RACL Geartech Ltd (BSE: 520073) Q1 2026 Earnings Call dated Aug. 22, 2025
Corporate Participants:
Unidentified Speaker
Neha Bahal — Company Secretary
Gursharan Singh — Chairman & Managing Director
Jitender Jain — Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
Neha Bahal — Company Secretary
Good afternoon everyone. I am Neha Beheld, the Company Secretary and Compliance Officer of RACL Gareth limited. On behalf of the company, I would like to extend a warm welcome to all of you to this post. Results conference call for the first quarter of the financial year 2025 26. I will be your moderator for today’s session. Before we begin, I would like to make a few important announcements. Please note that this conference call may include forward looking statements based on the company’s current beliefs, opinions and expectations. These statements are not a guarantee of future performance and are subject to various risks and uncertainties which may cause actual results to differ.
Additionally, all participant lines will be on mute during the presentation and we will have a question and answer session at the end of the presentation where you can ask any question that you may have. If you need any assistance during the call, you can submit your questions via the Q and A box or raise your hand as for the available options on the screen and we will assist you accordingly. Please be informed that this call is being recorded. We are pleased to be joined today by the management team of RACL Gear Tech Limited represented by Mr.
Gurshanan Singh, Chairman and Managing Director. Mr. Jitendra Jain, Chief Financial Officer Mr. Prabh Mehar Singh, Chief Operating Officer. With that I now invite Mr. Gursharan Singh for his opening remarks. Over to you sir.
Gursharan Singh — Chairman & Managing Director
Hi friends. Hi colleagues. Good afternoon. So it’s really my pleasure and of course my always inspiration to keep it interacting with you every three months. We eagerly await always these investors call because we also get lots and lots of insight from our investors and analysts fraternity. So it really gives us many many new avenues, many many new ideas to generate. And of course it keeps my CFO also on his toes to keep preparing always for the numbers and of course improving the performance. So definitely it’s our pleasure to meet you, interact you and we really love this journey of our quarterly Rostov with started I think what five, six years back? How many years? Precisely 26 years.
16. And when I feel we are seriously doing every three months. Yes, yes, every quarter. So we are a disciplined company so always maintain discipline and some of your suggestions are always there that after the quarterly results we should convene the calls as soon as possible. So now this time we have reduced the gap and I think just in a gap of 10 days we have done it. Yes. So I hope it will be happiness to you all you guys. And definitely it’s during the day we’ll interact a lot and we’ll update you what all we are doing and what all we are going to do further and that’s it. So I’ll just hand it over to. If you can really run through the presentation and then probably you are online.
Jitender Jain — Chief Financial Officer
Yes. Yes. Good afternoon everyone. This is gg. I think display settings you need to make as duplicate the screen. Yeah. Yes, it’s fine now. Yes, it is fine now. Yes. So good afternoon everyone. This is Jitendra Jain, CFO of the company. I welcome humbly all of you in the first investor interaction for financial year 2526. And basically I think. I think the rains are there in almost all the metro cities. And also I think good weather is there everywhere. But Mumbai is not in that good shape. So we’ll. We’ll start with the basic introduction of the company. So as you all are aware your company is more than four decades old. We established in 1983 FY25. We clock the revenue of close to $50 million. Our total number of employees, permanent employees are around 832. We are headquartered in Noida. We have two manufacturing locations. One in Gajwala in UP and another one in Noida again UC. Our corporate office is based at Noida. And we have four warehouses across various places in Europe. Our product applications, we are there in two wheelers, three wheelers, passenger cars, ATVs, commercial trucks.
Across all the segments in the automobile industry we have 22 active customers and more than 900 plus SKUs. Our product range ranges from transmission gears and shafts, sub assemblies, precision machine parts, chassis parts and industrial gears. We are a rated by care. We are listed on both the stock exchanges of India, BSE and NSC. And we have one subsidiary, 100% subsidiary which is based at Austria. We have all the certifications which are required in India and globally for running a manufacturing facility. Our core competencies includes everything starting from gear cutting to precision machining, aluminium machining, heat treatment process, R and D, concurrent engineering, laser welding, laser cutting.
We have the capability to conduct all the processes, complicated and latest processes which are required for the manufacturing of gears and other automotive components. Next. Now coming to the financial performance for quarter one. 25, 26. Next. So quarter one we clogged a turnover of 107.96 crores, close to 108 crores. The bifurcation for the same is around 65 and a half crores of turnover was exports, 28.2 crores was domestic, 6.17 crore was other operating income and close to 8 crores was other non operating income. Now due to that our Bifurcation of exports versus domestic has changed a bit in quarter one as compared to last few quarters. So our exports turnover now contributes about 61% of our turnover and the domestic turnover including operating another non operating income is close to 39%.
Next. Now this is a quarter on quarter comparison. So we have clogged a turnover of 100 close to 108 crores as compared to 105 crores in Q1 of last financial year which is a growth of about 2%. Our EBITDA is 26.8 crores as compared to 22 crores same period last year so which is a growth of about 20%. And our PBT margins are 11.25 crores as compared to 8.43 crores of quarter one last year which is a growth of close to 33%. And if I talk about the main financial ratios and all. So as compared to Q1 of last year our gross profit margin is 74.57% as compared to 71.65% last year.
EBITDA 24.83% as compared to 21.1% same quarter last year. PBT 10.42% and net PAT of 7.68% as compared to close to 8% and 6% respectively for last quarter next. Now this is the slide which we have started for last few quarters. Basically we give the profitability comparison of this quarter as compared to the last quarter, same quarter last year and the last quarter. So as you have seen, as compared to Q1 of 2024 25, our EBITDA margin has increased by close to 3.72% and PBT has grown by about 2.45%. And as compared to Q4 of 2425, EBITDA margin has grown to 2.15% and PBT margin has grown by almost close to 2%.
So this is the broad breakup of headwise comparison from these respective quarters and our EBITDA margin. If I compare with last quarters and all from Q4, 22.66%. Q1 was Q1 of last year was 21.11% and this year quarter one we have clocked almost 24.83% of EBITDA. Now coming to the latest development. So we have, we have add. I’m happy to share that we have basically added two directors, two additional directors on our board and I’m. I’m really happy and excited to introduce both the directors. Now first we have. I’m happy to introduce Mr. Praveen Kumar who is a retired IAS officer.
He has been appointed as a non Executive Independent Director in the company. Just to give a brief background of Mr. Kumar, Mr. Kumar holds a Bachelor Bachelor of Technology degree in Electrical Engineering from IIT Kanpur where he was a gold medalist and he was also awarded as an all rounder. Mr. Kumar is a 1982 batch IES officer of UP cadre. Mr. Kumar have served several various various departments in Central and State Governments which include UP State Road Transport Corporation, UP Agro Industries Corporation, Ministry of msme. He has also been the Development Commissioner of Kandla Mundla and Dahed SCZ in Gujarat under Department of Commerce.
He has worked as a DGFT in Ministry of Commerce and Industry in the rank and scale of Additional Secretary to Government of India and it is a proud to share that he he was the one who has drafted India’s foreign trade policies at the time of 2015 to 2020. He is currently the managing partner of Oxford Consultant AS LLP which is engaged into providing technical consultancy in ESG and CSR. Next Mr. I’m happy to introduce Mr. Rakesh Kapoor who has been appointed as a non Executive Director in our Board of directors. Now Mr. Kapoor is a seasoned techno financial professional with over 48 years of experience in the corporate and financial sectors.
He has spent more than 20 years with IFCI Ltd. A premier financial institution where he held various roles in project financing. During his tenure he has handled a diverse portfolio of projects across sectors such as steel, cement, chemicals, textiles and other infrastructure companies. He has also served for five years. As Managing Director of IFCI Factors, a subsidiary of IFCI Limited engaged in factoring and short term receivable financing. Mr. Rakesh Kapoor was also initially associated with the company as an independent director and he has made notable contribution during his previous tenure bringing valuable insights, strategic guidance, industry expertise to the board. I will hand over now to tab to take to take it further.
Unidentified Speaker
Thanks. Thanks jj I hope you can hear me.
Jitender Jain — Chief Financial Officer
Yes, yes from your audible.
Unidentified Speaker
Yeah, sorry I was having water. Good afternoon everyone. So the numbers I think were always known. So we declared the results last week. So we want to also talk about the new businesses which we are getting the Next I believe 20 minutes. I will try to make you understand two important things. So I’ve been able to spend some time on this presentation because there were a lot of questions coming in about the growth, about the sales, about turnover, about short term, long term. So this presentation, the next three to four slides should first of all increase your understanding about the organization.
Second, it Will also try to explain you where RACL is headed in the sense we are very proudly always mentioning that we are one of the most preferred technology partner for a lot of these big OEMs. So how we are different from a component supplier to be called as a technology supplier. So that is one thing which we’ll try to explain. And second, there are certain times when some companies invest a lot on future probable business projects which will gain mass segment across the years. So there are ideas which are always in the market. So there are companies who build businesses around that and then there are companies who are part of the future and then they build certain products, certain platforms with their customers which are a futuristic vision of the application, how the world is looking like.
