Rolex Rings Ltd (NSE: ROLEXRINGS) Q2 2025 Earnings Call dated Nov. 11, 2024
Corporate Participants:
Mihir Rupeshkumar Madeka — Wholetime Director
Hiren Dilipbhai Doshi — Chief Financial Officer
Analysts:
Sonal Gupta — Analyst
Harish Bihani — Analyst
Abir Tatian — Analyst
Kushner — Analyst
Dhaval Shah — Analyst
Jason — Analyst
Lakshmi Narayanan — Analyst
Presentation:
Mihir Rupeshkumar Madeka — Wholetime Director
[Abrupt Start] opening remarks, post which we will have a Q&A session. Over to you, Hiren sir.
Hiren Dilipbhai Doshi — Chief Financial Officer
Yeah. Mihir, allow me to share the presentation. Mihir, my screen is visible?
Mihir Rupeshkumar Madeka — Wholetime Director
Yes.
Hiren Dilipbhai Doshi — Chief Financial Officer
Okay. Very good morning to all the participants.
This is Hiren Doshi from Rolex Rings Limited. Thank you very much for your spending your time to attend this quarterly call, and we would like to brief you the quarter 2 of FY ’25 as well as the first half of FY ’25, the financial and business developments. The revenues for this second quarter of fiscal ’23, net revenue what — it has recorded at INR300 crore, which was INR311 crore in the last quarter, that is the June ’24 quarter. I would like to tell that here we had a deep of somewhere about 3%, 3.5% odd. But in terms of EBITDA, I would like to tell you that in second quarter of FY ’25, that is September ’24, we have recorded 24.4%, which was 24.2% in the previous quarter. So in-spite of reduction of 3.5% odd over here in revenue, but the company has able to maintain the EBITDA.
Here, I would also like to mention that this EBITDA what we are telling you is considering the other income. Even if after the — without considering the other income, on paper it looks like that EBITDA is 22% without other income. But I would like to clarify that in other income, we have a forex gain realized. Forex gain is somewhere about 3.5 to — 35 to 37 million which is actually it is in nature of operational. If you add this amount then even after without considering other income our EBITDA is to 23% for this quarter FY ’24 quarter of September ended. In terms of PBT, company has recorded INR65 crore revenue which was almost same INR66 crore in the previous quarter. At the same time the PAT company has recorded INR49.3 crore which was almost touching INR50 crores in previous quarter. Here the company would like to tell you that in spite of having some dip on top line, but we are able to maintain the margin the PBT PAT level.
In terms of business segments, the bearing ring which is a suppressed sector as of now wherein it has contributed 47% of our revenue and auto component its 53%. From this fiscal onwards, the auto components the strong demand and the new order winning we have been able to surpass the bearing ring level which was until previous fiscal the bearing ring was somewhere about 60%, but this fiscal it is more or less 47% and 53% of auto components. In terms of exports business and domestic revenue, company has recorded 52% of its contribution from the exports revenue and 48% from the domestic business. And revenue mix with the application of the product with the end user of the products, almost 46% goes to the passenger vehicle segment, 18% goes to the industrial one, 27% it is for commercial vehicle, heavy commercial vehicle and 8% goes for the EV and hybrid kind of vehicles.
If we talk about the total revenue from the company, total revenue from operations for this first half it has INR611 crore which was INR1,221 crore in the previous fiscal. So on an annualized basis, we are almost at par. Though the second quarter was bit down compared to the first one, but we expect some good recovery in the last quarter of this current fiscal. In terms of EBITDA for the first half INR152 crore which is 24.3%. For the fiscal FY ’24 it was INR277 crores. In terms of EBITDA, we are on the bit ahead compared to the previous fiscal as far as the annualized number is concerned. Same way in terms of PBT, it was INR99 crore for the first half which was INR132 crores PBT. In fiscal ’24 it was INR242 crore. We are almost surpassing the PBT PAT level what we had in the previous fiscal.
The company is having a quite strong operating cash flow and with the minimum capex and the required capex company has maintained good cash position for the current fiscal. First half the operating cash flow was somewhere about INR124 crore out of which INR20 odd crore something has been spent for the capex. Remaining is being reinvested and parked to the instruments. In terms of debt, as we told earlier also company is in net negative debt for almost a year and today, company is carrying good cash surplus with him without carrying single rupee of debt. Return on equity, it is in the range of 20% what we had in 27 24% percentage in previous fiscal. These are the detailed numbers for the operating as well as the balance sheet numbers.
