Sandhar Technologies Limited (NSE: SANDHAR) Q2 2025 Earnings Call dated Nov. 12, 2024
Corporate Participants:
Jayant Davar — Chairman, Managing Director & Chief Executive Officer
Yashpal Jain — Chief Financial Officer & Company Secretary
Analysts:
Shailly Jain — Analyst
Pritesh Chheda — Analyst
Ajay Sharma — Analyst
Abhilasha Satale — Analyst
Jay Betai — Analyst
Ankit Manocha — Analyst
Saurabh Jain — Analyst
Radha Agarwalla — Analyst
Aditya Kondawar — Analyst
Pavitra Godara — Analyst
Udit Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Sandhar Technologies Q2 and H1 FY ’25 Earnings Conference Call, hosted by Dolat Capital. [Operator Instructions]
I now hand the conference over to Ms. Shailly Jain. Thank you, and over to you, ma’am.
Shailly Jain — Analyst
Thanks, Shifa. Good morning, everyone. On behalf of Dolat Capital, I welcome you all in second quarter and H1 FY ’25 conference call of Sandhar Technologies.
From the management side, we have with us, Mr. Jayant Davar, Chairman, Managing Director and Chief Executive Officer, along with him, Mr. Yashpal Jain, Chief Financial Officer and Company Secretary of the Company. We thank the management for providing us the opportunity to host the call.
Now, I hand over the call to management for their opening remarks, followed by the question-and-answer session. Over to you, Jayant, sir.
Jayant Davar — Chairman, Managing Director & Chief Executive Officer
Yeah. Good morning, everyone. Thank you, all, for taking time to be with us this morning. I also want to thank Dolat Capital and Shailly for organizing this call. On behalf of Sandhar, let me just start with some remarks, and then we are very happy to answer any queries that you may have.
So, first of all, you’re all aware that we have gone through a nice prosperous Diwali, and Diwali has been kind to the automotive industry. Most of the companies have done record numbers in terms of the Diwali sales. As far as Sandhar is concerned, you are all aware of the results that we released yesterday. But just for consignment again, we achieved a total income growth of 11.5% versus quarter of 2024 and 10.9% versus first-half of financial year 2024 at a consol level. And we expect to continue the growth momentum over the last year’s numbers, depending, of course, on the geopolitical situation, demand in the market, growth in the auto sector and other related events.
In terms of margin, our consolidated EBITDA, you’d be happy to know, registered a growth of 110 basis points year-on-year basis for the quarter and 10.6% in quarter two 2025 versus 9.5% in quarter two 2024 and 90 basis points year-on-year for half-year, which is 10.2% in first-half of 2025 and 9.3% in first-half of last year in comparison. So, I think this is, again, brilliant news for Sandhar and for all of you who’ve been asking us when we will reach these numbers. In fact, as you’ve seen, we’ve reached this number faster than what we have explained in our last call.
In terms of joint ventures, I’m happy to inform you that our joint ventures are growing fast and consistently improving the performance. Six of our joint ventures are PAT positive now. And one of the joint ventures, Kwangsung Sandhar, is marginally losses and expected to turn around in due course. This has been possible with the consistent efforts towards cost control, localization, better business synergies, and we expect that the joint ventures would continue with our growth trajectory. All joint venture companies taken together registered a total income of INR179 crores with an average EBITDA of 10.26%.
In terms of overseas business, our Romania plant is gradually moving towards maturity and expected to be breakeven by the end of this financial year. Partial capex has been incurred on the project, and the remaining set of machinery shall be installed in the next financial year. In terms of new expansion projects, the Company’s expansion projects in Pune for cabins and fabrication and die casting are expected to commence commercial production by the end of January 2025. You’d be happy to know that our EV foray, the Company has started commercial production of battery charges and is getting a very positive response from the market. The customer base is gradually increasing with more and more customers being added. The motor controller and the DC-DC converter are in testing phase and expected to go live in the next financial year.
