Frontier Springs Ltd (BSE: 522195) Q2 2025 Earnings Call dated Nov. 18, 2024
Corporate Participants:
Kapil Bhatia — Managing Director
Analysts:
Abhishek Mehra — Analyst
Aman Soni — Analyst
Agastya Dave — Analyst
Mahesh Atal — Analyst
Vivek Gautam — Analyst
Raja Panda — Analyst
Rakesh Roy — Analyst
Saket Kapoor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Frontier Springs Limited Q2 and H1, FY ’25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Abhishek Mehra from TIL Advisors. Thank you. And over to you, Mr. Mehra.
Abhishek Mehra — Analyst
Thank you, Renu.[Phonetic] Good afternoon and welcome everyone. Thanks for joining this Q2 and H1, FY ’25 earnings conference call of Frontier Springs Ltd. The investor updates have already been uploaded on the Stock Exchange and the company website and have been emailed to you. In case you do not have a copy of the same, please feel free to reach out to us. To take us through the discussion we have today with us Mr. Kapil Bhatia, Managing Director; Mr. Neeraj Bhatia, Whole Time Director and Chief Financial Officer; and Mr. Dhruv Bhasin, Company Secretary.
We’ll be starting the call with a brief overview of the business and the financial performance which will then be followed by the Q&A session. I would like to remind you all that everything said in this call reflecting any outlook for the future which can be construed as a forward-looking statement, must be viewed in conjunction with the risks and uncertainties that the company faces. These risks and uncertainties have been mentioned in our annual report. With that said, I would now like to hand over the call to Mr. Kapil Bhatia. Over to you sir.
Kapil Bhatia — Managing Director
Thank you, Abhishek. Good afternoon everyone and thank you for joining us today for Frontier Springs Limited earnings call for the second quarter FY ’25. I am Kapil Bhatia, the Managing Director of Frontier Springs Limited and it is my pleasure to present our financial results to provide insights into our performance during this quarter.
We are pleased to report that our financial results of quarter two FY ’25 align with the guidance we set at the start of the financial year. Our revenue from operations for the quarter stands at INR52.24 crores reflecting 59.49% increase compared to the same period last year. Our EBITDA has also shown significant improvement reaching to INR10.69 crores which is an impressive 126.68% year-on-year increase. This translates to an EBITDA margin of 20.46% up from 14.40% in FY ’24.
Furthermore, our profit after tax has surged by 155.30% to INR7.29 crores. As we dwell deeper into the performance of our key segment, I would like to highlight the strong contribution from our three primary business vertical, Coil springs, Forging, and Air springs. In the Coil Spring segment we experienced a substantial increase in demand driven by sizable order related to the production of LHB coaches.
The emergency procurement associates with this demand has resulted in favorable price realization along with stable raw material cost. This combination has significantly enhanced our profitability in this segment and we anticipate that this positive trend will continue as we progress through the year.
Turning to forging, we did encounter a slight delay in the setup of our new 6-ton hammer. We are optimistic about commencing trial production shortly. We have already begun receiving order from Indian Railway for forgings that will be produced using this new capacity and we expect these contributions to start reflecting in our financials from quarter four onwards.
Our Air Springs vertical is also demonstrating robust performance with a healthy order book, we are well positioned to meet the incremental demand for Air Springs required for LHB coaches which should further accelerate growth in this segment. Looking ahead, we remain committed to investing strategically in the small capital expenditure aimed at clearing bottlenecks and enhancing our production capacities. This proactive approach will enable us to cater effectively to the growing demand across all segments. Overall, we find ourselves in a strong position with a healthy order book and excellent visibility of future demand for our products.
The strategic initiative we have implemented are yielding positive results and we remain confident in achieving our stated guidance of gross revenue between INR240 crores to INR250 crores for financial year ’25. In conclusion, I would like to express my gratitude to all our stakeholders for their continued support and trust in Frontier Springs Ltd.
We are excited about the opportunities that lie ahead and are committed to maintaining transparency as we navigate through these promising times. Thank you once again for joining us today. I look forward to addressing your questions during Q&A session following this presentation. Thank you so much.
Operator
Shall we begin the question-and-answer session?
Kapil Bhatia — Managing Director
Yes.
Questions and Answers:
Operator
Thank you. We will now begin the question and answer session. [Operator Instructions] The first question comes from the line of Aman Soni with Nvest Analytics Advisory LLP. Please go ahead.
