RAMKRISHNA FORGINGS LTD (RKFORGE) Q1 FY23 Earnings Concall Transcript

RAMKRISHNA FORGINGS LTD (NSE:RKFORGE) Q1 FY23 Earnings Concall dated Jul. 21, 2022

Corporate Participants:

Lalit Khetan — Executive Director and Chief Financial Officer

Analysts:

Mumuksh Mandlesha — Emkay Global — Analyst

Abhishek Jain — Dolat Capital — Analyst

Mitul Shah — Reliance Securities — Analyst

Pratit Vajani — ICICI Securities — Analyst

Saket Kapoor — Kapoor Company — Analyst

Smita Mohta — Kredent Infoedge — Analyst

Unidentified Participant — — Analyst

Taral Shah — Kitara Capital — Analyst

Sangeeta Purushottam — Cogito Advisors — Analyst

Karishma Makhija — Motilal Oswal — Analyst

Rajesh Mundra — Company Secretory

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Ramkrishna Forgings Limited Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note this call has been recorded. I now hand the conference over to Mr. Pratit. Thank you, and over to you, sir.

Pratit Vajani — ICICI Securities — Analyst

Thank you, Seema. Good day. Welcome everyone for the Q1 FY ’23 Conference Call for Ramkrishna Forgings. The company today is represented by Mr. Naresh Jalan Managing Director, Mr. Chaitanya Jalan Whole Time Director, Mr. Lalit Khetan, Executive Director and CFO, and Mr. Rajesh Mundhra, Company Secretary and Senior GM Finance. Now, I would like to invite Mr. Lalit Khetan for his opening remarks. Over to you, sir.

Lalit Khetan — Executive Director and Chief Financial Officer

Thank you, Patrit. Good evening, and a very warm welcome to everyone present on the call. We hope and pray for the safety, health and security of you and your loved ones. Along with me, I have Mr. Naresh Jalan, our Managing Director, Mr. Chaitanya Jalan, Whole Time Director, Mr. Rajesh Mundhra, Company Secretory and SGA, our Investor Relation Advisors. Hope, you all have received our investor presentation by now. For those who have not you can view them on the stock exchange and the company website.

We had a strong start for the financial year with revenue increasing by 57.62% in Q1 FY ’23, our Q1 FY’22. The growth was driven by both volume growth, as well as value growth. During the quarter we registered a 221 basis point improvement in capacity to 77.97% as compared to 75.76% in Q1 FY 22.

We believe with the new order wins will keep improving our capacity utilization, which in turn will lead to higher operating leverage and margin expenses. During the quarter we won 4 new contracts totaling to INR388 crore, call from Europe and North America blasting our order book. Further, our products have been well received and are generating a lot of interest in the international market, which has resulted in new business context from North America as well as Europe, and also during the quarter we have received a new witnessed order for differential housing case, which has enabled us to move up the value chain and diversifying our product portfolio.

In line with our capital allocation strategy, we have reduced our debt for the quarter by INR30 crores, whereas on the dividend front the board of directors has declared an interim dividend of INR50 per — INR0.50 per equity share up face value of INR2 each. In terms of industry dynamics commercial vehicles in the United States increased in the June quarter when compared to previous year, truck manufacturers are expected to increase production in second half of the year on the back of pent-up demand for new trucks, as well as fleet replacement.

In domestic market MSEB recovery is on track as the freight rates improve and fleet operators gaming financial strength. Demand in the entire CV segment remains strong, which benefits component suppliers like us. We expect Indian CV market to achieve a good great in the upcoming years. That’s all from my side. We can have now open the floor for Q&A.

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions] We have the first question from the line of Mumuksh Mandlesha from Emkay Global. Please go ahead.

Mumuksh Mandlesha — Emkay Global — Analyst

Thank you so much for the opportunity, and congratulations on the good results, sir. Sir, first question is, can you share the outlook for CVs in North America and Europe markets? And how is the traction with the new customers there? Also led with China Plus One strategy and supply chain constraints what kind of outsourcing opportunities are we witnessing with the customers?

Lalit Khetan — Executive Director and Chief Financial Officer

Right now, both in North America as well as in Europe I think with the chip issue getting sorted out I think there is a good demand, and we are seeing OEMs manufacturing more and more vehicles. And demand for the full year, as projected is going to be robust. And in terms of supply chain constraints, I think, we are seeing lot of supplies moving to India from other places of the world and Indian manufacturers getting benefited with this.

Mumuksh Mandlesha — Emkay Global — Analyst

Thank you. And sir, can you talk about the opportunity of doing Railway segment for both in the fabrication and the Components segment side? And also within industry which are the sub-segments witnessing growth? And can you share the outlook for them?

Lalit Khetan — Executive Director and Chief Financial Officer

In railway company feels that we will be able to 100% grow on what we did last year. And the pipeline and the order book shows that right now the manufacturing of new coaches, as well as wagons have imported and and government allocation for new money into this has become extremely good. So, we feel that demand from railways are going to be very high, and company expects to double in absolute terms, the top line what we did last year and this year.

Mumuksh Mandlesha — Emkay Global — Analyst

And for other Industrial segments. Sir, can you share, which are doing well? And what’s the outlook there?

Lalit Khetan — Executive Director and Chief Financial Officer

Helping there we don’t have any figures in terms of Industrial segments. We cater to as and when requirement comes. So it is extremely difficult to plug a particular Industrial segment. Overall until think demand side, we are seeing good demand in the Industrial segment.

Mumuksh Mandlesha — Emkay Global — Analyst

Right. Thank you so much, sir for the opportunity.

Operator

Thank you, sir. We take the next question from the line of Mr. Abhishek Jain from Dolat Capital. Please go ahead.

Abhishek Jain — Dolat Capital — Analyst

Congress for strong set of numbers, sir. Sir, we have seen 330 days quarter-on-quarter jump in the gross margin despite the geography mix product mix and the higher power cost. So what is the key reason of the gross margin expansion? And will it be sustainable? Hello.

Lalit Khetan — Executive Director and Chief Financial Officer

Yes, Abhishek. The gross margin, I think is we have to sustain. And I think we can expect this levels to remain elevated for the full year.

Abhishek Jain — Dolat Capital — Analyst

Sir, this quarter we got the benefit significant benefit of the change in the inventory this quarter. So, will it be sustainable gross margin in the coming quarters?

Lalit Khetan — Executive Director and Chief Financial Officer

Change in inventory means I could not understand.

Abhishek Jain — Dolat Capital — Analyst

Sir, we have been the benefit of around IINR70 crores because of the change in that in the inventory in the PL.

Lalit Khetan — Executive Director and Chief Financial Officer

Abhishek, that’s not a benefit, that’s the extra production over sales.