So these two areas we will try to explain in the coming slides. And first of all it is very good to see a full house today. I believe 70, 75 people have never joined. So that is a good interest coming in. I don’t know if that is the pressure people are trying to build or an interest. Okay, so on the business nominations I think this is on the left is one new nomination which we I think disclosed yesterday. And maybe certain times things align. We only got this nomination two days back. We have been chasing or working in increasing our dominance in the domestic segment.
Why? Because we believe the Indian market is also now maturing to a lot of new quality conscious products. The existing OEMs are also upgrading their platforms, their vendor base to suppliers who are more quality conscious and who work at a global landscape. We operating at 70, 75% of exports so we understand how the global supply chains are. So we were able to secure a very prestigious nomination from an Indian two wheeler manufacturer. We cannot disclose the name at the moment since the project is under nomination in the sense under development. Once the SOP or the start of production happens, maybe then we are able to disclose which will be three to four months from now.
But we need to check with our customer on that. So this project is basically going to be, I believe a very high volume business for us. Typically we operate in a premium niche segment where volumes are not too high, the variety is big. So we work with, as you know, all, not all, but most of the superbikes premium segments. When we say premium is in motorcycle, anything more than 350 cc is considered. Anything which is more than 800 or 600 cc is a superbike. So we operate in both these platforms. So India also is now increasing all of these conventional two wheeler companies are increasing their presence in this premium and the superbike segment, wherein all of them have a lot of plans.
For example, as you already know, we are working with Norton, which is a TVS brand they are trying to launch and similarly there are other players in the industry. So we got this business nomination from a company which is already operating in the premium space in that engine segment. And historically they have always made these gears themselves or I would say as a backup maybe on a supplier outside. Because we’ve always maintained this gear is a product not many companies want to outsource because of of course it is heart of the engine or the transmission which goes to the tuning with the engine.
So this project will be starting January 26th. We will be working immediately on the sample submission. So January 26th is what the target is. But I think commercialization should start from February. So this should help us to also achieve some numbers for this financial year. Typically it takes, as you know, between one to two years as a gestation for our kind of products to grow in the exports market. In this, since this is a regular platform which the customer is already tried and testing, they are wanting to launch us in the existing models. So the validation will be very quick.
And we are hoping that when the sample submission happens in November, January onwards or February onwards, we should start the commercial supplies, the scale and the revenue from the business. Again, we are not in a position to declare as of now, but in the due course we will also declare what is the size of the contract and what is the quantum through which we are targeting. Of course this is a high volume customer. The customer is also facing a very high demand in the market. So they also have very encouraging growth plans. Typically they do not or take any vendor in the gear profile as of now they were, as I said, making on their own.
So this is a very prestigious nomination for us. So it, it corresponds to a value of catering only to premium segment. But at the same time it also helps us to gain certain value which is in the form of having a higher presence in the domestic market. It will help us to improve our working capital. Payment terms will be very good since the supplies have to be in India only. Okay. On the right is another new project which we have bagged from our existing customer, BRP Canada. So they make of course a lot of off road vehicles, so what we call as recreational.
So they make ATVs, snow scooters, skidos and other equipments. So we have bagged one business order for a different product. So we are known for making a transmission gearbox. So what you see in the picture on the right is a typical transmission assembly which has I think five speed or a six speed gearbox. And then what you see on the top is a shifting mechanism. So if you’re driving a two wheeler or this ATV there is a clutch or when you, when the user engages that clutch there is a shifting which happens for example if you need to go from gear 3 or gear 2 or how it is.
So there is a shifting mechanism which is engaged to do this shifting. Till now we were never in this. So we have bagged this order from our customer. It is a high volume business. When I say high volume it is around 150,000 parts per annum which should be. So we always keep in a flexibility of plus minus 20% so we need to have capacity up to I would say 180,000 or something like that. This also brings us to a new product, family of shifting drums. As you know, motorcycles will always have shifting mechanism. So we can now pitch this product to our existing customers customers so that we can also receive orders from them.
In this there are two variants. One is a manual shifting and one is an auto shifting. I think in the last couple of calls we did explain you that we have also working on auto shifting mechanism which I will explain you in the later slides. So these two projects are part of the new business developments which we wanted to disclose in the call today. And the commercial supply of the second project from this BRP should also start in the year 26. Since this is an export customer so the validations might be a bit longer. But I would say in next six months.
Sample summations have already started. We have already submitted the first leg of samples and the feedback is awaited. So the customer is wanting to change the supplier due to certain issues at their end. So resourcing projects. Resourcing means when the platforms are already in the market it is always faster to onboard a new supplier. So that is how these both projects. One may be February next year and this may be June or July next year. These both should start generating good revenue for us. Who next Jay. Next slide. I think this is also part of a disclosure which we already made that we are now also registered with bhel. BHEL as you know is a PSU is a public sector engineering company. They work in a lot of platforms. So we have been allotted their vendor code. It is usually very difficult because as you know PSUs have their own time of evaluation and then things don’t move at the pace of automotive industry. So this will enable us to participate in a plethora of RFQs which we will get directly on our portal or email which will be involving supply of precision engineered components.
Application can be varied and of course here we have to work with a lot of Indian competition. So this is something which we actively will be, you know, picking up projects.
Gursharan Singh — Chairman & Managing Director
Just add one thing. Sorry to interrupt you to all the colleagues. You know, Normally in all PSUs the business happens through GEMS portal. It means it’s a tendering process. But for very, very precise components or some critical components, they have a separate procedure where they register you as a approved vendor. Now technically we can be a one to one RFQ from this customer via GL to us. So technically we have technically have gotten upper edge or advantage that we need not to go to the tendering process. You know, in a particular tendering process, sometimes very very unorganic sector and low end competitions will start coming in.
Then the pricing L1 or L2 becomes a criteria. But when you are approved vendor, so then we have got a privilege that if any urgent requirement is there, any business is there, BHL can simply send us an RFQS and the offer and then that’s it. And if you get the nomination, we start producing. So this is a slightly. Again we say that we maintain our premiumness so even with our PSU regardless separate kind of direct entry business. So no need to enter through the tendering business. Yes, please continue.
Unidentified Speaker
Yeah, so of course the scale and what opportunities this converts into time has to tell. But of course we will actively be working to develop since these are not high volume but high value since they work in very precision oriented environments. So we will keep updating you as and when if any new businesses are starting with BHL next. Okay, let me share my screen. It will be more. Can you stop sharing now? Adobe, is my screen visible?
Jitender Jain — Chief Financial Officer
Not yet. Yes, now it is but just displaying the. Just convert into display.
Unidentified Speaker
Now it is okay.
Jitender Jain — Chief Financial Officer
JJ sir, it’s not in a display full screen. Now it is fine.
Unidentified Speaker
Yeah, you need to give a minute. Okay, so future ready. So what exactly we mean by that is the company started in 1987 or 89. Since then we have seen two legs of business. As you understand, the company comes from a background wherein it started with the focus on aftermarket and Indian businesses of, you know, gears. Conventionally we were two or three companies who were in India OEMs and then that is how the business started to supply either to them. First was Yama and then at that time aftermarket was a big business. Then in 2002 the change of management happened There the company saw some red times financially.
After that, the next leg was a focus on exports. So in 2004 or 2005 we shifted our focus, what we call RACL 2.0, towards making this company an export centering organization. But at the same time we also started working on improving the financial performance since it came from a certain legacy it had. So it took us good 10 to 15 years to establish that. And in the last five years, from 2015 to 2020, we augmented our, you know, presence in the market by I think reaching to a 200 crore kind of a turnover level in 2019 or 2020, 2018 to be honest.
And then from there onwards we started foring or creating our presence into the markets, which we were never there. In the segment, sorry, which was the premiumness of the motorcycles, second was the pass cars and third commercial trucks. And then the 20 to 25 segment, where now we are aspiring to reach a certain number of 500 is 25. But 25 is already on the cards. The next two slides will explain you what is, what do I mean by evolution of RSL 3.0? What that means is now we have reached a level we have in the terms of skill set, plant and machinery.
Some of you have visited our plants in the annual shareholder visits we do. Most of you comment that this does not look like automotive plants. This looks more like a semiconductor or a pharmaceutical plant. Because the kind of precision, the clean cleanliness, the technological mindset and equipments we have. So this has brought us to a level where we are now working on a lot of future technologies with our customer which are still evolving, which will gain traction in the coming years. And it is kind of a first foot where not many Indian companies are already thinking on this.
And most of these technologies are widely being developed and consumed in the western world. But as you know, India is also now growing. The likes of Indian homegrown OEMs are also placing very competitive cars, good platforms. But they’re also reinventing how the vehicles are behaving. Historically, vehicles have always evolved around engines. Maybe you take about a V6 or a V8 or a V12 engine, how it is coupled with certain turbochargers performance car can go from 0 to 100 in some seconds. With the evolution of electric car, 0 to 100 was now not a big thing.
So that is not how car companies can sell. If you say my car is the fastest, Even a Tata 10 lakh electric car can do faster from most of the combustion cars because the principle of dynamics is totally different. In the new evolving cars. So now what we are seeing in the automotive industry is that a lot of work is happening around the chases. So that is what I’ve made this presentation to explain you that how this is becoming the new powerhouse. A lot of differentiating technologies the car companies are wanting to launch to make the ride, first of all more safe, second, more comfortable.