Before inviting the participants for the question Q&A session, I would like to request our Director, Mr. Mihir Madeka, to just give you throw some lights on the current business affairs as well as the business what we are expecting in the coming quarters as well as for the next fiscal also. Over to you, Mihir bhai.
Mihir Rupeshkumar Madeka — Wholetime Director
Yeah. So good morning.
See regarding the auto component as we — regarding the auto component — means we are growing in — you know that Europe and US is a bit down due to all this — the war and the issues and all but we are getting more — we are pitching more customers and more businesses from the existing customers which are going to start from the next year and so on. And like there are few customers like American customers who has a facility across the globe where we are growing with them in Mexico, Poland and there are a few customers who are European customers. They are also having a plant across the globe where we are growing in US, Mexico, in Italy. And furthermore, businesses are on the discussions. Apart from that, there is again one French company, big OEM. With them also recently we got a good business for US which is going to start from the next year.
So definitely as far as the auto component is concerned, we are having a very good customer base. And we are growing a good customer base. We are having — and since you might be knowing that we installed one high speed hot former last year over and above that we all we also ordered two more vertical forging lines for which we already got few businesses and we need those lines. So we have ordered and that line is going to be installed immediately within next year. Good growth in auto components. So there is a very good growth in the auto component. Same way bearing ring is down at present due to all these geopolitical issues and this war and all. But definitely next year what we are getting assigned because here customers in bearing what they are doing, they are shuffling their business. Shifting or shuffling you can say like few countries they are shifting. They are no more now profitable. So they are moving those lines or those business to their other countries. So we have already started. So at present it is down. But they are moving, they are shifting the business. So immediately within another maximum 3 to 5 month we are going to get some more business from their other country in Europe.
There are many Asian countries where their facility they are shifting their requirement from Korea to India. And recently, we have many customer visit. Very important customer from their senior CEO are visiting our facility next week. So we are very much hopeful that from that it is very easy for bearing manufacturer to shift the supplier. In case of automotive, it takes 1.5 years, 2 years to start the bulk business. But bearing, they can shift the supply from other supplier also. So as a part of that many bearing customers are visiting in next few weeks to shift their requirement from India. So we are very much hopeful that bearing business will also grow from next quarter.
See one thing I would like to tell you that in our this tenure, we have not lose a single customer. So which is the very big plus point. So this is only and only because of this geopolitical issues around situations. It’s a time being issue and now we think that it is going to resolve because what feel we are getting from our customer, the way they are visiting, the way they are discussing with us.
So in nutshell we would like to inform to the stakeholders that there is a dip particularly in the bearing ring market and particularly from the overseas market. At the same time, we would like to inform that company has gained good amount of share in domestic auto components business as well as winning auto components business from the overseas. No doubt the auto component business what we awarded last year which was supposed to be ramped up quickly. Those have been bit deferred or started slowly. But with the conversation with the dialogues and the forecasting now what our customers are giving on that base, we expect a good momentum from the last quarter of this fiscal and there onwards. That is why we have added couple of more forging press, though we have added one high speed hot former in the previous fiscal. In this fiscal, we have added couple of more vertical presses because we have already received the nomination. We have already received the program for the supply of certain kind of auto components to these new customers which would schedule to be in the mid of ’25, end of calendar year ’25 and the end of next fiscal.
Management is very much confident to have at least mid team growth in the next fiscal which is very much feasible and very much achievable as of now, looking to the dialogues, looking to the figures, what our customers have given. At the same time what we are expecting that the bearing ring business which has reduced, which has gone down that also to be bit slightly improved from the first quarter of the next fiscal and the last quarter of the current fiscal.
Would like to now open a session for the Q&A.
Questions and Answers:
Operator
Yeah. So thank you, sir, for your opening remarks. [Operator Instructions] So our first question is from the line of Sonal Gupta. Sonal sir, you may go ahead. Sonal sir, you’re not audible.
Sonal Gupta
Sorry, can you hear me now?
Operator
Yeah.
Sonal Gupta
Okay. Sorry. No sir, good morning, and thanks for taking my question. Could you just share the scrap sales and other operating income for the quarter?
Hiren Dilipbhai Doshi
For the quarter, scrap sales is INR199.92 million or you can say INR200 million and export incentives INR39.88 million, you may say INR40 million. And the other income breakup as I was mentioning that somewhere about INR37 million, INR38 million consisted of realized gain loss. Apart from that, company has also accrued the income for the funds which have been parked which is somewhere INR35 million odd. And again, and interest income from the bank fixed deposits to the extent of INR20 million.