Abhishek Jain — Dolat Capital — Analyst

Okay.

Lalit Khetan — Executive Director and Chief Financial Officer

So, that’s overall gross margin has improved in terms of as we have improved our overall gross margin by almost 200 basis point, that’s the why you are seeing this performance.

Abhishek Jain — Dolat Capital — Analyst

Okay. So, sir, what is the reason for this expansion in the gross margin despite this weaker geography mix and the high power cost? Because of — is it because of the better increase in the turnover from the heavy baseline?

Lalit Khetan — Executive Director and Chief Financial Officer

No, Abhishek. I think it is a premix as new order wins is getting converted into regular production. And as we move up the value-add chain I think there is the reason gross margin is improving.

Abhishek Jain — Dolat Capital — Analyst

Okay. And sir, this quarter we have seen improvement in the business from the Europe. So currently rising cost in Europe is a big challenge, so how is the outlook for the export in the Europe for the forging companies?

Lalit Khetan — Executive Director and Chief Financial Officer

I cannot tell about the forging companies, what is the prospect, but I can — as far as RKFL is concerned, we expect this full year our sales to both north America and Europe are going to be robust.

Abhishek Jain — Dolat Capital — Analyst

And what would be the reason for this? Although the truck sales has a slowdown right now in the Europe because of the many trucks are stuck because of this ongoing war in that this Russia and Ukraine. So don’t you see there will be impact on it in your business as well?

Lalit Khetan — Executive Director and Chief Financial Officer

I am not. I don’t know about how the impact is on what it is, what you are trying to make out of it. But as far as RKFL is concerned, we project that our sales to North America and Europe are going to remain robust. The order pipeline, which we have and the customer feedback what we have is right now that we continue to write the value-add chain and continue to outperform the segments over there.

Abhishek Jain — Dolat Capital — Analyst

Sir how much growth, can we expect in that both in the export in FY ’23, sir. Can you give some guidelines?

Lalit Khetan — Executive Director and Chief Financial Officer

No, I cannot give you any guidelines right now. But whatever right now you are seeing it is going to, it is a sustainable performance, and you will continue to see this kind of performance going forward for the entire year.

Abhishek Jain — Dolat Capital — Analyst

Okay. And sir, we have seen our sharp fall in the steel prices in India and globally. So what impact do you see?

Lalit Khetan — Executive Director and Chief Financial Officer

In automotive steel, in India, there has been no correct, price correction yet. As of 1st April, the price remains as such as of today.

Abhishek Jain — Dolat Capital — Analyst

So now the steel prices has gone. I mean the HRC prices has gone down to INR52,000 versus the INR76,000.

Lalit Khetan — Executive Director and Chief Financial Officer

Abhishek. I think, the HRC pricing is not relevant to the automobile, automotive component industry. So, I would not like to comment or I have not be able to comment on HRC products.

Abhishek Jain — Dolat Capital — Analyst

Okay, sir. Sir, just I wanted to understand the impact on the top line and margin side of because of the correction in the steel prices. So what then only happens when there is a correction of steel prices? What would be the impact?

Lalit Khetan — Executive Director and Chief Financial Officer

Steel prices remain unchanged as was is since 1st October 2021.

Abhishek Jain — Dolat Capital — Analyst

Okay. So, going ahead the realization would continue to be very strong in both domestic and that export price.

Lalit Khetan — Executive Director and Chief Financial Officer

It is going to. The current realization is going to sustain.

Abhishek Jain — Dolat Capital — Analyst

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

Operator

Thank you, Mr. Jain. We take the next question from the line of Mr. Mitul Shah from Reliance Securities. Please go ahead, sir.

Mitul Shah — Reliance Securities — Analyst

Good evening, sir. Thank you for taking my question, and congratulations on of additional performance. Sir, I have two question on the business side. Though, you highlighted of the class 8 truck side and overall business performance. What is your view on the LCD segment? And what is our current status in terms of, we were planning to ramp up these segments’ revenue?

Lalit Khetan — Executive Director and Chief Financial Officer

Already LCVs the product mix change which I elaborated in the earlier question is related to LCV itself. The — there has been a huge change in terms of our product mix. And that’s already showing up in terms of our realization, and in terms of our top line. And this is mainly driven by volume growth in LCV segment. And in terms of class 8, I cannot define what class 8 is doing because we are not a significant player only in class 8. So overall in terms of North America I think we are doing extremely well, and we foresee near future to continuously good in North American market.

Mitul Shah — Reliance Securities — Analyst

Sir, how much would be LCV contribution in this quarter, approximately?

Lalit Khetan — Executive Director and Chief Financial Officer

About it should be close to 5% to 6% in the export portfolio.

Mitul Shah — Reliance Securities — Analyst

5% to 6%.

Lalit Khetan — Executive Director and Chief Financial Officer

Roughly.

Mitul Shah — Reliance Securities — Analyst

Yeah. And on the non-auto side though you highlighted about the Railway segment. Sir, oil and gas segment contribution has almost doubled more than doubled in this quarter compared to last year. So, it is very small in terms of overall just 2%. So what is your view? And then can it become a significant?

Lalit Khetan — Executive Director and Chief Financial Officer

Yes. Oil and gas will continue to grow. And I think probably in this quarter you will see further growth from what we have done. We don’t look at things in terms of percentage, but in absolute terms, oil and gas is going to grow further in this quarter. And it will continue to grow for the entire year.

Mitul Shah — Reliance Securities — Analyst

And this entirely in North America again?

Lalit Khetan — Executive Director and Chief Financial Officer

Yes it is entirely North America.

Mitul Shah — Reliance Securities — Analyst

So, here sir, are we growing with the existing client or we are adding any? We have added and your major client that is why it has increased?

Lalit Khetan — Executive Director and Chief Financial Officer

Our endeavor is to add and keep on growing with the existing clients also. So I would not be able to comment on exact clients, but we have already been given doing lot of press releases in terms of addition of new clients, so it can be a factor of both addition of clients as well as growing into particular client also. Existing clients also.

Mitul Shah — Reliance Securities — Analyst

Sir you highlighted in your key initiative EV ESG and all. So can you throw some more light on today what is our presence at present? And what is the?

Lalit Khetan — Executive Director and Chief Financial Officer

We have already clearly mentioned in our presentation EV programs which we are running globally and where we have added. I think in North America, we have added the programs and how many customers, we have both, we have mentioned very clearly. And EV continues to be a very small portion right now of our total business in terms of percentage. But we feel that as the market grows, we will continue to keep on adding EV in terms of our portfolio.

