Rane (Madras) Limited (NSE: RML) Q3 2026 Earnings Call dated Feb. 17, 2026
Corporate Participants:
Unidentified Speaker
L. Ganesh — Chairman and Managing Director, Rane Holdings Limited
Analysts:
Unidentified Participant
Divakar Pingle — Analyst
Abhay Tibrewal — Analyst
Sunil Kothari — Analyst
Manish Goyal — Analyst
Raja Kumar Vaidanathan — Analyst
Krishna Kumar — Analyst
Chetan Cholera — Analyst
Saket Kapoor — Analyst
Raja Kumar Vaidanathan — Analyst
Radha Agarwalla — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Rane Group Q3 FY26 earnings call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Divakar Pingle from EY. Thank you. And over to you sir.
Divakar Pingle — Analyst
Thank you very much. Ikra. Good afternoon. Good evening to everyone. Welcome to the Q3 FY26 investor call of Pranav Group to discuss the results and answer your questions. Today we have the management team from presented by Mr. P. Abdonaz, President Finance and Group CFO Mr. J. Anand, Executive Vice President Finance and CEO for Ronnie holdings and Mr. S. Prasad, Associate Vice President Corporate Fund and Rani Holdings. Just a brief update I think a couple of quarters before when Rani was trying to do earnings call only for two quarters we got a feedback from the investors for having regular quarterly calls.
So we kind of shifted back to a quarterly call format since then. With a small caveat that Harish did mention to that he will join the calls on the half yearly and the annual calls and the rest of the quarters. The top exit management of Ranu would possibly give the updates. So in keeping with that in this particular call Harish is not available. I just wanted to be careful on that. The results in the presentation have already been mailed to you and you can also view it on the company’s website. In case anyone does not have a copy of the presentation or you’re not marking the mail, please do write to us at EY or CWAM Kazarame IR team and we’ll be happy to send the same to you.
Before we start I’d like to say that everything that is said on this call that for the future or which can be construed as a forward looking statement must be viewed in conjunction with risks and certainties that we face. These uncertainties that are included but not limited to what we mentioned in the prospectus and subsequently in annual reports which you can find on our website. With that said, I’ll hand over the call to over to you.
L. Ganesh — Chairman and Managing Director, Rane Holdings Limited
Thank you Divakar. Good afternoon ladies and gentlemen. Thank you for dialing in. I would like to welcome you all for this teleconference. I would like to start with a few comments on the industry. India’s automobile sector recorded a strong recovery in the third quarter supported by timely GST rate reductions during the festive season, healthy retail momentum and disciplined inventory management across segments. The improved performance was driven by a combination of policy led demand stimulus, easing financing conditions following repo rate cuts and strengthening consumer sentiment during the festive period. Improved affordability, adequate financing availability and a healthy pipeline of new product launches further supported demand across categories.
The passenger vehicle segment delivered their strongest performance in the recent times. Growth was driven by festive demand, enhanced affordability resulting from GST reductions and tax relief measures, lowering finance costs and sustained positive buyer sentiment. Utility vehicles continue to lead the segment reflecting an ongoing structural preference for SUVs among consumers. The commercial vehicle segment witnessed growth led by stronger freight movement and consumption driven demand during the festive season. Higher industrial activity, continued infrastructure execution and increasing formalization of logistics supported fleet expansion thereby driving CV purchases. The two wheeler segment recorded steady growth supported by robust scooter and motorcycle demand in urban markets.
Scooters continue to outperform motorcycles on a year to date basis while the moped segment remains subdued. Growth is increasingly skewed toward premium and mid capacity motorcycles with the 150-250cc category emerging as one of the fastest growing segments following a strong turnaround in the second half of the year. The tractor segment delivered a robust performance during the quarter supported by the recent GST reduction, favorable monsoon conditions, strong agricultural sentiment and improving rural income. Overall, the quarter reflects a broad based recovery across segments positioning the industry for sustained momentum in the near term. I’ll now move on to key highlights.
RML’s total revenue was Rupees 1019.1 crore for Q3 of financial year 2526 compared to Rupees 840.5 crore in Q3 financial year 2425, an increase of 21.3%. I’m also happy to share that we won new business worth rupees 130 crores across product categories in the quarter. The recent announcement of the India US Trade deal including tariff reductions is a positive development for global trade flows. Though we await further details on the duties we see. The trade deal provide clarity on the strategic direction and is expected to enhance competitiveness and help us progress on the conversations with the customers more positively.
During. Q3 of financial year 2526. EBITDA margin improved by 106bps from 8.2% to 9.3% during the quarter. Our associate entity REDEP Rane Automotive India Private Limited has made a one off warranty provision of around 230 crores net of tax. It’s around 172 crores related to product recall liability towards quality and safety related issues in certain products manufactured and sold in prior periods that may require corrective action including voluntary and regulator mandated recall. There were few complaints of unlatching of seat belt buckles in the Hyundai Palisade SUV when the tongue is inserted slowly inside the buckle in some of the vehicles in certain North American markets under extreme climate conditions.