I also want to mention here, our efforts on CSR. Over the years, we’ve dedicated ourselves to sustainable business practices that tackle economic, environmental and social challenges. Our efforts go beyond near business concerns, creating positive effects on the communities that we serve. Our CSR activities focus on key areas, include healthcare through Sandhar Healthcare Center, which is in village Begampur Khatola in Gurugram; education through Sandhar Ki Beti and Sandhar Center of Learning at Devli Sangam Vihar; skilling and vocational through Swabhimaan program; senior care through Adopt a Gran program; environment, we have a program called Go Green through the Peenya Industrial Park, Bangalore. The Company is focusing in diversity and creating equal opportunities for gender neutrality. The Company’s social programs are dedicated towards underprivileged, unserved and deeper sections of the society.
Going forward, we, as a company, are looking towards certain focus areas, one being working towards ESG and SDG, which are Sustainable Development Goals, to attain carbon neutrality in the coming years; diversification of our product portfolio; expanding customer base; and increasing content per vehicle. We will focus on generation of more free cash flow and deleveraging of the balance sheet, as we will continuously improve our return on capital employed and return on investments. And, of course, we will continue our focus on consolidation of our overall operations.
That being my opening remarks, I’m very happy to take questions. With me today is Mr. Yashpal Jain, who is the CFO of the Company, and he will assist me and take a lead on any questions regarding finance and other things. In terms of strategy or anything, I’d be happy to take calls from all of you. Thank you very much, and look forward to your questions. Thank you, once again, Dolat Capital.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions]
The first question we have is from the line of Pritesh Chheda from Lucky Investment. Please go ahead.
Pritesh Chheda
Yeah. Hi, sir. Sir, my question is with respect — specifically with respect to the sheet metals and cabin and fabrication business, where we have a lot of capacity is being put up for TVS, one of the clients. So, there, in the quarter two and H1, what would be the growth of these two divisions? That’s my first question.
Jayant Davar
Okay. You want us to answer the question first and then move on to the second question, or you want to ask all the questions [Phonetic]?
Pritesh Chheda
Whichever way you are comfortable. I may ask every — the other questions also, if you want to.
Jayant Davar
Please ask the other questions, so that we can respond together.
Pritesh Chheda
The other question is, if you could call out in your H1 and quarter two, what would be the volume-led growth, and if there is any price?
Jayant Davar
All right. Okay. Yashpal ji, do you want to comment with those numbers?
Yashpal Jain
Yeah, definitely. So, like, coming for the TVS project, your specific question was about TVS project. So, let me tell you, as far as we put up three projects for TVS, one was in Attibele, another was in Mysore, and third was in Nalagarh. Nalagarh is already operating at a level of monthly level of about INR12 crores a month. And if you take year-on-year for the half year, at that point of time, it was operating roughly at INR6 crores — INR5 crores to INR6 crores. So, it’s just doubled. This is a growth for Nalagarh plant.
Attibele is concerned, Attibele is operating at a monthly level of INR17 crores to INR18 crores against earlier level of INR9 crores to INR10 crores. And similar is the case with Mysore, Mysore is picking up, because there has been some issue with the Raider’s [Phonetic] volume, the premium product of TVS, which was supposed to be done from Mysore. So, presently, Mysore is at a level of close to INR12 crores, INR12.5 crores against a level of INR3 crores in the corresponding half year. I hope that justifies your answer — satisfies your answer — question.
Operator
Sir, I believe the line for the participant got disconnected. We will proceed with the next question, which is from the line of Ajay Sharma from Maybank. Please proceed, sir.
Ajay Sharma
Yeah. Hi. Actually, I just wanted to get a sense on how do you see both the top-line growth as well as margin panning out over next two, three years? And I’m wondering why, I mean, typically, auto components companies have higher margin, higher return on capital. What is in your business, which actually prevents you from achieving those sort of levels?
Jayant Davar
Can you ask that second question — second part again?
Ajay Sharma
I mean, generally, auto component companies worldwide, even in India, the margins and returns on capital are much higher. And I’m just wondering what is in the nature of your business, or is it the low value-add kind of work you’re doing that the margins as well as the returns are pretty sub-optimal?
Jayant Davar
Well, I wouldn’t say — so, first of all, let me respond to the second question. Our margins are hybrid margins between different kind of businesses. And as you know, we now operate about 45-odd plants. And in 45 different plants, there are different kind of technologies that are in play. Several of the components that are under development, which will open up new avenues of technology going forward are in nascent levels at all points of time.
