with respect to our Aluminium segment, so now that two-wheeler contribution in the mix has declined to 68% and non-auto is increasing to 15%. So what would be the difference in margin that we earn on two-wheeler versus the non-Two-wheeler side?

Srinivasan Ravi — Chairman & Managing Director

Well, it is in a mixed bag, it will be different from product-to-product and there a lot of synergy is there between — there are gravity die parts, low-pressure die-cast parts in all the three segments in the industrial aluminum business, in the passenger vehicle, commercial vehicle, as well as in the two-wheeler business. So we have a common overheads and we’re managing, but the calculation wise, it is showing the same. Predominantly the high-pressure die-casting is being used for two-wheeler and a very little of gravity and low-pressure die-casting, but the margins are more or less same.

Chetan Gindodia — AlfAccurate Advisors Pvt. Ltd. — Analyst

Okay, got it, sir. And lastly the INR70 crore capex that we are planning to commission for the new order on the Aluminum side, so can you shed some light on what is the nature of the customer or the segment, is it a two-wheeler or an export order, domestic, any kind of details if you can say?

Srinivasan Ravi — Chairman & Managing Director

No, sorry, I cannot share that, but because we had done some capex in the previous years, which we have low diverted for this particular customer order. The additional capex what we’re doing is only INR70 crore, we’re not saying INR70 crore is the capex. We are using the current building, we are — diverted many things from various other projects and we done it apart from the new capex whatever we have planned. So, I would not like to share competitive information in a general platform. Sorry, I have to abstain this a little bit.

Chetan Gindodia — AlfAccurate Advisors Pvt. Ltd. — Analyst

No problem. Thank you. Thank you so much and I wish you all the best.

Operator

Thank you. We have our next question from the line of Pranay Roop Chatterjee from BCMPL. Please go-ahead.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Hi, good evening everyone. Am I audible?

Operator

Yes.

Srinivasan Ravi — Chairman & Managing Director

Yes.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Great. Well, firstly, I’ll just go segment wise, I have one question for each segment. In Powertrain, it was not entirely clear in the first part, the reason for a Q-on-Q drop in margins. So one reason could be that, let me — correct me if I’m wrong, but the tractors have actually gone down in the mix versus others, where tractor is supposed to be high in machining. So that could be one of the reasons, but you actually mentioned a couple of other reasons, some charges and you mentioned commodity prices are at a higher-level. So, given commodity prices have decreased Q-on-Q, steel especially and aluminium, how would you break-down this Q-on-Q drop in Powertrain? And should we expect it to come back to normal in the next one or two quarters?

Srinivasan Ravi — Chairman & Managing Director

There has not been any dramatic change in the value addition between Q1 and Q2. It is — the value addition has been INR223 crore, going up to INR232 crore, practically it is only INR9 crore has been the increase in the total value addition in the Auto Powertrain. There has been of course inflation all over, whether it is salary, whether it is power or whatever maybe, plus on certain segment of the business where we had little more profitable sunken capacity which is available, the capacity utilization was low, because the farm sector went down, some of the clients were suboptimal utilization, so it had impacted a little, but overall, I think the EBIT margins on the — we had maintained, I think from — it had dropped from, say, INR95 crore to INR92 crore. So overall, it is not any significant drop when compared to inflation, which is one year apart — sorry, three months apart, where we had implemented also the salary increases for our employees.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Got it, got it, okay. Next is trying to understand something in the Aluminum segment. So, how I track this is, basically I see how much the aluminum price, the average aluminum price has moved Q-on-Q. Then I see your overall revenue Q-on-Q and then I see your value addition Q-on-Q. And usually it is additive in nature, but what I’ve seen this quarter is that, aluminum prices, LME, average prices have actually gone down by about 15%.

