Rolex Rings Ltd (ROLEXRINGS) Q2 FY23 Earnings Concall Transcript

Rolex Rings Ltd (NSE:ROLEXRINGS) Q2 FY23 Earnings Concall dated Nov. 10, 2022

Corporate Participants:

Hiren Dilipbhai Doshi — Chief Financial Officer

Manesh Dayashankar Madeka — Chairman & Managing Director

Unidentified Speaker —

Analysts:

Ashutosh Tiwari — Equirus Securities — Analyst

Unidentified Participant — — Analyst

Presentation:

Ashutosh Tiwari — Equirus Securities — Analyst

Yeah, Hi. Good afternoon, everyone. On behalf of Equirus Securities, I welcome you all on this Second Quarter FY ’23 Conference Call of Rolex Rings. From the management side, we have Mr. Manesh Madeka, who is a MD; and Hiren Doshi, who is a CFO.

Without further ado, I hand over the call to Mr. Hiren Doshi for the opening remarks, followed by a Q&A. Over to you, Hiren.

Hiren Dilipbhai Doshi — Chief Financial Officer

Thank you, Mr. Ashutosh. Good afternoon dear investors. First of all. I would like to greet, wish you a very Happy New Year. Wish you a very prosperous New Year. Stay safe, stay healthy. Heartily welcome all of you on the investor call on Quarter 2 as well as first half of fiscal ’23.

Taking you through the certain financial parameters and numbers for the first half as well as Quarter 2. I would like to begin with that revenue from operations in this Quarter 2 [Technical Issues] FY ’23, it was more or less same what we had in Quarter 1 of FY ’23. We have recorded revenue of almost INR290 crore, which was INR287 crore in Quarter 1.

Coming to EBITDA. As we have already indicated that EBITDA would be in the range of the — somewhere in between 22.5% to 23.5% off percentage. We have recorded revenue of INR69 crore in Quarter 2 of FY ’23, which is in terms of percentage is 23.5% almost. As we have already informed that company has just obtained new tax regime from this fiscal so that to reduce the tax burden. In this Quarter 2 FY ’23, company has recorded almost to same PBT which was INR60 crores against INR61 crore almost in Quarter 1 of FY ’23. In terms of post-tax profit, it was INR49.7 crores in FY ’23 — first quarter of FY ’23 and again the same INR49.20 crores in Quarter 3 of FY ’23.

In terms of product mix as we have indicated bearing rings is almost 53% of total components sales and auto components little increase, which is 47% of overall components sales. In terms of exports, it is almost touching 60% exports and 41% domestic including certain other income and scrap revenue et cetera.

I would like to inform that many of the new customers have already awarded certain program which portion it is being going to be started in Q4 of this current fiscal and in bulk rate in FY ’24. Further, we are looking or rather we got many inquiries in terms of bearing rings as well as auto components in both the segments. Bearing ring, again, we are happy to add the couple of new customers who are completely non-automotive bearing manufacturers and they have started [Technical Issues]supply from this quarter onwards and it would be in a monthly next quarter.

As you better know that commodity pricing was quite fluctuating till last quarter and now we expect it to be stabilized and we also expect that marginal reduction from here to the some extent in commodity pricing. Young companies are using alloy steel bar, which is having commodity impact. In terms of our cost reduction measures, what we have informed earlier that company has already installed or rather almost on the verge of installation of ground mouinted solar project to the extent of 16 megawatt, out of that partial is at the 90%, 95% are near competition and will fairly — we’ll be able to install at a 4 megawatt ground mounted solar by December ’22, and the remaining 10 to 12 megawatt by March ’23.

Further, I would like to inform that the company has quite good cash flow — operating cash flow and we have maintained a very optimum way which is beneficial to the company and company is in continuously process to reduce the long-term as well as the short-term debt. As you know that long-term that hardly — it was INR17 crore as of September ’22 numbers. And again, further, company has almost another INR22 crore have already been paid off. So today as on date we are sitting on a long-term debt of hardly INR15 crore, which down the line maybe 12 to — next nine to 12 months we had a client to repay of and it would be completely debt — long-term debt free in next fiscal.

Apart from that short-term debt what it was there in last fiscal, again, company is having — company has maintained the momentum or rather the same level of operations, wherein which helped us to reduce the working capital burden also. And its almost significant you can say more than 20% of March ’22 level, company has reduced their working capital utilization. All put together, as on September ’22, company has in debt of less than INR150 crore.

