Nelcast Limited (NELCAST) Q4 FY23 Earnings Concall Transcript

Nelcast Limited (NSE:NELCAST) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

Sonia Keswani — Investor Relations

P. Deepak — Managing Director and Chief Executive Officer

Analysts:

Aman Agrawal — Carnelian Capital — Analyst

Ankur Kumar — Alpha Capital — Analyst

Dhiral Shah — PhillipCapital PCG — Analyst

V.P. Rajesh — Banyan Capital Advisors — Analyst

Nilesh Doshi — Green Lantern Capital — Analyst

Nandish Shah — Money Control Research — Analyst

Anupama Bhootra — Arihant Capital Markets — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Rehaan Phophalia — Sicomoro Advisors Private Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Nelcast Limited’s Q4 and FY’23 Earnings Conference Call. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Ms. Sonia Keswani from Ernst & Young, IR Practice. Thank you and over to you, ma’am.

Sonia Keswani — Investor Relations

Thank you, Nikhil, and good morning, everyone. On behalf of Nelcast Limited, I welcome all of you to the company’s Q4 and FY’23 earnings conference Call. You would have already received the Q4 and FY’23 results and investor presentation, which is also available in our filings with the Exchange. To discuss the company’s business performance during the quarter and the full-year and the outlook going-forward, we have with us today Mr. Deepak, the Managing Director and Chief Executive Officer; and Mr. S.K. Sivakumar, the Chief Financial Officer of Nelcast.

Before we proceed with the call, a disclaimer, please do note that anything said on this call during the course of the interaction and in our collaterals, which reflects our outlook towards the future or which should be construed as a certain forward-looking statement, must be viewed in conjunction with the risks the company faces and may not be updated from time-to-time. More details are provided at the end-of-the investor presentation and other filings that can be found on our site www.nelcast.com.

Should you have any queries, or need any further information at the end of this call, you can reach out to us at the email address as mentioned in the company collaterals.

With that, I would now like to hand it over to Mr. Deepak. Thank you, and over to you, sir.

P. Deepak — Managing Director and Chief Executive Officer

Thank you, Sonia. Good morning, everyone. I would like to thank you and welcome you all to our Q4 and FY’23 earnings call. I hope all of you are doing well. I would like to start by talking about the quarterly performance. Our revenues stood at INR315 crores, which is up 16% year-over-year and driven by a small increase in volumes, which stood at 20,620 tonnes in Q4 of FY’23 compared to 19,389 tonnes in Q4 of FY’22.

Significant growth in export revenue, which was 53% year-on year. On a quarter-on-quarter basis, our revenues were down 5.6% due to operational challenges within the company, which we will resolve within the FY’24. On the EBITDA front, we saw a drop of 0.4% year-over-year and 2.3% quarter-on-quarter. So it stood [Phonetic] about INR21 crores. This was due to the reduction in volume on the quarter-on-quarter basis as well as the normal seasonal slowdown that is there in the tractor segment and increased operational costs.

Moving onto the numbers for the full-year. Our total revenue stood at INR1,280 crores and we crossed the INR1,000 crore mark for the first time and reported a strong growth close to 37% year-over-year. This was driven by increase in sales volumes that stood at 84,381 tonnes, up 17% year-on-year. While we saw demand across all our segments, the strongest demand growth came from commercial vehicles and exports.

EBITDA for the year stood close to INR96 crores, which is up 42% year-over-year on the back of volume growth, better realization and increase in our export business. EBITDA per kg, was at INR10.3 — I’m sorry, INR11.3 per kg, as domestic raw material pricing to remain relatively stagnant, but we did actually see a big drop in international raw material prices, which impacted the price realizations. However, we are now seeing a mild reduction in domestic prices and a steep increase in international prices. So we expect these two converge fairly quickly and get our margins back to more normalcy.

Profit after tax more than doubled and stood at INR30 crores and the PAT margin was 2.3%.

Moving on to how we performed segment-wise in FY’23 and our outlook for the coming year. Medium and heavy commercial vehicle segment reported revenue growth of 47% year-over-year. This was driven by recovery in the industry as well as strong demand. We expect this industry to continue to grow in the current financial year FY’24, driven by increased infrastructure spends, which will also lead to more demand for tippers and because tippers contribute materially to our top line. Having a higher casting content, we expect our M&HCV segment growth to continue on a strong trajectory in the coming year.

Tractor industry had a strong year as sales touched an all-time high. We reported a growth of 24% year-over-year despite the typical slowdown in the second-half due to the normal seasonality. We expect the growth to be marginal in FY’24 due to what seems at least in these early stages to be a slow growth in the rural economy.

On the export front, we surpassed our guidance. We generated more than INR329 crores, reported growth of 49% year-over-year, while the growth was primarily driven by our base business and several new launches that have happened in FY’23. We believe most of the new launches that are scheduled have been completed and there will be more coming towards the end of FY’24. On the back of this, we expect our export business to also grow about 20% or so in the coming year.