Aman Soni
Hello, am I audible? Hello, am I audible sir?
Kapil Bhatia
Yes, you are audible.
Aman Soni
Good afternoon sir. Congrats for a good set of numbers. My first question is on our order book, like we performed decently in first half but can you spend few minutes on guiding us the kind of orders that you are witnessing that are coming to us and the kind of orders for which we are into the big line which can give the visibility for say next two to three years.
Kapil Bhatia
We have a very healthy order book and as committed we are — we will be doing around INR240 crores to INR250 crore gross revenue this year and the next year estimated will be around INR300 crores gross revenue. Our company and orders are keep on coming in for all the three segments the coil spring, air spring, and forgings and this is a normal trend that there is not a single tender so that we can wait for another year or so. It is a continuous process. We always keep on offering tenders to us and we keep on quoting, and at the moment we are already booked for next six to eight months. We are already having good order and we are running our business with 75% to 80% capacities and others are in a good position.
Aman Soni
So, that INR300 crores, you are saying to next year but I think on a small base, we are showing very decent growth this particular year. So are you seeing any kind of slowdown happening in terms of the orders coming in after FY ’26?
Kapil Bhatia
No, I don’t see any shortfall, as we know that Indian Railways are already working and keeping increasing the capacity of manufacturing their freight wagons, passenger coaches, and locomotives where we are supplying our products. And next year onwards they are already planning to go for 6,000 passenger coaches to 10,000 passenger coaches and as well as freight wagons and locomotives. So, we don’t see any slowdown in the orders for the next three, four, five years at all.
Aman Soni
Got it, sir. Sir, secondly on our margins, if we see like for the last seven quarter consequently we are showing the uptick in the margins. So how do you see these margins shaping up and is there any kind of target that we are looking at like after that the margin margins will get stabilized and that should continue for a reasonable period of time.
Kapil Bhatia
Yeah, the margin what we are having now it will continue for sizable period of time and I don’t see more competition in this, so that our margin will go down, it will minimum remain same or it may increase further.
Aman Soni
Increase further from the current level, like in this quarter we did around 20.46%, right?
Kapil Bhatia
Yes.
Aman Soni
Got it sir. And are we looking for any fundraiser for the purpose of further expansion or catering to the upgrowing demand? Because if we look at our net block, so that is more or less same for the last two to three years. It is not a big capex happened at our company level. So what’s your view on that?
Kapil Bhatia
No, we don’t require any major capex this thing at the moment. Whatever small bottlenecks are there to keep all our capacities upgraded as far as the supplies are concerned. So, we don’t see any more fundraising and whatever it will be there it will be from the internal accrual for at least one year. The small capex of INR7 crores, INR8 crores which is a continuous process per year, we will keep on doing it from our internal fundraising at the moment for any project.
Aman Soni
Got it, sir. That’s it from my side, sir. I’ll join back the queue. All the best for the future.
Kapil Bhatia
Thank you.
Operator
Thank you. Next question comes from the line of Agastya Dave with CAO Capital. Please go ahead.
Agastya Dave
Hello. Am I audible?
Kapil Bhatia
Yeah.
Agastya Dave
Thank you very much for the opportunity, sir. And thank you very much for conducting the conference call. Sir, congratulations on great execution. Sir, I have a question on your total capacity in terms of peak revenues that you can achieve with the current asset block. With the debottlenecking exercises that you mentioned, what’s the maximum revenue potential of the company as of now.
Kapil Bhatia
Yeah, we can, with the same capacity we can reach up to INR500 crores gross which will be there around FY ’27. And with — as I already mentioned, for some — the bottlenecks, we keep on doing it for improvement. So INR500 crores for the financial year ’27. So there will be no problem with the current capacities, the major capacities what we are having.
Agastya Dave
Great. Sir, so then if our target Is to reach INR500 crores or the potential of the company is clearly to reach INR500 crores by FY ’27, why the lull in ’26? Because we are growing very rapidly this year. And then it would seem that we would be growing very rapidly in FY ’27. But FY ’26, the 20% number, is it you being conservative and as the previous participant also mentioned, are you seeing any slowdown? Are there any like bottlenecks that you need to address?
Kapil Bhatia
No, I am really little conservative and we may touch INR350 crores next year, but I am little bit conservative telling all these things. Let the things happen and the results speak themselves. That is the main thing, where we are not slowing down anything and we are quite sure that the business will keep on increasing every year.