Sonal Gupta
Right. Great. Thanks. I mean like it’s been like now almost like more than two years or almost two years of a slowdown, and we have consistently won new orders. I mean our commentary has always been that we are winning new orders. And I mean, earlier it was that Europe was showing a decline, and we were not as a result overall our top line was not growing. But I understand, I mean like your business is completely export dependent and mostly export dependent and, therefore, the challenge in some of the export geographies is impacting you. But I’m just trying to understand the divergence between like — I mean we’ve consistently said we are winning new orders. These are starting going to start. So even this year we started with like or last year the expectation was this year will be a mid-teens growth and now we are ending up with zero growth for this year also potentially. So I’m just, I mean like is there a need to — I’m just trying to understand right. Like how, I mean if you could give us some sense of how are your existing orders moving, I mean like on a year-on-year basis versus how much have the new orders contributed? I mean if you would give us some sense on what is happening, right a little more detail.
Hiren Dilipbhai Doshi
Very true. Mr. Sonal, as you said that we have almost a consistent top line of say quarterly INR300 odd crore. But I would like you to just please take a note that in this particular revenue number, the existing business of the bearing ring in domestic as well as in overseas has significantly reduced. At the same time we — it has been compensated with the new order, with the new program with initiation of the new supply. So it’s not that that new orders have not started new. If those orders were not executed or not started again these numbers would be much lower than that because the loss of bearing ring business is somewhere about you can say almost 30% of overall our contribution what we had in FY ’23 from the bearing ring business. So there is a growth in terms of auto component business. Even if you compare my auto component business number of previous fiscals which was somewhere about 35%, 40% and today it is touching to or crossing the 50%. So there is a growth over there also.
So new program what we have awarded at the same time the quantum at which and the pace at which those were supposed to be started that is bit slow because of all this uncontrollable parameters. You better know that for the last six months, again the ocean freight matter has significantly arise for the Europe and US. So these are the things, which bit reluctant or rather create certain hurdles as far as overall growth is concerned. But today, what we are telling to you that the order winning what we had, the nomination what we had and the numbers what customer intimated accordingly we are expecting that a meeting growth in the next fiscal. No doubt this year also, till in the first half we didn’t have growth. But definitely by end of this fiscal, we expect particularly in the last quarter of this fiscal, we expect good jump over there.
Sonal Gupta
So you’ve also won like on the auto component side orders on the like — I think a lot of the auto component orders are going into the EV related things on the power, I mean like in the transmission et cetera. So is there, I mean like have these orders really ramped up that much? I mean like or because of the slowdown in Europe in EVs et cetera, we’re not seeing these orders or the ramp up.
Hiren Dilipbhai Doshi
Let me tell you, Sonal, see it’s not the EV only which is going or rather on the other side, if I’ll tell you the EV customers or rather the EV products are not that in demand compared to even the back to ICE vehicles. The new projects, what we are winning even the customers what they are targeting one of our Europe major auto component auto buyer customer, he is starting new plant in or rather already started, and he’s going to source the transmission parts for the ICE vehicle. So it’s EV. No doubt it is gradually or you can say the growth what we had in EV in the previous fiscal, it is degraded in this current year. But ICE part, again it is growing and we are mainly getting from there.
Operator
Got it, sir. Okay, thanks. I’ll join back the queue. Thank you so much. We’ll take the next question from Mr. Harish Bihani. Harish sir, your line has been open so you can now ask.
Harish Bihani
Am I audible?
Operator
Yes, sir.
Harish Bihani
Good morning, Hiren bhai. Good morning, Mihir bhai. Just wanted to understand what is the absolute number from that one customer for bearing rings which is coming down on a year-on-year basis for the first half?
Hiren Dilipbhai Doshi
From the one particular customer group in the bearing ring business in this first half compared to FY ’23 numbers it is almost 35% to 40%.
Harish Bihani
Decline. Absolute — what is the absolute number Mihir bhai?
Hiren Dilipbhai Doshi
The absolute number you can see in terms of somewhere about INR70 crores to INR90 crores.
Harish Bihani
From that one individual customer?
Hiren Dilipbhai Doshi
One customer group, having more plants. They have multiple facilities across the globe. So with few customers we are discussing with them, and we got some businesses from their multiple plant, not one plant. Or you can say multiple program. Again customer only, they are shifting their or starting new facility in Europe which till now it was not there with us. Now we expect that the in the existing couple of plants which they are going to ship this facility in the new plant at Europe, we will be getting supply or we’ll be starting supply from the last quarter of this fiscal.
Mihir Rupeshkumar Madeka
See, their facility was there, but they were not our — that plant was not our customer. So now they are shifting their some of their US business to that Eastern Europe part where they were having their own forging and bearing manufacturing. Now forging they have stopped, and they are shifting some business from their US facility to their Eastern Europe. So there we are under very rigorous discussions, and they are going to award us some business.