Our segment-wise contribution in FY’23 saw the largest share coming from M&HCV at 39% of total revenues: Tractors was at 29%, exports at 26%, railways at 3%, off-highway and others made up about 2%. Looking-forward to FY’24, we expect double-digit top line growth in FY’24. This will come with growth in M&HCV segment with increased infrastructure spends, pick-up in export markets due to the strong order backlog and the easing of some of the other supply-chain problems, including the chip shortages that have plagued the industry for the last few years and we believe that we will also have some marginal growth in the tractor segment.

With this, we can now open the floor for any questions that might be.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Aman from Carnelian Capital. Please go ahead.

Aman Agrawal — Carnelian Capital — Analyst

Sir, thank you for the opportunity. My first question was on the volume guidance for next year. This year we have done somewhere around 86,000 tonnes and for next year, we are seeing 10% to 15% kind of volume growth in our presentation. But then last call only we were talking about at least doing 1 lakh tonnes. So given that like what has changed? Are we seeing some kind of slowdown in export market? Or like, is it mainly because of the tractor slowdown, which could happen this year?

P. Deepak — Managing Director and Chief Executive Officer

So regarding — I think the volume expectations overall I think we do believe that we will get close to that number. I think there is a little the tractor expectations three months ago were actually higher than they are currently. The tractor is still a little bit of wait-and-watch, because obviously the monsoon also has an impact on the tractor sales. So I think we’re being a little bit more cautious right now just due to a little bit of unknown in terms of what the tractor market might look like.

Aman Agrawal — Carnelian Capital — Analyst

Understood, sir. And secondly on the margin, like, this quarter we have seen INR9.7 per kg EBITDA rate like. So what impacted this? Because we were talking about achieving INR12 per kg this year. So how that was — what led to the trend? How we see this going forward, let us see [Phonetic] then, elaborate on that please?

P. Deepak — Managing Director and Chief Executive Officer

Yeah. So, yeah, so for the full-year, the number is actually INR11.34, for the quarter, you’re right, it was INR9.7. So, I think we’ve had couple of things I think that I’ve mentioned that had the impact on the margin. One was operational issues that we did have in our Gudur plant, one of which I think we did mention in our previous call that the replacement transformer was of a lower capacity. So we did lose some potential production volume because of that.

The other was also the raw-material price difference, so we are linked to some global indices in terms of the price recovery for the raw-material price increase and decrease and we had seen fairly drastic reduction happening in the global markets, which didn’t happen in India. And now we’re starting to see them converge as well. So — and historically also it’s been a temporary phenomenon, the divergence, but it has never happened to this extent. So we do believe that it’s going to normalize and we should get back to more normal margins. But if you look at I think the last few quarters is where this has probably taken some toll on us.

Aman Agrawal — Carnelian Capital — Analyst

Excellent. So FY’24, can we see INR12 per kg, that kind of margins because even our power and fuel cost which we are experiencing higher. Have you seen some kind of customer compensation on that side and if that can benefit us in terms of better margins going forward?

P. Deepak — Managing Director and Chief Executive Officer

Yeah. So, I think, yeah, definitely, that’s we would — we believe that we would be able to do better than that in than what we have done in this year and next year, so INR12. And our plan kind of in the medium-to-long term of moving to INR15 is still something that we — we believe is achievable and we are working towards. But I think that’s something then you mentioned about the power cost as well. Yeah, there was hikes in the power price in both Andhra Pradesh as well as Tamil Nadu, which is where our plants are located and we have in most of the cases already negotiated and finalized this with the customers.

Aman Agrawal — Carnelian Capital — Analyst

Just one final question before I move to the question queue, sir, like, this is on like export volumes. If you can give me an outlook for export, like, are we seeing any good traction with new customers? Have we signed any new customers or like we increased it from any of the customers?

P. Deepak — Managing Director and Chief Executive Officer

So we are seeing existing volumes going up with existing customers. As I’m sure you’re aware, there’s a huge backlog of orders for trucks as well as the cars in the US. And I think that was driven one with all the cash that had that was out in the market during COVID, but also because of the chip shortage there was constraints in manufacturing as well, due to supply-chain. So now that those constraints have started easing. We do believe that same customer, same product will have growth in this current quarter Q1 and Q2 happening. We have some new products lined-up for launch as well that will happen in Q3 and Q4. So we do believe that we are quite positive on exports.

In terms of new customers, there are some serious discussions happening with new customers. And that’s something that we will update at the appropriate time. The other thing is I think we’ve got a new program. It may not be significant volumes for the current year or even the next financial year. But for electric Class 8 trucks, there is a new project that just got awarded to us. So this is something that might be perhaps one-and-a-half years, two years down the road launch that will happen with maybe only some small samples and trials happening in the current year.

Aman Agrawal — Carnelian Capital — Analyst

Correct, sir. Thank you. Thank you for answering my questions, sir. I will get back in the queue.

Operator

Thank you. Our next question is from the line of Ankur Kumar from Alpha Capital. Please go ahead.