Agastya Dave
Great, sir. Sir, my next question is on the margin side. So can you talk a little bit about gross margins? How should we look at it? And when you have different divisions which are, I’m pretty sure they have different economics. So how does a relative shift in higher revenues in a particular division affect your margins? For example, now the forging side will kick in when the new hammer is completely operational. So what will it do to your margins? Can you cover the gross margins as well as EBITDA margins in this question.
Kapil Bhatia
The forging will not increase much of the margin but definitely add to the revenue with a reasonable profit margin. But the coil spring and the air spring will definitely increase our margin or maybe remain same. Forging will definitely, because forging is a very competitive market and we don’t see much of the increased profit margin but definitely add to our revenue in a great number.
And also we are looking for some exports in the forging division also. As soon as that will add then the profit margin will definitely increase in the forging division also when we add export because we don’t see export for the coil spring and air spring at the moment because Indian markets are too high and we don’t want to go outside. Everybody wants to come to India to supply the railways so we don’t want to spoil that thing.
But forging definitely we are looking for some export business and maybe next year, second quarter onwards we’ll start getting order for the export of forging division.
Agastya Dave
Great sir. So just to press upon this margin part again you mentioned in, I believe, in the opening remarks that our margins will be here or they will become better. So what should I take as the base? Because if I look at the last, let’s say, 10, 12 quarters there has been a — there was some — like there was a little bit of a pressure in ’22 — ’22, ’23 but then you rebounded back to the older margins of 14%, 15% and now you are reporting 20%. So what is the base, sir, sustainably you can maintain and on which you can build upon, what should we consider?
Kapil Bhatia
Between 18% to 20%.
Agastya Dave
As the base, sir?
Kapil Bhatia
Yeah.
Agastya Dave
And then you can further build upon it.
Kapil Bhatia
Yes.
Agastya Dave
And sir — and one last question again sir, on the margin. So if the total potential of the company is to do INR500 crores without substantial capex, so you are effectively operating at 50% of less than 50% utilization. So what kind of operating leverage can you see? Because if a facility is operating at 50% utilization and then reporting 20% margins with 50% plus gross margins as you scale towards 50% — as you scale towards INR500 crores and 100% utilization your margins can be probably 25%. So is that a fair assumption or am I reading too much into it with the element of operating leverage, I’m trying to understand, sir.
Kapil Bhatia
You want to understand the capacity utilization of our units or what you want to know?
Agastya Dave
Sir, I’m looking at three, four things. One is that you said that this year we are around 250, 270. So that would — let’s say 250 but the peak is 500. So that would mean that the current utilization is somewhere close to 50%. But at 50% capacity utilization you’re already reporting 20% EBITDA which is like fantastic. So, if you go towards 100% capacity utilization, I mean I’m just trying to understand will the margins not approach like 25%…
Kapil Bhatia
No, we are not working at 50%. We are already working at 60%, 65% capacity in some of the division. And we are — like I already told you, we are working on the bottleneck so that we can execute more orders. Orders are there, we are not able to execute because of some bottlenecks. And we are working on that and by next year onwards, we will be able to get our machines in line and we will operate more. And we are already working on 65% to 70% capacity.
But we have capacity in making coil spring, but finishing or maybe testing we require some, where we have a bottleneck so that we are working on that. So, we’ll able to do that with the little capex of INR5 crores to INR7 crores, we are able to complete the bottlenecks, then we’ll be able to do it.
Agastya Dave
Okay, so that was my next question. You already answered. Thank you very much, sir. All the best. Great performance, sir.
Kapil Bhatia
Thank you so much.
Operator
Thank you. The next question comes from the line of Mahesh Atal with Atal Investment Advisors. Please go ahead.
Mahesh Atal
Congratulations on great set of numbers. My first question would be out of this INR52 crores, can you please specify the different — I mean the turnover on the coil spring, forging, and air spring, please.
Kapil Bhatia
INR250 crores; the coil spring will be around INR80 to INR90 crores; INR60 crores of forging, and rest is air springs. So INR90 crores, INR90 crores is almost air spring and coil spring. And the INR60 crores, INR65 crores is for forging.
Mahesh Atal
No, I’m talking about the quarter, sir. The quarter gone by.
