RAMKRISHNA FORGINGS LTD (NSE: RKFORGE) Q2 2025 Earnings Call dated Oct. 24, 2024
Corporate Participants:
Lalit Khetan — Whole-Time Director and Chief Financial Officer
Milesh Gandhi — Executive Director
Rajesh Mundhra — Vice President, Finance and Company Secretary
Analysts:
Raghunandhan NL — Analyst
Mumuksh Mandlesha — Analyst
Shaleen Kumar — Analyst
Mitul Shah — Analyst
Jyoti Singh — Analyst
Dhawal Shah — Analyst
Rakesh Roy — Analyst
Pratik Bandari — |Analyst
Khush Nahar — Analyst
Vidrum Mehta — Analyst
Karan Gupta — Analyst
Harsh Saraf — Analyst
Puneet Saveri — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Ramkrishna Forgings Q2 FY ’25 and H1 FY ’25 Conference Call hosted by Nuvama Wealth Management. As a reminder, all participants’ lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions].
I now hand the conference over to Mr. Raghunandhan from Nuvama Wealth Management. Thank you, and over to you, sir.
Raghunandhan NL — Analyst
Thank you. Good afternoon, everyone. On behalf of Nuvama Wealth Management, I would like to welcome you all to this earnings call of Ramkrishna Forgings. I would like to thank the management for giving us this opportunity. From the management team, we have with us today Mr. Naresh Jalan, Managing Director; Mr. Chaitanya Jalan, Executive Director; Mr. Lalit Khetan, Whole-Time Director and CFO; Mr. Milesh Gandhi, Executive Director; and Mr. Rajesh Mundhra, VP, Finance and Company Secretary.
Before we begin, may I remind you of the safe harbor. The management may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risks the company faces. I shall now hand over the call to Mr. Lalit Kumar Khetan for opening remarks. Over to you, Lalit sir.
Lalit Khetan — Whole-Time Director and Chief Financial Officer
Thank you, Raghu. Welcome to all of my investor friends on Q2 FY ’25 and H1 FY ’25 earnings call of the Ramkrishna Forgings Limited. In the midst of rising geopolitical tension and ongoing global economic uncertainty, we have continued to make steady progress in our strategic efforts. While maintaining a strong financial performance, we are undertaking multiple initiatives to further strengthen our business model and equip ourselves with levers to ensure sustained growth in the quarters ahead.
As you are aware, during last year, we acquired Multitech Auto, JMT Auto now renamed Ramkrishna Castings, and followed by acquisition of ACIL earlier this year. We are focused on integrating these acquisitions and have established a plan to streamline our corporate structure. In Q2, we divested 100% stake in our travel company Globe All India Services Limited to Yatra Online for a cash consideration of INR128 crores.
These funds unlocked from non-core assets are being invested as growth capital. The Board of Directors has also improved an investment of INR57.5 crore to establish an aluminium forging capability around 3,000 metric tons per annum at Jamshedpur primarily to serve the EV segment. This will significantly enhance our position in EV market. This is in addition to our previously-announced plans to enhance capacity by our forging capability of 40,000 tons and coal forging capability by 25,000 tons.
Additionally, the company in Mexico, which we acquired in Q2 has been renamed as Ramkrishna Forgings Mexico. This will serve as an operational hub for some of our international business in North America and bring us the additional business in the entire North America continent. Apart from above, we have done significant capex in upsetters of coal forging 8,000 tons fresh capacity during H1. Further, we have also invested in ramp up of production of our subsidiaries that is Ramkrishna Casting and ACIL.
We have also built-up stock for new developed products for the order wins in the recent past and for the assembly verticals. This stock built-up coupled with the ramping-up of production in subsidiaries has also led to a little bit increase in inventory during H1 ’25. Further little bit inventory has also gone up due to build-up of stock in transit and at warehouses due to the [Indecipherable] issues.
All the other combined events combined has led to increase in consolidated debt by INR282 crores in H1 F25 — FY ’25. But same is likely to normalize in upcoming periods as we anticipate seeing the benefits from the other initiatives in the coming quarters with more substantial momentum expected from FY ’26 onwards. For investors, the key takeaway is that our growth will become increasingly multidimensional with an expanded range of end-user industries. RKFL now has multiple growth avenues, which are also seeing exciting potential in non-automotive segment, mainly railway and farm equipment, and assemblies.
Additionally, we are positioning ourselves to scale up in the electric vehicle industry also. The ongoing integration and both initiatives are expected to gradually improve our EBITDA and margin profile. In our backdrop, let us go over to our financial performance for the second quarter of financial year ’24-25. During the quarter, raw-material prices decreased by 4%, which has also resulted in lower realization per ton and also impacted top line to that extent. Still, we have been able to achieve highest ever top-line for the company in the quarter. We report revenue of INR1,053 crore, INR1,534.63 crore on a consolidated basis, representing 17.2% year-on-year growth.