Harish Bihani
So to clarify first half, the absolute decline from that one customer group is around INR90 crores.
Hiren Dilipbhai Doshi
No sir, I’m talking annualized numbers.
Harish Bihani
Annualized numbers. So ballpark around INR45 crores.
Hiren Dilipbhai Doshi
Yes.
Harish Bihani
Understood. And in terms of the new business win, either in terms of bearing rings or in the auto component, which is included in the first half numbers, how much would that be?
Hiren Dilipbhai Doshi
That is somewhere about in this first half you can say again INR80 crores to INR100 crores.
Harish Bihani
This is annualized INR100 crores or this is?
Hiren Dilipbhai Doshi
No, I’m talking about this one, six months numbers.
Harish Bihani
And this would be predominantly in auto components?
Hiren Dilipbhai Doshi
Yes, auto components.
Harish Bihani
And given where we are today, given the slowdown which is there in Europe, some parts of US, we expecting third quarter to be fairly similar to second quarter and things should start improving from fourth quarter. Is that the right understanding?
Hiren Dilipbhai Doshi
Yes sir.
Harish Bihani
Okay. Understood. Okay. All the best. Thanks.
Hiren Dilipbhai Doshi
Thank you.
Operator
Next question is from the line of Abir Tatian. Your line has been unmuted. You can go ahead.
Abir Tatian
Am I audible?
Operator
Yes.
Abir Tatian
Hi, this is Abir from New. So just some basic questions. First of all, can you give the breakup of auto component and bearing rings absolute number between domestic and exports, like you did last quarter?
Hiren Dilipbhai Doshi
You want for this quarter or the first half?
Abir Tatian
For this quarter specifically.
Hiren Dilipbhai Doshi
For this quarter, particularly domestic bearing ring INR88 crores. Domestic auto components INR49 crores. Export bearing rings INR43 crores. Export auto components INR96 crores.
Abir Tatian
Sorry, what was the last number? INR96 crores.
Hiren Dilipbhai Doshi
Yes. You can say overall bearing ring is INR131crore and auto components INR145 crores for the first half of current fiscal.
Abir Tatian
Okay. So roughly 25% to 30% degrowth we saw still in bearing rigs during this quarter.
Hiren Dilipbhai Doshi
Yes.
Abir Tatian
Okay. Understood. Thank you.
Operator
The next question is from the line of Dhaval Shah. I think the participant has dropped down. So next question is from Kushner.
Kushner
Thank you for the opportunity, sir. Just two questions. One is on the competitive intensity. I think one of our other forging player is planning to enter the bearing ring segment. So how do we look at the competitive scenario? And my second question is I think so Trump in the pledges has said of making US. So does that — how does that affect our export business?
Hiren Dilipbhai Doshi
First of all what you said is about to some competitors this thing. I’m sorry we don’t know any new competitor at least in there in last quarter. There are the players who are into the industry, but as we have already highlighted or indicated earlier that the kind of facility, the kind of equipments or the multi-fold the number of SKUs and multi-fold forging as well as machining and other value added processes what we have. It is difficult for the competitor to attend or to cater entire range of my products or even the entire set of my customers. And because we will level the volume of my customers, the quality level again the pricing it would be a concern for us. So but as of now, we didn’t face any kind of that competition. Competition will be there.
Mihir Rupeshkumar Madeka
Second thing I would like to notice that whenever we get any program in auto component, there is always a contract of 5 to 7 year minimum, okay. So then they pay us a huge amount of development and the tooling cost and the same amount more than that amount they spend to validate our product in their facility. So they will never change the supplier until and unless there is any major quality issue or there is any major delivery issue or we suddenly ask for any abnormal price increase. In this three scenario only they will try to move out. Otherwise for that seven year that program is with us. And after seven years, there is always going to be extension of minimum four to five or seven year. That is also they are going to keep it with us only because again if they are moving, then they need to invest a huge amount of money in validation and proving out and the same amount of money they have to give it to their supplier.
Hiren Dilipbhai Doshi
Into your second part of the question that Trump is there on the set or rather on the present level, we expect that this would be a good sign or good indicator for the India because till now or even in past India is supplying sub assemblies, small components which are being final process and which are being final assembled and to be fitted into the their final SKUs. So India is always there to providing the sub assemblies and the components not in directly competition with the US products. So definitely there would be a consistency or even we expect to increase because we expect their production is to be ramp up or increase which in turn helps to India to produce more and export more. At the same time, we expect that Trump might be introducing certain anti-dumping or some kind of — certain restrictions for certain countries apart from India as far as the US import is concerned which will definitely give us some benefit to India. That is what our belief.