The customer is planning to carry out in vehicle inspection for the vehicles sold in North American markets to replace any defective parts. We will keep you updated on further developments as we move into the final quarter of financial year 2526. We carry forward strong momentum and expect demand to remain steady, continued policy tailwinds and stable macroeconomic conditions while remaining vigilant to evolving geopolitical risks and external uncertainties. The near term environment remains supportive with the policy continuity on the Union budget post GST 2.0 and the stable interest rate environment collectively strengthen affordability, financing, comfort and overall demand sentiment.
With these remarks we will now open for any questions that you may have.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhay Tibriwal from Vision8 Investments. Please go ahead.
Abhay Tibrewal
Hi, this is Abhaya. So just wanted to understand how you see the recent orders like up to 135 crores in Q3 and the Mexico facility 250 crores pipeline from Ford, GM and Honda impact our 2627 revenue EBITDA guidance given the 21% Q3 growth from Rani Madras.
L. Ganesh
Yeah. So this 130 crores orders are for future businesses. Right. So they are not going to start in the immediately. So the other thing which you have mentioned about what is that related to the 250 crores? That portion of it is not very clear.
Abhay Tibrewal
Okay, so 250 crores from. We don’t have any clear like visibility. Because those are pipeline orders from Mexico. Right.
L. Ganesh
So no, I. I’m not able to actually fully gather your 250crore question related to Mexico. What, what is that? Because the orders that we have actually won in this quarter is about 130 odd crores particularly for Rana Madras. Okay. And over this entire year if you look at it from for the last three quarters we have won about 650 crores of orders for Rani Madras.
Abhay Tibrewal
Okay, okay. And how this will impact the 26, 27 and further, you know, 27, 28 revenue and EBITDA guidance. Given the stupendous growth in this quarter.
L. Ganesh
We don’t give guidance for the future quarters in terms of ebitda but we could, I would say that we are moving in the right direction. If you notice that during this quarter itself there is a improvement in the EBITDA numbers and we are making a lot of effort for cost reduction. We are doing a lot of cost reduction initiatives which we are hopeful that will re fro in the coming months. So we are hopeful that there will be an improvement in the EBITDA numbers going forward in the coming quarters as well as the coming financial year.
Abhay Tibrewal
Okay, thank you and all the best.
L. Ganesh
Thank you.
operator
Thank you. Before we take the next question, I reminded to all the participants that you may press star and one to ask the question. The next question is from the line of Sunil Kothari from Unique pms. Please go ahead.
Sunil Kothari
Yeah, thank you for opportunity. Sir, my question is normally in the past, many times we mentioned that whenever we grew double digit high double digit then we can expect double digit more than double digit EBITDA margin. I would like to understand with this restructuring merger getting over now everything almost benefits also must be coming and we have grown year on year, quarter on quarter substantially why it is not converting in a better 11 12% EBITDA margin which always run a group aspire to achieve. So if you can in detail explain what is stopping us from getting this 11 12% EBITDA margin.
L. Ganesh
See like we mentioned in the past calls also Sunil, we are taking a lot of initiatives wherein we are expecting quarter on quarter improvement in our EBITDA numbers. And as you have seen in the last quarter we have shown an improvement in the EBITDA numbers. And you will also be aware that we had a new labor code coming in and we have also made one time provision for that additional any positive expenses on account of the labor code that is also contained in this P and L for the quarter. So in spite of that we have grown in the EBITDA number and due to our cost reduction initiatives we are fairly confident that in the coming financial year we will touch double digit EBITDA numbers for Ranim as well.
Sunil Kothari
So sir, what steps yet we are taking to improve our EBITDA margin? Because now fortunately we are moving towards a double digit top line growth. But to improve Substantially EBITDA margin what other measures are we taking which other benefits are yet to come of merger? If you can explain little bit in detail with the relax see one is.
L. Ganesh
On the direct material front this merger has offered us an opportunity to look at areas where we can do ordering collectively and that can help us in reducing the cost. On indirect materials also we see a lot of opportunity for cost reduction and on freight and logistics also we are looking looking at areas for cost reduction. On warehousing also there is a scope for cost reduction so it is across the board Sunil on multiple areas consequent to this merger we are hopeful that we will be able to synergize this and then ensure that overall there is a reduction in cost and since these are all activities which take time to consummate we are hopeful that in the coming quarters we will constantly see improvement in the margin.
Sunil Kothari
Okay thanks. One more thing is about debt reduction. We already I think got some fund from the land sale and we were also expecting some more land sale by March. So if you can a little bit explain detail how much we already repaid the type of repayment we want to make of a debt by March and any other land sell parcel planning going on something more on it.
L. Ganesh
See on the debt front the one thing that has happened is in spite of capital investment of close to 100 crores we have kept the debt at overall debt at more or less the same level which means had we not got this land parcel sale related advance money we would have gone for another close to 100 crore debt which we could avoid by using those funds for our own capex expansion and going forward Also our clear thought process is that we want to bring down the debt substantially and we are hopeful that with further amounts which as we receive towards this land sale we’ll be using it towards debt reduction.
So that’s. That’s brief to you. That’s a substantial reduction over the next 12 to 18 months as already indicated.
Sunil Kothari
Sir by when we are getting those amounts remaining pending rounds these are all.
L. Ganesh
Milestone payments spread over the next year or so. So as and when we reach milestone we’ll be getting this payment so consecutive quarters we’ll see some debt reduction happening as we move on.