Mitul Shah — Reliance Securities — Analyst

Sir the question is around this presentation only. Sir, in case of the realization export realization has come down, volume growth is there but this mathematically it’s not matching with our export revenue which has reported high growth again. For example export revenue growth is around 12.4% but the volume growth is just 12% and even there is a realization volume decline is 4% realization growth just 12.3%. So how this revenue can be 13.4%.

Lalit Khetan — Executive Director and Chief Financial Officer

Basically revenue growth seems to be slightly higher after doing this calculation of ASP as well as volume. So anything we are missing out on this sir.

Unidentified Speaker —

So here the total export includes also the freight, which I think you have to eliminate wherever the real value. We have to do the adjustment for the freight realized were total export sales. This quarter, the export realization and last quarter export realization as an element of freight realized from the customer and that adjustment has been arrived at, that’s why it will not and definitely match.

Mitul Shah — Reliance Securities — Analyst

Okay. The lastly on this again production in terms of tonnage, as well as sale this time also, it is 36.4% is a production whereas sales is 30.5%. So this as a percentage like waste, wastage has come down. It seems like the final output as a percentage of the production tonnage seem to be slightly higher this quarter compared to last year, as well as the previous quarter. So, any change because of the product mix or any process change or what is or is there anything related to inventory?

Lalit Khetan — Executive Director and Chief Financial Officer

Certainly, it is more to do with inventory only. We can see that there is increase in inventory.

Mitul Shah — Reliance Securities — Analyst

Okay. So no major change in terms of process of where wastage is coming down or anything.

Lalit Khetan — Executive Director and Chief Financial Officer

There may be marginal numbers on that side, but major is from the inventory side only.

Mitul Shah — Reliance Securities — Analyst

Sir lastly, just thought process. In case a U.S. enters a recession next year if at all. So based on your past experience of past one or two down cycle then all these orders of the class 8 trucks and all those. How this cancellation or as a percentage how much value experience cancellation goes from the peak level of orders?

Lalit Khetan — Executive Director and Chief Financial Officer

I think, I think we don’t work with in case in our mind. So I would not be able to tell you what exactly will happen. But as far as projections and other feedback we have from the customer we remain bullish on the current output and offtake by the customers. So we don’t foresee any challenges right now for the next three quarters. And we will see as the time arise. I think right now, in case cannot be built in our business plan.

Mitul Shah — Reliance Securities — Analyst

And sir, based on past experience you must have observed whenever any such thing happens so what has been this percentage of as a cancellation?

Lalit Khetan — Executive Director and Chief Financial Officer

No, I would not like. I will not be able to comment on this.

Mitul Shah — Reliance Securities — Analyst

Okay, sir. Thanks.

Operator

Thank you. We take the next question from the line of Mr. Saket Kapoor from Kapoor Company. Please go ahead, sir.

Saket Kapoor — Kapoor Company — Analyst

Thank you for this opportunity. Sir, firstly, sir what are the key reasons for realization being up for export? Is it be currency part of the product mix, particularly that gives a difference higher realization for the exports?

Lalit Khetan — Executive Director and Chief Financial Officer

It is both. It is a mix of currency, as well as products change. As we are our offtake in oil and gas has improved the realization is better in oil and gas. And as well as light vehicle has contributed higher sales in North American market. And new and new customers entry at better pricing in Europe market also has. It’s a cumulative effect of both currency as well as better realization from the customer itself.

Saket Kapoor — Kapoor Company — Analyst

And sir, you mentioned about order intake of INR388 crore you release. So what is the current order book, sir. As on Q1. And what is the export and domestic mix that if you could throw some more light, we don’t have any kind of order book. Right now we don’t maintain that. Or new order means is basically what Lalit has mentioned, it is basically an estimated annual volume offtake which customer gives us, and based on that, we start the development process. Basically based on that Lalit has given you are INR388 crores of order win. But we don’t have because automotive schedules work on basically monthly schedules. So, we don’t have that kind of safety that this is my order book or we do not have an approximate evolution to that. So, sir. INR3.88 crore order book this is for executable period. When it is going to get executed?

Unidentified Speaker —

It is samples productions have are going to start. Executive period period is going to start from next year and it is for some contracts are 3 years of some contracts are 5 years. And this is what is our annualized volume, estimated annualized volume.

Saket Kapoor — Kapoor Company — Analyst

Sir, this order execution will start FY ’23?

Unidentified Speaker —

Yes. No, we are already in FY ’23.

Saket Kapoor — Kapoor Company — Analyst

For FY ’24 sorry.

Unidentified Speaker —

FY ’24.

Saket Kapoor — Kapoor Company — Analyst

’24. Okay. So, sir, this is only an indication that you have given to us. Whatever business we are going to do over this period of time that is different than what this order is giving.

Unidentified Speaker —

Estimated visibility for next year from the new customers.

Saket Kapoor — Kapoor Company — Analyst

Okay, sir. What is the mix. Is it totally export part or?

Lalit Khetan — Executive Director and Chief Financial Officer

Entirely export this entirely export.

Saket Kapoor — Kapoor Company — Analyst

Okay. Sir, in your opening remarks sir you were answering one question that the railway, top line is going to double from what you did last year. This is what you indicated?

Lalit Khetan — Executive Director and Chief Financial Officer

Yes.

Saket Kapoor — Kapoor Company — Analyst

The railway business?

Lalit Khetan — Executive Director and Chief Financial Officer

Yes.

Saket Kapoor — Kapoor Company — Analyst

Okay. As it is 1% I think in your presentation it was mentioned. So, what was the absolute number, sir, last year?

Lalit Khetan — Executive Director and Chief Financial Officer

Last year number for the railway you are looking at correct.

Saket Kapoor — Kapoor Company — Analyst

Yes, revenue numbers.

Lalit Khetan — Executive Director and Chief Financial Officer

I think last year number was somewhat in the range of INR50 crore.

Saket Kapoor — Kapoor Company — Analyst

INR50 crore. Okay. Sir, can you give the net debt number sir for this quarter, sir?

Lalit Khetan — Executive Director and Chief Financial Officer

This quarter net debt number is around INR1,300 crore.

Saket Kapoor — Kapoor Company — Analyst

And sir, the split between the same? What is the working capital? What is the long-term? And the cost of borrowing?

Lalit Khetan — Executive Director and Chief Financial Officer

See the total borrowing is INR1,300 core is a mix of because. See if you look at the last quarter number it was around INR990 crore of the long-term in addition to short-term. Long-term debt has gone by INR30 crore, and short-term debt will remain at the same level almost. And the cost of borrowing has certainyly marginally gone up in this quarter by 40-50 basis point. The full impact has not come in this quarter for that.

Saket Kapoor — Kapoor Company — Analyst

But blended cost of fund?

Lalit Khetan — Executive Director and Chief Financial Officer

Blended cost of fund, I think it is near to 7%.