Srinivasan Ravi — Chairman & Managing Director

We were billing at a lower-price, because the price drop, we are billing at a lower-price to customer, that is the reason for the depression in value addition in aluminium.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

No, no, so that is not my question. My question is that the overall revenue has gone up by a double-digit percentage, despite the value addition and aluminum prices Q-on-Q dropping, so which would imply that the non-value added portion products have increased in the mix. Is that a correct understanding?

Srinivasan Ravi — Chairman & Managing Director

Non-value-added products means, what do you mean by non-value added products?

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Okay, so just to simplify again, the aluminum price quarter-on-quarter has dropped, so part of your portfolio is where you directly pass-on the aluminum price. So that portion, the top line should have dropped. Then the other portion is the value-added portion, which is also Q-on-Q, there is a slight drop from INR71 crore last quarter to INR68 crore in this quarter. So, but overall on the revenue we see that there is a double-digit growth quarter-on-quarter, so I’m just trying to tie how it is working out.

Srinivasan Ravi — Chairman & Managing Director

The revenue quarter-on-quarter has grown by 10% right totally, it should have grown by 20% if the Aluminum prices had been stable, that is the explanation.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Okay, okay, got it. And just quickly on the margins, Aluminum margins. So you mentioned that inventory hit was the reason, that is well-understood. My question is, if the inventory hit had not happened, whether the Aluminum price would have been same, given the product mix this quarter, would the margins still have come at around 11%, 12%, and should we expect it to go back to 11%, 12% in the next few quarters or would there still be a pressure on margins because of prices?

Srinivasan Ravi — Chairman & Managing Director

Thanks for the question. Now on the Aluminum products as I mentioned, their top-line revenue has moved from INR171 crore to INR196 crore. If the Aluminum prices are not dropped, this INR196 crore would have been approximately INR205 crore, the INR205 crore would have resulted in another INR10 crore increase in value addition, instead of INR68 crore it would have been INR78 crore. So that entire, say, around INR10 crore would have flowed through to the EBITDA level and that means the margin would have been organized.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Got it, okay. Okay and the last question is on, basically the Stellantis order. Again, it was not entirely clear at my end, did you mention that the order around 40% to 50% would be booked in FY24 instead of the entire revenue being booked as was previously-stated?

Srinivasan Ravi — Chairman & Managing Director

Here I would take a little back-step and now I stop talking about customers and names. So because these customer numbers do not add-up, you could see that without Stellantis anything being here, we are talking INR200 crore on the business quarter and we are continuing to grow. I think putting the customer projection here, their project delays or their product strategies or whatever is happening in Europe is impacting us. So we’ll take it as it comes. So now production is supposed to start next year, yes, but how is starting, how much will be the sale, I will not like to put a number to it now, but we can commit as a company that our Aluminum business will grow by 20% next year compared to this year.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Got it. And if I could just slip in one more on revenue for FY23, would you expect the second half to be materially stronger than the first-half?

Srinivasan Ravi — Chairman & Managing Director

So here it is — for FY23 or FY24?

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

’23, this year, this year.

Srinivasan Ravi — Chairman & Managing Director

If — the quarter three is always a challenge for inventory correction for customers, end-of-the year multinational companies within the country closing down their plants for two weeks, plus also the automotive December production keeping it low for the year of manufacture reasons. All that and the post specialization and inventory correction. So all put together, we always see a challenge on Q3, it is difficult to even replicate the current Q2 and Q3, but compared to last year Q3, I think we’ll be far, far better-off in this Q3. Yes, Q4, if there is no further big new headwinds coming in the way of the international issues, geopolitical issues, also we are still facing a huge inflation of not only for the industry for the common man, this continues for more time we may see some depressed retail offtake. There, there may be some challenges, but we have even factoring that in, I think Q4 will be a good number because of our diverse portfolio, if one cylinder is not kicking-in, not doing well, I think we’ll do better on something else. So we are still very confident about Q4, not about Q3.

Pranay Roop Chatterjee — Burman Capital Management Private Limited — Analyst

Understood, and thanks. Thanks a lot, thanks a lot. I’ll go back in the queue.