Sunil Kothari
Last question on this recall at I think unfortunately or whatever reason many in every each of our manufacturing units we are getting this type of accidental outcome which is happening non stop I mean somewhere Enginewal sometime Rani Madras previously it was MSK what steps are we taking now to I mean mitigate this type of accident in Future what, what measures? Because now you have tie up with JF also and yet this is happening. So what happened and what we are trying to do which remove us this risk from in future.
Unidentified Speaker
Yeah. So Prasad here. I’ll enter it in two parts. The first part is specific to this warranty issue that we have with ZF running. So this issue pertains to a particular model that we have been supplying to the global market. And this is happening in a specific extreme climate conditions, in terms of very cold climate conditions. And this is not happening on all the vehicles that has been there. And this is due to an environmental specific conditions. And we have estimated the number of vehicles and this is again related to NHSTA recall and the customer has actually decided to go in that route and we have actually made the provision to this.
However, one thing that we wanted actually clarify is related to our relationship with our customers which remains very strong and we continue to win new businesses. And the way in which we have been able to demonstrate and quickly move on in terms of clarifying the necessary inputs for the customer to take these calls reissues our relationship with the customer and we continue to win new businesses across geographies with this specific customer. Yeah. And given the safety critical nature of these parts and we were in this kind of a recall kind of a scenario. Right. So this is again not specifically related to a part that is manufactured by us and this is being supplied to us through one of the company.
You will be able to actually identify this company because this is public information as well related to a plastic injection molding part. Right. So we have been able to learn from our way in which we were able to deal with some of these suppliers and we have actually taken corrective measures. So in substance the relationship with our customers continue to be strong, strengthened and then we continue to win new businesses and we have been able to strengthen our overall supplier development, quality and other operation related measures.
Sunil Kothari
And we don’t have any insurance.
operator
Sorry to interrupt. Mr. Kothari, please rejoin the key for more questions. Yeah, thank you. The next question is from the line of Manish Goyal from Thinkwise Wealth Management Central llp. Please go ahead.
Manish Goyal
Yeah, thank you so much sir. So as we were discussing, I would like to continue on the same topic. So what? Probably Sunil was asking that in terms of insurance, do we have insurance coverage? Number one. Number two, sir, if you can just repeat, what is this pertaining to? You said that it is part which is not manufactured by us. So what, what product is it related? I missed the initial comment. If you can provide us. And third thing is that have we made sufficient provision that it may not require any further provision at your end? Yeah, thank you.
L. Ganesh
Manish. This I’ll answer on the insurance and sufficiency of the provisions. Yes, we do have insurance. The normal insurance we have. It may not be to this extent but we do have an insurance. But it’s very preliminary for us to make any conclusion on this because this is a lengthy process. We will make all attempts to ensure that we mitigate the overall loss on this account. As far as the adequacy of provision is concerned. Again, it’s very early to comment. We will be reviewing it sometime in March, April of this year and at that time we will have a better idea if this amount is sufficient or any additional provision we have to be made.
Unidentified Speaker
Yeah, Manish, in terms of the part. Okay, this is a seat belt. Right. And a buckle for the seat belt. So there is a plastic injection molding part which is actually where the seat belt is inserted right onto when we are actually driving. This is on our left side. That is where this is getting inserted. And there is a potential problem which has been identified as tongue is being inserted slowly or it is being released under the extreme exposure to extreme weather conditions.
Manish Goyal
So okay, so like. So this is basically we are exporting through ZF Group. And so this product was not tested for such extreme cold climate conditions earlier. Just want to get a sense that probably this, this is something which we would have been manufacturing under their technology transfer. Right?
Unidentified Speaker
Yes, this is, this is, this is a part that we actually supply to the Hyundai. Right. And this is a global program that we have been nominated to supply by the ZF Group.
Manish Goyal
Okay, so is there a case like what we probably had that because it’s not pertaining to manufacturing issue at our end we should be getting compensated going forward. Like what we saw in the case of Lana nhk.
Unidentified Speaker
Yeah, this is a very. This part is being supplied by a very small supplier. Right. So we don’t know how we will be able to recover it from them. Right. So and this is like as a. Countermeasure we have actually changed the source and moved to another global supplier.
Manish Goyal
And are we the only company we can face this issue in? ZF Group or any other company has also faced this problem because of this vendor?
Unidentified Speaker
No, we are not aware of that.
Manish Goyal
Okay. Okay, fine. I’ll probably move to other set of questions. If you can sir, within like ZF Rani, if you can give us the revenue breakup for steering and safety products. And what is the domestic and exports number. That should be helpful. That was one question. And second question within Raleigh Group sales, probably what we see is that in your revenue breakup, sales by product line, the other segment revenue share has been given as 7% which is probably as compared to last quarter at 1%. So want to know what, what product is got categorized over here? That was one thing.
And third thing on Rane Madras you, you replied to Sunil’s question that we should see a double digit margin. So ideally by when should we see it over a period of next three to four quarters. That are the set of questions. Thank you.
Unidentified Speaker
Yeah, so I’ll. I’ll go from the reverse one. So in Rania Madras I think it is consistent to what we have actually told in our. So we are looking at a 12 to 18 months kind of a window we have actually set out. And that 11 12% kind of an EBITDA is what we are actually targeting. And with respect to the Zfrani sales breakup for the Q3, the steering division actually accounted for about 37% of the revenue and occupant safety division accounted for 63% of the revenue. And in terms of domestic and exports, domestic is about 78% and exports is about 22%.