In terms of product segmentation, almost 42% boost to automotive sector 24% that goes to the industrial application segment, 29% that is heavy commercial vehicle, off-highway vehicles, commercial vehicles and so on. And again, the 5% odd goes to the hybrid vehicle and EV segments.

In terms comparison of total revenue of operations, fiscal ’22 was ended with INR1,017 crore. This first half we ended with INR577 crore which is having somewhere about 16% to 18% growth on an annualized basis. And we would like to be aspiring to achieve the numbers what we have estimated for this current fiscal.

In terms of EBITDA, it was INR240 crores in FY ’22. In this first half we have already achieved a level of INR140 crores. PBT, it was INR121 crore in this first half vis-a-vis PAT is INR99 crore and in FY ’22 profit before tax, PBT was INR194 crore whereas PBT was INR132 crore in the entire year. Again, that INR99 crore company has already achieved in the first half only.

Operating cash flow as I was mentioning, company is having quite good or rather strengthening the cash flow position. The operating cash flow during first half, it was INR86 odd crores, out of that company has spent INR27 odd crores for the CapEx of various furnaces, machining lines, other miscellaneous equipments and the remaining part of the solar — ground mounted solar project.

As mentioned earlier also that company has maintained or rather reduced the debt and it was significantly which was in FY ’22 it was all put together net debt was INR203 crore, in first half only it is INR146 crores. So more than INR50 crore have been reduced in the first half. It is a mixture or a combination of long-term as well as short-term debt.

Original our equity, again, it has gone to 27% and we inclined this FY ’23, again it increase to the extent of 7%, 8% of this number. We have worked our annualized number 27% on the basis of the numbers of first half. The detailed financials and the operating numbers, balance sheet numbers cash flow we have already uploaded and circulated even it has been published into the newspaper and communicated to all.

This is all from my side. Thank you very much for patient hearing. Now we can open this session for Q&A.

Questions and Answers:

Ashutosh Tiwari — Equirus Securities — Analyst

Thank you, Hiren sir, for the detailed opening remark. We will start the question-and-answer session. [Operator Instructions] Yeah. We have a first question from Mr. Aman. Please unmute your line and ask your question.

Unidentified Participant — — Analyst

Sir, thank you for the opportunity. A few your questions from my side. So first of all, if you can touch upon how the outlook is in terms of exports? And are we facing any issues like in terms of slowdown and quantity reduction from our customers?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes. We are not facing significant reduction or any kind of downfall for overseas business. Yes, definitely, from certain European customers, they have reduced their volume. And they have deferred certain their lifting plan at least for a quarter or something, which was to the extent of 20% 25% of that particular customer. But at the same time, we tried to add new customers in — from that territory or from the European market [Indecipherable] though, they are also what they have asked say for example 100% component and which they deferred to this extent of 50% or something like that.

So because of their lifting and managing the other customer lifting we are able to maintain the momentum or rather the continued run rate of almost INR100 crore per month. But we expect some bit of not significant marginal impact from European market in this quarter also, but at the same time, we are getting good demands and lifting from the domestic even from the US region.

Unidentified Participant — — Analyst

Thank you, sir. That was really helpful. Just a related question on PAT. So we have not been reporting any new order wins for the last two quarters. So if you can quantify if we have won any major orders in the amount rate so that like how much is the total order value if we have won any major orders over the last two quarters?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yeah. As we communicated, definitely, we didn’t have a new customer or rather the program of what adding last couple of quarters, but, definitely there are many things which are in under process and even couple of European customer, couple of US customers, just because of their even conservative approach they are holding certain project or rather just moving in a gradual piece. So that’s why the certain projects or certain programs got deferred. But we are getting good in inquiries and we expect it to be converted in the next fiscal. And the problems what we have been awarded the last quarter of last fiscal, even in the first-quarter, those will be started from the end of this current fiscal end early or first half of next fiscal. So, that would be there. And overall, what we are expecting to have an incremental revenue at least 15% to 20% of my current revenue level in the next fiscal from the new customers.

Unidentified Participant — — Analyst

Understood, sir. And just on this raw-material thing, how much of this has been in our revenue and how much it could affect us declining raw material prices in the next quarter or so when it passes thorough.