Saket Kapoor — Kapoor Company — Analyst

Is at 7%. And with rating post this rating interested rate hike, so we are not expecting any lowering now. Whatever the hike will happen just moderate.

Lalit Khetan — Executive Director and Chief Financial Officer

Yeah, interest rate is not going to go down right now.

Saket Kapoor — Kapoor Company — Analyst

And as a percentage.

Lalit Khetan — Executive Director and Chief Financial Officer

Whatever we can pay whatever we can pay for that will have an impact on the borrowing cost.

Saket Kapoor — Kapoor Company — Analyst

What would be the targeted levels sir, for this INR990 crores for FY’23? See what we have clearly said in our capital allocation is straightly our major amount of earning will go towards repayment of debt, and we are targeting ourselves to become net debt free in next 3 year time. So, we are reiterating that and we are working on that. And you can see quarter-on-quarter reduction in debt level. So full year number, I think still we should wait for one more quarter. So to have a full-year number on the debt side.

Unidentified Speaker —

And basically we can be what we, Lalit wants to say, we from operations we want to be debt free in next 3 years’ time. There is no, he is not building in any capital raising to be debt free in next 3 year.

Saket Kapoor — Kapoor Company — Analyst

Okay, sir. Thanks. And there also seasonality factor as we have built up inventory this was evident last June. I think the last June COVID factor. So is there a seasonality factor that plays out for us in our business or it is a linear process.

Lalit Khetan — Executive Director and Chief Financial Officer

It is ongoing process. And we don’t play basically or inventory or anything it is ongoing process. It’s in at first-in first-out basis.

Saket Kapoor — Kapoor Company — Analyst

Okay. So what this inventory buildup is indicating?

Lalit Khetan — Executive Director and Chief Financial Officer

The inventory buildup is not. It may not be only at the current plant level it maybe at the warehouse in the at the customer end, which is our RKFL. Let’s see, so I would not be able to exactly say where the inventory right now. So there can be mix of planned inventory as well as inventory lying at the customer end.

Saket Kapoor — Kapoor Company — Analyst

And lastly, sir on the raw material basket. Sir what constitutes the major raw material? And how are we sourcing done sir?

Lalit Khetan — Executive Director and Chief Financial Officer

No, I think enrollment raw material prices.

Saket Kapoor — Kapoor Company — Analyst

Basket sir. Yeah.

Lalit Khetan — Executive Director and Chief Financial Officer

I would not be able to comment on what is going to be market in terms of steel pricing. But we feel that steel, for us, steel pricing would remain stable.

Saket Kapoor — Kapoor Company — Analyst

The constitution of the raw material basket. What continues? HRC? What is?

Lalit Khetan — Executive Director and Chief Financial Officer

No, we did long products basically forging quality steel.

Saket Kapoor — Kapoor Company — Analyst

And everything is sourced domestically only sir. Will it depend upon the raw material?

Lalit Khetan — Executive Director and Chief Financial Officer

Yes. No, we 100% source raw materials domestically.

Saket Kapoor — Kapoor Company — Analyst

And number of players from whom we are sourcing. How many players.

Lalit Khetan — Executive Director and Chief Financial Officer

I think we will not be able to comment on this.

Saket Kapoor — Kapoor Company — Analyst

Okay, sir. As you explained to us in your opening remark and also reiterated the fact about debt reduction and continued good numbers or maintaining these number. So what are the key risks to your projections. Business plan current year, so what are the key risks god forbid that may play, may not play out going forward.

Lalit Khetan — Executive Director and Chief Financial Officer

Basically god forbid if we exist, organization exist performance will come. If we don’t exist organization does not exist results will also not be there.

Saket Kapoor — Kapoor Company — Analyst

Business environment.

Lalit Khetan — Executive Director and Chief Financial Officer

We feel that the business environment is extremely conducive. And demand will remain robust. That’s what we have from our customer end. And that we can ensure the investors that that is what is there right now in pipeline feedback we have.

Saket Kapoor — Kapoor Company — Analyst

Correct, sir. And for the capex side. How much goes into the maintenance capex currently? And any further capacity augmentation we are looking, sir?

Lalit Khetan — Executive Director and Chief Financial Officer

No, right now, if you see our full year presentation last year. We have already outlined our capital allocation policy and we stick to that. Based on that whatever cash flow permits, we will go ahead and do capex. We continue to augment capacity, create capacity and grow the company. But everything will depend how the cash flow permits. And based on cash flow permissions post debt reduction, post in paying dividends to investors whatever cash flow is there we will plow back the cash to the company to augment capacity.

Saket Kapoor — Kapoor Company — Analyst

And what is the maintenance capex number, sir? Any numbers absolute number you can share?

Lalit Khetan — Executive Director and Chief Financial Officer

It should be around INR70 crores to INR80 crores maintenance capex.

Saket Kapoor — Kapoor Company — Analyst

INR70 crores to INR80 crores. And sir, with this reduction of debt and overall quarter which from the cash flow you will be reducing. As a percentage of sales, how should we look at this, this finance cost number also? Last year it was, absolute number was INR153 crores. So for this.

Lalit Khetan — Executive Director and Chief Financial Officer

Last year the number was INR93 crore on the finance cost, right.

Saket Kapoor — Kapoor Company — Analyst

Sir, consolidated number so for.

Pratit Vajani — ICICI Securities — Analyst

See if you look at the consolidated number the last year number was sorry give me the number consolidated number let me get on the consolidated. INR96 crore was the last year’s consolidated number.

Saket Kapoor — Kapoor Company — Analyst

Yes, sir. Right. Understood.

Lalit Khetan — Executive Director and Chief Financial Officer

And this is year we have come with INR26 crore in the Q1. And it looks stage to be remain it’s the current label-only view. And even if there will be an increase in interest cost we will be able to save that by paying reducing our debt. So, this will not go up from this level. I think we will be somewhere in the range of INR100 crores to INR105 crores for the full year.

Saket Kapoor — Kapoor Company — Analyst

Thank you so much, sir, for all the elaborate answer. And all the best.

Operator

Thank you. We take the next question is from the line of Shubhankar Sharma from Motilal Oswal Private Equity. Please go ahead, sir. Mr. Sharma your line is in talk mode, sir. Please go ahead with your question. Mr. Sharma. Sir, we do not have any response from this line. Moving to the next question. We take the next question from the line of Smita Mohta from Kredent Infoedge. Please go ahead.

Smita Mohta — Kredent Infoedge — Analyst

I wanted to ask one question that is, as the management is saying that the financials are supposed to remain the same for the next year that they’re expecting, which means.

Lalit Khetan — Executive Director and Chief Financial Officer

Ma’am. Can you. Ma’am, you are not audible ma’am.