EBITDA at INR232.75 crore represent an increase of 16.2% year-on-year basis. The consolidated EBITDA margin for Q2 FY ’25 stood at 22.09% and the same has been moderated by 20 basis points year-on-year. We believe that we will be able to improve upon the above margin in the near future. Profit-after-tax, including exceptional item is INR189.77 crore in Q2 FY ’25 compared to INR82.2 crore in Q2 FY ’24, which is a price of 130% year-on-year. That’s all from the financial from my side. Now I will request Milesh Gandhi to update the investors on the order win during the quarter. After that, we can have the floor open for the Q&A. Millesh, over to you.
Milesh Gandhi — Executive Director
Good afternoon. Very good afternoon. Millesh Gandhi here. I would like to convey that we have secured orders during the quarter worth INR1,522 crores to be executed over a period of four years against the INR1,522 crore orders we have received from North America orders worth INR1,475 crores, in which we have secured INR1,312 crores from the auto segment and from the non-auto segment, we have pitched orders worth INR163 crores. From India, we secured INR47 crores orders in which non-auto represents INR39 crores and railway represents INR8 crores order winning. This is from my side. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Mumuksh Shah from Anand Rathi Institutional Equities. Please go ahead.
Mumuksh Mandlesha
Yeah. Thank you, sir, for the opportunity, and happy festive season to the management. And congrats on the strong order books for this quarter, sir. Sir, firstly, this quarter we’ve seen a very good growth from the domestic revenues. Can you help us understand because if you look at underlying spend with CV, which was very muted this quarter. So we notably outperformed that market. Just want to understand which orders have seen the ramp-up and which segments are doing well in domestic market, sir?
Lalit Khetan
I think in this quarter, we have seen degrowth in the commercial vehicle sector, but we have grown because of share of business going up in lot of businesses and also new pipelines of new components which we have introduced in our business scenarios that has resulted in the strong order — strong revenue from the domestic sectors.
Mumuksh Mandlesha
And sir, this kind of outperformance we expect to maintain based on this new orders ramp-up, right, sir?
Lalit Khetan
We expect to grow from here. I think domestic business will further grow from here.
Mumuksh Mandlesha
Okay. Got it. And sir, this year, first half has been around 7% growth on the revenue side and we have a target of 15% growth. So do you see this year it will be a little lower than the guidance, but from next year onwards, we should see much better growth, right, sir?
Lalit Khetan
No, I think we have — I think we stick to our guidance of 15% to 20% growth. And if you see realization from raw-material basically has gone down by 4% in this quarter. That also has resulted in the lower revenue, but overall, we expect 15% volume growth for the full year.
Mumuksh Mandlesha
Got it, sir. And just sir, on the overall medium to long-term, sir, you talked about multiple segments expected to do well for Ramkrishna. So I just want to understand, do you see the pace of a growth of 15% to 20% further increasing over medium to long term, sir?
Lalit Khetan
I think we are right now well-positioned for 15% to 20% growth and with new sectors coming in like two-wheelers and passenger vehicles in the coming months and coming quarters, we will see further growth coming from the automotive sector, which we were not present. So all these levers will help us to maintain the growth trajectory. With the capacity additions which we are having, this will surely help us in getting into the trajectory and on a continuous growth basis.
Mumuksh Mandlesha
So broadly our target also would be there, sir, 15% to 20% is what we are looking out, sir, in terms of growth rate?
Lalit Khetan
Yes, we are confident of 15% to 20% year-on-year growth also.
Mumuksh Mandlesha
Got it. Just lastly, sir, on the other expenses, last quarter we had this one-off item of electoral bond trust and the freight costs were higher. This quarter also, we saw other expenses on the rise only. So any reason for the higher other expenses, sir?
Lalit Khetan
So other expenses, the only reason this quarter is due to that export expenses, carriage cost has increased on the Red Sea. So that’s why it looks flat quarter-on-quarter and that increase of one-time expenses has been offset by the increase in export carriage cost. Okay?
Mumuksh Mandlesha
Thank you so much for the opportunity, sir.
Operator
Thank you. The next question is from the line of Shaleen Kumar from UBS. Please go ahead.
Shaleen Kumar
Yeah. Hi, sir. Thank you so much for the opportunity. Sir, this is more of a near to medium-term question, right? It’s like we are facing challenges in the CV market and it’s like both domestic as well as global. That’s what we’ve been hearing, right? So understanding that, how do you see us delivering the growth which you’re talking about, right,m if let’s say this continues in this year as well as the next year? I mean that’s one of the big concerns, which I feel we’ve been hearing from investor community. So how do you see that?