If you look at our established businesses, which is, let’s say, locks, mirrors, castings and so on and so forth, I don’t think we are at any way less. In fact, in many cases, we are higher than our peers and competitors. And as we have said, we’ve made a lot of investment in the last few years. And as it matures, our margins are likely to go up on a sequential basis. I think this is the guidance that we had given in the past calls as well, where — Yashpal ji, you had mentioned a 50 basis points improvement, right, on…
Yashpal Jain
Yeah, exactly.
Jayant Davar
Do you want to respond to that?
Yashpal Jain
Yeah, I would respond. So, last year, like, we closed at a margin of 9.95%. This year, we have given a guidance that we’ll be improving in between a 50-point basis, followed by 50-point basis in the coming FY ’25, ’26. So, we expect the margins to be hovering around 11%, 11.5%. I think it’s a decent margin, given the situation when you are in the core manufacturing activities. There can be higher margins than other peers, but it depends on the nature of activity, whether we are core manufacturing or we are trading or we are assembling the products.
Secondly, as far as the revenue growth is concerned, we have given a guidance that this year, we’ll be closing something in between INR4,000 crores to INR4,100 crores. And the — for the next year, we have a guidance of around INR4,500 crores to INR4,600 crores of revenues that we’ll be generating at a margin of close to 11%. This is our revenue guidance for next year, along with the margin.
Ajay Sharma
Okay. And on the EV business, how big do you expect that to become in next few years? I mean, how would be the ramp-up like starting from next year onwards?
Jayant Davar
It’s a difficult question. I don’t think it’s more spiritual call, if you ask me. It depends on the establishment of EVs as a permanent standee in the automotive industry. You are aware that there are several technologies at play with alternate fuels as well as the existing IC engines now becoming almost pollution-free in the new avatars that are going to come. So, while we, as a company, are in tune to supply the components, which is DC-DC converters, which is chargers and motor controllers, these are for the two-wheeler industry. And we believe that as the two-wheeler industry is one of the sectors which is likely to grow faster than the others, we should benefit.
In terms of value, the three parts that we are going to manufacture have a total value of something in the region of INR12,000 to INR13,000 per vehicle. And therefore, it is a calculation as to what percentage of the market we’ll be able to gather and garner. The big advantage that we have versus a lot of peers is that all our products and all the inputs in our products are all locally made vis-a-vis many other companies that are importing it from China and other places. And therefore, with the government bent on making everything in India, we do believe that we have a superior edge to moving forward and faster in these particular areas. But in terms of the actual revenues, we have not taken those in our business plans either for this year, and we will reconsider that when we make business plans for next year as to what percentage of our revenues will come from EV.
Ajay Sharma
Okay. And lastly, how much capex do you need to incur this year and next year?
Jayant Davar
Yashpal ji?
Yashpal Jain
This year till date, we incurred INR90 crores. And we are finishing up with some expansion plans, as sir has mentioned in the opening remarks, the two plants at Pune. And we have some commitments over the last year that has been carried forward for the sheet metal projects that we have put up in last two years to three years. So — and nevertheless, starting next year, we have policy. I mean earlier also, we are having a policy that normally, our annual capex charge is equivalent to a depreciation, which is close to INR160 crores to INR165 crores [Phonetic] per annum. While this year, it might be around INR250 crores, because we have INR100 crores of carry-forward commitment, which we need to settle in this year for the expansions that we took in the past.
Ajay Sharma
Okay. Thank you very much.
Yashpal Jain
Thank you.
Operator
Thank you very much. [Operator Instructions]
We have Mr. Pritesh from Lucky Investment back online with us.
Pritesh Chheda
Yeah. Sorry, sir, my line got dropped. So, I don’t know if I asked the third question or not actually.
Yashpal Jain
You were asking for the growth from the TVS business, if I correctly remember, right?
Pritesh Chheda
Okay. So, first question was in — specifically in the cabins and the sheet metal business, where we have put up a large capacity for the key client and there’s a wallet share gain possibility. So, what is the growth in H1 and Q2 for these two divisions?
My second question is, if you could decipher the H1 and the quarter two growth in terms of volume and price deflation, if any, because the base metal prices were different?