Kapil Bhatia
I was telling you the total year. So the percentage will remain the same approximately. I don’t have exact number at the moment in front of me. But I think…
Mahesh Atal
I’ll get it offline, sir. I had another question which would be on the — If I go through your annual report, sir, there’s one thing that you reported in the related party transactions which would be the job work that you have paid to Vishwa Rail which is around INR37 crores odd. So, if you could please throw some light on what kind of job work we are paying to this party and do we have any formal agreement with them on the job work?
Kapil Bhatia
We are already having a formal agreement and we are doing our — some work for the finishing side, so that we’ll able to get the things done and delivery faster to the railways. We are already having machines — they have more machines and they are doing it for us. So it is like that.
Mahesh Atal
That’s a big size. Is it a promoter entity, sir?
Kapil Bhatia
It is a…
Mahesh Atal
It is a promoter entity, right, and everything is on arm length basis?
Kapil Bhatia
Yes.
Mahesh Atal
All right. Second question would be on the investment that you have — that you are having in the equity sides. So is this professionally managed investment that you are doing with the cash that you have accumulated or is it that internally we are deciding on which equities we will…
Kapil Bhatia
It is internally and we have a team to do that internally to decide on this.
Mahesh Atal
So are we going to build up further on this or this would — this was just a small arrangement.
Kapil Bhatia
We keep on doing it and we keep on doing it as and when we have an excess fund. So we just don’t want to keep it idle in the bank account. So we keep on investing in these things so that whenever we require for future expansion we can immediately do that and they can give us some yield on that.
Mahesh Atal
Yeah. And one advice would be sir, if you could please give a breakup of which equity shares this invest — the money is invested into that would throw a light for the maybe next year or so. Anyways, my next question would be on sir, we have a lot of cash coming into our books. So actually by having cash in our books, we are pulling down our ROCE. So could you please throw some light on what further plans we are having beyond ’27, are you working upon that and how far are we on that? If you could…
Kapil Bhatia
We are already looking for — I don’t want to reveal now but we are looking for some takeover of some businesses related to railways. The talks are on a very initial basis. Let something happen then we will definitely reveal to shareholders. We are already working on to multifold our business taking over some companies with our cash and maybe require if something buy from the primary market we can go to that also. But it’s very initial thing let us materialize something. And we are already doing some due diligence on one or two companies and we are also looking for some major diversification. So, let’s see what happens and will be able to definitely disclose to the shareholder and something happen positively.
Mahesh Atal
Fine, sir. I’ll join back in the queue. Thank you.
Kapil Bhatia
Thank you.
Operator
Thank you. Next question comes from the line of Vivek Gautam with GS Investments. Please go ahead.
Vivek Gautam
Yeah, hello. Am I audible?
Kapil Bhatia
Yeah,
Vivek Gautam
Yeah. First of all congratulation on steady set of numbers. My question is regarding the macro scenario for railways. I’ve seen in the railway recently that lot of rush is there in the general compartment and the people belonging to the lower category going into the AC coaches and other things and creating trouble for it. So basically the railway budget has sort of has also focused shifted from premium Vande Bharat sort of line to general category coaches and as such our air springs which were being done in — used in premier Vande Bharat coaches. So they are having some headwinds and some budget allocation is there moving to more towards due to the accidents also due to Kavach and other general things from our premium Vande Bharat offerings. So what impact can it have on us, sir?
Kapil Bhatia
This is actually very good news to the shareholders that railways are little bit curtailing Vande Bharat things and going for the traditional LHB coaches more from 6,000 coaches per year to 10,000 coaches as you clearly stated that there is a dearth of coaches and the people are not able to get seats in the railways. So that is a good news for us. And air springs are not only used in Vande Bharat, they are now using the air spring LHB coaches with the coil spring. So, we are having bounty level both the end and as much as LHB coaches are made that is good for the company and for our all the three divisions because we are supplying forging for LHB coaches, coil spring for LHB coaches, and air spring for LHB coaches.
So that is the main thing that I already mentioned that additional demand of coil spring emergency procurement because they wanted to produce more LHB coaches. So, it is good for us and good for the company as many as LHB coaches will be built and railway has really curtailed Vande Bharat chaircar and now they are working on Vande Bharat sleeper car. So, once they’re rolled out then they will see what is the economics and all that. So, it is good that LHBs are working for us.
Vivek Gautam
Okay sir, answer any client concentration risk for us, Railway being our major customer only and any risk mitigation plans we are taking. And what about the opportunity size for us and the expected growth which we can expect, sir?