Lalit Khetan
No, I think in CV sector, it remains flat or where it is today also, we are sure to grow by 15% to 20%. I think with the introduction of new components as well as new assemblies, we have been able to get better share of businesses. And this better share of business is resulting in a strong momentum in the domestic order book growth for us and revenue growth for us. So we are very confident with the addition of capacities and the new more automated lines and more value-engineered lines. We will be able to still further grow in terms of our value-add with our existing customers and continue to add on to our order books.
Shaleen Kumar
Thank you.
Milesh Gandhi
Shaleen, I would like to add little bit here, Shaleen, that — see, we have lot of new product development being done for the past order wins. So, which will also help us improving this graph — growth and plus the capacity we are putting on the coal forging and aluminium forging also that will give us that kind of growth.
Shaleen Kumar
Okay, thanks, sir. So sir, then about [Indecipherable] acquisitions which we have done like [Indecipherable] and JMP, so are we getting exposure to the new segments or new clients as well?
Lalit Khetan
Yes, we are getting exposure to new segments, new clients across the globe right now? I think Millesh in his opening statement has announced that around INR1,500 crores of new order book which we have won for this quarter, almost INR1,300 crores is from the North American industry. So they are all from new clients and new businesses.
Shaleen Kumar
Is it possible to share what are the new segments of the clients, anything which I have not first, if you can share something there?
Lalit Khetan
Shaleen, can you repeat the question? I could not hear you.
Shaleen Kumar
So is it possible to share the names of these segments for the clients, anything further possible from your side?
Lalit Khetan
It is basically automotive segment, Shaleen.
Shaleen Kumar
Okay. Clients that — any new clients that you’ve added? I don’t know if you can share that again or not.
Lalit Khetan
No, we actually cannot name the clients.
Shaleen Kumar
Okay. Okay. Sir, just switching on now, INR100 crore aluminium. So can we talk about like economics of this segment? And second, INR100 crores — actually I think it’s a starting point, right? That’s my understanding, you can correct me. So do you think that it’s just a starting point and more of a sort of just testing the product going to the market, we should be able to do more, much more bigger capex here and the opportunity is much bigger here?
Lalit Khetan
Shaleen, we are just — I think at the starting point, 3,000 tons of capacity addition in aluminum and with only around INR60 crores of capex, this is just we are testing waters. And while our customer for whom we are building this capacity is wanting much more bigger capacity, but we would want to test waters because in — we have never, ever ventured in non-ferrous ever before. So we want to enter into non-ferrous in a very cautious mode because of the volatility in the pricing and other things.
We would want to test waters with a small capacity of 3,000 tons and then put a larger sum of money, but the opportunity is I think almost 30 times of the capacity which we are putting in right now. So it is just a tip of the iceberg. And I think gradually we will see much more bigger capex coming into it and much bigger non-ferrous activity starting post this done.
Shaleen Kumar
And sir, in terms of the profitability returns, is it comparable better or inferior compared to the ferrous?
Lalit Khetan
In terms of EBITDA margins, it is lesser because the commodity pricing is much higher than current, but in terms of realization or in terms of return ratios, it is much faster than what we are doing for our customers currently.
Shaleen Kumar
Got it, sir. Got it. That’s it from my side, sir. Thank you so much. I’ll get back in the queue. Thank you.
Operator
Thank you. The next question is from the line of Mitul Shah from DAM Capital. Please go ahead.
Mitul Shah
Thank you for the opportunity and congratulations on a very strong performance. Sir, first question, again, clarification on this 15% plus volume growth. Based on first-half number, then it implies that second-half growth would be like a 20% to 25%. So do we have that type of order in-hand starting from October itself or it will be back-ended in Q4 and we have concrete visibility on this second-half, this type of growth of about 25%?
Lalit Khetan
Mitul, we are very confident on what we are commenting. And more than that, I think we would not like to substantiate, but we would only say that whatever we are saying, we are — we have a concrete plan for that and we will be able to meet what we are saying to for 15% plus growth.
Mitul Shah
Okay. Sir, second question on sir, casting business where we have now increased our focus, including capex and all. So majority of this are new clients or existing clients we are trying to cross-sell or how much clientele base would be overlap and how much would be incremental clients where we can also cross-sell our forging products also?
Lalit Khetan
I think we are — we are or we — by next year FY ’26, we will be having almost 80,000 tons of casting capacities and we are going to sell casting both domestic and international. Right now, we have no international business as such. We have just started getting orders from our FR from international businesses. We are focusing both on our existing clienteles as well as new clienteles. So it is a very, very exciting opportunity for us. And our overall aim is to double our capacity in next two years. And we have confirmed visibility from our existing clients also and we have extremely strong RFQ pipeline from new customers.