Ankur Kumar — Alpha Capital — Analyst

Hello, sir. Thank you for taking my questions. Sir, question is on EBITDA per kg. So in Q3, we had transformer failure, because of which we couldn’t do production for a week or so then we had some one-time issues also. And then also, we had INR10 per kg EBITDA. Now, in February call, you were guiding that we are expecting to go back to INR12. But disappointingly, EBITDA per kg has even come down this quarter. So can you comment — I think, you in the — to the previous participant, you did mention. So can you comment what was one-off in this quarter and can we expect this EBITDA per kg to improve from Q1 only or it will take more time to go back to INR12?

P. Deepak — Managing Director and Chief Executive Officer

So, in — if we look at Q4, right, the transformer failure that had happened in the month of December, which impacted us for about eight days was the impact of the transformer failure in the month of December. So obviously, we lost eight days of production. But one of the things that happened was because the transformer needed a significant amount of time for the repair, we had actually procured a rental transformer and we had run on the rental transformer, which was up a lower capacity. So we could not operate at the same production level, we had to operate with a reduced capacity because the capacity of the transformer was the limitation, that has impacted the volumes throughout, right?

So it’s a small impact on a daily basis rather than a 100% impact for one-week. So that was part of that impact that had happened on Q4. And now we are running without that impact anymore. The transformer is no longer the constraint. The — so that impacted the volumes, especially at the Gudur plant, which is we had a — prevented us from being able to increase our production to the levels that we would have like to be at.

And I think the second thing that I had also mentioned was raw-material prices. Our — on many of our exports, we have picked the prices linked to global indices for raw materials, which are very, very aligned to Indian prices. Unfortunately, only in the last two or three quarters that alignment has somehow broken off and fairly significantly. But that’s something where they are in the process of getting realigned and I think in the — by the next quarter, we should pretty much be back to normal in that sense.

Just a rough number, if you were to look converted into rupees per kg, the international prices, actually in the US market specifically, if you look at their indicies, those prices have come down by about INR14, INR15 per kg on raw-material, whereas in India, we have probably seen only something around INR2 or so — INR2 to INR3 or so on raw materials. So that gap was the short-term impact that was there.

Ankur Kumar — Alpha Capital — Analyst

But this happened recently only because in the — we had the presentation in call in February. So that time we were guiding that we were expecting INR12 per kg.

P. Deepak — Managing Director and Chief Executive Officer

Yeah. So, unfortunately, I mean, we were expecting some convergence to happen, so that did not happen. I think we were guiding for INR12 for the full-year. So unfortunately, that’s at INR11.34.

Ankur Kumar — Alpha Capital — Analyst

And sir, now we are half quarter past — in this quarter also, half of the quarter has passed. So are we seeing any improvement or you think that is like more in the later part?

P. Deepak — Managing Director and Chief Executive Officer

I don’t want to comment on the current quarter, but I think some of the things that we’re working on I think, where I believe our best performance for this will be will definitely be in the second-half, because I think we’ve got some pretty important things that we are working on. In terms of our operational efficiencies and all of that, that we will really see significant impact in the second half. So — but I think certainly we would like to make improvements in the first and second quarter. But like I said, some of the more important things where we think we’ll make significant operational improvements will happen in the second-half.

Ankur Kumar — Alpha Capital — Analyst

Got it. Thank you.

Operator

Thank you. Our next question is from the line of Dhiral from PhillipCapital PCG. Please go ahead.

Dhiral Shah — PhillipCapital PCG — Analyst

Yeah, good morning, sir. Thanks for the opportunity. Sir, you just talked about that you have seen a INR14 to INR15 price dip in the international market. I mean that is — and that is for the Indian market, it was just INR2 to INR3, right? So this is for the Q4 or you have seen this in Q1 also?

P. Deepak — Managing Director and Chief Executive Officer

So this is in Q4. In Q1, we’re actually seeing that gap come down quite a bit. But I think rightly, so right now, because there is a one quarter lag, I’m not sure exactly what the numbers will be for Q1. But we are seeing significant increase now happening in the international market and probably a mild softening happening in the domestic market. So we believe that maybe by the end of this quarter or so that they will come back to what was the equilibrium.

Dhiral Shah — PhillipCapital PCG — Analyst

So from Q4 to Q1, sir, how much more we have seen the fall in the domestic prices, sir?

P. Deepak — Managing Director and Chief Executive Officer

Marginal, maybe, again, we are INR1 to INR2 per kg, but we’ve seen an increase there out of maybe the INR14, INR15 what had reduced. We have seen almost already INR7, INR8 increase in the monthly numbers.

Dhiral Shah — PhillipCapital PCG — Analyst

Okay. So will this, sir, impact — will this help to improve our margins in Q1 or maybe it will have some impact on the margins?

P. Deepak — Managing Director and Chief Executive Officer

Yeah. I mean, this is definitely going to help improve, especially when you compare to Q3 and Q4, where Q3 had some impact, but Q4 had the bigger brunt of the pain. But I think that certainly this will ease off some of that impact in Q1 and definitely I think Q2 should be back to normalcy is what I anticipate.