Smita Mohta — Kredent Infoedge — Analyst

Okay. Am I audible now.

Operator

Smith ma’am your voice is very low. Could you be a little louder.

Smita Mohta — Kredent Infoedge — Analyst

Yeah. Am I audible now ma’am.

Operator

Better now. Yeah.

Smita Mohta — Kredent Infoedge — Analyst

Okay. So I was asking as the management is saying that the, the financials next year is expected to be similar to this year’s result, if may say so. So which means that the revenue would be rising at near around 67% and the margins at 22%. Is that what the management is meaning? I wanted to confirm the same.

Lalit Khetan — Executive Director and Chief Financial Officer

I’m not able to understand the question, ma’am.

Smita Mohta — Kredent Infoedge — Analyst

Sir. The question is for the full year FY ’23. Right. So if, if you are not suggesting that the financial are expected to be seen, so should I assume that as the revenue for the full year has risen, it will be in the similar lines for the next year also?

Lalit Khetan — Executive Director and Chief Financial Officer

Ma’am. I’m not commenting on FY ’20. FY ’23 what we comment right now is that next 3 quarters are going to be on the expected lines. And we should outperform the expectations. And what results have come out today is sustainable, and it will continue to grow in the fashion throughout the year. In terms of FY ’24 we feel that market as today is extremely good. And if this continues, company is going to grow further from where we end FY ’23 at.

Smita Mohta — Kredent Infoedge — Analyst

Great. So what I was suggesting sir, is, that if we look at the value by revenue it has risen by 67%. So are you commenting that the next 3 quarters also, your revenue would be rising in the similar terms?

Lalit Khetan — Executive Director and Chief Financial Officer

In terms of percentage I’m not telling anything. In terms of absolute number, yes, we will be able to sustain the current revenue mix, as well as, the margins for the next 3 quarters.

Smita Mohta — Kredent Infoedge — Analyst

Okay. Could you bifurcate sir the class 8 truck sales order that you received from your revenue? Like, what is the percentage of class 8 truck orders?

Lalit Khetan — Executive Director and Chief Financial Officer

No. We don’t have any break-up in terms of class 8.

Smita Mohta — Kredent Infoedge — Analyst

Okay. And margins for the full year. Is it expected to be at near around 22%?

Lalit Khetan — Executive Director and Chief Financial Officer

We will be able to sustain the current levels of margin for the entire year.

Smita Mohta — Kredent Infoedge — Analyst

Okay, thanks a lot, sir.

Operator

Thank you, ma’am. [Operator Instructions] We take the next question from the line of Mr. Kushal from Motilal Oswal. Please go ahead, sir.

Unidentified Participant — — Analyst

Sir, regarding, I wanted to the understand regarding the realization. When we say that we expect the current realization to sustain. Then maybe how we are expecting the railway orders to improve to 2 times. Is it because of the orders flow from the government or we are increasing the penetration in the segment? And the other thing was 5 which can be the most contributing to the growth over 3 to 5 years.

Lalit Khetan — Executive Director and Chief Financial Officer

In terms of railways, with the new fabrication facility being commissioned in the previous year we have started getting good orders from railways. And that is showing up in our balance sheet in terms of growth in railways. And I think we will continue to grow in railways in the significant way with the current business environment in railways. So I think for next 2 to 3 years, we can comfortably say that railway is going to be doing extremely well in terms of our overall portfolio. In terms of 3 to 4 years’ growth plan, I cannot say what is going to happen next 3, 4 years. I would be able to comment on the next 3 quarters and we expect if the economy remains as such what it is today we will do extremely well in FY ’24 also.

Unidentified Participant — — Analyst

But, let’s forget about the external factors or internal factors.

Lalit Khetan — Executive Director and Chief Financial Officer

Can you be little loud please. We are unable to hear you. Either from the handset or.

Unidentified Participant — — Analyst

Sir, I’m not telling about the external factors but internal factors where you are considering the next leg of growth to come over 3 to 5 years like.

Lalit Khetan — Executive Director and Chief Financial Officer

No, internal both in railways, commercial vehicle and we have entered the light vehicle in Indian segment also. And we are trying to penetrate in the passenger vehicle in a significant. Right now passenger vehicle is insignificant for us. We are trying to grow our passenger vehicle segment, but it is still absolutely very nascent to for us to comment on a significant portion in passenger vehicle. And sector has started doing extreme. So overall, we see the domestic market will outperform in next 3 to 4 years time.

Unidentified Participant — — Analyst

Sir, and the realization sustainable — sustainability and how we are expecting that?

Lalit Khetan — Executive Director and Chief Financial Officer

With the current steel pricing, we are not expecting any price has to go up or go down. We expect the realization to sustain at the current levels for next 3 quarters at least.

Unidentified Participant — — Analyst

Sure, sir. Thank you.

Operator

Thank you. We take the next question from the line of Harmit Singh. He is an Individual Investor. Please go ahead, sir. Mr. Harmit Singh your line is in talk mode. Sir, please go ahead with your questions. Hello, Mr. Singh. Due to no response we move onto the next question. The next question is from the line of Taral Shah from Kitara Capital. Please go ahead.

Taral Shah — Kitara Capital — Analyst

Yeah, this is. Hello, am I audible.

Operator

Yes, sir.

Taral Shah — Kitara Capital — Analyst

Hello.

Operator

Yes, sir. Your audible. Please go ahead.

Taral Shah — Kitara Capital — Analyst

So this is your export order book. So the large 5, 6 quarters your volumes have remained at around 10,000 tonnes per quarter. So when we say there is a strong demand from export market so why these numbers are not increasing?

Lalit Khetan — Executive Director and Chief Financial Officer

We are unable to hear the question even.

Taral Shah — Kitara Capital — Analyst

See, for last 5, 6 quarters your export volumes has remained around 10,000 per quarter, right? Hello.

Lalit Khetan — Executive Director and Chief Financial Officer

Hello.

Taral Shah — Kitara Capital — Analyst

Hello, am I audible.

Lalit Khetan — Executive Director and Chief Financial Officer

Yes, you are audible right now.

Taral Shah — Kitara Capital — Analyst

So, what I am asking is for.

Lalit Khetan — Executive Director and Chief Financial Officer

Hello.

Operator

Sir, Mr. Taral’s line just got dropped. We are trying to reach him back. We take the next question from the line of Mr. Dipen from DS investments. Please go ahead, sir.

Unidentified Participant — — Analyst

Yeah, thank you for the opportunity. I had a couple of questions. Firstly on the fund raise side. We were expecting some announcements from the company about the fundraise either by way of bonds or equity. So if you could just throw some light on what should we expect out of that? And the second question is.