Mitul Shah
Great, sir. But sir, would there be more new clients or majority of would be existing and maybe about 20%, 30% only new clients?
Lalit Khetan
I think, Mitul, whoever gives me business, whether it is existing or new, it does not make a difference for me. As far as I am concerned, I am ready to set up a capacity of 80,000 tons, we are on path by next year, we should be having this capacity and we are confident our marketing team is confident of selling the entire capacity.
Mitul Shah
Yes, sir, that’s true. I’m just trying to analyze whether can there is a possibility of cross-selling forging products to these new clients from that perspective, I was trying to understand?
Lalit Khetan
No, basically, we are always — Mitul, we are always looking for new clientele. So I think this new order wins, which we have announced right now for — from North merica, these are from new clientele. So obviously, this forging will — also we are pitching castings to also then. So it cross-selling or because RKFL is a one, we have different bouquet of products to offer to them. It is up to client to choose which one they want to source from RKFL.
Mitul Shah
Okay. Great, sir. Lastly, on railway side, we are hearing slowdown and some ramp-down by government orders getting delayed, etc. Anything all that for our JV business?
Lalit Khetan
We are not into wagon building, so we cannot comment on anything on the wagon side of it. But in terms of passenger, I don’t think there is any slowdown, while I think entire focus of government capex is improving passenger comfort and passenger safety. So their focus and ramp-up is continuously there and we have a very strong pipeline in terms of order book from railways. So we are not at all impacted by any news which is coming in terms of there is going to a slowdown in railways.
Mitul Shah
Thank you, sir. All the best.
Operator
Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Jyoti Singh
Thank you, sir, for the opportunity. Sir, just like you mentioned we are having impact from the Red Sea side. So just wanted to get the idea on the Red Sea side that which country and geography is benefiting with the export because we are not able to export at this time?
Lalit Khetan
No, we are — we have never said that we are not able to export. We are obviously able to export or sea time of transit time has increased because of the Red Sea issue because the ships are taking a divergent route, that’s the reason our transit time has increased, but it is not that we are not able to export.
Jyoti Singh
So we are exporting full-fledged?
Lalit Khetan
Yes, yes, we are exporting full-fledge and we are doing extremely well in exports.
Jyoti Singh
Okay. So sir, and doesn’t China benefiting as they can export directly?
Lalit Khetan
We cannot comment on this. I think it is extremely difficult for us to comment about China.
Jyoti Singh
Okay, okay. Thank you so much, sir. Thank you. The next question is from the line of Raghunandhan from Nuvama Wealth Management. Please go ahead.
Raghunandhan NL
Congratulations, sir, for another set of strong numbers. Sir, firstly, in terms of subsidiary performance, MAPL in Q1 had seen INR86 crore of revenue with 16% kind of margin. Can you talk about the Q2 performance and whether we are on track for the INR5 billion target for the full year with a, 17%, 18% margin?
Lalit Khetan
So, Raghu, coming to the subsidiary performance, yes sir, we have just started ramping up of the subsidiaries like BMT and ACIF. And if I look at the performance, there is a Multitech, Multitech is already established and we have done a turnover about 94 in this quarter in the Multitech and about 34 in KMP and 24 in ACIL. There has been some elimination due to the material being shipped from the RCFL to the other entity or another entity for the value-add. So that’s why the console number is 1,053, but this is going to improve significantly in upcoming quarters. And coming to the INR5 billion target of top-line, I will say we are very much on board. Only we have to keep target we have already disposed of our subsidiary group. So that still has a commensurate impact on that. And otherwise, if there is a material decrease or material decrease, that can have the impact. Otherwise we are very much on course of that top-line guidance what we are doing on the control vehicle.
Raghunandhan NL
Okay, sir. Good to hear that. Sir, in terms of your product portfolio, you have been continuously expanding and adding new products. And in one of your slide, other categories, you have displayed products relating to the trailer axle assembly and suspension. Just if you can spend a little time explaining the potential for these products?
Lalit Khetan
I mean, taylor axle assembly, we have just launched in this quarter, and we have achieved a sales of almost INR20 plus crores. Our — this is a INR2,000 plus crores market and growing at a very rapid pace of 17% to 20% every year. And it’s that we are expecting to at least by this year end or first quarter of next year to get to almost 25% market share in this segment. And we have patented our axles and this is a proprietary item going directly to the consumer and we expect a very large growth in next two years to come from this portfolio. And in coming months in this quarter or maybe by next quarter, we are launching some more proprietary parts, which is going to be exceptionally a good for our growth in terms of our assembled verticals which we are launching.
Raghunandhan NL
That’s good to hear, sir. And in terms of order book in this space, you would be in a discussion with the customers and what would be the status kind of orders you would have already received?