Dhiral Shah — PhillipCapital PCG — Analyst

And sir, we sold 100% of the scrap steel from the Indian market, right? Hello?

P. Deepak — Managing Director and Chief Executive Officer

Yes, we sold 100% from the Indian market.

Dhiral Shah — PhillipCapital PCG — Analyst

Okay. And sir, if you throw some light on how we have grown in FY’23 in tractor and M&HCV, what is the industry growth?

P. Deepak — Managing Director and Chief Executive Officer

Sure. I can tell you our growth numbers by segment. Just give me one second. Just one second, Dhiral, I just have — I have that information, I’m just pulling that up.

Dhiral Shah — PhillipCapital PCG — Analyst

Okay.

P. Deepak — Managing Director and Chief Executive Officer

So in terms of revenue growth, medium and heavy commercial vehicles was 45% revenue growth. Tractors was 33.9%. Sorry. No, no, no, sorry, my mistake. Just give me one second. I gave the wrong numbers. Okay. Sorry. M&HCV growth was for us was 46% last year. Tractor growth was 25%. Exports was 49%. And the railways was 0%, actually they were flat, even Off-highway was flat. That’s it.

Dhiral Shah — PhillipCapital PCG — Analyst

And sir, in M&HCV, particularly the tipper contributes to the majority of the revenue, right? So how much tipper have grown and what is the overall industry growth for the tipper in FY’23?

P. Deepak — Managing Director and Chief Executive Officer

I don’t have that information. We don’t split it by tippers. We only split it by the whole M&HCV segment. So, unfortunately, I don’t have that number that I can share.

Dhiral Shah — PhillipCapital PCG — Analyst

Okay, okay. Thank you so much, sir. That’s all from my side.

P. Deepak — Managing Director and Chief Executive Officer

It’s also a difficult question, because we have some products that will go both into tipper as well as into the regular M&HCV truck. So for us, it’s also to split our revenues between tipper and non-tipper, it becomes difficult.

Dhiral Shah — PhillipCapital PCG — Analyst

Okay, okay. Got it, sir.

P. Deepak — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Hi, thanks for the opportunity. And first of all, congratulations on getting some important milestones —

Operator

Mr. Rajesh, maybe I request you to use the handset.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Yeah, I am using my handset. Is it not clear?

Operator

The audio is not clear, sir.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Is it better now?

P. Deepak — Managing Director and Chief Executive Officer

I think, Rajesh, there is some slight background noise at there, but I think I can understand you. But there is some — seems to be some mild background noise.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Okay, is it better now?

P. Deepak — Managing Director and Chief Executive Officer

Yes.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Okay. So I was saying, first of all congratulations on hitting some important milestones, like the INR1,000 crore revenue. My question was this current quarter, is there any impact of the transformer issue in this quarter or this is the replay [Phonetic] from that perspective?

P. Deepak — Managing Director and Chief Executive Officer

Specifically, the transformer issue, no, we don’t — we’re not — we don’t have that impact in this current quarter.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Okay. And then secondly, the price deflation that you have discussed in the raw-material, so is that something that, in fact, you will realize in this quarter or is that completely lost? How should one think about that?

P. Deepak — Managing Director and Chief Executive Officer

So in this particular case, see, normally, when we talk about a lag being there, in that lag, it’s only a delay, right? In this case, see, both the industry is just kind of went away from each other, which is a fairly rare phenomenon, have you studied almost 15 years of data, this is the first time, so we’ve seen it. We see small differences and converging within a quarter. This time the difference was very substantial, and I think fairly unexplainable also. But it looks like they are now converging. But this will at this point it looks like it will be a permanent loss. It doesn’t look like there will be an over correction the other way around. But, again, these are global markets that we don’t know how they might react, right? It is very possible based on some international data that it could go the other way.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Yeah, understood.

P. Deepak — Managing Director and Chief Executive Officer

We don’t have enough information to assume that. So I think the fair assumption is that it will be permanent.

V.P. Rajesh — Banyan Capital Advisors — Analyst

I see. Understood. So let’s assume if we do 95,000 volume this year in fiscal ’24. What kind of EBITDA per kg can we expect in that kind of volume?

P. Deepak — Managing Director and Chief Executive Officer

So, I think as I mentioned that we do believe that we should have significant improvement happening in the second half of the year, because we have certain plans that we have from an operational improvement standpoint. But I think for the time-being, what we’ve guided to in the past of about INR12 is something that we — that we still feel strongly positive about for the year. But I think as these improvements get rolled-out into that and we start to see the impact and we can make further improvements. Perhaps in the second half, we will be in a better position to talk about something better.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Understood, understood. And then in the US market, how is the backlog M&HCV compared to [Indecipherable] has it come down some deals. And I’m talking about the end markets not the all markets.