And my third question is empirically, considering your wallet share gain and considering the two-wheeler growth, you should have grown — and the revenue growth, you should have grown faster, a lot faster than the two-wheeler growth. So, if there are any divisions where there is any miss on growth and if there is any cost correction that you guys have planned? So, these are my three questions. So, everything on the revenue side?
Yashpal Jain
So, first, we’ll start with the TVS project. Let me tell you, in cabins and fabrication, we haven’t carried any expansion in past three years. It’s a normal capex that we have been put up. And cabins and fabrication will be closing above a mark of INR550 crores for the current financial year. So, we haven’t put any capex for the cabins and fabrication, especially the growth capex except the one, the expansion, which is going into Pune, which is already the pre-matches owned by us, and we will be spending total INR18 crores, nearly INR18 crores to install some sort of machineries over there.
As far as sheet metal business is concerned, we’ve set up three plants for TVS in past two years to three years of time starting in 2021. Presently, they are giving us a monthly revenue of INR40 crores to INR45 crores in between from TVS side. If you ask me the year-on-year growth, last year, at the same time, the situation was that they were, on a consol level, generating a revenue of close to around INR18 crores to INR20 crores. They have just doubled, because Attibele and Nalagarh are operating at the volumes that were pre-planned, and Mysore will be picking up in due course of time, because the Raider’s volume has been down. That’s the reason the volumes have been down and it’s operating close to INR12 crores a month. I hope this answers your question.
Pritesh Chheda
Can you give the H1 growth for both these divisions?
Yashpal Jain
As I told you, it’s INR42 crores — INR40 crores to INR42 crores.
Pritesh Chheda
No, no. Okay.
Yashpal Jain
H1, comparison with — I’m giving you the H1 comparison year-on-year. It has just doubled from INR20 crores to INR40 crores to INR42 crores.
Pritesh Chheda
This is for sheet metal?
Yashpal Jain
Yeah, this is for sheet metal.
Pritesh Chheda
On a monthly basis?
Yashpal Jain
Only three plants of sheet metal which has been put up for TVS.
Pritesh Chheda
No, if you could give for the segment, including everything?
Yashpal Jain
Apart from that, we have only one plant, which is for Hero, which is in Behrampur in Gurgaon. It is going to a normal growth of 10% to 15%, which Hero is generating the…
Pritesh Chheda
Okay. And what would be the growth in the cabins and fabrication part of the business?
Yashpal Jain
Cabins and fabrication is growing at a level of 10% to 12% because we haven’t put up any new capacities, no new plant has been set up in cabins and fabrication. They are already at the maximum capacity that we could supply to the customers. It’s operating above a level of INR550 crores. That’s the maximum we could do from that business.
Pritesh Chheda
Perfect. This answers the question one. Question two, on volume and price, if any?
Yashpal Jain
Well, the items are such, they’re going to the pieces and numbers. Exact volumes, I may not be able to give.
Pritesh Chheda
Any indicative — indicative is — any indicative guesswork is also fine. Was there a deflation, there was no deflation?
Yashpal Jain
Well, very honestly, no guesswork can come out of this. As far as price settlement is concerned, you must be aware that the customers have taken up a uniform policy. They have identified the — I mean, the raw material sourcing — sources. They have a consolidated contracts. So, we are not affected by the any price increase or decrease. It is settled on a monthly or a quarterly basis depending on the customer cycle now. They’ve identified the vendors. They have a bulk contract with them, and we are taking materials from them.
Pritesh Chheda
No problem. This answers the second question. And the third question, sir, on the — yeah, overall growth empirically should be faster than two-wheeler, if there are any divisions which are…
Yashpal Jain
No. You see, the two-wheeler growth has not been even a double-digit, if I’m right, right?
Pritesh Chheda
So, it is — what number we see it’s a double-digit volumes, so that’s why.
Yashpal Jain
Last year, it was…
Pritesh Chheda
There is no double-digit growth in two-wheeler.
Yashpal Jain
9.8% last year, if you see. We were around 20%. This year, these are the two quarters that we have sum up. It’s 11.5% year-on-year. And quarter three and four are normally the — good quarters in the auto industry. So, we expect that we have set up a target of around INR4,100 crores for this year. We would be able to achieve that turnover figure.