And one more which you asked related to the. The overall. Yeah, the aftermarket products. So as you know we have actually have a post the merger we have a separate unit which is called aftermarket products business. Right. So that is actually tagged under others.
Manish Goyal
Okay. And this is largely reflected to Rana Madras.
operator
Sorry to interrupt. Mr. Goyal, please rejoinder for more questions.
Manish Goyal
Sure. Thank you so much.
operator
Thank you. The next question is from the line of Raja Kumar Vaidanathan from RK Investment. Please go ahead.
Raja Kumar Vaidanathan
Hello?
L. Ganesh
Hello.
Raja Kumar Vaidanathan
Can you hear me?
L. Ganesh
Yeah, we can hear you.
Raja Kumar Vaidanathan
Yeah. Good afternoon. Thanks for the opportunity. So just two, three questions. So the first question is this. There is a small dip in the EBITDA margins of Rani Steering and the Rani Automotive. So is it due to the labor code provision or is there anything more sitting there.
L. Ganesh
See in steering systems? Labor code, yes, that is having an impact on the margins. And also like we have mentioned, for the next 12 months or so the margins will be subdued in case of ranch steering systems, mainly due to some low pricing at which we have accepted some orders a few years back. So that is also playing a role. So due to poor product mix and as well as the labor code, both have contributed to a low margin in case of Rani steering systems.
Raja Kumar Vaidanathan
So what is the amount? Sir, if you can quantify for Rani Steering with the labor code provision. As well as Rani Automotive.
L. Ganesh
It’S about 1.8 crores.
Raja Kumar Vaidanathan
And for Rani Automotive.
L. Ganesh
Rani Automotive is around 1.18 crores. Okay, that is our share, 49% share. It’s overall 2.4 crores but our share is 1.18.
Raja Kumar Vaidanathan
Okay, got it. And and second thing, sorry to labor on that warranty provision. So basically I want to know but do you expect a similar kind of a provision the upcoming quarter? You think you have made a reasonable estimate of the provision? And continuing on the same question, do you expect any further remediation cost or any, you know, pressure on margins because of this?
L. Ganesh
See, as far as adequacy of provision, like I mentioned earlier, it’s a bit early to commit right now because we are still in the process of reviewing it. So by April, May we will have a better idea whether this provision is sufficient or any more provision is required. So we’ll come back to you during the next call on that aspect and margins. That is as per the orders that we are procuring, the margins will be there. This particular aspect will not have any impact on the normal order procurement margins which we are getting.
Raja Kumar Vaidanathan
Okay. And if I understand Rania Automotive, you’re paying royalty to zf so will this not be covered by your royalty agreements? Whether they will not be picking up a significant, you know, portion of this warranty similar to what the NSK has done, you know, in that other jv.
L. Ganesh
This is a manufacturing related issue as it is because of joint venture they are, they’ll be bearing 51% of this cost in any case will be bang only 49% of this.
Raja Kumar Vaidanathan
Okay, thank you.
operator
Thank you. The next question is from the line of Krishna Kumar s from Lion Hill Capital. Please go ahead.
Krishna Kumar
Good afternoon sir. Congrats on a good set of operating metrics on the running address. If you can just clarify sir, on the warranty provision, do we have an idea of the total number of vehicles which are having this problem or. That’s an ongoing thing that will keep coming up sir, as we encounter problem. Any vehicle part you have in mind.
L. Ganesh
Sir, are you referring to. Yeah, yeah. Okay. Yes. See in North America we have around five 67,000 vehicles in USA and around 44,000 vehicles in Canada. But overall for the entire program it’s around 9 lakh 60,000 vehicles where the supplies have been made to North America, Europe, Middle east and Australia. So this covers the entire program, whatever number of vehicles for that program which is around 9,60,000 vehicles. The provision has been there for that. Program basically. So there can be a potential fight back, sir, if things aren’t as bad as we expect. It’s a bit early to comment. Krishna Kumar. Maybe by next call we will be having a better clearer position.
Krishna Kumar
On the Rane and Madras. Is it possible to give some color in terms of how you know the growth has been on the different segments like you talked about, different brakes, engine parts and steering. So can you give some color on the product price growth, sir? Ioi, is that possible? And also on exports, how they have growth, sir? IOI growth.
Unidentified Speaker
Yes. So product wise, if you look at it so steering and linkages business, we have a good growth both in domestic as well as exports. And however if we you look at it from other segments, particularly the light metal castings, we had a growth but it’s not comparable to the steering and linkages. In terms of aftermarket, we have good set of numbers, good traction that we are seeing in the market. And as we have integrated all the aftermarket businesses into one entity, we are actually building lot of synergies and then we are actually consolidating the one approach of working and there has been a lot of synergies there.
And in terms of engine components we face some challenges in terms of the exports particularly because of the tariff situation and the brake components. Also we are having a good traction across the segments, both domestic as well as rails and the exports.
Krishna Kumar
Thank you sir. Thank you very much sir. All the best.
operator
Thank you. The next question is from the line of meat Raj from Equis Secure Equeris pms. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Am I audible?
L. Ganesh
Yeah.
Unidentified Participant
Yeah. So first question is on debt. Can you call out gross data across the entities rml, RSSL and zf?