P. Deepak — Managing Director and Chief Executive Officer

So there is definitely a reduction in the backlog and that’s driven by improvement in deliveries, for sure. There are some mixed signals coming in terms of new orders. So the backlog has come down. That’s there. But certainly, we feel very strong that for the next year or so, we don’t see any slowdown in production numbers at least for the next year. So we have to wait-and-watch based on order intake. But I think the order intake now has pretty convinced that we will see very strong numbers for the rest of the financial year.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Okay. And in terms of new programs, I think you said earlier that you don’t have any new venture this year, which can potentially ramp-up next year. Is that the right way to understand which you [Indecipherable] for fiscal year ’25, right now?

P. Deepak — Managing Director and Chief Executive Officer

We do have some programs that we won last year that will launch probably between Q3 and Q4 again this year. Including one that’s an electric vehicle program that I think I had mentioned in past conference calls, that goes on a delivery van. The kind of ramp that a FedEx or UPS might used to do the last mile delivery in the US. So there is some of those wins from last year that are in the development and execution stage this year.

In addition to that, there are some I would say very serious discussions happening. But again, those would require probably six to nine months of our development time happening. And the thing I would say, a new win, which I think is significant, more from a strategic standpoint with related to the Class 8 truck electrification program. So there’s some Class 8s that we have now been awarded for that. But that’s probably a mid to late 2024 launch type of a program. So that would not impact in this financial year.

V.P. Rajesh — Banyan Capital Advisors — Analyst

Right, right. Okay. Thank you, and if I have more, I will get back in the queue.

P. Deepak — Managing Director and Chief Executive Officer

Thank you, Rajesh.

Operator

Thank you. Our next question is from the line of Nilesh Doshi from Green Lantern Capital. Please go ahead.

Nilesh Doshi — Green Lantern Capital — Analyst

Yeah. Thank you for the question. Sir, just couple of things, because you spoke about operational issues. So I’m bit trying to understand because, I mean, we have been running this casting business for more than two decades and the 60,000 tonne new capacity, we have implemented almost two years ago. So what kind of this operational issues, which has come up which proactively we could not envisage. Because, I mean, you people are working extremely hard to keep achieving increasing milestones. But when it comes to bottom-line at the end of the day, I mean we are making 1% PAT. So — and still, you are not very confident of getting back to INR12, INR13 per kg because now you are saying it could be in FY’24 especially, second half. So can you please, sir, help us to understand how you are — how could you identify what were these kind of issues? And now, what kind of steps you are taking?

P. Deepak — Managing Director and Chief Executive Officer

So I think, mainly, when I talk about operational issues, there were three things that I was enquiring to, right. One is the one that I’ve already explained a little bit more about which was the in terms of the unexpected problem with the transformer and the related to power. The second is related to a lot of the new product development that we’re doing. And a lot of the new products, getting them ramped-up and stabilized was a bit of a challenge, and we have on that path and of doing that. Especially when we talk about the new plant, the size of the products and the range of products is something that we have never done in the past, whereas and these are the products that we have gone into the ramp-up more recently. So even the Pedapariya plant, which as you said has been a couple of years, since now we have installed it.

The capacity utilization of that in the last quarter has gone up from 23% to 26%, so it’s continuously increasing. And as a result of that, one of the thing is also the kind of manpower that we need to have the training, the skill and the experience of the manpower as well in order to be able to meet the requirements, as well as get used to producing some of these new products and optimizing these products, that we have been running now.

Nilesh Doshi — Green Lantern Capital — Analyst

So sir, can we now come to some kind of a clarity on which — from which quarter we should we start getting to because earlier I remember you also had an ambition to reach INR15 a kg kind of EBITDA.

P. Deepak — Managing Director and Chief Executive Officer

Yeah.

Nilesh Doshi — Green Lantern Capital — Analyst

So, can we now come close to understanding since you know the problem, I’m sure you and your team is proactively handling those issues and trying to overcome those issues. So can we now come very close to say that, okay in Q2, we will achieve or Q3, we will achieve.

P. Deepak — Managing Director and Chief Executive Officer

So I think what we believe is the most of the improvements that we have planned and the root causes that we’ve identified and the improvements that we planned as well as some of these activities that we’re doing, we believe we will see improvement — significant improvement in the second half of the current year.

Nilesh Doshi — Green Lantern Capital — Analyst

Okay. Thank you, sir.

Operator

Thank you. Our next question is from the line of Nandish from Money Control Research. Please go ahead.

Nandish Shah — Money Control Research — Analyst

Hello.

P. Deepak — Managing Director and Chief Executive Officer

Hi, Nandish.

Nandish Shah — Money Control Research — Analyst

Yeah, hi. Sir, my first question is regarding what kind of capacity utilization have you seen in the March quarter, March ’23 for all the three plants?

P. Deepak — Managing Director and Chief Executive Officer

Okay. So in terms of the overall capacity utilization for the fourth-quarter, right? That’s the question, right?

Nandish Shah — Money Control Research — Analyst

Yeah.

P. Deepak — Managing Director and Chief Executive Officer

Just give me one second. I will just have that exact location.

Nandish Shah — Money Control Research — Analyst

In case you can give plant-wise, that could be helpful.