And secondly, like there are products ups and downs, we have a mix of construction equipment, also cabins and fabrication, which will be picking up in third quarter. And at the same time, the car segment is not working proper, although we enjoy a small share in car segment. But still, any downwards on the car segment affects the entire, I would say, the growth of the organization, but still we are at a comfortable growth.
Pritesh Chheda
Okay. Thank you very much and all the best to you, sir.
Yashpal Jain
Thank you. Thanks a lot.
Pritesh Chheda
Thank you, sir. Thank you.
Operator
Thank you very much. We have next question from the line of Abhilasha from Quantum. Please go ahead.
Abhilasha Satale
Yeah. Thank you for taking my question. Sir, you just mentioned that we are expecting around INR4,100 crores. So, I’m supposing that we are then guiding for around 15% to 16% year-on-year growth for the second half. So, can you just elaborate what will drive that, because two-wheeler, again, we are expecting a similar higher double-digit or mid — sorry, higher-single-digit or mid-single-digit number for the industry. So, in the first half, if you have not grown substantially higher than the industry growth, then what is it driving in the second half? That is my first question.
And secondly, let’s say, for the next year, we are guiding INR4,500 crores. I suppose if the industry continues to grow in that tandem, then — and if we’ve — we have always guided that we can grow double the industry growth, then why are we guiding for just 10% to 12% growth for the next year when our cabins and fabrication business also will be ramped up? So, I mean, why we are guiding for the subdued growth for the next year, can you just explain?
Jayant Davar
Let me answer this question in a different form. We have outperformed the industry and we will continue to outperform the industry on account of new businesses that we’ve added in the last few years. I think there was — this could have a relation to the question that was asked by the gentleman before as well.
In terms of sheet metal, the new business that we had generated, our capacity utilization at this point stands at somewhere in the region of 55% to 82%. So, that gives us a leg room to be able to grow this. And the orders are in place. So, development activity is on, and the start of production for these will begin in the second half of the year on a graduated basis, and that is the reason why Yashpal ji is saying that, that would be a trigger of growth. And irrespective of the growth of the industry, we are quite certain that with these new developmental and these new product lines being added, our trigger for higher growth is already in place.
In terms of locks, our — the Suzuki order, which was the order to do smart locks was delayed — has been delayed from November to January now. Again, in the next quarter, you will see that, that will start adding along with some other componentry which will bring onward [Phonetic].
The third aspect is that the last quarter is always the heaviest quarter, if you go back and see in history of the automotive industry. And a large part — so, if we actually divide this and we say that 40% of our revenues in the past and by historical patterns comes in the first two quarters and 60% comes in the second half of the year. If you were to balance for these, I see no reason why there should be any change to that particular victim. And that is why it becomes — we feel we are very, very confident that whether the industry grows or doesn’t grow, with the growth patterns that are already inside with the existing orders, we should be able to deliver the revenue that is being suggested right now. We may be a little conservative right now, but we feel being conservative is a little better and to assure you that whatever we are saying is kind of a hand in that.
Abhilasha Satale
Yes. Okay. Sure. And the similar outlook, can you give for the next year? I mean, yeah, I understand that we are conservative. But then, in that case, what could be the upside from where the upside could come to our projections?
Jayant Davar
Well, in the next financial year, obviously, it’s too early for me to say right now. But from my gather, like I said, we have spare capacities available. We have new capacities coming up. Yashpal ji just mentioned that we have two plants that are now on the annual. One plant is being set up for cabins and fabrication. The other one is being set up for die casting in Pune. These two will add to capacity utilizations for orders that we already have in the books. So, there is a certain element of revenue that is already kind of guaranteed for next year.
We also believe that even in the sheet metal that I mentioned, this will continue to grow for the utilization of the capacities that we have. So, we are quite confident that there should be a healthy premium growth over the industry growth in the next financial year as well.
Abhilasha Satale
Sure. Thank you. My last question is on the working capital and debt. How do we see that if some of our incremental business coming at incremental working capital, and how do we see, therefore, debt movement going forward?