Hiren Dilipbhai Doshi — Chief Financial Officer

Yeah, as we well communicated, it is 100% pass-through mechanism, but the upward-trend in raw-material is completely, what do you say, adverse to the downward trend because the way the steel price has gone up, which you see somewhere about 33.5%, something. Till now, the price has not reduced by 5%. So, we didn’t expect much of the reduction, maybe 3% to 5% more reduction on the steel prices, which may not impact significantly on our revenue, and It will affect our numbers.

Unidentified Participant — — Analyst

And, sir, just one final question on this tax-rate. So during the first two quarters, our tax-rate is somewhere around 18% to 19%. So, even with new regime, it should be somewhere around 25%, right sir. So, what is the leading to such lower tax rates for us right now?

Hiren Dilipbhai Doshi — Chief Financial Officer

I think, you have considered the net tax, which is somewhere about 18%, but what we need to see is the current tax numbers because the deferred tax, as you know, it is a book entry and what I have already — because of this change of tax regime, the earlier accumulated deferred tax which was considered as a 35% of marginal rate, and now it is 25%. So, my effective rate would be 25%. My outflow would be 25%. And I think we should consider the current tax number, which is almost 25% of my PBT.

Unidentified Participant — — Analyst

Understood sir. [Indecipherable] our actual accounting tax-rate, it was also more to this 25% number, so —

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes, we are accounting that only.

Unidentified Participant — — Analyst

Okay, sir. But sir, I was trying to understand when this effective tax-rate will move to 25% for us.

Hiren Dilipbhai Doshi — Chief Financial Officer

It will take, I think, from — again, we’ll have certain deferred tax credit, it would be there in next fiscal also. So, from thereafter, it would be at the marginal rate.

Unidentified Participant — — Analyst

Understood, sir. Thank you and good luck for futures.

Unidentified Speaker —

Thank you.

Operator

We have a next question from Mr. Sonal. Please unmute your line and ask your question.

Unidentified Participant — — Analyst

Yeah. Hi, thanks for taking my question. Good afternoon, sir. Sir, just on the breakup of revenues, could you tell us what is the other operating income for the quarter and what does the scrap sales for the quarter?

Hiren Dilipbhai Doshi — Chief Financial Officer

For the quarter 2, scrap revenue is almost INR18 crores — INR180 million. Export incentives is almost INR35.5 million and,u windmill power generation saving is somewhere about INR23 million.

Unidentified Participant — — Analyst

And any FX-related benefit in the revenue line?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yeah, definitely. In my other income, FX revenues is there, where in realized gain what we had, many of our export invoices we didn’t got discounted because my working capital requirement was not bad. So, we kept it open something what we have exported before, say, three-four months back where dollar rate was 78 and today if you are getting the funds, I am getting or rather, I am realizing at the price of 82. So, those kind of gain is definitely there.

Unidentified Participant — — Analyst

But that is in the other income, not other operating, right.

Hiren Dilipbhai Doshi — Chief Financial Officer

Not other operating income, obviously. It is there in other income.

Unidentified Participant — — Analyst

Thanks. Sorry, could you repeat the wind mill number again?

Hiren Dilipbhai Doshi — Chief Financial Officer

It’s INR23 million.

Unidentified Participant — — Analyst

And sir, when will we expect the solar plant to be fully operational?

Hiren Dilipbhai Doshi — Chief Financial Officer

Fully operational, it would be next fiscal only but we expect 4 MW that would be starting from next month and also probably the balanced 12 MW something, we are expecting by end of February or maybe in March 23.

Unidentified Participant — — Analyst

Got it. And so, what is the benefit that we expect out of that?

Hiren Dilipbhai Doshi — Chief Financial Officer

Say, if I tell you broadly, the number of — the amount what I’m going to save from my electricity expense, it would be to the extent of INR15 to INR17 crores on an annual basis once we have entire this it is installed.

Unidentified Participant — — Analyst

But this will be — this is net of the whatever the operating expenses for the solar plant, etc.

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes.

Unidentified Participant — — Analyst

So and this is — okay, and we more or less retain this benefit, right.

Hiren Dilipbhai Doshi — Chief Financial Officer

Yeah, obviously.

Unidentified Participant — — Analyst

Got it. Great, sir. Thank you so much.

Hiren Dilipbhai Doshi — Chief Financial Officer

Thank you.

Operator

We have our next question from Mr. Abhishek. Please unmute your line and ask your question.

Unidentified Participant — — Analyst

Hi sir, am I audible?