And third, it has to be very much light because you know, the battery or the other things, the frames are getting lighter because you have less mechanical components. But the same time the rigidity should always be there. So to augment all of that, a lot of things are coming in. And historically, if it is in a fully electric or a hybrid or a combustion car companies have kept their chassis or the other moving instruments almost same. So these three to four new technologies which are now, sorry, are now working. So I will explain you one by one.
So these projects we have bagged maybe in last couple of years certain revenues customer committed to us. You ask right, you ask rightly the questions, you know, 500 crores, 600 crores. We don’t see the businesses on a turnover level as a pressure to not participate in such programs. The adaptation of such technologies always take time. And this is evolution phase. A lot of companies are doing a lot of things to be differentiating from the other competition. So one such technology which we have been working for many years, this is for zf is this erc, as you know.
So this. Most of you have visited our plant, but maybe the functioning is difficult to understand because we do the components for these assemblies. The customer is doing the electric assembly. But today I will try to explain you maybe what these technologies are. You see a lot of videos on Internet how you know, cars are smooth on the road. So ERC is one thing which is controlling a lot of such things. Right now only two companies, what we know have this one is. I don’t know if I’m allowed to tell him, but both are German car manufacturers who have these applications to make their ride control more smoother.
I have, I have one video which will try to explain you. This is again from Internet how this ERC works. But in principle, basically there is what you call roll control bars. All cars have it, tall cars have it, SUVs have it. So what that does it, it prevents the car from rolling when you are maneuvering on the road. But these ones are electronically controlled. What that means is there is a bar attached to the tie rod or to the axle of the wheel or the car or the chassis there the ERC Basically is a subunit wherein there is a care unit, there is a motor and there is a ecu.
So when you are in the car, if you are feeling any jerk on the road, the motor will run as high as 30,000, 35,000 RPM. And basically it will what do is if suppose you are in the vehicle and the wheel on the right is going into a pothole. So the ECU will immediately sense within nanoseconds there will be a compensating effect on that wheel through this ERC which will give a jerk back to the wheel so that the jerk is not felt in the car. Also when you’re maneuvering on the road, if you are tilting the car, sometimes that roll means that car rotates or not rotates, shifts towards, let’s say if it is on the plane towards angle.
So this ERC also stops it from happening. Now these technologies were launched, are being launched slowly across the car platform. So this was first launched to one of an electric car platform of that of that customer. And then they are now launching into their other variants. So for example, if it is a fully electric, a high end, a 4 crore car, now they are slowly launching this platform to their 1 crore or 90 lakh or 80 lakh care. But slowly they launch these technologies because first they understand how is the market response, how is the application and that is how the businesses increase.
So just to give an example, I don’t know if this link will work. Oh yeah, it should work.
Jitender Jain — Chief Financial Officer
It’s working now.
Unidentified Speaker
Yeah. And this all is from online data. We’ll give you the source and all. So this is what an ERC looks like. So you see a lot of gears inside. So what is that doing is there is a torque which I think the video is explanatory. So this you see when the car is without erc, if suppose you feel a role in the car, right? That angular displacement from the base is very high. Now with ERC it is reduced by 50%. So what they’re doing is it is creating that balance, it is negligible. Similarly as I was explaining, if you are in a pothole, so that is the jerk you will feel inside the vehicle.
But if the car has erc, this is the jerk that a user might feel. Now such technologies are very expensive. They are being designed, developed in Europe for European cars. You have ADAs coming in. Cars are autonomous. So the driver dependency needs to be reduced by such things. So remaining is that so I’ll go back to the presentation. So this one technology we have invested huge There was a certain, you know how things are evolving. So now it will scale up. Customers issuing good projections for 27, 28. The early adoption was not happening at the pace at which it should have.
So that also resulted in some of our business not growing at the level at which anticipated. But we understand that these things take time to bring in a certain level of scale. Next is steer by wire. You might have heard. So a lot of new cars, expensive cars, long cars. So what has happened is with the cars going electric, the wheelbase has increased to accommodate the battery. So now you have a longer choices. So what that means is that increases the turning radius of the car when you are rotating the steering. So companies have brought in certain equipments wherein the front tires, when you rotate conventionally, the reverse or the rear tires stays at the same location.
But in these new actuators which are connected to like a reverse steering system, wherein if you are, let’s say turning the car to 90° towards right, the back tires might rotate maybe 3 to 4 degrees on the opposite direction to give you a smaller radius on the cornering also that helps you. Maybe the video will explain you better. This is without any reverse rear steering system. You see the wheels on the right, all the four wheels are rotating. It’s called akc. It is again by one of our customer, how they call it. This is again on Internet.
We’ll share the links later on. This is the turning radius I was mentioning. Now if the car does not have this, see it needs to go back and do it. Now these are expensive equipments. You don’t have mass adaptation. But if you don’t work on these technologies, somebody else will. This system, what we are developing, this is for Porsche, the I think electric Porsche Kyne or something Panamera. I don’t remember the exact model. Now the adaptation of such cars is creating time. And this technology, technology is in a lot of other brands as well. So the customer is selling to one platform.
They are pitching it strongly to sell to other platforms as well. But we are the only supplier for both this ERC and akc. Nobody else can make for the customer. And the validations are so strong, investments are so high. A lot of all the mechanical items products are being done by us. Customer is buying the electrical. Of course their. Their focus is in the design and the assembly. That is their forte. So this is how we are developing those things. On the left side, the parking lot mechanism. As you know, BMW is launching a new electric car in 27.
It is going to be one of its kind There are a lot of media articles about it. They say it should be a thousand horsepower electric car M Sports. And in that we are participating in this park lock mechanism. Basically this is. There is a technology which is confidential which we can’t explain. But again this is a mechanism which is an assembly of around 50 parts which we are making they are buying. Also we are assembling inside the customer just as to engage this. This is right now under the prototyping phase. A lot of investments are going into this.
The samples are going every month to the customer. They are going to take two years for this validation. I think in two years they will be consuming roughly, I don’t know, maybe 10 to 12,000 parts. How many of that cars will be there? Some cars are actually running right now. Maybe 100, 200 in on ground for validation. So a lot of technology, a lot of work is going on there. And this mechanism which they are launching again we can sell to a lot of companies who are doing that. And the last is steering systems. So as you know we recently got a business from.
We disclosed the name for the this project for. Yeah, we will be disclosed. So ZF Ronnie, we are developing this project. Basically this is for a pickup truck platform for an American oem. And conventionally they have a hydraulic steering system. So a difference between a hydraulic and electric. This one is a rec circulating ball mechanism system in. In layman basically when you are driving or when you are rotating the steering wheel there is a hydraulic pump and that runs the motor which takes care of the torque. So the driver has to put less effort. Now this will be replaced by electric motor and a gearbox which will take care of the torque because every time the torque will not be same.
So you need to have reduction in that gear set. So this is what this steering system will be. And this again is a project or a platform. Right now that customer is using hydraulic. Once it changes to electric. That is the future. Now you will not have very tight steering steering systems in the coming times. And this pickup platform is a very big market in US and the assemblies will happen in Mexico and then it goes to. This is a very hot prime project for the customer. So in one slide I wanted to explain you.
We have invested a lot in last two to three years in these projects. These projects maybe have not grown at the pace at which the customer committed. But eventually they have to grow because as you know, the entire world is moving towards electrification, towards the smarter cars, safer cars, lighter cars. And these technologies are going to be differentiator. When you Choose a car on the, on the road. You know, you will not now choose how a car looks or how that fast is because every car is going to be fast. These things are going to be differentiators of the future.
And we have very rightly chosen the right Pascar segment. And these are again engine agnostic. Even if they are hybrid or ICE engine, these things will remain. A steering system will retain. This steer wire is already right now in a lot of fuel cars. Erc, as I said, they launched in electrics. Now they’re trickling it down to their mass runners as well because this is getting a very mass response from the customer. So that was one slide on the Pascar how the next five years will shape the growth of the company in such projects. The next is the motorcycle platform.
Conventionally we have been always termed as making gears. That is something which we will always do and keep doing. But with the virtue of making a lot of gears. We have gotten a skill set or technologies to develop many other parts into the motorcycle platform. So one such is a wheel axle assembly. What you see we are working on, we have the technology or the components. The back wheel of the motorcycle sits on this axle. Axle assembly is a very safety critical and a difficult assembly. Not many companies outsource this to companies who are not well known in the market.
So we are developing, we are working on this wheel axle assembly not for one customer, couple of customers. We are also into brake mounting housings. So this goes to the vehicle body in the sense where the brake is mounted on this, this flange goes and this is again a safety component. If this fails, the brake fails. And you know what can happen if the brake fails. Transmission assemblies and engine timings, we’re always there. We are getting new businesses like we just caught. We explained you this shifting drum mechanism, we just explained this is a new product line which will help us to augment our presence in the motorcycle portfolio.
And we are very happy to share. And you of course know, I think we are there in 80 of the world’s premium motorcycle brands, be it Kawasaki, BMW, KTM, EVS, Norton, Aprilia, Moto, Guzzi, CF Moto. I think two or three are left. One we already got which we can’t name and remaining I believe should come to us very soon. We also do some steering components of the motorcycle. The handle of the motorcycle rests on the parts which we make this auto shift mechanism. Now you, you’ve always heard that a car can run in auto mode wherein you don’t need to do any engagement.