Kushner
Okay. Thank you.
Operator
Next question is from the line of Dhaval Shah.
Dhaval Shah
Yeah. Hi, am I audible?
Operator
Yes.
Dhaval Shah
Okay. Thank you. Thank you for the opportunity. Sir, a couple of questions from my side. First one, if you could just quantify on your comment regarding the customer wanting to shift some of its production from US to East Europe. So I didn’t understand the reason for this why it’s the customer shifting? So that’s my first question.
Mihir Rupeshkumar Madeka
See they have a multiple plants across the globe. So for their majority into industrial business. Okay. But this is the business where we were supplying to them earlier in US was an automotive business 100%. So might be due to where they are located in US, due to cost reduction for them, they have decided to shift few of their automotive business to Eastern Europe.
Dhaval Shah
Okay.
Mihir Rupeshkumar Madeka
Okay and Mexico and due to that. So for time being due to this decision, as Hiren bhai has told you that our bearing ring business was down export business. Okay. More than 25% or something. Okay.
Dhaval Shah
Yes.
Mihir Rupeshkumar Madeka
So this is one of the reason due to their shift, it took 6 to 9 months and now maybe in another after one quarter there means we are going to get that business from their Eastern Europe facility.
Hiren Dilipbhai Doshi
Already we have started getting business from one of the European customers.
Mihir Rupeshkumar Madeka
Yeah.
Hiren Dilipbhai Doshi
It was stopped for two quarters, but now from January quarter they already started.
Mihir Rupeshkumar Madeka
We got the schedule.
Dhaval Shah
Okay.
Hiren Dilipbhai Doshi
I’m talking about purely bearing ring.
Dhaval Shah
Yeah. Understood. Yes. Understood. Yes. My second question is on the auto component business. So the way we have increased share of revenue, and you’ve kept on adding customers. So on this on the backdrop of overall market not improving, but our revenues are increasing from auto component. So here I would like to understand, it’s definitely a market share again for us with the customer. So that’s number one. So which type of — so who is the competition and from which geography are we gaining the market share? Is it from the Indian supplier or overseas supplier? And second is which type of auto components are we gaining market share? In which category of the products are we gaining market share? And where are we going to grow in the future? Yeah, that’s my question.
Hiren Dilipbhai Doshi
So in auto component, we are getting more and more market share from Mexico, USA and from — so majority is from Mexico and USA. So you can say 70% and 30% from Europe. Even in domestic also we are getting, there are multinational companies and they are growing in India and we are getting their market share.
Mihir Rupeshkumar Madeka
See, there are few customer we supply only semi-finished product. But they have identified few supplier who can supply them the full finish component.
Dhaval Shah
The machined one?
Mihir Rupeshkumar Madeka
Suggested that supplier to source the semi finished product from Rolex. So one of the opportunity we have. Yeah, so those finished product manufacturer are in India also, and they are in at overseas also. Recently we have added two such customers. One in USA and one in India in Chennai.
Dhaval Shah
Okay.
Mihir Rupeshkumar Madeka
They are our existing customer, but they want concrete finished product and they have suggested to source from Rolex.
Dhaval Shah
Okay. And which type of products do we do?
Mihir Rupeshkumar Madeka
The transmission component.
Dhaval Shah
Transmission component. Okay. And in terms of profitability, how are they compared to the ring? Sorry? Yeah, compared to the bearings business?
Hiren Dilipbhai Doshi
Definitely it is higher by 15% to 20% what we are getting in bearing ring. Because here the transmission components, what we are producing for the high premium cars as well as for the EVs having critical operations and good value addition. That is why the margins are quite lucrative over there.
Dhaval Shah
Okay. And these components are made in a ring rolling or it’s made in a press. How is it made?
Hiren Dilipbhai Doshi
It’s a combination of not measured from the ring rolling because ring rolling parts are the quite bigger size of component which is not there. But we had vertical and horizontal presses, high speed hot formers as well as vertical presses where we are producing such kind of components. We have 18 kind of different forging lines, vertical as well as high speed horizontal.
Dhaval Shah
Okay. And everything is hot forging for us?
Hiren Dilipbhai Doshi
Yes, 100%.
Dhaval Shah
Okay. So any plans to get into warm or cold forging?
Hiren Dilipbhai Doshi
Not immediately, definitely it is in our mind. But it requires and completely entire set of new facilities. And it’s a completely what you say, a greenfield project kind of thing. But first we would like to just be more concentrated on the existing facility wherein we have certain spare capacity in terms of infrastructure as well as equipment capabilities that we would like to cater first. But down the line, 3 to 4 years definitely we may look for cold forging also. Again it’s very much on a primary stage.