L. Ganesh
Rml is 764 crores. Rssl is 175 crores.
Unidentified Participant
Yeah. On ZF.
Unidentified Speaker
ZF combined is 722 crores.
Unidentified Participant
Okay. Okay. And on RSSL margins, so you’ve been highlighting that incremental business is being taken at high single digit margin, maybe closer to 7, 8%. So my question is how many quarters will it take to improve the fund sold margin? Maybe towards mid single digit in RSSL.
L. Ganesh
It will be maybe in the year of 2728 onwards we can start seeing improvement. We will require at least another 15 months for this to stabilize. After that once the new program starts, that will help in overall improvement. So I would say 2728 onwards we can see an improvement in the EBITDA numbers.
Unidentified Participant
Okay. Okay. And just a clarification the provision which we have made in quarter three is for all the 9.6 lakhs vehicles, right?
L. Ganesh
Yes.
Unidentified Participant
Okay. Okay. Thank you.
operator
Thank you. The next question is in the line of Mozill Shah from nsfo. Please go ahead.
Unidentified Participant
So my question pertains to Rani Madras. In our earlier calls we have mentioned that by Q4 exit we would be inching towards 10% EBITDA margin at the exit. That is one question. And second is in debt reduction. So in Q2 call we had mentioned that the first half capex was on a higher side at 94% and we had received one hundred and fifteen crores from land sale. And third quarter numbers are much better than first two quarters. And capex intensity is going to decline significantly in second half. So are we on track to achieve 150200 crores of debt reduction by end of March 2026?
L. Ganesh
Not. Not by March 2026. We’ve been always maintaining that it will take 12 to 18 months for this to happen. So maybe March of 27th we will see that kind of a number reduction because this is in transit we are receiving it. So while we are using currently most of the money for without additional borrowing handling the capex for the absolute number of debt to come down it may be March 27th.
Unidentified Participant
So in that case your working capital has increased significantly because even before the land sale we were assuming 150 or crores of debt reduction in financial year 26. So this 21% growth has come with lot of working capital addition.
L. Ganesh
See during this year there has been a slight increase in working capital partly due to conscious inventory buildup. But going forward this working capital optimization you will see from quarter on quarter so that will start reducing. This was for a short period of time because of conscious inventory buildup. This is showing that will come down.
Unidentified Participant
So is it now fair to assume? Because see what happens is every quarter we are changing the guidance actually.
L. Ganesh
Okay. And so if I put like financial at 27. Okay. So by end of financial 27 your gross date in Rane Madas is close to 764 crores. Yes.
Unidentified Participant
Right. So that should come down to close to find it crores by end of financial year 27. No, but see because see we will be do we will be increasing our EBIT also will grow also and we will perhaps receive the balance amount of land. Right. And the Capex intensity is going to be somewhere on 150 odd crores. And you are mentioning that working capital intensity would also come down. So I’m assuming only 250 crores debt reduction in financial A27.
L. Ganesh
See we. We track the debt to capital employed and debt equity. From that standpoint there will be quantum improvement. But in terms of absolute debt that is also a function of the new business that we are procuring and the investment that is required for a new business. That’s why while the debt to capital employed will substantially come down because of the good performance and the numbers that you will be seeing going forward as far as absolute debt is concerned I would say 600 crore, 150 crore reduction is something we can look for over and above the capex investment which we’ll be doing from our own fund.
Unidentified Participant
Based on this so large question then in that case what is our capex for 26, 2728 on a console basis for Rani Madras.
L. Ganesh
It’ll be around 200 crores for each year. Yeah.
Unidentified Participant
So it will be total of 600.
L. Ganesh
Crores for 26, 27282526 to 2728 the three years. Correct.
Unidentified Participant
So 600 crores for three years.
L. Ganesh
Yeah.
Unidentified Participant
Okay. Thank you. Thank you very much sir.
operator
Thank you. The next question is from the line of Chetan Cholera from Pragya Equities Private limited. Please go ahead.
Chetan Cholera
Hi, can you hear me?
L. Ganesh
Yeah, we can hear.
Chetan Cholera
Thanks for the opportunity. See one common upgrade we see in successful auto component companies entering in high precision engineering and component sector for example industries like aerospace and defense. Do we have any plan or thoughts on pursuing this?
Unidentified Speaker
No. So currently we are focusing on exploring opportunities in the automotive sector. Because it’s. This whole generally entering is a very time consuming job. So if you start early you can, you can get some orders after a few years. So is there any plan?
Chetan Cholera
Is any what what we want to see ourselves in three to five years down the line.
Unidentified Speaker
Yeah. See right now we have a significant order book that is one with respect to our existing businesses and all our products are partner and agnostic. And then we see a good headway in terms of our traction in terms of our product. The second thing is in terms of new products we continue to evaluate multiple opportunities in terms of both inorganic as well as new products from our own thing. And we strongly believe that given the position of automotive sector in India we strongly see lot more opportunities for playing out in automotive sector for the next three to five years.
Of course we have an experience of supplying to aerospace in the past and we might look at other non automotive segments in future. So right now there is no plan.
Chetan Cholera
Okay. Thank you.
operator
Thank you. The next question is from the Line of Saket Kapoor from Kapoor and company. Please go ahead.