Operator

Yes, you are.

Unidentified Participant — — Analyst

Sir, just a couple of things. You mentioned about a 15% to 20% of revenue growth going-forward. Does that also account for the fall in raw-material prices? So, should we assume volume growth will be much higher than that, how should we look at it?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yeah, definitely, but as I was telling you that we didn’t expect much of the reduction on raw-material pricing. If raw-material pricing is reduced by 5%, if you’ve seen that impact might or rather revenue numbers would be 2% to 2.5%. So, definitely we expect and 15% to 18% number what I told on my existing numbers that is what we expect from the new customers down the line from next fiscal or from now to 18 months.

Unidentified Participant — — Analyst

I was more [Indecipherable] the fact that we’ve already seen a major correction in steel prices, but that does not seem to have impacted your realization much. So, the raw material that use, the corresponding decline in that has been much lesser. Is that a right way to look at it?

Hiren Dilipbhai Doshi — Chief Financial Officer

I’m sorry. Can you please come again?

Unidentified Participant — — Analyst

What I have been asking is that we have seen almost at 25% to 30% percent correction in steel prices, but your realization seems to be stable. It has not seen much of a decline.

Hiren Dilipbhai Doshi — Chief Financial Officer

Sorry to interrupt. Let me tell you, our commodity, the kind of steel what we are using there, we didn’t have correction of 25%, 30%. It is hardly 5% to 6%. That’s why it is not having much impact on my top line.

Unidentified Participant — — Analyst

So, the steel that you use, the correction is only to the extent of 4% to 5%.

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes.

Unidentified Participant — — Analyst

But the other thing is, you spoken about you could be adding new customers and other things. Are those mostly from [Indecipherable] or are you also seeing good traction in the domestic market, if you can give some color at the bearing side of it?

Hiren Dilipbhai Doshi — Chief Financial Officer

Definitely, we are getting good demand from the few of the domestic customers who are mainly into O2 parts and with whom we have started business in last end-of-the quarter-four only. And again, we are expecting couple of my bearing rings customers who are in expansion mode and they have also increased the overall projection and the intent to be almost double in next two three to four years spun. I would like to request Mr. Madeka to just give some light on that.

Manesh Dayashankar Madeka — Chairman & Managing Director

You may be aware that these railway infrastructure Vande Bharath Rail and these and that, so there are two major new vector of bidding for railway. So, we are expecting some increase in volume for railway bidding also from a domestic customer from January onwards.

Unidentified Participant — — Analyst

Okay and sir, if you can help us understand [Indecipherable] CapEx for FY 2023 and if you have a number for 2024 as well.

Hiren Dilipbhai Doshi — Chief Financial Officer

FY 2023, for the full-year, I would be ended by somewhere about INR35 odd crores. Out of that, INR26 crores, INR27 crores something I’ve already incurred. And for FY 2024, again, we didn’t plan for any significant CapEx, but we may consider to the extent of INR25 crores to INR30 crores.

Unidentified Participant — — Analyst

Okay sir. Thank you so much for answering my questions and wish you all the best.

Hiren Dilipbhai Doshi — Chief Financial Officer

Thank you.

Operator

We have the next question from Mr. [Indecipherable]. Please unmute your line and ask your question.

Unidentified Participant — — Analyst

Good afternoon, team and thank you for the opportunity. Sir, if we look at domestic growth over the last four years, it has been at about 4%. Compared to that, the export growth has been almost 10%. Do you see this trend continuing going-forward as well where really export will continue to outperform domestic or do you think domestic so sort of catch-up?

Hiren Dilipbhai Doshi — Chief Financial Officer

See, we have recently added two, three, new customer and they are mainly for export in the USA and European country. So, I think, the same momentum will continue because our main [Indecipherable] what we have is over a high volume and some [Indecipherable]. So, we are expecting the same momentum, domestic and the export, both.

Unidentified Participant — — Analyst

These new customers, which you alluded you added in exports for US, are they new plant locations or are they completely —

Hiren Dilipbhai Doshi — Chief Financial Officer

No, they’re totally new customer.

Unidentified Participant — — Analyst

Totally new customer and would they have —

Hiren Dilipbhai Doshi — Chief Financial Officer

And our existing customer has added a few new countries like Mexico, Germany, Poland. So, existing two customers also added new different, different countries.