Dhaval Shah
Primary stage, got it. Okay. So technically now our margins should inch up from here on as we increase the share of our auto component business.
Hiren Dilipbhai Doshi
Yes, we expect that, sir.
Dhaval Shah
Okay, on our website in the industry served, it mentions about oil and gas industry and also the high speed rail. So what is the share of those industries right now in our total contribution?
Mihir Rupeshkumar Madeka
This railways and this other industrial application, see when we say industrial application that includes equipments, machines and other allied accessories, all put together, I think not more than 12% to 14% as far as industrial and railways is concerned.
Dhaval Shah
Industrial. Okay. So out of this 18% for H1 ’25?
Mihir Rupeshkumar Madeka
Yes. There we can say railway contribution is not more than 4%.
Dhaval Shah
Okay. So our focus area as a company is going to be PV automobile, right? PVCV.
Hiren Dilipbhai Doshi
Yes, definitely PVCV. Apart from that we are supplying to certain off highway non-heavy vehicles or heavy buses or you can say earth moving equipment who is one of our main customer as far as auto component business is concerned. So there also we have a good share and as my MD just told maybe that these customers are also in expansion plan and particularly their domestic plant is going under expansion and down the line one year, we will be getting good share over there also.
Dhaval Shah
Got it. And out of our total business, how much is machining — machined and how much is non-machined or everything is machined for us.
Hiren Dilipbhai Doshi
No. 70% to 75% is machined one and balance is the forged one, rough discipline.
Dhaval Shah
Okay, and so last question. So you guided for mid-teens growth for FY ’26, right?
Hiren Dilipbhai Doshi
Yes, sir.
Dhaval Shah
And for FY ’25 more or less a flat year?
Hiren Dilipbhai Doshi
We expect the last quarter would be much better having some growth. Yeah.
Dhaval Shah
Okay. So as of now the whatever schedules and programs we have from the customer, this is your outlook?
Hiren Dilipbhai Doshi
Yes.
Dhaval Shah
Got it. Okay, thank you very much. I’m done with my question.
Operator
Next question is from the line of Jason. Sir, you may go ahead.
Jason
Hello?
Operator
Yeah. You are audible.
Jason
Yeah, I am audible, right?
Operator
Yes.
Jason
Okay. Thanks, Hiren bhai and the team, for taking my question. So first question is, I mean in last Q4 we had a right of recompense and there was I think around INR32 crore one off expense which was taken. Now I just wanted to know is there any update on that we don’t expect that to come again or is there any update on that that? That was done one time and that’s gone, right? I mean or is it expected to come again or just wanted to understand that aspect of it.
Hiren Dilipbhai Doshi
That was the estimated number what we had in last year. Accordingly, we tried to provide over the books. And as far as the final numbers are concerned, our bankers are working on that. Probably we will be able to know by end of this quarter there would be some kind of additional impact over there that is to be charged at that particular time.
Jason
Okay. So what I understand is once you do that, then probably you will get more leeway on these restrictions and you can take loans and et cetera from other banks as well in terms of covenants, you’re free to do that.
Hiren Dilipbhai Doshi
Definitely we do not have any plan to borrow funds or something. But the restrictions what we had as of now because of this ROR compliance, those will be removed, and we will be very much free as far as the appropriation of our earnings. And we can very much decide further on.
Jason
Okay, sure. Sir, just my next question, now you said that there could be some expense further on this right of comment. That’s okay. Now just wanted to understand sir, you did mention about this INR70 crore to INR90 crore annualized dip from ’23 levels from a particular customer group. Now I just wanted to know, what do you think is the reason for this weakness? Of course it has impacted us in our bearing ring segment which is around 15% of revenue for us. So what do you think is the majority? I mean what is the main cause of this weakness? And has the client told you that when do they see an upturn in this? When there’ll be an uptick in revenues for bearing rings?
Hiren Dilipbhai Doshi
That particular customer, first of all, all these plants are into producing of non-automotive bearings. And majority of these plants say out of six plants, four plants are there in the Europe territory, one is there in India and one is there in US. So there is some kind of cyclical or a seasonal kind of thing as far as the non-automotive bearing rings are concerned. And in Europe, in US, the momentum for the industrial developments is completely stopped. You can say for last couple of years or rather the — forget about the new industry, but even the existing are under what you say cover for the last couple of years. And that is why the — what you say repairs, renovation, re-hauling and infrastructure development is almost zero in these advanced countries where our plants are situated. That is the reason where the demands have significantly reduced. And you better know the situation at Europe on a quarterly basis, how the things are moving and what are the new hurdles and the geopolitical reasons which are the main reasons for this.