Saket Kapoor
Thank you ma’. Am. Namaste. Hope I’m audible.
L. Ganesh
Yeah, you are audible.
Saket Kapoor
So when we look at the consolidated performance for Rani holding excluding the performance of Rane Madras, that is the consolidation of Rane Madras, the. The profitability and the margins are on the lower side. I am talking about before the share of profit from jv. When we look at Rania holdings console number for the quarter it stood at 44.78 crores. And whereas Rani Madras numbers for the quarter were at 43 crores, the PBT. So excluding the Rania Madras numbers, the other JVs and other subsidies are not performing. So is it only because of the product profile which you just alluded to the earlier participants I.e.
that these are not contributing or what. What are the key reasons and when are we going to see the contribution from other other subsidiaries? Also.
L. Ganesh
Currently RHL consolidates RML and RSSL and rml. As you have seen, the performance has been good during the last quarter. Rani Steering Systems as we already mentioned, it has a issue with respect to margin which we are correcting in the next 12 to 15 months. And so for the next 15 months this challenge will be there in the RHL consolidated results post which we expect Rani Steering Systems also to contribute to the bottom line of Rani Holdings Ltd.
Saket Kapoor
Okay. And so can you dwell further. Is it the nature of the order booking with some. Some cost escalations or the product? What is the reason why this is the state of affair for rssm?
L. Ganesh
This we also mentioned in the past call some orders have been booked at very low margins a few years back. And then since that program is still continuing till the end of that program this talent will be there. In the meanwhile we have booked some new orders at higher margins that will start production sometime in 2728. So from 2728 year onwards we we are hopeful that Rania Steering Systems also will start contributing to Rania holdings. Bottom line.
Saket Kapoor
Just a second point to it post this restructuring. This is. Is this the final capital structure for both the misn? Because having the separate entity of Rami Madras been trading separately and running holding separately does this will run a holding valuation will ascribe properly or will it always trade at a discount because of a holding company market perception? So are we done with this exercise or going ahead to in order to create value we can look forward for further changes in the capital structure at this juncture.
L. Ganesh
Keeping in mind our company profile within the group. We felt that this restructuring is good. For us to reap all the synergies. And so as we stand, this is the structure we are looking at which we feel will help us reap all the synergies of this merger and going forward improve our margins as well.
Saket Kapoor
Okay. And last lastly on the JF running automotive part. So you mentioned about that plastic component being sourced. So that is being sourced from the JF facility or who are the suppliers? Can you name? And you have also changed that. I mean now we have taken the course correction. Also the changing of the supplier for the plastic component molding which you just mentioned.
L. Ganesh
Hello, Sorry, you want to know the.
Saket Kapoor
Yes. The name of the entity from where we have sold this plastic moldings which.
L. Ganesh
You have mentioned, Microtech Polymers.
Saket Kapoor
Okay. They are not in the listed space, right?
L. Ganesh
They are not.
Saket Kapoor
Thank you sir for the clarification and join the quiz. Thank you.
operator
Thank you. Ladies and gentlemen, a reminder to all the participants, if you wish to ask a question please press star and 1. The next question is from the line of Raja Kumar Vaidanathan from RK Investment. Please go ahead.
Raja Kumar Vaidanathan
Yeah, thanks for the follow up. Sir, my question is on this warranty provision which you said you will revisit by April May and then kind of finalize the number. So the question is is there a risk of this Provision continuing for 2, 3/4 similar to the way we saw it in NSK jv or do you think by April May we’ll be able to kind of come with a firm number? Because I just wonder whether it’s going to be a long term pain or it’s more a short term pain.
L. Ganesh
We believe that by April May we should be able to come out with the final number. As again as I said it’s very preliminary. We will based on the experience and the review in April May we will definitely get more clarity on this.
Raja Kumar Vaidanathan
Okay sir, thank you so much.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Harshit Vora, an individual investor. Please go ahead.
Unidentified Participant
Good afternoon sir. I just wanted to understand what kind of sales are we expecting from the 600 crores capex that we are going to do in Rane Madras in next three years. What should be the approximate asset turnover for this Capex and how much of it is growth Capex versus maintenance Capex. Thank you.
L. Ganesh
It’s very difficult to give one single number Harshit because each business business has its own ratio of fixed assets turnover. So it varies from business to business and overall numbers currently Ballpark numbers. We have picked it up and we feel it will be around 200 crores per annum.
Unidentified Participant
If I want a broad understanding of where the company thinks itself, you know, in terms of top line in next four to five years, what would that number be?
Unidentified Speaker
Yeah. So as you know this is our typical planning cycle that we are underway now. So we’ll be able to come back to you maybe in the. Once we close out this quarter and then when we meet next quarter time we should be able to actually give you a directional number by then. So we, most of our businesses are undergoing the planning exercise now. So. Okay, should be able to come back to you probably next time.
Unidentified Participant
Okay, thanks a lot sir.
operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor and company. Please go ahead.
Saket Kapoor
Yes, sir. When we look at the presentation slide number nine and the performance for Rani steering systems for Q1 and Q2 the the EBITDA was at 18 crore and the margins were at 3.9 to 3.7%. So is it only the labor code provision that led to the drop in margin as you were mentioning that the orders, old orders at lower margins were there. So what explains this 2% reduction in EBITDA margin? Q on Q.