Motorcycles have now, auto shift mechanism, wherein you can choose, you want to manually shift the gears or you want motorcycle to change gear on its own. And this goes to a BMW motorcycle, I think R 1300 or something. And it is getting huge response from the customer. Only one company is making this right now. Now of course, when this gets mass adaptation to other platforms, many more customers will be launching. And we always have the first edge for working on such technologies. These are of course components of these technologies. But these are critical components company of our scale.
We will move slowly to these critical assemblies. But components wise, yes, a lot of dependence of our customer is on such platforms. So the message through this slide is that whatever we have learned in the last 10 years in transmission assemblies, now we are expanding our presence in the other areas of the motorcycle so that our vehicle value addition increases by offering more products to the same customers. Beyond automotive, this is one project again, we invested a couple of years back, not getting good response. But the customer is encouraging us to be patient. This will grow in the coming years.
Bicycle Electricity Bicycles. You might have heard, basically there are two kinds of one is a mid drive and one is a hub drive wherein there is a battery attached to the cycle and then there is a motor which is either in the wheel or in the hub itself, which is in the center. These are bicycles actually and they can do 30 to 35 miles per hour or kmph. But one such technology we are working with pinion. All of these bicycles also have gear boxes now. Now bicycles having gear is a very old phenomena, but not.
We are not talking about bicycle gears, we’re talking about bicycle technology which is like an automotive gearbox. So this has an auto shift. If you have ridden bicycles, let’s assume you are at gear 10. Now if you want to cycle, you need to go back to gear zero to start it. This is an automatic gearbox. You started gear 18. The cycle will run at the same friction you need. This has, you know, this 1, 2, 3. Again, we’ve taken from our customer. So this entire gearbox, what you see is in the cycle which is mounted in.
So when you are pedaling, so it is applying a force which then shifts the gear determined by you, not by the sensors. It means that the gears can change automatically. How you are kind of, you know the kind of torque. If you are on a hill, it can take care of that that. So it is not transmitting through any shift mechanism in the sense that it. There is no sensor which is sensing. It is the user who is deciding. Okay, if I want to go at gear 18 it will automatically engage gear 18 and give you that much torque you need at that level.
And then there is a motor which is running which gives you that amplification so that your effort is very less. This is a very huge, I think into 2022. The competitor to this company is Bosch. They sold 2 million bicycles with such gearboxes. And this market is evolving. These are very expensive bicycles. And as you know, in the coming times, bicycles in Europe at least are increasing a lot of prominence. And these projects are also taking shape slowly. But it is in anticipation to how these technologies are being well developed. And mind you, these cycles are €3,000 to €6,000.
So they are expensive products. Last, we also work on ATVs so our customer, as we said, has product. We have products and everywhere, snow, on road, off road, on water. We are not just doing gears, we are doing propeller shaft assemblies. We are doing components for turbochargers for the engine. We are doing components for axle shaft assembly. Some of them are painted. These are, you know, having mass application. This customer of ours is I think top three in the world. There are many other companies like Polaris and I think more companies are there who are making such ATVs right now.
We are working with them and slowly we can increase our presence. But again, this is not an automotive business. This is a separately vertical and this vertical is generating huge revenue for us. In the last three years it has grown like anything this year this is the highest segment and I don’t know the entire market is in US and Canada so far. That would know impact on us for any kind of geopolitical situations which are happening because the plants are in U.S. canada and we are supplying to Austria or maybe Canada, Mexico directly. But this is how you know, you, you’re, you’re part of a company which is having a vision, which is having a vision to be keep evolving to, to keep evolving its customer base, its product portfolio base.
Yes, these all things are capital intensive. A lot of questions come in. Why do you keep investing? Why the turnover is not growing at the rate. But you need to also understand these are not end of the mill projects. We can work at a 10% margin and supply to Indian companies, companies and be happy with it at the same time. We are a passionate company. We are passionate people who like to work on technologies which nobody else can. You know. Some of you should visit the plant this time we’ll try to explain in more detail how complex these customer requirements are, how critical these assemblies are.
You know, if anything fails on the road, a person can die. So that is the kind of dependence our customers have on us. And these technologies are slowly getting mass adaptation. As the money disposable income in people’s hand increase the volume of such products will increase accordingly. I think I took more than the time I should have. But the idea was to explain you that how this is something which is keeping in mind that we are investing judiciously but the same time we’re investing on projects which are very futuristic. And this gives a lot of confidence to us that we are the first mover.
To be honest now when we are looking for some business in domestic a lot of people ask us I will not name the customer. Most of them tell them, tell us that we can’t afford you. You are very expensive for us. We are, you know, 100 green. Nobody needs this in Indian ecosystem. But slowly Indian ecosystem is also adapting and evolving to such requirements which the other companies will take time to come to our level. So this is from my side right now. I do not think we have any other things to show on a presentation.
Good to see 68 people still there. So nobody left now I think Neha, we can have questions. We don’t have any pre registered questions. So if we can have raise of hands that will help us. Yes. So good. A lot of hands are raising that will help us. Lining up. So I see five hands, six hands now so we can start one by one. Neha, I think you. You can see and start.
Neha Bahal — Company Secretary
Okay sir. So Mr. Vijay Pandey, can you hear us?
Unidentified Speaker
You need to unmute Mr. Pandey first. We have enabled your mic.
Unidentified Participant
Okay. Hi. Thank you. Thank you for taking my questions and thanks for a detailed presentation. It was was pretty helpful to know about the upcoming products. I have a couple of questions. The first one is our effects benefit that came in quarter one. Like in terms of euro exposure.
Jitender Jain — Chief Financial Officer
Your voice is cracking. Can you. Can you repeat the question please? Your voice was cracking, sir. Is it okay now?
Jitender Jain — Chief Financial Officer
Yes. Yes. Yes. Yes.
Unidentified Speaker
It’s better.
Unidentified Participant
Just wanted to check what was the our FX benefit in the quarter. First from the euro exposure.
Jitender Jain — Chief Financial Officer
So sir, this is as per the accounting standard. As per the accounting standard all export receivables receivables are reinstated as per the current rate on the last day of the quarter. And then the other the short term borrowings and long term borrowings. Any loss or any gain gain on that that gets adjusted below the line. So since you have seen that we have. We have a predominant exposure in euro and euro has appreciated significantly in last three months. So this was basically the reinstatement of. Basically. Basically as per the accounting standard.
Unidentified Participant
Like do you have any figure from like in just a deposit, 3, 4 crores or 5 crores? Just wanted to check because our other income was significantly higher. So that’s why I wanted.
Jitender Jain — Chief Financial Officer
It was in. It was over 7 crores.
Unidentified Participant
Okay. Okay. Thank you. Answer. Secondly, I understand that we have got two orders from BMW. One is for parking lock mechanism and one is for electric drivetrain. So this is for both for BMW passenger car or is it one for BMW passenger car or BMW motorcycle?
Gursharan Singh — Chairman & Managing Director
For the car platform and for the same model.
Unidentified Participant
Okay. And the our commercial production, this is expected to start next year.
Gursharan Singh — Chairman & Managing Director
Yes, it is financial year 27. 27 years.
Unidentified Participant
Okay. Okay. For both of these products parking lot.
Gursharan Singh — Chairman & Managing Director
For the same platform. Yes.
Unidentified Participant
Okay. Okay. And sir, can you give us an update about the TVS Norton? What is the update? Is the commercial production started? Because we expect it to be launched in this year later.
Gursharan Singh — Chairman & Managing Director
Modi has already inaugurated that vehicle manufacturing system jointly with the British Prime Minister. And this vehicle is actually set to be launched in the commercial market probably in November 2025. So we have already got the orders and we are preparing. Yes.
Jitender Jain — Chief Financial Officer
We are dispatching in September our from our side.
Gursharan Singh — Chairman & Managing Director
Of course the parts are under production and of course probably in September October they have to produce this bike here.
Unidentified Participant
So we start to see a big benefit coming from Q3 if I’m correct.
Gursharan Singh — Chairman & Managing Director
Yeah. 1.2 liter motorcycle. So we have to really see that how much volumes it picks up. Because I probably this is going to be a first motorcycle in India which is going to be with such high power and being produced in India. So of course more than US TVS also will be over anxious to see the response. But yes, it is a new platform.
Jitender Jain — Chief Financial Officer
I think the assembly will happen in uk. The engine will be made here. The vehicle is simply in in UK only. And then it is for exports market. And you know these are not high volume businesses but these are high margin businesses. Okay.
Unidentified Participant
And so one last question. So this is on the ktm. So we understand that like KTM is moving, shifting some part of production from Austria to India or either China. So do we supply to the KTM India or KTM China? And are we seeing any production ramp up after like they had stopped production for five, six months. So are we now seeing the production ramp up or is there any delay again happening on that front?
Gursharan Singh — Chairman & Managing Director
First of all I’ll give you an update. KTM has already restarted production and in fact the full production has already started. But to have a full volumes. You also understand if a company remains closed for six, seven months, so they have to revamp the entire supply chain. So obviously they are also going in a very, very systemic and structured way because they already have faced bankruptcy in the past. So they do not want to know create too much of excess stops. It will take a little more time to come to their full volume production. But yes, you’re right, production has already started and at a fairly reasonable level.