P. Deepak — Managing Director and Chief Executive Officer

Okay. The overall capacity utilization was 54% for the fourth quarter. Out of that 26% was in the new plant in Pedapariya. And Ponneri was actually above 90%. And, yeah, Gudur was about 50%, just under 50%.

Nandish Shah — Money Control Research — Analyst

Thanks. And sir my second question is related to the power cost build up, since last couple of quarters we have been trying to reduce debt, but where you were in debt journey?

P. Deepak — Managing Director and Chief Executive Officer

Sorry, you were asking about power cost.

Nandish Shah — Money Control Research — Analyst

Yeah.

P. Deepak — Managing Director and Chief Executive Officer

Then, I didn’t hear what you said after that.

Nandish Shah — Money Control Research — Analyst

Actually, we were trying to reduce our power cost, by doing some, what you say, tie-up with the renewable players. So where we’re in at the debt journey because debt seems to be at the same level.

P. Deepak — Managing Director and Chief Executive Officer

So power cost is based on two things. One, obviously the contracts and agreements that we have versus how much we buy from EB. So right now, if I just look at the last quarter, it was 62% was the renewable energy mix in our power cost. At the other part of it is the consumption per tonne and that also is something that will come down as the capacity utilization goes up.

Nandish Shah — Money Control Research — Analyst

Sure. Thank you. And sir, what is the capex we are looking for FY’24?

P. Deepak — Managing Director and Chief Executive Officer

Sorry, can you repeat the question?

Nandish Shah — Money Control Research — Analyst

Capex number for FY’24?

P. Deepak — Managing Director and Chief Executive Officer

Capex number is a regular maintenance capex. Right now, what’s on the plan is a regular maintenance capex of about INR15 crores.

Nandish Shah — Money Control Research — Analyst

Yeah, thanks. I’m done with my questions.

P. Deepak — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question is from the line of Anupama from Ardian Capital Markets. Please go ahead.

Anupama Bhootra — Arihant Capital Markets — Analyst

Yeah. Thank you for taking my question. So I just wanted to understand now, as I am seeing railways as a team right now. Can you throw some light on your products, which you’re initiated railway segment. And in FY’22, the share was like 4.4% which was against 3.1%, so any plans of you expanding in that segment because since like last year which we’re just planning and it’s been just let us know what kind of products you cater to the segment. This is one and the other thing is if you can quantify order book at spillover for FY’23 and fresh order intake.

P. Deepak — Managing Director and Chief Executive Officer

Okay. So the — in terms of railways which was your first question. I don’t think we are looking at the products that we do at least as a significant growth driver for us in FY’24 or at least in the medium-term. And the products that we do are primarily two products, one is the base plates that we’re doing that goes into the metro rail. This is what the plate on which the actual rail track sits on and is fastened to.

The second product is the brake disc that we do for the LHB coaches as they call them; the Rajdhani and Shatabdi. This is something that we are — that we are doing, but obviously these are two segments that I think we are part of not much else that we do that goes into the railway segment from our standpoint. So we don’t really see in this area significant amount of growth that will happen for us at least in this financial year.

And the second question, sorry, Anupama, can you repeat?

Anupama Bhootra — Arihant Capital Markets — Analyst

Order book, if you can quantify like order book as a spillover of FY’23 and fresh orders till this date, which we have?

P. Deepak — Managing Director and Chief Executive Officer

So normally, what the way that it works is we get our monthly schedule. So we typically we get when we get orders, right. That was our blanket purchase orders that we get. And then every month, the customer schedule of what they would like delivered in that month. In some cases, it’s on a weekly basis. In some cases, on a monthly basis. And so there is no necessarily — I wouldn’t necessarily say there’s a backlog carry over based on their production plan and how they adjust to that it comes. But what we’re seeing right now is we’re seeing maybe about an order availability for us to execute of about maybe 8,500 tonnes or so per month.

Anupama Bhootra — Arihant Capital Markets — Analyst

And one more thing I wanted to ask regarding the Pedapariya utilization levels. Sir, what is the reason for the low utilization levels of Pedapariya plant?

P. Deepak — Managing Director and Chief Executive Officer

It’s the new product development and I think it’s more than anything else, it’s just ramp-up on the new product development, as more products are getting approved and we are starting to do the more of the ramp-up. They also — there is a couple of equipment that I think from a design perspective, we have — they will all need to be replaced, not any big-ticket items within that capex number that I’ve already mentioned of INR15 [Phonetic] crores overall. But we are also executing to make sure that they can handle the higher load.

Anupama Bhootra — Arihant Capital Markets — Analyst

Okay. Thank you so much.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

[Foreign Speech] sir.

P. Deepak — Managing Director and Chief Executive Officer

[Foreign Speech] Saket.

Saket Kapoor — Kapoor and Company — Analyst

Sir, firstly, if you could explain me that the reason for this other income going down from INR7 crore to INR2 [Phonetic] crore, and correct me here, sir, when we take your raw material to sales percentage, it is lower on a quarter-on-quarter basis. So if we omit the line-item, the reduction it is — the reduction in profit is mainly attributable to the other income part. If you could explain the reason for that, sir?