Lalit Khetan
No, I think this is a B2C segment and directly to the consumer. This is not with the OEMS. So there is no confirmed order book. It is made — tailor-made to the requirements. But we expect month or year quarter-on-quarter at least 40% to 50% growth till we achieve a 25% to 30% market share and for us, the current market today in India is close to around INR2,000 crores for this.
Raghunandhan NL
Got it, sir. Wishing you all the best there. And sir, in terms of the railway business and we had the Vande Bharat related orders of INR270 crores. So would it be right to understand that these orders would be executed over ’26-27?
Lalit Khetan
Yes, it is right. It is going to be executed over ’26-27.
Raghunandhan NL
And one clarification on the aluminium forgings. So the capacity we are putting up would be backed by the orders, sir?
Lalit Khetan
It is already backed by an order. The entire capacity of 3,000 tons is completely backed by a firm order for five years.
Raghunandhan NL
Got it, sir. And in terms of our growth, the share of North America has been consistently going up and we have been doing very well both in terms of order wins and growth in that particular market. Your thoughts on how the demand is there, how you expect the outperformance to continue? Recently, there were comments by Volvo that 2025 North America EV market should see a positive growth. So in terms of what you’re hearing from the client or how the share of business is increasing?
Lalit Khetan
Raghu, right now the market is flattish. We are growing and we are doing exceptionally well because of our marketing is being able to penetrate new segments and new customers in North America. And that’s the reason we are growing. And with setting up of facility in Mexico, we expect this to further consolidate and grow. And we are extremely bullish on our North America segment with setting up of this facility, which is going to be upstream from this quarter onwards. And next quarter onwards, we are going to see revenue coming in from that sector. So the current pipeline and the current visibility which we have is extreme — gives us extreme confidence that in North America, we will continue to grow and continue to consolidate in coming quarters and coming year.
Raghunandhan NL
Got it, sir. And in terms of the PV space, how do you see your share in the PV space to increase, and which regions will contribute to that?
Lalit Khetan
PV space, I think, Raghu, we have just entered. It is very, very minuscule right now. But I think the biggest PV chunk is going to come by FY ’26, both from North America and from India.
Raghunandhan NL
Got it, sir. Wishing you all the best, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Dhawal Shah from Girik Capital. Please go ahead. Yeah. Hi, hi, please. Great set of numbers. My question is for Mr. Gandhi. So I read somewhere that in 2027, the North American heavy commercial truck market is having some emission norm change. So could you share your thoughts on it with respect to that norm change, how would the customer buying be — how does it happen? How does it work there?
Milesh Gandhi
So I heard your question, see, whenever any norm change comes in, there is always a pre-buy that is always expected. And so — but always when the norm change comes in ’27, ’26 is going to be a very strong year and North America has already been spelling so. But because of many of the infrastructure demands and the way America is trying to rebuild itself, the demand is going to be very strong for the next two years and we foresee even if the change is going to happen, but the demand will still change when the emission norms get changed. I hope you answered you.
Dhawal Shah
Yeah. So — and this is for Class-8 specifically or it is for other trucks also?
Milesh Gandhi
The Class-8 makes the maximum effect because the long-haul comes under the Class-8. So that is going to be the primary market and vocational trucks along with dirt trucks also come into the same freight. So it is going to be a effect across.
Dhawal Shah
Okay. So you feel that the due to be buying, but the growth would be better in calendar year ’26.
Milesh Gandhi
I did not hear your last point.
Dhawal Shah
I’m saying because of the pre-buying, the growth could be better in calendar year ’26.
Milesh Gandhi
America has been stating very clearly the demand is going to be good over a period of time in the forthcoming years. So even I think the demand will continue to remain so. And I think the pre-buy can always give a better numbers, but with the amount of demand on account of the construction and with regard to infrastructure, that should continue in the same pace.
Dhawal Shah
Okay. Okay. Great. Thank you.
Operator
Thank you. The next question is from the line of Rakesh Roy from Boring AMC. Please go ahead.
Rakesh Roy
Yeah, sir. My first question regarding, sir, you are setting up aluminum plant in additional one of 3,000, sir. So mostly we are focusing on EV segment or other also? In EV segment what we are going to make?
Lalit Khetan
I think we are focusing on EV segment. What we are going to make, I think we would not like to name the product or basically it is the transmission components which we are going to make, but exactly the component we cannot name. It is primarily the entire capacity is for EV segment.
Rakesh Roy
Right, sir. And can you highlight the North America truck market is basically the Class-8 truck market, how is doing and for next 12 months, what is your outlook?