And now your question of coming back to India. These all are futuristic things. Nothing is going to happen overnight. But yes, over a period of 2 years, 3 years, 5 years, it may happen, it may not happen. But this is very clear that KTM is not that they will stop production in Austria and they will start producing everything in India. So it will happen some models or some. Some strategies which will take some more time to really take shape. But one thing is very clear, if any models or production shift happens to India, so eventually we will be the beneficiary because we are already abroad supplier.
So then the parts doesn’t need to be revalidated. Revalidated. And regarding China, I think you might have already read the interview of Mr. Rajiv Rajaj. They are rather saying that they have to be very, very focused on developing the Indian market. So eventually we don’t foresee now KTM making big strides in China. It will keep happening in Austria and something may happen in India, of course. But in both ways we are always since you know, we are a kind of 20, maybe almost 15 years life partners with them. So rather we are at the average.
Unidentified Participant
Thank you. Thank you sir. Just one more thing, just a suggestion.
Jitender Jain — Chief Financial Officer
You can email it to us maybe Please restrict questions to two questions, please.
Unidentified Participant
Now what we will do is not.
Unidentified Participant
A question, just because now we are doing the conferences call. So it will be great if we can also give a bifurcation between two wheelers passenger vehicle and ATV revenue sales. That will be pretty helpful.
Jitender Jain — Chief Financial Officer
Your question, annual report.
Unidentified Speaker
It always comes in our annual bifurcation.
Gursharan Singh — Chairman & Managing Director
Between passenger vehicle that is already there. It becomes too cumbersome for us to announce. But annual reports we always give.
Unidentified Participant
Okay, thank you. Thank you sir.
Unidentified Speaker
Thank you.
Neha Bahal — Company Secretary
Keeping in view the time limit, we would request all of you to kindly limit the number of questions to two. Yes, I would not request. Mr. Yoganshaw. Mr. Yogansh, can you hear us?
Unidentified Participant
Yes ma’. Am. Am I audible? Yes. Yes. Yeah, perfect. Thank you so much for the opportunity. First of all, congratulations to the entire RACL team on winning these new orders. And it’s always a pleasure coming and joining your call and listening to your commentary. There’s so much to to learn from the team. So sir, coming to my two quick questions. The new business that we have won in two wheeler domestic business, the mass volume product, could you also share what would be the CAPEX outflow for this project?
Jitender Jain — Chief Financial Officer
Should I answer?
Gursharan Singh — Chairman & Managing Director
Since we got the order only two days back, so it will take some more time to calculate it.
Jitender Jain — Chief Financial Officer
But we can answer you in this way. There are two aspects to this. First is immediate start of production which will happen with the existing capacity we have. Since you know some of the projects which we have have certain idle capacities, then there is a ramp up phase within three months of sop. For that there is a specific capital expenditure required for which we are deliberating, deciding and and of course calculating and as and when if there are any additional funds which need to be deployed or raised that will follow with the conventional procedure, how we use.
Unidentified Participant
Got it. So Prabhup, suggest clarifying on that part because so far our business has always been more value driven and less volume driven and our plant and our setup has always been structured accordingly. While this is a mass volume product and hence we thought maybe going forward you’ll need a bigger size capex if.
Jitender Jain — Chief Financial Officer
Now as I said so this is cherry on the cake that we can start using our immediate capacity. Since we are not in motorcycle cares from now, from last 20 years we are giving same products to all customers. So we will use existing capacities which we have. As you know we are operating at a lower utilization. That is the reason turnovers are like that and we can use that immediately. So no CAPEX required immediately to start. But yes, this is a high volume. We have never done such a high volume. There definitely CAPEX will be required but the quantum we are not able to share with you as of today.
Unidentified Participant
Fair enough sir. Secondly, on the various projects that we have announced in past, like Project Titan Venus, if you could broadly highlight where are we in terms of the CAPEX cycle of those? And specifically on the Project Venus, like you were mentioning that this is a very interesting project that we are doing for the steering Mela component, I believe. This is for the US pickup truck. Oem and that is not Venus, that is something else. But yes, steering project is for zf, but go on. Okay, so I think in one of our past presentations or congos we had mentioned that Project Venus prototype had to start from quarter to FY26. So what is the status of that?
Jitender Jain — Chief Financial Officer
No, so you’re Confusing two things. Venus is a project which goes to BMW cars that prototyping is very much ongoing. And I think the first participant asked one is the SOP and sir explained SOPS next year, both platforms. The second part on the ZF project prototyping has been done. Submitted parts have gone to our customer. The validations are going on. The start of production of that project is much later. It is in 27 or 28. So for that we have good one and a half year because it’s a bigger cycle. We are tier three in this, so it is a longer validation cycle.
So it will take its own time for commercializing.
Unidentified Participant
Okay, and so the once the projects which we are supposed to go live in 26 where are we in terms of their capex cycle.
Jitender Jain — Chief Financial Officer
Finishing this year?
Unidentified Participant
Got it, got it. Thank you and all the best. I’ll get back in the queue. Thank you.
Neha Bahal — Company Secretary
I would now request Nyan Agility advisors to unmute themselves and ask their question.
Unidentified Participant
Yeah, hi. Hello. Hi. Am I audible? Yeah, please. Yes you are. Please. Yes. So I just had a question regarding the inventory. As we had seen there was a lot of inventory buildup for ktm. So in the last con call you said that the inventory will start reducing. So what is the status on that?
Unidentified Speaker
I’ll answer you. First of all, the inventory has been already started liquidating because since they are already starting production, they have given us a complete form plan and in fact whatever is the old inventory, this all will be picked up during next few months or maybe latest by end of this financial year. And in fact we have already started fresh production also so that way we are.
Unidentified Participant
All. Right. Sorry. Okay. All right sir. And the 25 EBITDA margins, are these sustainable or these are just one off for this quarter?
Jitender Jain — Chief Financial Officer
You know, nothing remains stationary one but one should always aspire for keeping the highest profitability. But you know in all our con calls we always maintain that we will always try to maintain our segment in a manner that it will always be high beta margins every day bordering every day me. So it’s really great. Nothing is stationary so our anything between 20 or 25% is always our benchmark. So percent error there always.
Unidentified Participant
All right sir, if I could just squeeze another question. The project crystal was for an American OEM and after the 50 tariffs on auto ancillary products. So will there be a delay in that project? And so like what will be the.
Jitender Jain — Chief Financial Officer
Everything is going as per try. You know, many times these tariffs are all are not actually business announcements, they are actually political announcements. So nobody knows which Way the things will settle down in coming few months. But you know, industries are, or the business houses or the state will never fine tune their policies on such volatile scenario. They will always have a long term framework. So there’s nothing stopping us for the. So everything is going as per plan.
Unidentified Participant
All right, thank you. So all the best for the coming quarter. Thank you.
Gursharan Singh — Chairman & Managing Director
Thank you. Thank you.
Neha Bahal — Company Secretary
Mr. Ramanjit Singh.
Unidentified Participant
Yeah. Hi. Thanks for the opportunity and thanks Prabh Mayor for that elaborative presentation. If I could just ask, apologize, it’s a very broad question but in terms of, you know, when a layman like me looks at the emerging landscape for automobile, it seems to be in a flux because you know we have ICE, we have hybrid EVs and especially I see a lot of OEMs in Europe, you know, facing a transition channel challenge on, you know, which way they would move next. So as a company which is very much into innovation, you know, what is your guiding star for which technology to focus on.
Like when you sit down and think for next four or five years, how do you define the path ahead given that you know, you, you are involved a lot in developing technology which is futuristic. Thanks.
Gursharan Singh — Chairman & Managing Director
Yeah, I will answer you to your satisfaction. You know, if you really see our broad business profile, it is very well diversified by into passenger cars, into commercial vehicles, into motorcycles and into off road vehicles. Now if you really see transition of all These segments from ICE or hybrid mobility to pure EV mobility is risk is at motorcycles of say sub 100cc or 150cc products, that is the highest probability of transition or I’ll say the fastest probability of transition and second is the passenger cars. So as a company strategy I will say we have focused very clearly that in motorcycles we will always insist for our strategize for premium segment.
When we say premium segment, anything above 250 300cc motorbikes and this is very clear that with the current level of technology of electric vehicles or the EV technology this high premium segment motorcycles, we do not foresee any immediate changeable possibility because many companies tried and then they found that it doesn’t sell. So then eventually they stopped focusing onto this. So that way we always have a very safe strategy in passenger cars. You all know that we started our passenger car entry only four, five years back. And incidentally these five years were the area where the transition discussion started between fuel to ev.
So as Prabhu has already explained you in that one pager slide, all our passenger car business is either EV or fuel agnostic. We are not making any investments or we are not planning anything into pure ICE or pure hybrid platform either their vehicle agnostic, sorry the fuel agnostic. Anything is whether ICE or hybrid or ev our parts will remain. Second is we are spending efforts onto the EV technology because we also do not want to be caught off guard. So that’s the reason this BMW project, this Venus and Titan, which we always codename them, they are for a futuristic electricity.