Unidentified Participant — — Analyst

Are these new customers you added, they also have manufacturing locations across various countries?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes. They are multi location countries. They have plant in Europe, given their area also and USA based company.

Unidentified Participant — — Analyst

Secondly, sir, we’ve been talking to customers in Korea and Germany as well for the longer-term. How has been the progress over there?

Hiren Dilipbhai Doshi — Chief Financial Officer

It has started only.

Unidentified Participant — — Analyst

What could be the contribution in terms of overall revenue from them, slightly small as of now?

Hiren Dilipbhai Doshi — Chief Financial Officer

As of now, it is small. And again Germany, it has started something in last quarter that is the Q1, but again in Q2, they got declined. But again, not having significant contribution as of now, but we expect it would be there from the maybe the last quarter onwards.

Unidentified Participant — — Analyst

And lastly, sir, with this energy prices escalating in Europe, is there a case where we can get more business around this geography, though, there might be some slowdown in demand where our market-share could improve in Europe?

Hiren Dilipbhai Doshi — Chief Financial Officer

See, definitely the prices of energy has gone up significantly in European market, but at the same time, they have used their production volume significantly. And as of now, they are considering India as what do you say Europe plus one factor, but it will take some time and we need to wait for next six to nine months how do we things are moving in Russia, Ukraine, on that basis. But definitely, we are expecting some good part because as I was mentioning earlier that a couple of customers have already declared that they are going to shut-down their facility in next fiscal and maybe that things are going to divert it into their India plants. So, we are expecting something from them also.

Unidentified Participant — — Analyst

And how much will be the revenue contribution from Europe for us?

Hiren Dilipbhai Doshi — Chief Financial Officer

As of now, out of my total revenue, Europe is somewhere about 25% to 27%. of my overall revenue.

Unidentified Participant — — Analyst

So big dependence on Europe. And you don’t think this —

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes, but it has been segregated to the various customers and even different segments.

Unidentified Participant — — Analyst

Because you alluded to demand slowdown over there so, will that not impact us?

Hiren Dilipbhai Doshi — Chief Financial Officer

We did not expect because, see, till now, what we have faced and what we are getting indication definitely the demand has gone down with couple of customers in a big — more than 30%, 40% something like that. Apart from that, the other regular customers maybe not more than 10% to 15%, what they had earlier.

Unidentified Participant — — Analyst

Okay, sir. Thank you very much and all the very best.

Operator

We have a next question from Mr. [Indecipherable]. Please unmute your line and ask your question.

Unidentified Participant — — Analyst

Hello, am I audible?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yeah.

Unidentified Participant — — Analyst

As per the [Indecipherable] the latest report which they have published on the Rolexrings, there has been suspected of profit margins and volatility due to the raw material thing. So my question is that, why we are not going for a long-term supply agreements with this new suppliers since we have already [Indecipherable] so why don’t we have long-term agreement with the supplies to ease that volatility or are we in the part of [Indecipherable] contracts like that?

Hiren Dilipbhai Doshi — Chief Financial Officer

No. As you know. all my vendors are being confirmed or nominated by my customers and my customers are not giving me the 100% plan. It is on the forecast for overseas customer is giving me a forecast of three to four months, having maybe 5% to 10% here and there, but whereas if I am going to have something or contract with steel plants, the price fluctuation, it is always open. It is not like that they are going to give me the confirmed price for the next six months and neither I’m going to confirm with my customers.

Unidentified Participant — — Analyst

So, it means that that volatility [Indecipherable]

Hiren Dilipbhai Doshi — Chief Financial Officer

Sorry, your voice is interrupting.

Unidentified Participant — — Analyst

Hello, am I audible?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yeah.

Unidentified Participant — — Analyst

So it means for the volatility of this new prices, we have to get that. There is no permanent solution for that right now.

Hiren Dilipbhai Doshi — Chief Financial Officer

No, we have to. And it is part and parcel of this kind of business. And price volatility — because customers are fluctuating their demand and if somthing, for example, they have given certain forecast and if I procure steel and I am committed to my vendors, I’m supposed to manage my working capital cost etcetera and maybe my customer is going to pay me on the future price. So, it is having some kind of risk also. So, it is obviously better to have open in terms from vendors as well as from customers.

Unidentified Participant — — Analyst

And sir. Can you throw some light on the CapEx utilization and what percentage we are opting it?

Hiren Dilipbhai Doshi — Chief Financial Officer

As of now, we are at somewhere about 63%, 64% of my achievable or utilized capacity.