Lalit Khetan — Executive Director and Chief Financial Officer

We have dropped our fund raising plan right now with the current performance of the stock we feel. And the expected business volume for next 3 years, we don’t expect any fundraising at the current moment.

Taral Shah — Kitara Capital — Analyst

Okay. Because I think yesterday you had intimated to the stock exchange, you were going to discuss about fundraising.

Lalit Khetan — Executive Director and Chief Financial Officer

Yes, we have given a press release today. And in that there is no resolution in terms of fundraising.

Taral Shah — Kitara Capital — Analyst

Okay. And the second thing you have partly answered about the current year’s growth rate. In the last couple of calls we have heard you telling about 20%, 25% growth in the current year. The first quarter has been way beyond that. So anything further qualitative you can tell us what we should expect for the current year? Thank you very much.

Lalit Khetan — Executive Director and Chief Financial Officer

And we have already elaborated that the current performance here to sustain. And we will be able to outperform going into next 3 quarters also.

Unidentified Participant — — Analyst

Sure. Thank you very much. And all the best.

Operator

Thank you. And we have Mr. Taral Shah connected in the question queue. Sir. You may go ahead Mr. Shah.

Taral Shah — Kitara Capital — Analyst

Got disconnected. So, my question was regarding export volumes. So for last 5, 6 quarters our volumes have remained a 10,000 tonnes per quarter. So, when you say there is a strong order from the export market then why our numbers have remained in this level?

Lalit Khetan — Executive Director and Chief Financial Officer

I think the product mix keeps on changing. The tonnage becomes insignificant. In terms of revenue overall revenue you will need to see vis-a-vis what is the market condition in the particular geography. While we continue to say that demand is robust I do not say about what is happening in the country in terms of economy. I can say, what we are doing in terms of our sustained growth in that geography. So we are not talking about the entire country or as an economy or port sector. We say that we continue to maintain sustainable growth in that geography and our demand is robust. So my pipeline is there. And product mix in terms of tonnage LCV parts are low weighs, oil and gas there are low weight parts, so volumes in that are going up, that may not add volume. And other some sectors may not be performing, so their volumes may go down. In terms of absolute number in rupees to see what is the growth.

Taral Shah — Kitara Capital — Analyst

So for over the next long-term, I mean 2, 3 years export can contribute how much?

Lalit Khetan — Executive Director and Chief Financial Officer

I could not understand you.

Taral Shah — Kitara Capital — Analyst

Sir, for next 2, 3 years currently the export is contributing around 30% or so of revenue, right. So how much this can increase the level?

Lalit Khetan — Executive Director and Chief Financial Officer

No, we will. The way the company is growing right now we can safely say that we will be able to maintain this kind of premix. Maybe prior 3% or 4% up and down, but 30% to 40% is going to be the range of exports to the top line.

Taral Shah — Kitara Capital — Analyst

Okay. So the moment your export contribution increase from current level so working capital days will increase or reduce?

Lalit Khetan — Executive Director and Chief Financial Officer

No. Working capital days in exports are higher. We are not doing any bill discounting on anything, so working capital days in terms of exports are higher. And that has been mentioned in last several calls, we have had that the export debtors have at least 110 days to 125 days cycle in the minimum. And it can go up 150 days also.

Taral Shah — Kitara Capital — Analyst

Okay. it can go up to 150 days. So there is no scope for improvement from current level right?

Lalit Khetan — Executive Director and Chief Financial Officer

No, in export debtors, we don’t see any improvement in terms of debtor days in exports. Unless we start doing factoring or discounting of the business, which is not in our current plans right now.

Taral Shah — Kitara Capital — Analyst

Okay. Thanks. That’s it from me.

Operator

Thank you, sir. We take the next question from the line of Sangeeta Purushottam from Cogito. Please go ahead.

Sangeeta Purushottam — Cogito Advisors — Analyst

Hi, good afternoon and thank you for taking my question. Sir, I just wanted to understand your capital allocation policy a little bit. Now what you said is that whatever cash flow is generated will obviously go partly to the will go partly to pay dividend partly the debt reduction. You will have some working capital requirement from there and the balancing factor will be capex. Had I understood you right?

Lalit Khetan — Executive Director and Chief Financial Officer

Ma’am we have said. As you can see my presentations for last full year we have mentioned the complete capital allocation policy. We have mentioned that part of the cash flow is going to be paid for debt and working capital and then dividend payout and whatever after dividend post the dividend payout is remains only plots in terms of augmenting new capacity or in the plant.

Sangeeta Purushottam — Cogito Advisors — Analyst

Right. Sir my question is that if you are looking at the outlook which is quite positive.

Lalit Khetan — Executive Director and Chief Financial Officer

Your voice breaking ma’am.

Sangeeta Purushottam — Cogito Advisors — Analyst

Can you hear me?

Operator

Ma’am your voice is breaking. I would request you to speak a little away from the mike. Little away from the mic.

Sangeeta Purushottam — Cogito Advisors — Analyst

Hello.

Operator

Yes, it’s audible. Now please go ahead.

Sangeeta Purushottam — Cogito Advisors — Analyst

Can you hear me.

Operator

Yes, ma’am. Please go ahead.

Sangeeta Purushottam — Cogito Advisors — Analyst

Hello.

Operator

Ma’am you are audible.

Lalit Khetan — Executive Director and Chief Financial Officer

Yes. We can hear you.

Operator

Audible. Please go ahead.

Sangeeta Purushottam — Cogito Advisors — Analyst

Hello. Can you hear me?

Operator

Ma’am, you are audible. You may go ahead please.

Sangeeta Purushottam — Cogito Advisors — Analyst

Okay. So, sir my question is, if that is the case looking at the business outlook which looks quite promising. Not just for FY ’23 but according to you for the next 2, 3 years as well will you have enough funds available to fund the capex requirement or won’t you need to borrow fund to do it then therefore debt reduction may not be that appropriate if you’re looking at strong opportunity.

Lalit Khetan — Executive Director and Chief Financial Officer

Ma’am, with the current business plan and scenario what we are working on. We are working on basically debt reduction for next 3 years, and that’s the policy, which the board has evolved in. And I and whatever cash flow is less I think that should be sufficient enough with the projections. We are working with our marketing team to funnel our growth for next 3 years.

Sangeeta Purushottam — Cogito Advisors — Analyst

Okay, if I might just add ask another questions in related to this what kind of capacity expansion are you planning over the next 3 years?

Lalit Khetan — Executive Director and Chief Financial Officer

Ma’am, we may not. We, in terms of tonnage I think we are not looking at augmenting a huge tonnage capacity in terms of tonnage. We are looking at adding more capacity in augmenting automation and value-add in the products. So that will improve the bottom lines more significantly than the top line.