L. Ganesh
So in the last financial year there were some reversal of. In the last two quarters there were some reversal of provisions which also helped in improving the ebitda. There was also a price increase which we got from RT retrospective price increase that also helped in improving the margin. So those were some onoff items which helped improve the EBITDA in the previous two quarters. And in this quarter labor code has further brought the EBITDA down.
Saket Kapoor
Okay, but the pride increase. Yeah please. Sorry sir.
L. Ganesh
That’s why there are two factors. The previous two quarters and this quarter is not comparable. Mainly because there there were some provision reversals. And here we have a additional provision made in this quarter.
Saket Kapoor
Yeah. Yes. Because the top line has improved from 480 to 520 crore. That is a 10% increase wherein the margins have halved. That is your explanation?
L. Ganesh
Yeah, that’s why I was mentioning that the EBITDA numbers are still at a low level. It is just that the 2/4 previous quarters because of some provision reversals it helped. Otherwise the EBITDA numbers are on this range only. And it further got impacted due to the labor code which is a one time thing.
Saket Kapoor
Okay. And for sir, rssl are we running at the utilization. The capacity utilization levels are at optimum level or if you could just give a number or two the same.
Unidentified Speaker
One second. We have. We are. We are running around 80 to 85% capacity utilization.
Saket Kapoor
Okay. Entered. We. We have mentioned about the order wind to the tune of 345 crore. I think so these are long term programs. Sir, I’m not one of the item that we have orders that we have won. This will con. This program will continue over a period of time.
Unidentified Speaker
Yeah.
Saket Kapoor
Yeah.
Unidentified Speaker
So each of these orders will be for a reasonably 56 year time frame. And some of it is replacement programs etc.
Saket Kapoor
Etc. Okay. And taking this into account that we are also contemplating any capex for RSSL also going there with the time with this order win and running at 80, 85% utilization level.
L. Ganesh
There will be some limited CAPEX in RSSL also considering the new orders they have got around 40 crores is the expected CapEx.
Saket Kapoor
Okay. And here we have only one product that are the steering as the name speaks or what are the key product profiles.
Unidentified Speaker
We have manual steering column which is predominantly to the commercial vehicle segment. And the column electric power steering which is for the passenger vehicle. The electric power steering is the major predominant portion of that revenue. 85% of the revenues.
Saket Kapoor
Lastly sir, a very small suggestion.
operator
Sorry to interrupt Mr. Kapoor. Ma’, am, please.
Saket Kapoor
Yes, yes ma’, am, do that.
operator
Thank you. The next question is from the line of Radha from BNK security. Please go ahead.
Radha Agarwalla
Hi sir. Am I audible?
L. Ganesh
Yeah, you’re audible.
Radha Agarwalla
Hi sir. Thank you for the opportunity. So because of the frequent warranty provisions it becomes kind of difficult to find the sustainability in earnings. So please help us understand what are the steps that we are taking and how seriously are we thinking about curtailing these kind of provisions in future.
Unidentified Speaker
Yeah. So I think it’s an unfortunate thing for us to as well we continue to strengthen our key processes across channel supply chain, our manufacturing everything. And the one thing that we can assure is this has actually not affected any of our customer relationship and we continue to be winning new businesses as I have actually told earlier as well. Right. And these are some of those things which are not available in the entire. Even even along with our joint venture partners when we actually look at it, we don’t have these kind of scenarios. These are more like a one off very, very low probability kind of scenario.
Right. So this our strength is in terms of our quality and processes and the nature of engineering engineering that we do. So those things remain consistent. So that is being reassured by our customers themselves in terms of providing us with new opportunities etc. Etc. All right. Hope this actually gives you an answer.
Radha Agarwalla
Yes. Secondly, the guidance of 11 to 12% EBITDA margins that you have given for Rani Madras. What are the plans for EBITDA margins for Rane holdings overall and by when do you expect to achieve that?
L. Ganesh
See, Rane holdings as you know is investing company and it’s basically Rane Madras and Rane Steering Systems. These are the two companies which will contribute to the overall major. RANE standalone has very limited activity. So. It will more or less match the whatever combined EBITDA of Rani Madras and Rani Steering System. It’s very difficult to give an EBITDA margin for Rani holdings separately because on a standalone basis it doesn’t do any manufacturing. It is only investment companies. Basically the consolidated revenues and EBITDA of the component subsidiaries of Ranch.
Radha Agarwalla
11 to 12% for Madras can be achieved next year.
L. Ganesh
Next year 11 to 12%. We are hopeful by 27th March.
operator
Understood sir. Thanks and all the best. Thank you. The next question is from the line of K. Mohan, an individual investor. Please go ahead.
Unidentified Participant
Hello. Hello.
L. Ganesh
Yes, Hello.
Unidentified Participant
Am I audible?
L. Ganesh
Yeah, you’re audible.
Unidentified Participant
Yeah. Thank you. I’m sorry that I thought that we are at the end of the bad, bad luck period, whatever you call it, for running because five years you suffered through the warranty problems of RMSS and now this problem is. But I’m sorry, I probably might have missed a part of the explanation for the warranty on ZF Rani. Is it a quality problem or is it a manufacturing defect?
Unidentified Speaker
This is. This is a. No, no, this is a manufacturing defect. This is with respect to one of our parts that we source from the Tier 2 Injection Molding Company.