Unidentified Participant — — Analyst

[Indecipherable] 80% or 85%?

Hiren Dilipbhai Doshi — Chief Financial Officer

It will take some time, maybe next year our target is to cross 78%, 80%. I’m talking about fiscal 2024.

Unidentified Participant — — Analyst

Okay sir. And sir, what’s the outlook for [Indecipherable] for this quarter? I understand you are saying that we have order book of around INR100 crores to INR125 crores per month. But when we see the revenue, that comes down to INR90 crores to INR95 crores per month-on an average basis. So, what’s outlook for this quarter since [Indecipherable]

Hiren Dilipbhai Doshi — Chief Financial Officer

See, my average monthly run rate is somewhere about INR97 crores to INR98 crores even as of now is for reported numbers. We expect this quarter, it would be again having the marginal growth. And from the last quarter of this fiscal and we expect some good turnaround from the next fiscal.

Unidentified Participant — — Analyst

This quarter, we should not expect much growth, like it will be almost flat.

Hiren Dilipbhai Doshi — Chief Financial Officer

We targets or rather we aspire to cross the INR300 mark-on the rather record number would be of INR300 crores.

Unidentified Participant — — Analyst

And sir, as per the half yearly balance sheet published, there has been an increase in the other financial assets from INR91million to INR222 million. So, can you please throw some light on that, what starting since the financial assets?

Hiren Dilipbhai Doshi — Chief Financial Officer

Sorry, please come again.

Unidentified Participant — — Analyst

Sir, in the half yearly balance sheet, there is a column of other financial assets that has increased from INR91 million INR222 million.

Hiren Dilipbhai Doshi — Chief Financial Officer

We are having so being cash — long-term cash-out the fixed deposits there with the bank that has been added. Apart from that the good amount of that bank guarantees yet to be received from the stock exchange, what we have given during our IPO, that will lead me at this number.

Unidentified Participant — — Analyst

Sir, the last one, like we are seeing continuously increase in the inventory fund. This time also we have increased our inventory by INR86 million. So are we facing order cancellations or there are supply constraints on the [Indecipherable]?

Hiren Dilipbhai Doshi — Chief Financial Officer

No, there is no order cancellation kind of thing. One of the major reasons of fluctuation inventory or rather having something abnormal, but that is because of certain accounting arrangement. As per Indian accounting standards, Ind-AS, I’m supposed to whatever my components, which are in transit or which are there in the warehouse, I need to move off from my sales and I need to book as an inventory. So, the differential number of March 22 and September 22 was

Somewhere about INR18 crore. So, that has been added to my inventory level. And the prices of inventory as well, we discussed, it has also gone up in the first quarter, second quarter. I am carrying certain inventory of the WIP, semi-finished goods, finished goods and certain raw materials. So, that will give me some longer period, or rather the longer amount of inventory.

Unidentified Participant — — Analyst

And sir, in the [Indecipherable] revenue was not as per the expectation, you said that there was some [Indecipherable] —

Hiren Dilipbhai Doshi — Chief Financial Officer

Sorry. Your voice is just, please come again?

Unidentified Participant — — Analyst

Sir, last time, you said that due to shortage of the export containers, we were not able to export some of the orders and that cancelled. So this time also is there any —

Hiren Dilipbhai Doshi — Chief Financial Officer

Sorry, gentlemen, those were not cancelled. Let me tell you, those were differed. Even as of October 31, a couple of my customers, big customers of US having a sales arrangement on ex-factory, my ex-Rolex kind of thing, they were not able to manage the containers, and they didn’t send me the seven containers, which I did in the first week of November.

Unidentified Participant — — Analyst

Okay sir. So, do you think [Indecipherable]

Operator

There a lot of disturbance in your line [Indecipherable]. I’ll ask if you could improve that?

Unidentified Participant — — Analyst

Sir, I’m saying that, our business is not disturbed from that. It’s only deferred?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes, sir.

Unidentified Participant — — Analyst

Okay. Thank you and all the best. Thank you, sir.

Operator

Yeah, so we have a follow up question from Mr. Aman. Please unmute your line and ask your question.

Unidentified Participant — — Analyst

Sir, thanks for the follow up. So just on the CapEx side, like earlier we have said that we can operate maximum at around 80% kind capacity utilization and currently, we arelooking for 75% to 80% kind capacity utilization for next year. So like, are we thinking of going for a forging CapEx in next year like or anything on that?