Yashpal Jain
So, I’ll answer Abhilasha. So, like as of September, we have a gross debt of INR620 crores and a net debt of INR581 crores. And we expect that we will not be reaching a level of INR700 crores. As of now, we are operating at a working capital of around INR30 crores. That’s the utilization that we have done as far as working capital is concerned. Rest is the term loans that we have taken to fund our expansion plans, which are mostly complete now and they have started generating the revenues and the repayments are already in process.
So, I think there should not be any concerns regarding the breaching of the debt levels that we have internally set. And we are generating sufficient cash flows, even in this half year also, it’s close to INR142 crores that we have generated the cash flows, which are sufficient enough to fund our expansion plans also.
Abhilasha Satale
Yeah. So, that I understand. So, do we have — apart from whatever the regular repayments, do we have — but do we see the debt repayment accelerating because the cash flows will be good?
Yashpal Jain
No, we will not be going with any accelerated prepayments. It depends on the situation at the time if some better opportunity comes, we’ll be following the normal prepayment period — repayment period instead of going for accelerated prepayment of the debt.
Abhilasha Satale
Okay. Sure. Thanks.
Yashpal Jain
Thank you.
Operator
Thank you very much. We have next question from the line of Jay from Dolat Capital. Please proceed, sir.
Jay Betai
Hi, sir. Very good morning, and thank you for the opportunity. Sir, my first question is, on your current debt level, so sir, could you just let us know what would be the peak debt? And how would be the peak payment schedule going on?
Yashpal Jain
This is regarding debt level?
Jay Betai
Debt level, yeah.
Yashpal Jain
So, like, our gross debt is INR620 crores as of September, net debt is INR581 crores. We do [Technical Issues] — as I said in the earlier calls also, we have a capital commitment of close to INR250 crores in this year, which includes INR100 crores of carry forward. At the same time, we are generating about INR140 crores of — on a half yearly basis, the internal cash generations through the operations. So, I think we will not be breaching a level of INR700 crores in the debt, given the situation after paying off our all expansion and the commitment for the past projects and the current projects that are ongoing.
Secondly, as far as repayment is concerned, we are well within the schedule and the repayment has already started as per the plans that has been submitted by the lenders. And we are not going for any prepayments to them, because prepayments come with a commitment cost. At the same time, we require money to fund our expansion plans. So, this is how we plan to keep the debt level.
Jay Betai
Okay. Thank you, sir. Sir, my another question is in locking systems, could you just give us some guidance how does the growth look ahead, especially for the new orders? As you said your Maruti — Suzuki order has been delayed. So, sir, could you just give more further light on it as well?
Yashpal Jain
So, sir has said, like responded to Abhilasha in the previous question, Suzuki product will be starting in Jan and Feb. There are two different products, smart locks and the shutter locks. So, once that starts, there will be increase in the revenues because obviously, the smart locks are much pricier than — compared to the traditional mechanical locks. But again, that is something which will be happening in quarter four and starting next financial year. So, obviously, the growth will be coming up in locks and mirrors, and I mean, in the smart locks segment. But again, it depends on the adoption by the market. So, let’s see how it performs in the market, I mean, especially the Suzuki model.
Jay Betai
Sure, sir. Sure. Sir, that’s it from my side. Thanks a lot for the opportunity and all the best.
Yashpal Jain
Thank you.
Operator
Thank you. Next question we have is from the line of Ankit Manocha from Adezi Ventures. Please proceed with your question.
Ankit Manocha
Yeah. Hi. Good morning. So, this is specifically with regard to margins for H2. I mean, if you look at the current raw material costs in terms of commodities and also we look at the capacities that are coming on board, do we still feel confident that the EBITDA growth that will come in H2 would come both from margins and volumes? So, would we expect margin expansion above this current 10.6%? Or do we believe that it’s coming — it will be more a function of volumes ahead?
Yashpal Jain
So, like, Ankit, it is a mixture of both, because, obviously, we operate in hybrid segments. We have four different products and the segment ranges that we are operating, verticals largely. So, what happens is that all the verticals have a — their different set of margins, right? And we have given a guidance at the beginning of this year that we’ll be improving by 50-point basis. So, from 9.95%, we have kept a target of 10.45%. It is because that we are executing some new expansion plans also and there are a lot of expenses initially when we start up those plants, especially in terms of development costs and other costs, which we are charging off through the P&L account.