But again I’ll say even in EV we are not into normal ev we are into again sports functions or high end premium segments or EVs. And as far as agricultural machinery or the off road vehicles or commercial vehicles, we do not foresee any transition like in av. Prabhu explained you that ADV or off road vehicles or snowmobiles. You can very well understand that in snowmobiles when a fellow has to use the snowmobile on a snow patch area from where he will get the electricity on a mountain having with snow. Same thing is with the sea scooters in oceans you can’t really drive electric vehicle.
So that way we do not foresee all such transition. So our strategy is very clear that impact of this transition. Either we have strategized very very clearly or our product portfolio is such where we do not foresee any changeover or any major changeover. Some minuscule error there will always happen. And as you know, three wheelers was also. In fact I forgot three wheelers is also one of the biggest transition. So that strategically we have already reduced our dependence on three wheeler business. Seven, eight years back I think we were 27, 27%. Now I think we are 3%.
Unidentified Participant
Three. Yeah, three.
Gursharan Singh — Chairman & Managing Director
3%. So this is how we have already de risked ourselves from such transitions. I hope I have been able to satisfy your question.
Jitender Jain — Chief Financial Officer
Just to add, I think Mr. Singh asked, See eventually when you are an innovative company. So we don’t define ourselves to just app platform. Like sir said, most of these technologies, even if they’re in ev the product or the technology base we have can make parts for even an aerospace product for an aircraft as well. The biggest asset is our people. The the knowledge about the systems, the procedures and the mindset. Once you have that mindset, it takes one year to add technology, but 10 years to have that mindset to run that technology. So that is our biggest asset does not come on paper anywhere that in last five to eight years our we have developed a team of so strong engineers and people who can handle any kind of expectation be aircraft worthy wherein there are zero failures or even a three Wheeler where the competition is very high.
We are still if still having 4% business in 3 Wheeler. It means we are competitive. It means we are still able to operate at that at pricing which is profitable for customer and me also. And similarly we are able to develop technologies which are very futuristic. So the biggest earning or the next five years of the company is taking care of this mindset which can do wonders if given in the right direction.
Unidentified Participant
Okay, thanks. Thanks for the input. So you know you’ve already alluded to it in your response. So is it good to understand that you know some part of. I know your hands are full but some part of your mind space thought space also goes to non automobile industry. Given that basically you are a position manufacturing.
Gursharan Singh — Chairman & Managing Director
You already saw the roadmap. So again we start from the top. So if we go into the non automotive so we pitch all for. You know BHL is one of the Navratna PhDs of India and I think they are number two anyone in Navratran is still.
Gursharan Singh — Chairman & Managing Director
I mean one which we can’t disclose that you know the meeting we had last week. So of course we are doing a lot in industrial applications. As I said we are very aspiring as an organization. We are thinking today because till thousand we are comfortable. So how does that happen? Is having a vision which can take us there.
Unidentified Participant
Okay, thanks a lot. Thanks a lot for your answers and best of luck.
Neha Bahal — Company Secretary
Thank you. Thank you Mr. Piyush Jain. Mr. P.J. you may unmute yourself.
Unidentified Participant
Am I audible? Am I audible?
Unidentified Speaker
Yes yes. Please go ahead.
Unidentified Participant
Yeah yeah yeah. Thank you. It’s always a delight to attend RSCL call. Thank you sir.
Jitender Jain — Chief Financial Officer
Thank you.
Gursharan Singh — Chairman & Managing Director
Thank you.
Unidentified Participant
From my first day of call attending. Today I think I always learn something about the cars and bikes and gears and all and it just mysterized the size of recl companies doing so much of good work. Kudos to you guys. I. I have one or two small question if you have because I joined later if you have given any guidance with respect to top line or something grows for one year, two year three years. Just if you can repeat if you want to give any guidance something. And second thing with respect to how much apex we are planning to do in next two years and we have raised some differential lot money also recently and what is what we will use for those money for reduction of debt or or capex what is the debt positioning could be after the two years down the line.
Jitender Jain — Chief Financial Officer
Yes. So. So on the guidance for this financial year we have already disclosed in our last to last board meeting we had Already disclosed the budgeted turnover for this year. So we are still abiding by the same and we are targeting the same same budget for this financial year. That was the. Your first question. To answer your second question right now on the to answer your third question. I’ll answer your third question first. The money which has been raised through preferential allotment and all the entire money apart from after meeting all the issue expenses and all have been utilized to predominantly to reduce the long term debt and some amount to reduce the short term debt.
But the entire money has been utilized to reduce the debt as of now. And on the capex part for this financial year the fresh capex which we had already announced last time. The fresh capex for this financial year as of now is close to around 50 crores and the corresponding the new debt which will come will be 75% obviously. So these all figures are already disclosed.
Unidentified Participant
Okay. And just one thing. Congratulations for the getting the process approval. From bail and all. So just as a broad what type of size of this industrial business can become because right now purely we have a predominated auto automobile business down the line. Let’s say two, three years maybe a bail, maybe some other other other company which might also be getting panel. So what type of size we can see it could be around 15, 20.
Unidentified Speaker
Please, please continue.
Unidentified Participant
Yeah, that is what I’m asking. Is.
Gursharan Singh — Chairman & Managing Director
One of one of the thought which we already got approvals over shared. Likewise we are talking to many many big conglomerates from USA they are not actually USA they are the global companies in USA they have presence in us, Europe, Germany, England, Italy. So. So we are talking to them so many such avenues. You know industrial segment or the construction segment has a huge plethora of business opportunities. And this is the segment which we have studied thinking on this and you know our strategy always remains like this. First we incubate ourselves like I will just give you an example this Bharat Electricals it’s not that we got vendor registered.
We just went there and they gave us. We worked with them for the last two years for I think two or three different projects through tendering routine. Now they awarded us those businesses and their top man was saying Mr. Singh we have never got such good quality in first go from any of our supplier. So you know always we incubate because if we enter into industrial sector first of all we picked up some specimen production line, we dollar them and we understood the thought process. The thinking process of the infrastructure segment or the industrial segment now and when we did the best now same when I will try to grow it out.
So now only time will tell how much growth we can achieve through this. But as automotive segment is always there. So this industrial segment we are also thinking both the segment are totally different. Automotive segment is a mass volume, high volume and by and by a consistent segment. Industrial segments or such construction segments they are generally not very high volumes, not any huge year on year growth but having good profit margin. So we have to have a balance onto this. It’s not that we are going to industrial. So then we will reduce our focus on automotive, automotive or this.
Even when you say automotive or non automotive. Even if you now see in automotive normally people consider Passenger cars and 2 villages Automotive off road vehicles, agriculture machinery, they are even now non automotive.
Jitender Jain — Chief Financial Officer
I was about to mention that even Today we have 40 business which is non automotive. So. So this consumption that we are 100 automotive is is not correct.
Gursharan Singh — Chairman & Managing Director
Indian calculations even commercial trucks, they don’t consider them as automotive. They consider them as a infrastructure. Or the trucking industry is not considered automotive. Automotive actually is considered only passenger vehicles and motorcycles.
Unidentified Participant
My question was little different actually I always wanted to check any industrial business which we we will get in future. Do we need to do a separate capex for that or our existing facility will support it?
Gursharan Singh — Chairman & Managing Director
Okay, it’s little complicated for us to answer because until we get the business we can’t really know that whether we use as extinct technology or we have to put those technology this all you know, depends. You know when we when you start hunting for a new business so you do not have what you have, only you’ll get that business. Once the business matures, we have to really see that what kind of business it will be. Although our focus will always be that first we should be able to utilize our existing infrastructure. But if business is promising, if business is good, so.
And then if capex is required, definitely we will love to do the capex because one thing is very clear. Irrespective whether it’s the automotive, non automotive, industrial, non industrial, we will always work with the top of the line businesses where there is no risk of investment. You know what happens? Making investments is not a bad bad thing thing. Making risky investments is a bad thing. Many times you invest on some risky businesses which do not have a clear visibility or you can’t trust them 100%. So that is absolutely clear.
Unidentified Participant
Sorry to interrupt. Actually I was coming from your quotes early because in the past also you have said we do capex only when we have a visibility of orders in hand or orders in something so. So that is what I my. My question is to understand like this government organization and bail and all etc how you will plan this. You will do capex first or you will get order then you will do capex the fresh facility or capex needs to be done or it’s the old structure infrastructure can help Just wanted to get some idea on it.
Gursharan Singh — Chairman & Managing Director
First of all I compliment your good memory that you keep my words or our no memory it is not people.
Jitender Jain — Chief Financial Officer
Document whatever we say so.
Unidentified Participant
I will just interrupt I am an investor in RACL and I don’t document anything in RCA I am an investor in RSL for last 5 years in last 5 years and I’m telling you I don’t need to go quarterly result here and there something I just look forward to listen to you guys in quarterly earnings call that’s it. I’m invested in RSL from last five years and I don’t document anything.
Gursharan Singh — Chairman & Managing Director
We are really glad to have such a long term that’s a compliment to the team.
Unidentified Participant
That’s a compliment to the team.