Unidentified Participant
So the loss is close to I think 160 crores or so. So are we going to get everything from the sourcing company or is this going to be shut case? Nothing we can possibly do to recover from the sourcing company. Let’s probably. It is a plastic component so it must be very low value component, is that right?
L. Ganesh
Yeah, it’s a small company.
Unidentified Participant
A small company and so yeah, it’s quite unfortunate and I’m a little disappointed that I thought we had come to the end of wounds. Anyway, so. And again you are saying that only by March or April you’ll be able to assess whether any further provision needs to be made or not because we’ve made a sizable provision of I think 120 crores. So. And is that okay? So it is not a sourcing problem. So there is no way in which we can name the collaborators the provided like in the case of the previous complaint and RMSS you could get something out of the MSK joint venture being a design problem. But here there’s no such possibility exists. Is that. Am I right in understanding that?
L. Ganesh
Yes, sir.
Unidentified Participant
Okay. Okay. Once again, my, my. I’m sorry for what’s happened and I can understand the pain that the company is suffering and all of our shareholders are bearing. May I just wish better luck for the company going ahead. Thank you.
operator
Thank you. The next question is from the line of Manish Royal from thinkwise Wealth Managers llp. Please go ahead.
Manish Goyal
Yeah, thank you. Sir, there are a couple of questions on Rane Madras. So in your earlier remarks you said that Rani Madras has won 650 crores of business new business in the current year till date. So sir, does it mean that this will be the new incremental business which will probably get added in coming year? Sir, that was the first question. And second question on revenue mix. Now we see that exports for last two quarters are picking up and the revenue share is roughly 25% ranging between 25 to 27%. And after market is roughly 18 to 19%.
So how should we see it going forward that growth of exports and aftermarket. Can it be double digit growth going forward?
Unidentified Speaker
Yeah. In terms of the new orders, one, this has a combination of both the replacement business which is for our existing ones as well as the new business. Right. And these will actually mature probably like one and a half to two years later. Right. So that is. That is one. And second thing is in terms of the mix, I think given the growth in domestic market from a volume perspective across segments starting from passenger vehicle, commercial vehicle and in fact form tractors. So we see the domestic growth is robust and our aftermarket growth is also.
We are anticipating it to be a growth driver. Given the share and penetration that we have, I think we can definitely grow that business. So given the higher growth that we are actually expecting in these two segments, the mix of exports is likely to be in a similar levels. And however, when we actually have this growth across the segments, when we look at it, we are looking at it a very similar percentage for the maybe one to two years.
Manish Goyal
Sure. Sir, thank you so much.
operator
Thank you. The next question is from the line of Ketan Sankhvi, an individual investor. Please go ahead.
Unidentified Participant
Thank you. Sir, I just have two questions. One is on the Velacheri land sale, just. Just help us understand whether the current amount to be received is about 230 crores. Is that correct? And is that expected in FY27?
L. Ganesh
There are milestone payments. If the overall amount is 230 crores said to be received. But it also depends on certain milestone payments which you have granted. As and when we reach that milestone, these amounts will start coming.
Unidentified Participant
Okay. And the second question was if I heard you correct in the beginning of the call. Is there a possibility of any insurance to be received against the claims at ZF Rani or that that’s not the case.
L. Ganesh
We do have a product like the insurance in Zfrani, but like I said, it’s a bit very early to comment on that. Maybe as we progress, if there’s any further development, we’ll keep you posted.
Unidentified Participant
Okay? Okay, sure. Thank you, sir.
operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.
Saket Kapoor
Only a humble suggestion to conclude we. We find that Ran Madras numbers are generally declared earlier, much earlier than the holding. So if the gap can be concluded in terms of the board meeting and things can be aligned in a way that these two companies post their numbers in, in. In the lesser gaps and then the concord is also held accordingly in that time frame. So that will suffice. Lot of our questions and the time period also a more long, longer times elapsed between running Madras numbers and holding. So get me corrected here. If there’s any.
If there is any way by which these can be reduced, that would suffice. Lot of investors interest. And the timing will also be shortened from my.
L. Ganesh
It will be very difficult to reduce that time cap because the Iranian holdings is the holding company of Rani Madras. So after the Rani Madras results are approved, the same has to be taken into consideration by Rani holdings. And then they have to finalize their financial. So this reasonable gap will continue to be there. At least a week’s gap.
Saket Kapoor
Okay, sir. Thank you. Thank you. And all the best for the teams.
operator
Thank you.
operator
Thank you. The next question is from the line of Mithraj from Equis pms. Please go ahead.
Unidentified Participant
Yeah, thanks for the follow up, sir, on this seatbelt thing. So what would be the content per vehicle for this particular Hyundai model for this product?
Unidentified Speaker
We don’t have that number with us.
Unidentified Participant
Okay.
operator
Mr. Rush, do you have more questions?
Unidentified Participant
No, that’s all from my center.
operator
All right, thank you. Ladies and gentlemen. We will take that as the last question for today. I now hand the conference over to the management for closing comments.
L. Ganesh
Thank you all for taking your time out and be available for this investor call. Thank you.
operator
Thank you very much on behalf of Rane Group. That concludes this conference. Thank you all for joining us today. And you may now disconnect your lines.