Operator

Thank you. We have our next question from the line of Jeetendra Khatri from Tata Mutual Fund. Please go-ahead.

Mr. Khatri, your line is not clear.

Jeetendra Khatri — Tata Mutual Fund — Analyst

Yes, sir, am I audible.

Operator

That is lot of disturbance, sir.

Jeetendra Khatri — Tata Mutual Fund — Analyst

Just a second. Is it okay now?

Operator

Yes, please go-ahead.

Jeetendra Khatri — Tata Mutual Fund — Analyst

Yeah, thank you. Sir, my question was, how much of light-weighting does our Aluminum division provide in Automotive, so would there be a range which we can provide, like, a 15% to 20% or what is the range of light-weighting?

Srinivasan Ravi — Chairman & Managing Director

Light-weighting, still it is not very effectively happening in India, so we are yet to see any significant change there.

Jeetendra Khatri — Tata Mutual Fund — Analyst

Okay. So, is it that the Aluminum division, the products that it’s making, is it that structurally it is always — it has always been made in Aluminum or is it that the industry is shifting to Aluminum, like the housing and all those things which we make in Aluminum for Automotive?

Srinivasan Ravi — Chairman & Managing Director

Currently what we’re doing is traditionally has been in Aluminum always, so we’re not seeing the benefit of the industry moving to Aluminum so far, which has to happen in the future, but it’s still it’s not at that point.

Jeetendra Khatri — Tata Mutual Fund — Analyst

Okay, okay. Any reason that it has traditionally been in Aluminum?

Srinivasan Ravi — Chairman & Managing Director

That was more suitable for Aluminum from the very beginning, whether it is cost, performance or it is the strength and durability requirement, and it is the near-net shape requirement of the casting which is done on a high-pressure die casting. So there was a advantage of doing it in Aluminum, which continues, but for the reason for light-weighting with the new aluminum prices, I think there can be a shift which may happen, but at the earlier, last year it was around INR280 a kilo, now it’s come to INR180, so that range, I mean approximately. So they may again look at it, but also there requires a fundamental model design change or new platforms to come in on the vehicles to accommodate this new standards. Yes, safety standards, testing has to be done, so whenever a new platform comes only it is going to happen.

Jeetendra Khatri — Tata Mutual Fund — Analyst

Okay. And sir, would you have any international benchmark in the Automotive Aluminum division, like some European player or some one, who you can anchor it? As an competitor or let’s say, the guy who has been there for very long-time and –?

Srinivasan Ravi — Chairman & Managing Director

You are talking about the size of the Aluminum business or –?

Jeetendra Khatri — Tata Mutual Fund — Analyst

No, no. No, I’m talking about — I’m talking about any competition in the Auto Aluminum division, any major competitor or any major benchmark company which you might be following?

Srinivasan Ravi — Chairman & Managing Director

Okay. We have three big companies in Japan, but I would put the names to you, one is Ryobi, and the next is Hiroshima Die Casters, third is RST, all of them are in the range of $1.3 billion to $1.5 billion, $1.7 billion in top-line only in the Aluminum business. They have quite fully-integrated, some are with machining and most of them are with the — making the dies also. But in Europe, you know very well Linamar of Canada, Nemak of Mexico, there are quite a lot of companies in North-America, as well as in Europe, they are dominating the space, including Georg Fischer, I think has been acquired. Then we have Martin Honsel, have Rheinmetall, we have Euro Castings.

There are players for more than EUR1 billion, EUR1 billion to around EUR3 billion, around seven, eight players in Europe, either own — they are standalone in Europe or may be owned by companies from — like Linamar of Canada or it may be Nemak of Mexico, this is a well-known facts, I’m freely using their names because they are market leaders, and Magna is also a very big-name in North-America. But all of them are more than $1 billion, that is very, very clear, maybe $2 billion, $3 billion also.

Jeetendra Khatri — Tata Mutual Fund — Analyst

So the scale is very big, okay.