Lalit Khetan
I think we will not be able to comment on Class-8 in particular. But overall, as far as RKSL is concerned, we are doing extremely well in the North-America market and we foresee going forward also, we will do — our operations and our volumes from North America is going to continue to remain strong.
Rakesh Roy
Okay. All right, sir. Thank you, sir.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Pratik Bandari from Art Ventures. Please go ahead.
Pratik Bandari
Yeah. Hi, sir. Thanks for the opportunity. I just wanted a breakup of order wins during the quarter, if you can just repeat the same?
Lalit Khetan
Milesh, can you repeat it, please?
Milesh Gandhi
Yeah. So I will repeat what I stated. Against the INR1,522 crores orders that is to be executed over a period of four years. For North America, we won INR1,475 crore orders in which auto constitutes to INR1,312 crores and non-auto constitutes to INR163 crores. Further, from India, we secured order of INR47 crores in this quarter, in which non-auto is around INR39 crores and railways specifically is INR8 crores.
Pratik Bandari
Okay. All right. Thanks a lot, sir.
Operator
Thank you. The next question is from the line of Khush Nahar from Electrum PMS. Please go ahead.
Khush Nahar
Thank you for the opportunity, sir. Sir, one question. Is there any update on the Ramkrishna Titagarh JV? What is the expected timeline of our first product?
Lalit Khetan
I mean, we are doing extremely well in terms of our Titagarh JV is concerned and project is moving as per timelines.
Khush Nahar
So if I’m not wrong that would be by FY ’26, I think?
Lalit Khetan
For last quarter of FY ’26, we will start producing wheels and delivering to railways.
Khush Nahar
Okay, sir. Thank you.
Operator
Thank you. The next question is from the line of Mr. Rahul from Nuvama Wealth Management Limited. Please go ahead.
Raghunandhan NL
Thank you. Raghu, here again. So sir, on the capex and investment side, first half this year, we have done INR400 crore-plus of capex and investment has been INR100 crore-plus. How do you see the capex for the full year? And also in terms of the debt, if you can talk about how you see the debt reducing as working capital normalizes and your efforts on improving the cash flows?
Milesh Gandhi
So Raghu, on the investment side, I think we are largely done on the investment with the subsidiary. There will be a small amount on the subsidiary side. And what we have given the guidance of about INR500 crores of capex initially, it may be increased by another INR50 crores during the year. And on the subsidiary side, it remains same. On the investment side also, we only need to invest on the JV with the Ramkrishna Titagarh. And for that also we have given our guidance of INR100 crores for the full year. We have already given INR50 crores in the first half, another INR47 odd crore orINR50 odd crores will go into that thing.
Raghunandhan NL
Got it, sir. And in terms of the EV space, how would you look at the aspiration you would have to improve your presence on the EV, given that you’re putting in more efforts, it helps both on the diversification side and also is opening up new opportunities for you. Over a medium term, how would you look at EV contribution to your overall business?
Lalit Khetan
So on the EV side, as already explained that usually we have just started and this ammonium forging is for the EV. We are also doing currently on the EV, but the ammonia forging will go a long way on the EV side. Let us first stabilize and then we will comment on how we are moving ahead on the EV side. Let’s wait for sometime now.
Milesh Gandhi
But I think Raghu, just to update on what Lalit said, our vision — internal vision in next two years by FY ’27, our 15% to 20% revenue should be coming from EV or hybrid vehicles. That’s the vision we are working with. And I think we are on track to achieve our vision.
Raghunandhan NL
Wonderful, sir. And would Tioso [Phonetic] also form part of that vision?
Lalit Khetan
Hello?
Raghunandhan NL
You had one investment in Tioso [Phonetic].
Lalit Khetan
No, no Tioso investment. I think last call also we have said we are not expecting anything from that. We have withdrawn from that investment and INR10 crore which we had paid, we have already got that refund.
Raghunandhan NL
Understood, sir. Got it, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Vidrum Mehta from Ask Investment Managers. Please go ahead.
Vidrum Mehta
Yeah. Thank you,sir, for the opportunity. Firstly, Seasons greeting to you and the entire team of RK Forging. Sir, my question was more related to the standalone business revenue growth of 10%, which we reported as against MHCV, you know, industry volume, which reported a high-single-digit or a double-digit decline. So if you could share broadly, what could be the growth in terms of you can — if you can break the growth with respect to the new products, the increase in share of business, and pure organic volume growth?
Lalit Khetan
I think it is extremely difficult for us to break it down in terms of products, but we can only say that overall in terms of our ambitions and our hard work for last few years in terms of getting into more value-added products and assemblies have resulted in higher share of business across the vehicles and that has resulted in an extremely strong domestic market for us and getting into strong volumes with even the drop-in overall MSCV demand. And I think going forward also, we foresee the same pattern to continue with the kind of work we have done and our continued progress in new product development and getting into higher value-add, we’ll continuously work on the same momentum to get us higher share of businesses and strong domestic market.