Kapil Bhatia
No Railway, you can very well see that because of the country’s population and government policies of our Prime Minister, Make In India, which has really helped the company to work in such a manner. So — and for next 10, 20 years we don’t see any downfall as far as railway business are concerned. You are already seeing that almost INR3 lakh crores is allocated to Indian Railways in this budget and maybe more for the next financial year.
And all over the world people wanted to come to India and supply to Indian Railway, because the business is there. So things are good and we are sure that the field where — and the country and the Prime Minister’s vision working on the infrastructure whether it is rail, road, or maybe shipping, all these things are working on a great manner. So the companies associated with these infrastructure things are working all right.
Vivek Gautam
And expected growth rate for next 2, 3, 4 years, sir, what is the expected growth rate?
Kapil Bhatia
I mentioned that by ’27, we’ll be touching gross revenue of INR500 crores, maybe little more. So things are good 20%, 25% growth every year.
Vivek Gautam
I remember the IPO of Frontier Springs came somewhere in mid 90s. And that’s a good part actually in the sense that so many companies came with the IPOs at that time and many of the companies disappeared and only a few are remaining including ours. So — and what happened sir and in between not much of the change happened and what was the positive figure for us and visibility for our earnings hasn’t started, if anything you can like to highlight sir,
Kapil Bhatia
When we have got our company listed, we were majorly working for the leaf spring segment for the state transport corporations and for the truck buses. But later around 2000, we have stopped making those products because of the major competition and very, very low profit margin. And the state government has started buying from the local vendors from their state. Earlier we used to supply to all the state transport corporation like MSRTC, Delhi or Hyderabad, everywhere we used to supply.
So things were different at that time. So business was very low. And then we entered into railway and it took some time, two, three, four years to build a new plant and then the new product and so it was like that. And slowly and steadily we have come on this way. And then Indian Railway used to import lot of springs. They were not buying from Indian sources. As I already mentioned that because of our Prime Minister, Make In India things we are able to do that, but Indian railway was not buying from the local vendors. But now they are buying it and we have already proven our quality and air spring, we already got our technical know our partner from Germany ContiTech Continental. So things are now good with us.
Vivek Gautam
And so one more thing I would like to congratulate you is about the I believe your name of the company. Our company is named after frontier province of Pakistan. So, your father started the company and you took it to the next level. Fantastic work by the first generation entrepreneurs sir. And a few words about the next generation who is there in the company and what are their role and who are they?
Kapil Bhatia
My nephew Mr. Shantanu Bhatia has already joined business. Mr. Neeraj Bhatia’s son. He has already joined business and looking after Air Spring and Forging division and he is working really hard for that. And things are in line for the next division also. And I am quite confident that they will take it further to the next level.
Vivek Gautam
Yes sir. And in the UP double engine sarkar is there and Kanpur used to be the major industrial hub and I believe they went through bad times. But now Frontier Spring might be one of the leading light of the Kanpur industrial unit, sir. And what is the encouragement you are getting from state government, sir?
Kapil Bhatia
Yeah, the state government is — you have already seen that double engine sarkar is working all right and law and order situation is very good, and power situation has improved tremendously since last seven, eight years. We are not using any gensets at all. And things are very working. And all the departments in the administration are really helpful for the units. Mr. Yogi is looking after [Technical Issues] daily basis. So we are associated with all the CIIs and other entities. So, things are good as far as UP governments are concerned.
Vivek Gautam
Excellent work sir. And seems our Maruti is on the way to become Mercedes now. Thanks a lot sir and keep up the good work sir. Thank you very much.
Operator
Thank you. Next question comes from the line of Aman Soni with Nvest Analytics Advisory LLP. Please go ahead.
Aman Soni
Hi, thanks for the follow-up. Sir, you mentioned to one of the participant like we are targeting INR500 crores by FY27, and at the same time we are looking for INR300 crores kind of number FY26. So can you, can you explain like what is the thought process or what is the rationale, like — is it like we are expecting some big orders in FY26 that are going to be executed in FY27, so can you put some color on it?
Kapil Bhatia
Yeah, Railways — railway demand, they have already mentioned that increasing in all the three segments where we are there, freight wagons, earlier they used to make 10,000 to 11,000 wagons. Now they are planning to produce almost 30,000 wagons a year, freight wagons and from 6,000 passenger coaches to 10,000 passenger coaches for the next three, four years. And as many as freight wagons and coaches will be made so that much of locomotives are required. So we are there in all the three segments, anything which carries load and moves required a coil spring from us to Indian Railway.