Manesh Dayashankar Madeka — Chairman & Managing Director

One machine, we have already ordered and that will be delivered by 2023 December. So, because forging machines are very costly machines and delivery time is very long. So, that we have already ordered the machine and we are expecting delivery by end 2023.

Hiren Dilipbhai Doshi — Chief Financial Officer

So we are —

Manesh Dayashankar Madeka — Chairman & Managing Director

We have the facility, having different, different capacity. So pure from our capacity, we are utilizing 85%.

Hiren Dilipbhai Doshi — Chief Financial Officer

That kind of equipment we have already ordered in anticipation that down the line 12 months, it would be rather 100% or more than 95% it would be utilized. So it would be a gradual CapEx for my forging expansion according to the current utilization or expected utilization of my forging lines.

Manesh Dayashankar Madeka — Chairman & Managing Director

Understood, sir. So, in the CapEx guidance, which you gave like INR30 crores to INR35 crores for this year and the next year, so this is included, right, the machines which we’re getting for the forging plant?

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes, yes. That we have included in that the INR35 crore number, what I told you for the next fiscal.

Unidentified Participant — — Analyst

Understood sir. Just one final question sir. So, in terms of competition, like one of the listed companies has acquired one of our peers and they’re looking to get into bearing rings manufacturing. So, if you can talk about how we see competition and like would our business be affected, like can they take business share from us in future, sir?

Hiren Dilipbhai Doshi — Chief Financial Officer

So, see, we didn’t expect much of the competition here from maybe the transaction what you are referring. The kind of facility, what we do have the versatile

Range of the product we do have, the current product mix and the customer base, what we have and —

Manesh Dayashankar Madeka — Chairman & Managing Director

We have not only in bearing ring, we also make the automotive component also. And the facility, we have a very vast range of facility and what we heard that still five-year old promoter will [Indecipherable] —

Hiren Dilipbhai Doshi — Chief Financial Officer

So, hello?

Unidentified Participant — — Analyst

Yes, sir. You are audible.

Hiren Dilipbhai Doshi — Chief Financial Officer

Audible, right. So, in nutshell, we don’t expect much of the competition as because of our strong association with our existing customers and we are just, the new customers as we have added and down the line also approaching to certain European customers who are having wide range of products and a bigger size of components, et cetera, which maybe that player is not able to produce or then do not have such kind of facility.

Manesh Dayashankar Madeka — Chairman & Managing Director

And the way the customers are sending the inquiry from Europe and USA, this is a very huge market. So, it’s not possible for any one of us to meet their requirement. So we are expecting within next two, three year, like one of our customers already declared that they’re going to stop their in-house facility and they have started working on that and we are fully prepared for that. And now, we have the cash flow we can invest in CapEx also, so we don’t see any effect from this.

Unidentified Participant — — Analyst

Understood sir. Thank you and good luck for future, sir. Thank you.

Operator

We have our next question for Mr. Priyaranjan. Please unmute your line and your question.

Unidentified Participant — — Analyst

Yeah, thanks. So you just mentioned about your ordered one forging set up so far, which will be delivered in 2023. So, what is the cost of that machine, if you can help us with that and what kind of capacity in terms of tonnage the capacity you have?

Hiren Dilipbhai Doshi — Chief Financial Officer

The overall cost of that, rather commissioning cost of that equipment with the incidentals and all these things, which maybe would be somewhere about INR350 million to INR370 million rupees and having a capacity to produce almost 1,100 to 1,400 metric tonne per month.

Unidentified Participant — — Analyst

Okay. And is this the new — doesn’t look like it’s a new machine? Is it?

Hiren Dilipbhai Doshi — Chief Financial Officer

Sorry.

Unidentified Participant — — Analyst

Doesn’t it look like it’s a new machine, because it looks like —

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes, yes, it is a new machine and having as a customized certain applications on customized bases, the kind of components what we are looking to produce from that equipment. On that base it has been designed or rather suitably modified.

Unidentified Participant — — Analyst

Okay and —

Hiren Dilipbhai Doshi — Chief Financial Officer

And it is from a very renowned forging equipment across the globe. And we already have three kinds of those forging lines with a different capacity for different set of products from that vendor.