Sangeeta Purushottam — Cogito Advisors — Analyst

Right. Okay. Understood. Alright, thank you so much.

Operator

Thank you very much ma’am. We take the next question is from the line of Harmit Singh. Please go ahead, sir. Mr. Harmit you may go ahead with your question sir. Your line is in talk mode. Mr. Harmit can you hear me, sir.

Unidentified Speaker —

Yes.

Operator

Sir, please go ahead with your question.

Lalit Khetan — Executive Director and Chief Financial Officer

No. Mr. Harmit, you need to be quite louder. You are very, very low. Your voice is very low.

Operator

Hello, Mr. Harmit.

Lalit Khetan — Executive Director and Chief Financial Officer

Not at all. No, I’m not able to listen at all.

Operator

Sir, just give me one. Mr. Harmit. Hello, Mr. Harmit.

Lalit Khetan — Executive Director and Chief Financial Officer

I think can we move to the next question please.

Operator

Sure sir. We take the next question from the line of Mr. Mitul Shah from Reliance Securities. Please go ahead, sir.

Mitul Shah — Reliance Securities — Analyst

Sir, thank you for giving opportunity again. Sir, just as you mentioned that there the requirement of the tonnage capacity addition. Sir, when I look at your presentation you’re ring rolling and forging has been always in the range of 100% to 115% even 125% of utilization. Sir, just want to understand up to what maximum utilization can we go for these three segments, ring rolling, forging and press in terms of 100% report maintain possible?

Lalit Khetan — Executive Director and Chief Financial Officer

No, I think when we say that we are not in terms of adding capacity we also have said that we are working in terms of automation and value-add. So I think that is what is the target of the company for next 3 years. And in terms of adding capacity in ring rolling or in press I think it’s a marketing call. We right now do not foresee any reason to augment fresh capacities in these places. So we will stick to what we have right now. And in case we change our policy or in case there is a new thought process in marketing we will come back to the investors and inform them.

Mitul Shah — Reliance Securities — Analyst

Yes, sir. But in this for example, ring rolling last year same quarter we went up to 125% utilization. So what is maximum possible utilization level in case if demand is high then can we go up to 15%?

Lalit Khetan — Executive Director and Chief Financial Officer

No. I think it all depends on the product mix, Mitul. I think it does not depend. If we get all the products on. Whenever we declare capacity is at the mean level it’s not at the top level. So it depends on all the quantity comes at the topmost weight level it may go up 130%, 135% also. But it all depends on the product mix we have right now. And we do not have any visibility in terms, it is on a monthly basis. So we cannot change that or we cannot do anything about that.

Mitul Shah — Reliance Securities — Analyst

Sir, what about machining capacity right now? Utilization?

Lalit Khetan — Executive Director and Chief Financial Officer

I think right now machining capacity is 100% is being utilized.

Mitul Shah — Reliance Securities — Analyst

So there any ramp up or capacity addition required?

Lalit Khetan — Executive Director and Chief Financial Officer

That is what I said. We will continue to add capacity in value-add. So, value-add means it is machining or something related to machining only we will keep on adding capacity.

Mitul Shah — Reliance Securities — Analyst

And sir, in your presentation that you mentioned about key focus area. And along with the EV and niche products. We stated we will focus more on the high margin segments now. So, which are the higher margin segments or products or can you highlight just two three?

Lalit Khetan — Executive Director and Chief Financial Officer

No, right now with key initiatives is that we are looking at getting into more assemblies right now all the components, which we are making. And also EV products which are coming into their high margins, as well as, oil and gas is high margin.

Mitul Shah — Reliance Securities — Analyst

Sir, any plan to come out with the more sub-assembly type of thing rather than only components?

Lalit Khetan — Executive Director and Chief Financial Officer

We have already started into sub-assemblies and full complete assemblies. So the company always looks at opportunities to improve product mix. So that is ongoing process, which we always keep on doing.

Mitul Shah — Reliance Securities — Analyst

That must be a high margin relatively right. Yes. Thank you, sir. And all the best.

Operator

Thank you, sir. Sir, we have Mr. Harmit Siingh. Please go ahead, sir with the question.

Unidentified Speaker —

In which type of product you are continuing.

Lalit Khetan — Executive Director and Chief Financial Officer

I think, I need to take up the line. There is some problem with the line with.

Unidentified Speaker —

With Harmit Singh I think there is a problem. Operator can you check it and then connect it, please.

Operator

Yeah, sir. I could hear him. Mr. Harmit.

Unidentified Participant — — Analyst

Which type of product you catering in EV sectors?

Unidentified Speaker —

Mr. Harmit, we are not able to hear you. You are not audible.

Operator

Mr. Harmit I would request if you could join back with us with any other alternate device. Because your line is not audible sir.

Unidentified Speaker —

Which type of policy you are bringing in EV sector.

Operator

Sir, you are breaking up, sir.

Unidentified Speaker —

I think he is maybe using.

Operator

Sir, we take the last question from the line of Mr. Saket Kapoor. This is a follow-up question. Mr. Kapoor, you may go ahead.

Saket Kapoor — Kapoor Company — Analyst

Yeah. Thank you. What Mr. Harmit was trying to say was the product category in the EV sector.

Lalit Khetan — Executive Director and Chief Financial Officer

I think, product category. We are, we cannot comment right now. Because EV is a very, very confidential portfolio for us. So we would not like to comment on what product portfolio we are going at in EV right now.

Saket Kapoor — Kapoor Company — Analyst

And sir, although, the total order book mix or the visibility which you have, what would be the contribution from EV? It will be a very small portion only, sir?

Lalit Khetan — Executive Director and Chief Financial Officer

No, I think in the last full year presentation we have already given our growth plans in EV. I think we are looking at close to around in terms of percentage if you look. I don’t have it right now in front of.

Unidentified Speaker —

3.5% for the full year FY ’23 for the turnover we are looking in the EV and 6% in FY ’24.

Saket Kapoor — Kapoor Company — Analyst

Sir, about the other income part if occurrence happens in the first quarter, what is the nature of this other income.

Unidentified Speaker —

It may be some insurance claim or that maybe small claims.

Saket Kapoor — Kapoor Company — Analyst

Okay. And sir, about the earlier participant did spoke about the utilization levels between the products, which is ring rolling, forging and press. Why on the press side it remains in this viscidity of say 50% to 65% only, if you could explain? Is it. It depends totally on the product mix that is correct. But nameplate capacity it is only for the new vehicle purposes only?

Lalit Khetan — Executive Director and Chief Financial Officer

It is a numerical purposes only. And it is based on the product mix. But you will be able to see in continued quarters improvement in press utilization also.

Saket Kapoor — Kapoor Company — Analyst

Right. Sir. And for the forex impact. Since the rupee has depreciated although the depreciation of rupee affects our earning, sir?