So all the three things, freight wagons, passenger coaches, and locomotives required our springs and because we are into suspension, so without suspension nothing can move. So we are quite positive that things will be alright for next 7, 8, 10 years. There will be no dearth of business as far as Indian Railways are concerned.
Aman Soni
Got it, sir. And sir, I think in previous con calls you mentioned like we are one of the three approved players in India for this air springs. So sir, can you comment upon like who are the other players who are getting ready for getting those approvals or what kind of competition do you See next, say 1.5 years, like what kind of players are coming in, how much capacities are coming in and whether it is likely like — those upcoming capacities are likely to exceed the demand level. So how it is going to shape up sir?
Kapil Bhatia
Still there are only three approved sources and I think maybe one — another one is there in line to get themselves registered and getting registered with Railways because these are the safety products required a lot of time and it requires at least two years to get your product approved with the Railways after testing, field trial and all. So, next two years, I don’t see much of the competition coming in as far as the coil springs and air springs are concerned.
Aman Soni
Got it, sir. And lastly sir, like we are, we are R&D company only. Like we are developing the products and customizing it as per the requirement of newest products that the railway is bringing on. So, are we looking to diversify further into the product segment? Like is it possible like we will be introducing newer products apart from catering to the existing areas?
Kapil Bhatia
No, we are into suspension and there are some other parts in Forging division which required heavy hammers which we are under installation so we will able to produce more forgings to the Railways and rest of the things will remain same and as we have already collaborated with Continental ContiTech Germany for further improvement in the quality of air springs, we are already doing that in consent with the railway research department which is very close to us and we are working hand to hand with RDSO and our company that whatever research is required for further improvement in quality and product we are already doing it.
So, that is added advantage and we are in Kanpur and Indian Railway Research Division is in Lucknow, just one and a half hours away from us. So we keep on doing that and which helps us for understanding the Railways’ need and Railways further requirement for quality as well as the protection.
Aman Soni
Got it, sir. That’s it from my side, sir. All the best for the future. Thank you.
Operator
Thank you. Next question comes on the line of Raja Panda, an Individual Investor. Please go ahead.
Raja Panda
Hi, am I audible?
Kapil Bhatia
Yeah.
Raja Panda
Sir, my question is regarding air springs and we had a INR52 crores order which was supposed to be delivered by December of this year. So, I’m assuming we are close to completing that order. Are there any further orders or any update on how the capacity is going to be used after this order?
Kapil Bhatia
No, we already got another INR50 crores order, keep on coming — keep on coming. That was the first big order — so orders INR10 crores, INR20 crores orders keep on coming in and we are booked for the next financial year, the total financial year at present and we are having a very good order book as far as air springs are concerned.
Raja Panda
Sir we had also updated that Alstom and Siemens and Bombardier and some other customers have visited the facility and they’re looking to locally procure from you for Make In India. So did that materialize? Are we getting some orders from these clients?
Kapil Bhatia
I couldn’t get you, your voice was little cracking. What are you saying?
Raja Panda
No, I said I think we had said in one of the call that Alstom and Siemens…
Kapil Bhatia
Yeah, we are already there, and as our — in air spring, we are having collaboration with Continental ContiTech which is an international company and they are already supplying to Siemens, Bombardier and other major players who is producing the Metro coaches. So as now we are in India and we are partnering with the Continental ContiTech, so that is added advantage to us. And things are already in line and whatever they are required, they will definitely come to us, it’s already discussed
Raja Panda
What will be the capacity utilization currently and going forward for this division, Air Springs division,
Kapil Bhatia
Air Spring, we are just at the moment doing 50% capacity utilization.
Raja Panda
Okay. Okay. So do we look forward to increasing that utilization rate?
Kapil Bhatia
Yes.
Raja Panda
Thank you so much.
Kapil Bhatia
Okay.
Operator
Thank you. Next question comes from the line of Mahesh Atal with Atal Investment Advisors. Please go ahead.
Mahesh Atal
So can you tell me the capacity of this air springs? Is it online now, the 250, we were supposed to move to 250 coaches per day, right? So is it on now?
Kapil Bhatia
Initially we have started with 100 coaches set per month and we are already doing it 50 coaches capacity is already [Technical Issues] 250 coaches per month.