P. Deepak — Managing Director and Chief Executive Officer

So the biggest chunk of other income, right, as we talked about on the last call, the biggest chunk of the other income comes from forex, right. So it’s — some of that rate is because of the difference in the price of the forex, at the time of shipment to the customer versus at the time of receiving the payment, right. So that is what is the biggest chunk of it. Other than that there is some interest income and that’s there, right. Let’s consider that’s pretty much the two chunks of that. And as I mentioned, the forex is the biggest chunk and yes. So obviously the delta between the products that was there in — yeah, from the beginning of the quarter to the end of the quarter was smaller, it was much bigger jump in the previous quarter.

Saket Kapoor — Kapoor and Company — Analyst

Sir, you were explaining, sir, at least the ideal [Phonetic] commentary, wherein you were explaining that the reduction in the raw material prices globally was significant than what was procured domestically. But even if we remove that aspect, our raw material to sales percentage has gone down by 200 basis points from q-on-q basis, is that understanding correct, sir?

P. Deepak — Managing Director and Chief Executive Officer

Yeah, so there is, like I said then there was a reduction in raw material prices domestically as well, but not to the extent of what was the reduction that had happened globally, right. So your understanding is I believe correct.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So for the sake of repetition, also how are things now looking up because whatever reduction will be a pass-through, and since with a lag effect it comes, how are margins are trending going ahead from Q1 onwards?

P. Deepak — Managing Director and Chief Executive Officer

So the raw material prices, I think, probably since the month of March or so have started going up quite significantly in the US. So I think that gap has narrowed quite a bit. I’m not exactly sure what that impact is for Q1. But I think we should see relative normalcy in Q2. That I think the difference would only be marginal in Q2.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Other than this forex impact, sir, I was just trying to understand this EBITDA margin part. When you are putting a number of INR12, you are not factoring in the forex because that is not — that is not a controllable bias?

P. Deepak — Managing Director and Chief Executive Officer

So there is some amount of it, right, that we are — that we try to manage either through hedging or through other things. That is there. So there is some portion of it that we believe will come and it will happen. And yes, there is some portion of it that is beyond our control always.

Saket Kapoor — Kapoor and Company — Analyst

Correct. Q1 onwards there will be improvements from Q1 itself or from Q2 onwards, sir?

P. Deepak — Managing Director and Chief Executive Officer

So I think we believe, definitely, we would like to improve compared to Q4 continuously. But as I mentioned earlier, we believe the second-half will be a very good half of the year for us.

Saket Kapoor — Kapoor and Company — Analyst

Sir, two small points, firstly, on this other expenses component and the interest cost. So what steps are we taking to lower the absolute number or even as a percentage. I think so, year-on year it has gone up from INR26 crores to INR31 crores. And also on the other expenses front, the other expenses maybe commensurate with the increase in volume, but q-on-q also, we have seen a jump of INR2.5 crores, INR3 crores. So if you could explain these two line items and steps taken to lower our finance costs, sir?

P. Deepak — Managing Director and Chief Executive Officer

Okay. So, I think in terms of finance cost, its unfortunately, because of the interest-rate hikes that have happened over the last few years the interest rates have gone up by about 2.5 [Technical Issues]. So that’s obviously had some impact in terms of those numbers. As well as for the increase sales, there was also increase in the working capital throughout the year. Fortunately, I think towards the end of the year, we were able to get some good collections and all of that. So the year end number was actually quite good.

But I think the finance costs are more linked to the interest rate as well as something in terms of working capital that we had through the year. In terms of other expenses, other expenses include some of the machining costs of parts that we are outsourcing the machining on. So that’s something that is a machining I think it also includes freight also, right. Machining, freight, things like that, that fall into other expenses.

Saket Kapoor — Kapoor and Company — Analyst

The last point is on the Pedapariya utilization, sir. Sir, by the time, sir, it is to very likely to be understood that the new capacity ramping up, getting the product acceptance takes time, but still I think from 2018 I think five, six years — five years down the line, we are moving only in the vicinity of 20%, 25% in terms of the utilization levels. And I think so the delta in our admin would only will start appearing once this unit starts contributing in a meaningful way. And we’d like to understand from you, when exactly do you think that the contribution from this unit would be significantly growing back to the numbers and what is our net-debt number as on 31st March?

P. Deepak — Managing Director and Chief Executive Officer

Sure. So I think Pedapariya also we believe it will be the same — it’s the second-half of the year, we’ve seen continuous improvement in Pedapariya if you take through the year. Two quarters ago it was about 19%, 20%, last quarter 23%, and then this quarter that we’re talking about is at 26%. We believe we can make a pretty big jump on that during the second half. And that’s what we are working for and we believe it will definitely happen. In terms of the net-debt number, the net-debt number is INR198.92 crores, so just under INR200 crores.

Saket Kapoor — Kapoor and Company — Analyst

And sir, when you say it will be meaningful, what should we be penciling in from 26% it will go to 50%.