Vidrum Mehta
So sir, in that case, how much should we outperform the overall industry? Could you give some sense on that?
Lalit Khetan
No, I think we don’t have a definite number to it, but I think we are working towards our overall objective of 15% to 20% continued year-on-year growth for near foreseeable future. So with this kind of thought process, we are on track to continuously keep on adding new products and as well as keep on working on the existing products to offer better solutions to our customers by which gain market share.
Vidrum Mehta
Okay. Okay. Sir, secondly, I understood the point on the volume growth that we are building in 15% to 20%. We expect 50% to 20% growth. But obviously, it is because you know the lower RM cost is resulting into lower realization. And so if I look at for H1, you know our realization is down roughly three-odd percent or despite volume higher in H1 of FY ’25. So how you look at realization or probably the RM basket moving in H2 of FY ’25?
Lalit Khetan
I think it is extremely difficult. I think raw-material prices is something which we cannot comment on. We would love to have stable raw material, but I think it is next to impossible for us to comment on whether raw-material prices are going to fall from here or it’s going to correct further from here or not. So we have to live with that. We can only say that — we only can say that we would continuously keep watch on it and we will — on our side, we will be able to only keep on maintaining our conversion margin and keep on adding value to the products by which we are going to try and see whatever best we can achieve in terms of our top-line.
Vidrum Mehta
Sir, in terms of procurement, would it be a quarter lag or how should one look at it like?
Lalit Khetan
No, it is a quarter lag. Quarter lag.
Vidrum Mehta
It’s a quarter lag, right?
Lalit Khetan
Yes. Yes.
Vidrum Mehta
Okay. Okay. And sir, one more question from my end. So you gave a breakup of revenue from the subsidiaries, which works out to be north of INR140 odd crores, but the reported number states that it is INR100-odd crores, if I just subtract consolidated minus standalone. So you said there is some related-party transfer?
Lalit Khetan
No basically the goods are — like lot of forgings are going from the parent company to the subsidiaries, but ultimately, they have not been sold to the customer yet. So that sales have been knocked off.
Vidrum Mehta
So how much percent should we assume in this knocking-off?
Lalit Khetan
So that I already told, about INR40 crore has been knocked off and that number itself is.
Vidrum Mehta
So that — so broadly, that should continue in coming quarters as well, right?
Milesh Gandhi
No. So it depends upon the ramping-up and how much the material is produced and sold. The number will certainly change, percentage will change.
Lalit Khetan
It will drop somewhat because lot of samples and other things have been developed in this quarter. So that has slowed down, but that will get further ramped-up in this quarter wherever sample approvals and other things have come in. So all those inventories will get liquidate and there will be — it will come into a regular cycle. That’s the reason we have mentioned in our presentation also, the working capital is going to moderate, which is seeing at an elevated level right now is going to moderate in coming quarters with all these samples getting converted into bulk supplies. Okay. So sir, then INR5 billion target of top-line from subsidiaries is including that or excluding that?
Milesh Gandhi
We have never said 5 billion revenue from subsidiaries, I think that is — Lalit, can you clarify?
Lalit Khetan
So you are talking about INR5 billion console, that guidance is given that so higher so earlier said the one including my travel subsidiary that has already gone and suddenly you have to look at the control number and suddenly I said you have to adjust it for the raw-material impact. So considering 50%, 20% growth, we are there almost online for that kind of number. But certainly now it will be not a INR5 million, it can be somewhere between INR4,500 crore to INR4,600 crore kind of thing right now on the consol basis for FY ’25, considering that adjustment of the opportunities.
Vidrum Mehta
Okay. Okay. Okay, sir. Okay. Thank you, sir. All the best.
Operator
Thank you. Thank you. The next question is from the line of Karan Gupta from InvestSavvy Portfolio Management. Please go ahead.
Karan Gupta
Yeah. Hi, hi, good afternoon. Am I audible?
Lalit Khetan
Yes, you’re audible.
Karan Gupta
Yeah. So first question is on the inventory receivables side compared to H1 of last year H1 of this year has increased significantly. So can you comment on that? And the second one on the capex breakup across the facilities you are starting our increasing capacity. So that’s second one.
Lalit Khetan
So looking at the payables, if you look at on a consol basis, it has gone up by INR119 crores, and that entity to be a little bit on the suddenly delay in receipts from the overseas customers, which is likely to moderate and improve in the upcoming quarter. So I will say it’s a marginal impact here in terms of days because there is an increase in sales also commensurate with revenue.