Mahesh Atal
So like since last month we are doing it 250, right. So we can take it as 250.
Kapil Bhatia
Yes.
Raja Panda
Which is 1,000 air springs per day — per month.
Kapil Bhatia
Yeah
Mahesh Atal
And sir, as you said, we have booked for the next financial year coming to air springs, right?
Kapil Bhatia
What?
Mahesh Atal
We are completely — we have orders in hand for the next financial year.
Kapil Bhatia
[Speech Overlap] we are booked for almost the full year for the next financial year.
Mahesh Atal
That is for the extended capacity, right, sir?
Kapil Bhatia
Yeah.
Mahesh Atal
Okay. All right sir, thank you. That’s it from my side. Thank you.
Operator
Thank you. Next question comes from the line of Rakesh Roy with Boring AMC Omkara Capital. Please go ahead.
Rakesh Roy
Yeah. Hi sir, just my first question regarding, sir, as you mentioned earlier, you are working for defense also, Metro also. Can you highlight on the progress on this sector part, sir?
Kapil Bhatia
For defense we are. We are working for our forging division and things [Technical Issues] five, six months to start something to the different areas. We are [Technical Issues] at the moment and next what you have asked [Technical Issues] now as we have [Technical Issues] for air springs and things are already started coming in from the BML and other manufacturer of coaches for supplying spring for their Metro and we started discussing with our OE Messrs ContiTech to supply us with their design. So every Metro has a different design of air spring, whether it is Siemens, Bombardier, BML whoever manufacturing Metro coaches so we keep on developing the air springs for each and everyone. As far as facility approval is concerned that is already there so now the product approval will start — we will start doing the product approval for their type of Metro purchase that is the thing.
Rakesh Roy
Right. So next question regarding sir, this — can you give me the number sir for coil spring you say INR80 crores to INR90 crores and for air spring how much sir, for forging?
Kapil Bhatia
Air springs, this year, the same the 90-90 for air spring and coil spring and around 60 to 70 for forging.
Rakesh Roy
Okay 90 for….
Kapil Bhatia
Yeah. INR240 crores to INR250 crores was what we are targeting this year.
Rakesh Roy
Okay sir my next question sir as you mentioned government has cut down Vande Bharat this number and increase the LHB coaches. LHB coaches we use air spring plus coil spring both, okay sir and how — yeah so if I’m right mathematically, if we take 50 coil spring and 50 air spring; out of total 800 coaches — 8,000 coaches every year and one if I’m right if one air spring cost is nearby 1.25 lakhs nearby…
Kapil Bhatia
Yes.
Rakesh Roy
And coil spring is nearby INR30,000 per unit.
Kapil Bhatia
Yes
Rakesh Roy
And our market share is nearby 50%.
Kapil Bhatia
Yes.
Rakesh Roy
So, in that case, sir, our revenue will increase further. This is apart from the [Indecipherable].
Kapil Bhatia
It is there and the prices is also going up because of the additional demand and we are getting a good margin for coil spring. What you are saying we are getting much better than the 30,000 at the moment and being an emergency demand by railway and suddenly increase the capacity. So, we have good margins from the railway and things are good as far as utilization.
Rakesh Roy
Sir, my question is regarding if you take 8,000 coaches — LHB coaches and if take 50% air spring, in that case only this ad only nearby INR160 crores market out [Indecipherable]
Kapil Bhatia
As I’m saying the next year order book is full so that is why it is full sir — because of the more requirement and the more…
Rakesh Roy
Okay right sir that’s it. I said can you highlight on the — this sir, forging business and how is the market size and who are the other players in same for railway forging?
Kapil Bhatia
There are a couple of suppliers and as I already mentioned that forging will not have the same margin as coil spring and air spring are having but there are good suppliers like RKFL, Ramakrishna Forging which is already listed company and there are few companies from Punjab who is supplying to railway. So there are seven, eight companies in forging this thing but what we are doing with the regular supply as we are increasing our hammer capacity so we are entering into some components which are having less supplier so that we get a better margin and all. So that’s why we are increasing our capacity to go for a bigger hammer in the major heavy product where we are having only two three suppliers, so that we can get a better margin on that in the forging division also.
Rakesh Roy
Okay, sir. Yes, sir. One is, sir, and you mentioned air springs, we have only three players and who are the other two players sir?
Kapil Bhatia
One is Avadh Rubber and there is a Tire Engineering like this.