Gursharan Singh — Chairman & Managing Director
Oh we are really very glad to have such investors who always work with us as a long term some trust builders on us but I’ll say since you raise this question I’ll again answer whatever I said few years back today also maintaining the same we will not make any investment. I told you very clearly that it’s not that we first invest and then start hunting that’s what I’m saying when business will come as I told you today that our prime interest will be that our existing capacity first of all should be able to be utilized but you also know it that it’s not that we are always having any unused capacity which is totally wrong because we never invest until there is a business okay so even in the infrastructure sector our prime interest will be it should revolve around our existing investment but if any new investments are happening and if there are big buyers why not we make investments so bankers and investors like you are always there to support us in but on a very very clear note we never make any large investments in anticipation okay we are now entering into infrastructure or industrial segment so we should invest 10 crores or 20 crores or 100 crores or thousand crore preparing for this segment.
No, we will first hunt for the clarity Just wanted to know.
Unidentified Participant
Yeah yeah just wanted to know that is this still continuing the same or we are changing that’s the only.
Gursharan Singh — Chairman & Managing Director
Absolutely, absolutely. You know it is either yours money or investment money or banker’s money. I am just a Custodian. So we’ll always invest judicious.
Unidentified Participant
Yeah.
Gursharan Singh — Chairman & Managing Director
We never invest with a even like I think preferential investment even we got them investment from the stock market or invest for the investors. It’s not that we’ll change our investment strategy. Investment strategy will always be very difficult.
Unidentified Participant
Thank you.
Gursharan Singh — Chairman & Managing Director
So thank you. Thank you once again.
Neha Bahal — Company Secretary
Okay, so I think we have six more questions and already one and a half hour into the call. Mr. Tej Patel.
Unidentified Participant
Yeah. Am I audible?
Unidentified Speaker
Yes sir.
Unidentified Participant
Good. Yeah, yeah. Thank you so much for the opportunity. I will just quickly ask my question. So just wanted to a broader question. So we are planning to you know touch about thousand crores of revenue by FY29 and you already said you we are planning beyond thousand crores. I just wanted to try and get your view on, you know, from where are we expecting this growth to come from. You know, will domestic market be a major focus area for us? You know, are we ready to take up let’s say more volume based order rather than value based order? I just, just trying to you know tell you from why I’m asking this because if I look at your customers today, you know they are all catered to the premium categories of the respective vehicle category which itself is growing at let’s say about the single digit volume growth.
Right. Even if I look at their numbers for let’s say the last two quarters in their commentary is Europe overall has been slow and the domestic mix of course is increasing for us also. I’m just trying to understand your view. From which segment, from which category of customers, from which product category do we do expect to ramp up fastly and achieve the thousand crores growth. So just wanted to understand your mindset. And one broader do we anticipate. Just wanted to get your point of view. Given the current geopolitical scenario and the tariff scenario, do you see the export getting, let’s say the sustainable growth towards export getting been impended because of the situation and do you see the yourself de risking it? You know what, what are your strategies? Just wanted to get your views on it.
Thank you.
Gursharan Singh — Chairman & Managing Director
So first of all I’ll, I’ll answer your first part of the question. In all our business, whether it’s a 500 crores or thousand crores or 50 crore or 5000 crores, we will always keep focus on value based business. Our focus is very clearly volume based business. Of course volume will bring only the top line but bottom line is very important for us. So we’ll not really hunt for business. Okay. Whatever is the cost here you just get it. So we’ll always keep focus on value business. And our focus is very clear that we always create our premiumness.
Okay. We are not into run of the mill business. Now to answer your second question from where the volume growth will come. If you have really seen our presentation today, we already told you that in 20, 27, 28, we are getting a big business into this electric power steering which Prabh explained you for a pickup truck platform. You know the biggest good thing in that project is that is actually currently running platform pickup truck in US. So it’s not that it’s a new vehicle. The customer is already producing 200, 250,000 pickup trucks per year. Only thing is they are changing from hydraulic steering to electric steering.
So that business will not have any ramp up that sudden increase of business. And I don’t have the exact numbers handy, but probably a few have some indicative numbers. But I think it is pretty.
Jitender Jain — Chief Financial Officer
Revenue. We can’t, we. We can’t disclose but the volume is around.
Gursharan Singh — Chairman & Managing Director
200,000. But that is the biggest revenue generator. Second is Europe. Okay, you say that Europe is declining and Europe is consistent or stagnant. But I will tell you what we see in this media. Europe sees only one of the media generally sees European economic numbers. But you know, automotive platforms, whether they are motorcycles or Pascas, Europe doesn’t produce only for Europe. Europe produce for whole of world. You know, whether South America, say Africa or usa. Okay, in Asia. I will not say that Europe has much exports from Europe to Asian countries like India or like China or Japan.
But that’s the world. Basically the American content, North America, South America, Europe is a big player. Africa, you know, Africa doesn’t have any carbon vaccine facility accepting maybe one facility in South Africa. Otherwise whole of Africa, there is no facility. So Europe is a feeder to the entire world. So automotive. Okay, I’m not saying that they’re growing 10% per year, but they’re not also declining like this. But you know, there are some transitions are happening today. All stuff is also affecting it coming to motorcycle business. European motorcycle business is a pretty stable business. But you also see that we also saw these headwinds or we foresee these admins and we already captured business from India’s or not India’s.
I’ll say it’s the world’s largest premium motorcycle manufacturer. So you can guess who are the customers. So we already took the top of the line business. So we have maintained our premiumness. We have got a high volume business. So eventually it will add to our Volume generation or the revenue generation in a big way. Likewise, we have many, many new discussions because as Prabh told you that up to thousand crores visibility is already there and that we have already said that by 2829 kind of financial years we have to be thousands. Now we have started thinking beyond 2829.
So you also understand that we still have five years to work. So we have started our roadmap and there are many, many new platforms are coming because it’s tariffs and all such stuff. Whatever is happening across United States. Believe me, as an industrialist, as a entrepreneur or as a businessman, I’ll say I always see silver lining in this. I always see half glass full. India will never be a loser. Out of this India will emerge a winner. And the way our government has taken a tough stand, I really appreciate this kind of upmanship. I personally feel whenever there is a conflict and conflict is suddenly jacked up, it is very clear that the settlement is in the horizon.
So somewhere these tariffs things will settle down. You also understand, sorry on that tariff.
Jitender Jain — Chief Financial Officer
I will also share that experience we had last week. So we were negotiating some business. I will not name the customer. So how the world is evolving. So the price is now being discussed as price without tariff and price after tariff. So they are actually putting this into the consideration and the customers was. It was a deep American company and we said our terms are clear, custom duty clearance is in your scope. Our landing price is this. You pick from our gate. Then what needs to be done, you can take care. And they were also flexible.
They said fine. We can of course put in this as a margin. For example, if we quoted 100, everything is subject to negotiation. So let’s assume his expectation was 80. So we said yeah, so this 20 can be our contribution towards tariff. So you know that ways people are waking up to this reality and it will be short lived and companies cannot have strategies for long term.
Gursharan Singh — Chairman & Managing Director
Exactly. And I’ll also add one thing, you know, because sometimes as I already told you, the business trends, business houses or big industries will never, never make strategy. On these political statements. You imagine when you put 50% or 25% tariff for India. And next morning we saw a Twitter statement by Donald Trump. Oh, billions of dollars have started coming into the United States. Now it’s a public platform. I should not be really speaking like this. But I personally fail to understand how come by increasing the traffic tariff the dollars, billions of dollars have started flowing to USA because it’s very clear tariff is being paid by the customer, not by the Supplier.
So it’s very clear these all are just statements to settle some other issues which are more underlying. So I don’t feel that this tariff thing is going to have any long term impact on the business strategy within USA and India. Believe me usa, India are long term partners and this partnership continue to go and let’s not really get excessively worried. And yes if it really something healing catastrophe happens so then the whole of Indian industry will be together and you know India is a big market so you should understand no country can ignore us.
Unidentified Participant
Great, great. Thank you. Thank you so much for the detailed answer sir. So I’ll just club two of my questions. I know you have said that we are probably you know doing capex of about 100 and 150 crores in the next two years. If possible could you break it down how much in the this financial year and how much in the next financial year? And is my understanding correct? The incremental growth about 25 30% which we are projecting this year is expected to come from the new projects coming live in the second half is my understanding correct?
Jitender Jain — Chief Financial Officer
So as I’ve told you the we have finalized this year CAPEX till now. So this year capex as of now is 50 crores. The the figures of capex which we had disclosed earlier was over a period of three years. So the next year capex and next to next year capex have still not been finalized. But out of that total capex which we have declared this year we’ll be doing a capex till now we are doing we’ll be doing a capex of 50 crores. And the growth, the growth party he thinks growth coming from only the new.
Growth business this year that you already explained. I think it’s a repetitive question.
Gursharan Singh — Chairman & Managing Director
I think we already explained growth is coming from existing business few nominations. We already got January 26th the starting and for that we are not making any cap. You know let us be very clear. We had some idle capacity for ktm.
Jitender Jain — Chief Financial Officer
Yes.
Gursharan Singh — Chairman & Managing Director
So we are now going to between the time when KTM grows again.
Unidentified Participant
Yes. Perfect. Perfect. Got it. Thank you. Thank you.
Gursharan Singh — Chairman & Managing Director
Thank you. I think now maybe another two watches. Three, two, two.
Neha Bahal — Company Secretary
Mr. Prith Pitani.