Unidentified Participant — — Analyst

So, going by your machines and your [Indecipherable] flow, it looks like — it’s a lot of machines will go from there or at least replacement cycle in the next couple of years or next few years at least because they have almost lost the useful life of their operation. So, how should we look at CapEx going ahead?

Hiren Dilipbhai Doshi — Chief Financial Officer

Not replacement kind of thing. We have a very organized, preventive measurement or preventing maintenance plan. We have our own in-house preventing management team, maintenance team who are managing all these equipment and all these equipment, as you better know, having a very big life and certain equipment, what we have installed before 18 years back still, we are utilizing at the optimum capacity. So, there is a continuous maintenance and maybe a

Refurbishment or some renovation kind of things, those are going on as and when required. So we don’t expect that replacement would be there. There would be an addition and maybe to some extent, and maybe to some extent having the discard or maybe the absolute technology which we just headed and those can be regard or discarded, but not having significant value or effect on main operating.

Unidentified Participant — — Analyst

Understood. And just one thing on the — you also said that there will be some offsetting factors like the new or the wins and there will be some reduction in the expected orders from the existing customers. So how should we look at it next year in terms of where your top line? Will it be fair to assume it will be let’s say, 10%, 12% kind of growth? Or is it like a single digit growth of…

Hiren Dilipbhai Doshi — Chief Financial Officer

Yes, yes. Yes, definitely, we aspire or rather we’re expecting minimum 12% to 15% growth on the numbers what we will be having in this fiscal. And as we mentioned repeatedly that no doubt there would be some kind of reduction on my existing customers or maybe the decline. But at the same time the new customers what we have started gradually they will be coming with the big volume or rather the big supply in next fiscal, so that would definitely be added. And as we have already indicated that certain things as what you say India Shining or maybe Vande Mataram what my MD is just referring, those kind of things would be there in next fiscal.

Unidentified Participant — — Analyst

And in terms of domestic bearing rings, I mean if I look at the domestic growth, the bearing companies have been delivering high. But your growth in domestic business thing has not been to the extent of one from bearing companies and then in India. So again what is the disconnect here? [Indecipherable].

Hiren Dilipbhai Doshi — Chief Financial Officer

Sorry, if I understood correctly, what you would like to tell that the growth of bearing industry is less overall compared to my growth in domestic segment. Is it your question?

Unidentified Participant — — Analyst

So yeah, so domestic bearing companies growth if I look at y-o-y and then slightly better than yearly growth. So is it because of price connection or something which you have done is because of that its sort of like in that number?

Hiren Dilipbhai Doshi — Chief Financial Officer

No. No, it’s not like that. Again the growth of bearing industry overall you can say we are not there to cater entire bearing industry of India or rather the kind of all bearing — the things for the all kind of bearing. I do have a range of particular this thing say up to 900 mm product what I can produce. So in that segment the major players of India rather say who are contributing more than 80%, 85% to the bearing industry for that addressable segment they are my customer. And there we didn’t have any what you say reduction or rather the not comparable curve, because the way they are growing and I am also getting the same kind of participation over there. But definitely, we cannot compare with the overall bearing industry.

Unidentified Participant — — Analyst

Okay. Thank you. That’s all from me. I mean just last to on the CDR parts. So all the paper work et cetera is done? I mean what is the status of that?

Hiren Dilipbhai Doshi — Chief Financial Officer

Still now we didn’t got any listing from the banks and the financial institutions. We have started just exploring because we have some kind of very vanilla kind of arrangement or agreement with the bankers wherein the probable liability of ROR may, may not arise. But we are just not touching on that point as of now as we are waiting for something to revert from the bank.

Unidentified Participant — — Analyst

Okay. Okay. Thank you.

Ashutosh Tiwari — Equirus Securities — Analyst

Yeah. Sir, that was the last question for the day. I would like to hand over the call to Hiren sir or Manesh sir for any closing remarks.

Hiren Dilipbhai Doshi — Chief Financial Officer

Thank you very much for the investors and their team who have attended the call. And we are here and we would like to assure you that the promoters, the management team is very much dedicated and rather have invested their 100% dedicated efforts to maintain and to have growth line on the operations. And as you people are evidencing that the numbers or the indicators what we are giving we are always trying to fulfill it. And till now we did it and we hope better for the coming quarters and definitely there would be a good fiscals down the line FY ’23 — FY ’24 and FY ’25. So your company would be having maximum utilization and having a quite attractive and more lucrative operating numbers.

Thank you very much for joining the call.