Srinivasan Ravi — Chairman & Managing Director

Yes.

Jeetendra Khatri — Tata Mutual Fund — Analyst

Yes, thank you so much, sir. Very insightful. Thanks for your time.

Srinivasan Ravi — Chairman & Managing Director

Thank you.

Operator

Thank you. We have our next question from the line of Darshil Jhaveri from Crown Capital. Please go-ahead.

Darshil Jhaveri — Crown Capital — Analyst

Hi, hello, good evening sir, and thank you for taking my question. Sir, I’m a bit new to the company, so sorry if my questions are a bit basic. I just got a bit confused when you were referring to 20% growth on value-added and on reported terms. So could you just help me figure that out. Our 20% growth we are talking about the revenue that we just did about INR170 crores, right? Or how does that factor-in?

Srinivasan Ravi — Chairman & Managing Director

We have been advocating in the past that top-line minus COGS is the value addition and that is the real work the company does, otherwise it is a commodity price fluctuation which is either inflating the top-line or depressing the top-line accordingly, which is not an apple-to-apple comparison, when you look on a year-on year with this sort of large movements in the commodity prices, which we have witnessed in the last two, three years. So, our margin comes from what we do and that is we call it is the top-line minus the COGS, that is the value addition or some of the calculations — some of the way of denoting that is the gross profit, totalling. So we were — we say — when we say growth, we say normally that growth in gross profit or growth in value addition.

Darshil Jhaveri — Crown Capital — Analyst

So basically we are talking about growth, okay thank you so much, that helped me a lot. And other thing I just wanted to ask about are, margins we — we just said about Aluminum and I’ve understood about that. So, now that one 10% drop has come, so going-forward, we’ll have similar margins that we had in previous quarters, right?

Srinivasan Ravi — Chairman & Managing Director

If the operating leverage remains the same if the top-line is getting depressed then our overheads absorption will not be sufficient enough.

Darshil Jhaveri — Crown Capital — Analyst

Okay, yes, thank you, that answers my question. Thank you so much.

Srinivasan Ravi — Chairman & Managing Director

Okay.

Operator

Thank you. We have our next question from the line of Jyoti Singh from Arihant Capital Markets Limited. Please go ahead.

Jyoti Singh — Arihant Capital Markets Limited — Analyst

Yes, thank you for the opportunity. Sir, I wanted to understand your view on the energy cost as-is in a currency cycle loss. So how we are seeing the impact on our company, overall, view on this?

Srinivasan Ravi — Chairman & Managing Director

We are not an energy intensive usage company as a whole. If you look at the top-line for H1, power and fuel has been INR70 crore on a top-line of INR1,446 crore, totally.

Jyoti Singh — Arihant Capital Markets Limited — Analyst

Okay, so we don’t have any impact because of the increased energy cost in Europe?

Srinivasan Ravi — Chairman & Managing Director

No, there is impact globally because of the energy cost of the fuel, which has increased and also in India power costs also is increasing. As I mentioned that, today on our top-line is around the 5%, so it may go up to 6%, 7% if there is a big. There is an impact. It’s an impact for everybody, it is on public domain, whatever is there, from state-to-state it varies on the power cost, but at least the diesel or the gas or CNG or LPG gas also be used for melting, there has been a little bit different from state-to-state, there has been increase all over.

Jyoti Singh — Arihant Capital Markets Limited — Analyst

Okay, thank you, sir.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Srinivasan Ravi for closing comments. Over to you, sir.

Srinivasan Ravi — Chairman & Managing Director

Thank you everybody for the active participation and also the detailed questions which also helps us to doing some thinking again, so that we are on the right track. Yes, we are confident about the company and we have demonstrated that over the last six quarters, we are a very versatile company and we have withstood the different ups and downs in the industry which has happened and still managed to grow. We’ll keep that spirit up going-forward. And thank you for all your support.

Operator

On behalf of Craftsman Automation Limited that concludes this conference. [Operator Closing Remarks]