Unidentified Participant
Thank you for the opportunity. Am I audible?
Jitender Jain — Chief Financial Officer
Can you be little louder please?
Unidentified Participant
Yeah. Am I audible now? Yes. My first question would be line on the tariff cost. So if you can quantify the amount of tariff cost which we have in quarter one and as you can see that the export to domestic fleet is 60s to 40 as compared to earlier. Guidance given of for FY26 for 70 is to 30. So is there any delay from our customer? I, I understand that there will be. No long term impact because of tariff but any short term headwind we are seeing because of this tariff.
Jitender Jain — Chief Financial Officer
I think we already answered that in the last question.
Gursharan Singh — Chairman & Managing Director
We already told here tariffs. We are not having any tariffs in our costing. Our, our terms are always at the port only, so no direct impact on our costing. And business is, you know, the 70, 30 or 60, 40, whatever we are discussing. Our own focus is to now focus more and increase our focus on domestic market. So that is the, you know, it’s a kind of mitigation of all such volatility where you see that on one side you all know KTM was down for almost seven, eight months last year. There was a lot of volatility in export business but we were still able to match our 23, 24 performance.
Rather we had a notional growth of 1%. So that really shows companies really fit in maintaining our top line and bottom lines. Irrespective I sell in India or I sell in Europe or in Japan or Pakistan, it doesn’t mean end of the day we must actually get revenues. So this 60, 40, 70, 30, whatever is there, you know, nothing can be stationary. It is always range bound. So I’ll say let it be 2 3rd export and 1 3rd domestic. It can be 60%, it can be 35%, 65%, it can be 70%. So some variations are always removed.
But primarily oil remained export focused company. But there’s one more thing. You know we already explained in the previous interactions many businesses which were actually exports business, now they are also converting into domestic business. You know, Kubota has acquired escorts. So now it has become a Scott’s Kubota. So now parts are still going from us. But now Scott’s Kubota does the consolidation. So eventually that business has shifted from, from export category to domestic category. So when it has come 60, 30, 60, 40 doesn’t mean that our export business has gone down. It is a re kind of say that route change.
Initially we were exporting directly. Now it is we are giving to their aggregators same ways our summit. Oh it’s for the Italian business. Until last year we were doing the entire business to Europe. Now somewhere as a factory in India they say we’ll do the consolidation. That also also has a little impact. Some businesses are being restructured from purely export business to domestic business. So you know, it gives us an advantage. So our receivables also get improved and our quantity Business is always there.
Jitender Jain — Chief Financial Officer
And just to add, I think as a concluding, most of the businesses are also shifting because of the low cost. But it is still an export business. So for example, we make motorcycle parts for Piago, for let’s say Norton or TVS or even BMW is making bikes in India. They’re actually selling more in export market than in domestic. If they’re making 170 are exported, 30 are only for India. Indian market is still not ready for that pricing or that premiumness. So in that like zf, Rana is also a domestic business. My payment will come in 40 days.
But it is an export business. It is for American market. So that way our strategy is still export centric. Because end customer is now making in India, maybe selling only abroad. So even if we are exporting to Europe or we are making in India, the application of the product is across the world. So that also needs to be always considered that domestic business. Because I think the question is coming domestic means maybe less premium. And then they want to factor in their Excel sheets maybe. No, that’s not the point. Point is business will always be of that same margin.
But actually it will be better because your payment will come in 40, 50 days. But the premiumness, the quality consciousness, the application will still remain global in terms of how it is being sold.
Unidentified Participant
No, you actually valid observation. That’s very clear. Whatever you do for tvs, it’s all basically instead of exporting, exporting entire motorcycle. Same with Aprilia. Aprilia has produced last year I think 9,000 motorcycles in India. And I don’t remember exact number but I vaguely remember they sold around thousand motorcycles only in India. India. That’s how it was export. So technically. So technically it is still export. I’m not exporting. Somebody else is exporting.
Unidentified Speaker
Yes. Okay. I think it is already four. We can take one last question from Dheeraj and we can end it. So I’m unmuted.
Unidentified Participant
Sorry sir, my one more question was there. If I can.
Unidentified Speaker
Sir, you can. You can come back in the line and then we can answer all your questions. Maybe you can write it to us.
Unidentified Participant
Hi. Hi. Thanks a lot for the opportunity. Thanks a lot. I’ll just. In the interest of time, I’ll just ask my question quickly. Given that we are only focusing on low volume, high margin products, that restricts our, I mean market opportunity in a way. So how easy or hard is it for us to get entry into aerospace or defense this as an opportunity? Because end of the day that is the next ancillary opportunity. I think we will need to enter, to really, you know, enter into the like a, for, for acquiring a bigger market. Right. In order to grow from thousand to. Say like northwards of like 1500, whatever. Right, so what is the view there? What is the thought process?
Gursharan Singh — Chairman & Managing Director
See I think what I explained early, it is the mindset which is required for aerospace, not the technology or the plant and machinery. That mindset we are building in last 10 years is preparing us for aerospace. Aerospace is no rocket science. It still operates within the same parameters. Only thing what changes is the traceability, the documentation. And the third is it has to be a 0ppm. Your products cannot fail, that is the only precondition and the gestation periods are very high. It is a learning curve. Every organization goes through that. And aerospace will happen at its own space and at the right time.
Because right now we are very focused on generating this growth which we have now brought to this level. So next three to five years are the growth times wherein we want to build in a good fundamental base. And then this is a journey beyond thousand. Maybe inorganic, maybe how we can use our existing know how by being that supplier who can, you know, create its presence. Because we have worked in aerospace in the past. We have certifications from, you know, hal, we have worked with them, we have worked in work with many other Indian, you know, in that ecosystem so that we understand our.
Our heat treatment lab is actually aerograde, certified by hil. They don’t do it. So certifications wise it is not difficult. And you know the kind of these electric cars are being made, they are actually aerograde technology in terms of that requirements. So we’re slowly ramping up to that Mindset is very important and I don’t think it is difficult to achieve that.
Unidentified Participant
Just a small doubt. If we are saying that our power steering is actually agnostic to ICE and hybrid and electric. Why do we term it as electric powering? Power steering.
Unidentified Speaker
Sorry, sorry, come again.
Unidentified Participant
Is of two types. One is hydraulic assisted, one electric assisted. When you say electric power steering it means the steering system works on electricity. There is no motor. Hydraulics. Yeah. So you know, even in India there are many cars which, which are having electric power steering. So because technically when it’s a power steering generally it is a. There is a hydraulic pump which is driven by the engine fan belt or the engine timing system. And but in electric power steering there is no hydraulic. It’s only. It runs through battery or through.
Unidentified Speaker
Basically there is a motor, there is an ECU and then the gearbox.
Unidentified Participant
No, no, it’s very clear but it can be Used in ICE also is what you’re saying.
Unidentified Speaker
Right. This project is for ICE only. This platform, I’ll clarify electric steering system is very much predominant today in past cars of a smaller engine. Let’s assume maybe a Kioskia Seltos or a BMW will have have it. We are talking about a pickup truck platform where electric steering systems right now are not predominantly there. So this is again a new product which is being brought in all put together for this segment. I don’t know if you understand pickup trucks. These pickup trucks are actually vehicles but they are huge. They are engine wise and load wise. So they’re having electric steering system means it needs a very big assembly.
So that is something which not many companies are able to make it. And this is for the first time this platform will have it. Got it.
Unidentified Participant
Thanks. Thanks a lot. Thanks a lot for that. Thank you. Thank you.
Unidentified Speaker
So I think now that’s concluded. Yes.
Jitender Jain — Chief Financial Officer
Any closing remarks from both sides?
Gursharan Singh — Chairman & Managing Director
You opened it, you should close it.
Jitender Jain — Chief Financial Officer
So thanks a lot. I think it was. This call was quite interactive. We are really glad and humbled to receive such a response. I think in last four or five quarters for the first time we have got more than 70 participants. This again, I’m presuming this is a testimony of some good work which we have been doing which has given so much interest in the market. And we feel quite humbled by the response. Thanks a lot everyone and have a. Have a. Have a good weekend. Thank you.
Gursharan Singh — Chairman & Managing Director
I will just conclude by adding I, you know while talking I got one message from one of the investors. I will not name him but he says I’m proud to be your shareholder. So much clarity on the past chosen and always ahead of others in terms of investing, developing and visualizing. You’re not a 500 crore company designed to be 5000 crores regardless. But I answered him in a humble way. Well, thanks dear for such thoughts. While it makes us glad to read such sentiment, it keeps us always in toes to perform continually. So. So your calls are very very happy moment for us.
But it definitely gives us many many sleepless nights where to get ready for the next.
Unidentified Speaker
Yes sir.
Gursharan Singh — Chairman & Managing Director
Thanks dear. Thank you. Thanks all the best to all of you. Have a good now rain free weather in Mumbai. Yes, I know most of people are from Mumbai. Thank you. Thank you. Thank you.
Neha Bahal — Company Secretary
On behalf of the management, I would like to sincerely thank all the participants for joining and engaging with us today. Your participation is greatly appreciated. I would also like to extend a special note of gratitude to the management team for their thorough and patient responses to all the questions raised during the session. Thank you, everyone.