Jason
Okay, sure. Okay. And also earlier in the call you had mentioned that. I mean Madeka sir mentioned that — I just wanted some clarity on this. He said that the shifting of bearing rings from the client is easier than auto components. So just was not very clear on this. I mean auto components I think will require an approval. You are right that you their machine parts and critical parts. Probably that’s the reason. So how is the shifting of bearing rings easier than say shifting auto components?
Hiren Dilipbhai Doshi
See what he would he tried to explain or to say that if an existing customer wants to switch over their supplier from A to B in the bearing ring segment, there are bit less process compared to the auto components. There are some less litigities or the trial and process timings, et cetera are less compared to the auto components. Because the inserting traditional bearing rings or in the other bearing rings, the critical operations are bit less compared to auto components. And to get a new or a bearing ring customer, we can start the SOP maybe from the six to eight months time, even from the day one he step in. But in case of auto components, it will take more than 12 to 15 months from the first day when he step into the company. Because of the criticality, because of the kind of products and the application of particular product.
Because auto components, those are the stringent part of the power pack, stringent part connected to the engine or to the vehicles whereas bearing rings, those are very much integral part of this thing. And again, bearing as we are producing only bearing ring, but the other parts of these things are being assembled, processed by our other vendors and customers. So for a changing of one bearing ring customer to another, it’s not a big deal or it may not take much of the time. That is what he would like to convey. And we expect couple of customers from US non-automotive industrial bearing ring manufacturers have already approached and very short span, not even more than seven to eight months. They have approved the bearing rings, and they have given the SOP in the first quarter of next fiscal.
Jason
Sure, sir. Thanks for that. Just one clarification, you said the auto components will take 15 to 18 months once you receive the order. And how much will the bearing rings take for the SOP to be generated?
Hiren Dilipbhai Doshi
Again, as I told you, sir, it starts from say 8 to 12 months. Also because if the bearing rings, particularly for the EV hybrid vehicles, they may require a couple of months more compared to the traditional one. But we can initiate in between 8 to 12 months max.
Jason
Sure. Okay. Thanks for this detailed explanation. And so again just one question just to clarify. Again, one earlier participant had asked that I was a little unclear on that. So there is some shifting from US customer to Eastern Europe. Now just hear me out, probably I can explain. I mean what I understand is let’s say a customer is in the US, he’s shifting into the Eastern Europe facility for basically cost saving. And that facility probably is what you say we are in touch with that and we can get increased business from that Eastern Europe facility. Is that right?
Mihir Rupeshkumar Madeka
That is particular one program, which they are supplying which is a auto — means like automotive industry, mainly passenger vehicle. The volume is high. Yeah. So due to their profitability issue, they are shifting particular that program to their facility in Eastern Europe. Because they know that their cost of production in Eastern Europe will be much more lower than if they are producing in USA. Definitely their customers are in US only. So they will produce that bearing in Eastern Europe and export to USA. But then also they will be getting more margins.
Jason
Okay. So this customer, if he sources from Eastern Europe, you will — though this is a bearing rings, right? Is this in it’s relation to bearing rings?
Mihir Rupeshkumar Madeka
Yes. Bearing rings.
Jason
And let’s say. So I’m just. Let’s say example Schaeffler is the customer. Schaeffler is sourcing from Eastern Europe. So Eastern Europe plant probably falls under your program and you can source more from Eastern Europe. So that means increased business for you. Is that right? Understand?
Mihir Rupeshkumar Madeka
Yeah. For us it will be a new facility. Their facilities, existing facility since last 50, 60, 70 years. But for us that will be a new customer or new plant.
Jason
Okay. So the more they source from Eastern Europe or Mexico, if that falls under your radar, it will win more business for you.
Mihir Rupeshkumar Madeka
Yes.
Jason
Okay. Sure. And sir, just one question. I probably may be basic. I just wanted to ask, actually when you look at forging, of course I understand that your relationships with bearing ring manufacturers are very, very strong in terms of auto components or also your relationships are very, very strong and you built this business over yours. But I just wanted to understand, of course your forging capacity also is good. But there are others also, the others I don’t want to name the competitors, but there are others who are doing forgings who are having this machinery et cetera, this high level machinery. And they have their own strengths. So sir, how do you protect yourself from those big businesses probably eating up into your business or do you have any risk mitigation strategy or anything in place? Other forging manufacturers also have bigger capacities and they are also coming in. So just wanted to understand from a strategy perspective, how do you look at it from them not entering your business, say bearing rings or auto competence or whatever it is.