So it’s about INR80 crore to INR94 increase, which is likely to corrected in the next quarter. Come to the next part of the question, that’s on the capex. The capex I have already see there are capex on 4 chain, 8,000 ton rest line and [Indecipherable] capability. And we have made significant progress on all these capacity. Apart from that, there is capex in the ramping-up of the JMT, that is Ramkrishna Castings, we’ve already started the production in Ramkrishna Castings, and we are in the process of adding up the capacity there. And same is with the API of ramping-up of the capacity happening up and renovation of facility happening up, all this together has played through this kind of capex?
Karan Gupta
Okay. Okay. And the last one is, can you just give some economic number of their aluminum capacity, what will be the asset turn, what will be the kind of margin and realization part?
Lalit Khetan
So we have already given that the segment there is a INR51 crores investment and at the optimum capacity utilization, it can give me around INR250 crore of top-line. You can understand that it’s simply around 4 plus kind of asset turn. And in terms of margin, suddenly EBITDA will be lower, but in terms of realization, it is much higher in terms of EBITDA per ton and that’s why if you look at it will be a payback of less than two years if we move on the full capacity.
Karan Gupta
Okay, okay. Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Harsh Saraf from Yashwi Securities. Please go ahead.
Harsh Saraf
Hello. Sir, I had one clarification question. If you could provide an update on the boggies that we were planning to assemble for the Vande Bharat?
Lalit Khetan
You’re talking about the body frame basically?
Harsh Saraf
Yes.
Lalit Khetan
Boggie frame, I think this month we are submitting the prototypes for Vande Bharat. And I think post the approval of prototypes, this will go into bulk production.
Harsh Saraf
Okay. Yeah. And just one clarification question on the comment you had made earlier, had you said that you had divested from the studio partnership and investment was refunded?
Lalit Khetan
Yes, we have divested from the CEO [Phonetic] partnership.
Harsh Saraf
Okay. That’s it from my side. Thank you.
Operator
Thank you. The next follow-up question is from the line of Pratik Bandari from Art Ventures. Please go ahead.
Pratik Bandari
Sir, about this aluminium forging test line, what quantum of capex have we done?
Lalit Khetan
We are going to do INR60 crores almost of capex for setting up this plant.
Harsh Saraf
Okay. On that, we are somewhere expecting INR250 crores of top-line?
Lalit Khetan
Yes.
Harsh Saraf
You stated that the payback period would be two, 2.5 years roughly? Yes. Roughly.
Lalit Khetan
Okay, fine. Thank you. Thanks a lot.
Operator
Thank you. The next question is from the line of Puneet Saveri [Phonetic], an Individual Investor. Please go ahead.
Puneet Saveri
Thank you for the opportunity. Just one question on your aluminum forging capacity. Now you said that it’s a small capacity right now 3,000 tons. Just wanted to understand how big is this opportunity within India or any kind of numbers that you would have for the domestic aluminum forging capacity in India currently?
Milesh Gandhi
No, we are not setting up this facility for manufacturing any products for Indian OEMs. It’s for overseas OEMs and we — the total available opportunity in overseas market is 20 times of the capacity which we are setting up for the customer, which we are doing this. So I think this is only a tip of the iceberg which we are setting up. And I think as we gain experience, we’ll add on more capacity.
Puneet Saveri
So is there any kind of at least in the short-term, maybe the next 12 to 18 months, do you see that this will only be once after this customer as well, this will only be used mostly for the overseas facility and only when the demand comes in the domestic market is when you will then put up additional capacity. So is there a safe assumption to it?
Milesh Gandhi
I think demand in domestic market is also there, but we are setting up this capacity for overseas. But once we gain experience in non-ferrous, I think post the development and post some bulk supplies for a few months, once we are confident of delivering goods, we will extend our capex in this line to cater to the domestic market as well. So opportunity overall globally is extremely huge. So I would not be able to substantiate or comment on exactly what is the total opportunity. But I can only say we are setting up a very small capacity and opportunity for us extremely big and we — you will see in coming years large amount of capex being allocated to set-up more capacities in aluminum in our capex.
Puneet Saveri
So just one clarification, sir, your current capacity, the opportunity is 20 times with the current customer, right, which you are setting up the capacity for?
Milesh Gandhi
Yes, 20 times.
Puneet Saveri
20 times. Understood. Okay, sir. That’s all my questions. Thank you so much for the opportunity.
Operator
Thank you. [Operator Instructions]. As there are no further questions from the participant, I now hand the conference over to the management for closing comments.
Rajesh Mundhra
Thank you. We take this opportunity to thank everyone for joining the call. We hope that we have been able to answer and address all your queries. For any further information, kindly get in touch with the Investor Relationship Advisors. Thank you very much for sparing your time and joining us on the call. Thank you, and have a good weekend.
Operator
[Operator Closing Remarks].