Rakesh Roy
Okay, sir. Right, sir. Thank you, sir.
Operator
Thank you. Next question comes from the line of Saket Kapoor with Kapoor and Co. Please go ahead
Saket Kapoor
[Indecipherable], sir, and thank you for the opportunity. Firstly when we look at the closing balance portfolio for CWIP, is it for the d bottlenecking exercise that we are coming that we have commenced and when we are going to reap the benefit or when it is it going to get capitalized that INR4 crores?
Kapil Bhatia
Hello. Yes sir, you can hear me, sir. Yeah. Now what are you asking?
Saket Kapoor
I was asking about the capital work in Progress balance of INR4 crores, is it towards the debottlenecking exercise that you alluded in your opening…
Kapil Bhatia
It is debottlenecking exercise as well as installing our new hammer in the forging division. So it will be around INR4 crores to INR5 crores which is — which we are already doing for this financial year. So, it is for both installing our hammer as well as the bottlenecking the capacities of our coil spring and air spring division.
Saket Kapoor
Okay, and when will this get applied and the benefit start going?
Kapil Bhatia
It is on a daily basis. By March this will all be done and we’ll start getting more better revenue for the next financial year.
Saket Kapoor
Okay, and sir, can you give the raw material basket mix what constitutes the major raw material consumed?
Kapil Bhatia
We are having a different type of raw material, like for our coil spring there is a spring steel rounds which we are buying [Technical Issues] RDSO approved railway process, three, four railway approved sources, the steel plant who are supplying for that. For air springs we require cold roll copper grade which is also supplied by few steel plants. And in forging also we require a different type of [Technical Issues] billets, it is all the steel basically and we are buying from the different sources of [Technical Issues] product, because all the items are safety item forgings and air spring coils [Technical Issues] in this.
Saket Kapoor
Sir, I missed last two comments, sir.
Kapil Bhatia
Like our mix [Technical Issues] all the three products [Technical Issues] air springs and coil springs, so their raw material supplier is also approved by RDSO, that is the [Technical Issues].
Saket Kapoor
There is some noise there in the background, if that could be cleared.
Kapil Bhatia
I don’t know.
Saket Kapoor
Yes, I’m not able to — yeah. Sir, you were answering that for even for the raw material part you have the RDSO that is the certified supplier from the railways taking into account considering safety aspect of the finished product.
Kapil Bhatia
Yes.
Saket Kapoor
In that case also for the raw material part also the railways are well aware how the — how are the price trends are and that even insulates your margin, that’s a better understanding.
Kapil Bhatia
It is their — but because of the quality they might charge little bit higher from the other sources. But that is there in our quotation that we have to buy from this and their prices are X plus from the other supplier from the market. So railway understands that and they give us that margin of buying a little bit expensive material, but because of the quality railway allows that.
Saket Kapoor
Okay. And other private players — private steel players are also providing these value-added steel products or it is mainly the PSUs.
Kapil Bhatia
It is all private players who are supplying the steel to us, Jindal, Sunflag Iron and Steel Company, Bhushan Steel. So it is all the private player who are supplying steel to us.
Saket Kapoor
Okay, right, sir. Sir, if you look at the other expenses line item, do we have any specific component that are that constitute or there are a lot many items that goes into this INR14 crores, INR15 crores quarterly run rate?
Kapil Bhatia
Yeah, I couldn’t get you, what you are actually asking?
Saket Kapoor
Our other expenses are to the tune of INR15 crores for this quarter. So, are there any major component that constitute and are clubbed as expenses or are they major — very small minor — [Technical Issues]
Kapil Bhatia
It remains same and what was the previous year, the same thing is.
Saket Kapoor
Right. Thank you, sir, for all the answers and all the best, sir. Thank you.
Kapil Bhatia
Thank you.
Operator
[Operator Instructions] Ladies and gentlemen, we have reached the end of question and answer session. I would now like to hand the conference over to Kapil Bhatia for closing comments.
Kapil Bhatia
Thank you. Thank you all the participants who have come and asked the questions about our company. Thank you for joining us today for our earnings call. We appreciate your time and interest in Frontier Springs Ltd. Should you have any further questions or require additional information, please do not hesitate to reach out to our investor relations advisor at TIL Advisors. We look forward to continuing our conversation and updating you on our progress in the future. Thank you once again and have a great day ahead. Thank you so much.
Operator
[Operator Closing Remarks]