P. Deepak — Managing Director and Chief Executive Officer

Sorry, from when?

Saket Kapoor — Kapoor and Company — Analyst

Sir, for Pedapariya, you mentioned it would be meaningful jump. For a number of 26%, what should we define meaningful 26% to 50% would be meaningful or 26% to 30% would be meaningful?

P. Deepak — Managing Director and Chief Executive Officer

Let’s say, I would say 26% to maybe 40% would be meaningful, right? That’s what we would want to.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. Sir, in your outlook part, you did mention about tippers contributing — contribute significantly to our top line, and have a high casting content. So if you could give us some breakup of what was out of the total revenue contribution out of the tonnage, how much was on the tipper side and what are we expecting for this year?

P. Deepak — Managing Director and Chief Executive Officer

So like I said, from medium and heavy commercial vehicle overall it was 39%. The tipper, as I said, it’s little bit difficult to split it out because some of the components can go both into the tipper as well as into a regular M&HCV, and it’s very difficult for us to actually split between the two, because we don’t know the end-use, right, because the customers buying the same product from us. So that way specifically splitting into tipper is little difficult. And also some of the components that go into tipper also might go into let’s say tractor-trailer and things like that. So it’s not — I don’t think it’s possible for us to actually break it down as an exclusive tipper. So I don’t have a number for that.

Saket Kapoor — Kapoor and Company — Analyst

Sir, for the mix can you provide, sir. Medium vehicle was 39 — medium and heavy was 39% of the total pie. So what it should likely to shape up between this and export? Export guidance you gave of 20% on a top line of 330 [Phonetic]. We will be closer to 400 for FY’24.

P. Deepak — Managing Director and Chief Executive Officer

Yeah, that’s roughly what where we believe will be various.

Saket Kapoor — Kapoor and Company — Analyst

And what would be the likely mix in the revenue? And also, sir, for this year, you guided for double-digit revenue growth. And 15% — 10% to 15% volume growth. So this double-digit what should be penciling in 20% should be the number on a top line of INR1,250 crores.

P. Deepak — Managing Director and Chief Executive Officer

Yes, so I think — yeah I think tippers — I mean, sorry, M&HCV, I think, certainly, it looks like we have the potential for 15% to 20% in M&HCV also seems to be the indication. Of course, typically the first-quarter is the slowest quarter for M&HCV. So we just have to wait-and-watch. But one of the signs that we’re seeing that’s a little bit unique about the M&HCV market now is we’re seeing a increase in the tractor-trailer market. I think there’s a couple of — seems to be a couple of different reasons driving that. And I think as we go more and more into this hub-and-spoke model, I think the transport between the hubs, the tractor-trailer will have a significant benefit on.

Operator

Thank you. Sorry to interrupt. Mr. Saket Kapoor, may we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn. Thank you. Our next question is from the line of Mr. Rehaan from Sicomoro. Please go ahead.

Rehaan Phophalia — Sicomoro Advisors Private Limited — Analyst

Hi, sir. Am I audible?

P. Deepak — Managing Director and Chief Executive Officer

Yeah, we can hear you.

Rehaan Phophalia — Sicomoro Advisors Private Limited — Analyst

Sir, I was just curious about the other expenses portion of fettling and other manufacturing costs makes up a significant portion of that. So, I wanted to understand what does this include and is this outsourced or done inhouse?

P. Deepak — Managing Director and Chief Executive Officer

Okay. So you’re talking about the heading of other expenses or — so it includes all the outsourced expenses that are there, right. So this includes fettling. This also includes machining. It includes freight. I mean, in the last year, obviously, because of the one, the growth in exports, but also the increase in the freight cost that had an increase fairly significant. Also, of course, in terms of machining. But if you are talking about specifically about fettling and other manufacturing expenses, primarily anything that’s contracted out. Most of these activities are subcontracted out to our suppliers. And this includes fettling and machining are probably the two biggest heads under this.

Rehaan Phophalia — Sicomoro Advisors Private Limited — Analyst

Okay. Thank you. That gives me clarity.

P. Deepak — Managing Director and Chief Executive Officer

So, I was looking at other expenses in total but, yeah, fettling and other manufacturing expenses of these two.

Rehaan Phophalia — Sicomoro Advisors Private Limited — Analyst

Sure. Thank you.

Operator

Thank you. Due to time constraint that was the last question of our question-and-answer session. I now hand the conference over to the management for closing comments.

P. Deepak — Managing Director and Chief Executive Officer

Thank you. Thank you all for your questions. Really appreciate your time. Definitely, a very challenging quarter for us, but we are still extremely positive on what it looks like. We do have some clear action plans in terms of improving our capacity utilization, which I think we’ll have significant impact both in terms of top line and bottom line. We have several of these projects running and we feel very good about the second half of the financial year. So we are extremely optimistic on what the scenario looks like and the demand scenario also looks extremely strong. So we are hopeful that we can continue to execute and continue to improve. Thank you.

Operator

[Operator Closing Remarks]