So, I think the guidance that we have given is valid. And taken together the average of second half at the year-end, we would be achieving what we have given as an improvement of 50-point basis — in a range of 50-point basis from 9.95% to 10.45% in between.
Ankit Manocha
Okay. And what’s the outlook on the current scenario with the commodities and the commodity prices?
Yashpal Jain
So, like, in commodities and the major raw materials, they have been, like, I would say, OEs or customers, they have made a contract, bulk contract with the supplier. They are deciding their prices and they are passing us the same to us. So, we are not affected by the increase and decrease because they are setting up the price, and same price is reimbursed to us by them.
Ankit Manocha
Okay. Understood. And secondly, I mean, my second question is more with regard to the on-ground demand that we see in the two-wheeler industry. So, looking at the festive season and also looking at the scenario ahead, I mean, if you look at different factors like the inventory levels that are there at the production floors or on the — in the dealerships. And overall, what is our outlook on demand? Does demand seem to be stronger than last year? Or is there — or would it be the same or lesser?
Jayant Davar
Well, I won’t be able to answer that question in great detail, except to tell you that FADA, which was projecting low pick-up of vehicles is bullish again now with the demand that seems to be coming from the rural segments of the country. And therefore, that demand will lead to maybe lower CP of motorcycles, but the volumes is probably going to be higher. It is also being exhibited by the fact that the inventory levels now within the showrooms has dropped down to less than 30 days, which is probably the first after several, several, several quarters. And that, I think, is good abatement to the fact that we should continue with production till — and there is seasonality and there is place in the market to absorb even a higher inventory. So, I would imagine that at this point of time, as we sit, we seem to be in a comfortable position.
Ankit Manocha
Right. Thank you.
Operator
Thank you very much. [Operator Instructions]
We will take next question from the line of Saurabh Jain of Sunidhi. Please go ahead.
Saurabh Jain
Hello. Good morning, sir. Many congratulations for healthy set of numbers. I have just one question left. My other questions have been answered. Sir, if you can provide us with the capacity utilization numbers in each of our reporting segments on fully expanded capacities, including these two plants in Pune, which were earlier scheduled to commence production by September ’24, one for die casting and one for cabins and fabrication. So, I’m just looking for a ball-park capacity utilization number including the recently expanded capacities and the capacities which are coming on board in the near future?
Jayant Davar
This is a question that needs more deliberation. And the reason for that is where assembly businesses are concerned, whether it’s locks or mirrors or even cabins, for instance. Cabins, for example, need space, but they need — do not need too much of capital investment. Where locks and mirrors are concerned, they need more manpower, but the assembly spaces and the capital investment is comparatively lower. Where die casting and sheet metal are concerned, these are capex-based businesses, and therefore, capacity utilization is measured easily.
In the die casting business, with the new plant coming online, I think we will have close to 25% to 27% capacity, which is likely to be added to the entire portfolio other than the organic business. In sheet metal, I did mention that our current capacity levels are between 55% and 82% depending from plant to plant. And those, we believe, could be utilized with the orders that we have in hand, which will start rolling out of our production lines in the next few months.
Saurabh Jain
Okay. So, if I may ask it differently, once we have these capacities ready for commercial production by the end of this fiscal, sir, then what kind of top-line can be achieved from the existing — like by March capacities?
Jayant Davar
Well, I think by March of ’25, you’re saying?
Saurabh Jain
Yeah.
Jayant Davar
Well, that I think we’ve already given you that March of ’25, we’ve said that 40% business comes in the first half, 60% comes in the second half. It’s an easy calculation for you to be able to know.
Saurabh Jain
No, of course, sir, I got the top-line growth, but I just wanted to know with the capacities in place, what can be achieved?
Jayant Davar
No, these capacities are also for next year. So, it’s not as if we will utilize the entire capacities up to March. We are saying this is the capacity utilization. There are businesses that are being developed right now. There are parts that are under development, which will come online perhaps in the next year, even in the sheet metal. I’m not saying all of them will start rolling out in this year. Some of them will spill over into the next year.