Lalit Khetan — Executive Director and Chief Financial Officer

I think we have already couple of times, we have said this in our call net for rupee we do not take a call on the forex side basically our policy and we follow with the customer that every quarter the forex is plus-minus 5% passed on to the customer, whatever may be. It may be appreciation or depreciation is passed on to the customer.

Saket Kapoor — Kapoor Company — Analyst

Sir come again sir. I missed your last line somehow. The forex is?

Lalit Khetan — Executive Director and Chief Financial Officer

Forex is passed on every quarter to the customer plus-minus 5%. So we do not take any call on the forex side.

Saket Kapoor — Kapoor Company — Analyst

Okay. So, and there is no liability also unhedged part generally. Because everything because you are sourcing everything domestically so that does not play out for us.

Lalit Khetan — Executive Director and Chief Financial Officer

Yeah, there is no liability in terms of hedging.

Saket Kapoor — Kapoor Company — Analyst

Sir, when we look at your last year number for March say for the full year March ’22. And the first quarter, the first quarter was do the first part of June was badly affected by the COVID. So it is a non-comparable quarter? June ’21?

Lalit Khetan — Executive Director and Chief Financial Officer

Domestic market was bad due to COVID on that time. Export was could. Because India was impacted by the second wave of COVID. So that helps us having some impact on the sales under domestic side in last year.

Saket Kapoor — Kapoor Company — Analyst

Because sir I asked this question is because since you are saying, you are exceeding towards that for this quarter, the revenue and the bottom line, which we have maintained that’s going to get. It’s going to be maintained, but when we look at the your numbers for the last year, it has improved sequentially on a larger trajectory. For posting a INR253 crore PBT number these second, third, and fourth quarter was where indiscriminately very high. But if we even extrapolate our annualized this first quarter number the growth numbers visa viz the March number are not looking very high. So, just wanted to understand how did linearity is going to play out. We would have some big quarter during this three coming quarters?

Lalit Khetan — Executive Director and Chief Financial Officer

We will continue to grow quarter-on-quarter.

Saket Kapoor — Kapoor Company — Analyst

Correct.

Lalit Khetan — Executive Director and Chief Financial Officer

What I have said that we will. To the question, which was asked whether we will be able to sustain. Yes, we will be able to sustain what we have done in this quarter. But I have never said that we will not grow from here. We will continue to grow. Company projects and company that could we continue to grow quarter-on-quarter and with the current order book and plans we are very confident to achieve higher growth for the full year.

Saket Kapoor — Kapoor Company — Analyst

Correct, sir. Sir, when we read your rating analysis there in this high customer concentration part is mentioned. Wherein in TATA Motors as you mentioned.

Lalit Khetan — Executive Director and Chief Financial Officer

I would not like to comment on any particular customer on or any.

Saket Kapoor — Kapoor Company — Analyst

It is very well documented in the rating that I was referring. If you allow I may refer it or if not then that’s all for me.

Lalit Khetan — Executive Director and Chief Financial Officer

No, you can refer it. But we will not. I will not be able to answer any questions related to that.

Saket Kapoor — Kapoor Company — Analyst

Because they have mentioned it that they accounted for your revenue of 25% and 27% for FY ’21. So I was just looking with this improved revenue which you are guiding to us this percentage this division factor will continue or Tata Motors business will also be equivalent. You will have the same share of price. But since you don’t want to comment on our customer.

Lalit Khetan — Executive Director and Chief Financial Officer

No, I would not be able to comment on any brokerage report or report you are referring to. And.

Saket Kapoor — Kapoor Company — Analyst

I’m referring to India rating report.

Lalit Khetan — Executive Director and Chief Financial Officer

No any anything on that sort. And I would not be able to comment on any particular customer.

Saket Kapoor — Kapoor Company — Analyst

Okay. Thank you for all the elaborated answer, sir. And all the best to the team, sir.

Operator

Thank you, Mr. Kapoor. We take the last question from the line of Karishma Makhija from Motilal Oswal. Please go ahead ma’am.

Karishma Makhija — Motilal Oswal — Analyst

Yeah. Hello sir. Sir, the gross margin from Q1 ’22 to ’23 there has been a drop a close to 6%. Is the main reason driving this drop? And two on the EV segment, which is the sub-segment in EV so from an export perspective they have seen that there is a significant growth in the coming quarters. Is it LCV is it tractors or trucks or what is your sir?

Lalit Khetan — Executive Director and Chief Financial Officer

No in EV we are right now working with three-wheeler, four-wheeler and small truck market. But I cannot comment because it’s very extremely confidential. So I would not more elaborate on this portfolio. And in terms of gross margin I think you are seeing it vis-a-vis the last FY ’21 Q1 in that the domestic market due to second wave of COVID was down and that’s the reason export as a percentage of sale was more than 50%. So that’s the reason gross margins in export realizations are better and that’s the reason in absolute term realization went up or gross margins went up. But if you see compare it with the last quarter of FY ’22, you will be, see we have grown in gross margin on Q-on-Q basis.

Karishma Makhija — Motilal Oswal — Analyst

Sir, you are saying that the export.

Lalit Khetan — Executive Director and Chief Financial Officer

Hello.

Karishma Makhija — Motilal Oswal — Analyst

Yeah. Sir, you’re seeing on Q1 FY ’22 the exports were higher versus domestic given the second wave of COVID. And.

Lalit Khetan — Executive Director and Chief Financial Officer

Q1 ’21.

Unidentified Speaker —

Q1 ’22.

Karishma Makhija — Motilal Oswal — Analyst

Gross margin was around 60.5%.

Lalit Khetan — Executive Director and Chief Financial Officer

Yeah. Q1 ’22 our gross margin was 60% because in exports you have a value of freight also in the realization. That’s why raw material cost goes down that’s why operating margin looks higher. And as in the entire mix that export was higher than the domestic and in the current quarter it’s reverse.

Karishma Makhija — Motilal Oswal — Analyst

Understood.

Operator

Thank you, ma’am. That was the last question. I would now like to hand over the conference to Mr. Lalit Khetan for closing comments. Thank you, and over to you, sir.

Lalit Khetan — Executive Director and Chief Financial Officer

Rajesh could you take in.

Rajesh Mundra — Company Secretory

Yeah. We take this opportunity to thank everyone for joining the call. I hope, we have been addressed to all your queries. If you have any further queries or information you can get in touch with us or SGA who is our investor. Thank you very much for taking our call.

Operator

Sir, should we conclude.

Rajesh Mundra — Company Secretory

Yeah, we can conclude.

Operator

Thank you on behalf of ICICI Securities that concludes this conference call. Thank you for joining us. You may now disconnect your lines.