Mihir Rupeshkumar Madeka
See, there are big companies in India also who are into these. Okay. So forging is a very wide world. Forging, it is not like that that on each and every forger can forge a transmission component or wheel hubs or whatever we are producing. Same way we cannot produce a connecting road, crankshaft. So forging is a very wider name or it has a huge range, okay. So they are into the big names what you have in your mind in India.
Jason
Yes.
Mihir Rupeshkumar Madeka
They are not at all our competitor. Their product is only 10% falling in our range or you can say our 10% product is falling in their range. In their facility, they cannot produce what I am producing. In my facility, I cannot produce what they are producing. So there is a huge and then there is a hot forging, warm forging, coal forging. So forging itself is a huge…
Hiren Dilipbhai Doshi
The type of equipment is required for producing different type of product.
Mihir Rupeshkumar Madeka
Yeah. If you want to be competitive, okay, you need a different type of technology in forging itself. So everybody is having their own you can say strength or range of product in their market.
Jason
Sure, sir. I completely agree.
Mihir Rupeshkumar Madeka
And again I can tell you that it’s a huge market across the globe.
Jason
Sure, sir. Okay. Sure, sir. I understand. And just one last question.
Operator
Sir, can you fall back in queue? We have few participants waiting.
Jason
Yeah. Sure.
Operator
So the next — the last question would be from Mr. Lakshmi Narayanan. Sir, you may go ahead with your question.
Lakshmi Narayanan
Thank you. Sir, if I just look at your bearings on domestic, what did you do for the first half bearing domestic, it comes to INR174 crores for the first half. What is the comparable figure last year stuff?
Hiren Dilipbhai Doshi
Sorry, can you please come again?
Lakshmi Narayanan
In the bearings domestic, if I just look at domestic bearings segment, we did something close to I think INR174 crore for the first half this year. What is the comparable number last year first half?
Hiren Dilipbhai Doshi
It was INR192 crores.
Lakshmi Narayanan
Okay. Sir, one question is that if I just look at Schaeffler and NRB, some of them have actually reported the numbers. They have shown some growth in their bearing segment apart from several other segments. Now we have reported a decline in the growth in bearing segment in domestic. How do you attribute this decline to?
Hiren Dilipbhai Doshi
See, first of all, NRB as we are not substantially or rather a significant customer for us, but as far as Schaeffler is concerned, their growth again it was not as at as per the estimated, but the growth what it is there in the mainly in the industrial components or mainly into the bigger size of rings or some portion of the railway business what they had. But if you see the commentary from them also as far as the automotive or the traditional bearings, what they have it has declined.
Lakshmi Narayanan
Got it. In that segment, if I just look at domestic, what is our market share right now approximately and how it has improved in the last two, three years?
Hiren Dilipbhai Doshi
Domestic bearing ring market through a forging hot forging process in our addressable segment or in our this range, we probably are in the range of 30% odd of overall market share. What we had is somewhere about prior to that was 33%, 34% you can say maybe before a couple of years back.
Lakshmi Narayanan
And the second player would be how large? The same thing when you are 32%, 33%.
Hiren Dilipbhai Doshi
It’s difficult to tell you, but not more than 8% to 10%.
Lakshmi Narayanan
All right. One more question. In the automotive component space where we are doing well in the exports market, how much is build to print for you? Is it that you actually and how much is something where you actually build as something you actually give the design and so on?
Hiren Dilipbhai Doshi
No, see in our kind of business, my customers are giving us design, and we produce according to the design specs given by my customer only.
Mihir Rupeshkumar Madeka
We don’t have any R&D department.
Lakshmi Narayanan
Got it. Thank you.
Mihir Rupeshkumar Madeka
We simply follow their drawing.
Lakshmi Narayanan
Got it. Sir, one last thing. What is your scrap sale and the export incentives and forex for the first half?
Hiren Dilipbhai Doshi
For the first half, scrap sales is somewhere about INR203 million and export incentives is INR84 million.
Lakshmi Narayanan
Thank you, sir.
Hiren Dilipbhai Doshi
Yeah. Thank you.
Operator
So thank you all for attending the call. I’ll now hand over the call to Hiren sir for any closing remarks with him.
Hiren Dilipbhai Doshi
So once again thank you very much to all the participation. Hope we have answered their queries and is there any other queries or concerns, we do request Team Equirus as well as to the participants, they can approach or they can send us email to us. We’ll be happy to answer that. Thank you very much.