But as an overall entity, if you were to ask me on a ball-park basis, I would imagine that our capacities that we have within the plants can afford at least a 20% to 25% higher output than what we will have in this particular year.
Saurabh Jain
Okay, sir. Got it. That answers my questions. Thank you so much and wish you all the best.
Jayant Davar
Thank you.
Operator
Thank you. We have next question from the line of Radha from B&K Securities. Please go ahead.
Radha Agarwalla
Thank you for the opportunity and congratulations for the good results. Sir my first question is that with Honda, we had added Honda Shine as a customer. And in that, are we supplying only locks or are we supplying locks and mirrors as well? Also, are you expecting to add more models with Honda and more products also with Honda?
Jayant Davar
You’re talking of Honda Motorcycle, right, Radha?
Radha Agarwalla
Yes, sir.
Jayant Davar
Yeah. So, Honda is — yes, Honda, we started with locks. We are now waiting for their offtake of the smart locks that will begin shortly. But besides that, a large chunk of business is being added to our portfolio of casting. So, I understand that we are close to about INR100 crores of casting, and this is an area that’s also growing. So, Honda will become a substantive — Honda two-wheeler will become a substantive customer for us as we go forward as we discuss with them other opportunities within the other segments that we operate in.
Radha Agarwalla
All right, sir. Are we also looking for any new model wins in Honda or only for the Honda Shine?
Jayant Davar
Yes, in every model from now on, we will participate.
Radha Agarwalla
All right, sir. Just from Honda, in next two years, what kind of revenue are we looking at?
Jayant Davar
Well, like I said, it’s difficult to say right now, depending on what parts are concluded for the additional stuff. But in terms of what we are looking at and the orders in hand, you are aware that their lower CC motorcycle is doing quite well, where we supply 100% of their locksets. And with the smart locks, that will get added. Those volumes are small to begin with, but the value of that is much higher than mechanical locks. So, in the locks business, I would anticipate a growth of about 25% to 30% in terms of pure value for Honda in the next year.
Radha Agarwalla
All right, sir. Sir, secondly, the domestic die casting and sheet metal business is witnessing a strong growth. Is this just like you had guided historically? So, please throw some light on which are the products among these two segments that are gaining more traction? And any new product launches that are expected in these two business verticals?
Jayant Davar
Yeah, Radha, thank you for that question. So, one, you are aware that we had bought over the machining business of all TVS lines from TVS. So, while the machining far end came — also came through were several casting businesses that have been added to the portfolio. And therefore, you have seen a quick ramp-up on the revenue growth of the casting business to an extent that we have been forced into setting up a new plant that we are doing right now. In fact, one in Chennai for die casting and one in Pune.
So, with these two additions, these will lead to capacities which will be close to 25% or 30% from our existing capacities. And with them getting filled, you can easily calculate the volume growth that we will get out of these new facilities towards the existing customers as well as from new customers that have been identified and are being spoken to and some parts are already being developed.
Radha Agarwalla
All right, sir. Sir, last question is just a clarification to one of the response to previous participants. You mentioned that customers have made a bulk contract with the supplier and they are setting up the prices. Sir, could you please elaborate a bit on this? And how is this for us versus the peers in the industry?
Jayant Davar
Yeah. So, this is — I think Yashpal ji had already mentioned. When you say bulk contracts, this is a routine process in the industry that every quarter, our prices are banked up, so that for us, commodity prices are a pass-through.
Now, within that framework, so let’s assume that we have aluminum selling at INR100 in the 1st of April. And then, over the quarter, the prices change from INR100 to INR105 to INR110 to INR120, the mean price is taken, which then becomes applicable from the 1st of July. So, there is a lag of three months, but otherwise, commodity prices for us, for the entire automotive industry and supplier community is matched up every quarter.
Radha Agarwalla
Okay. Understood. Thanks, sir, and all the best.
Operator
Thank you. We have next question from Aditya Kondawar from Complete Circle Capital. Please proceed.
Aditya Kondawar
So, first of all, great execution by team Sandhar. My first question was, can you just give some color on the EV two-wheelers that we are working with, especially the start-ups? What kind of volumes are you seeing from them? And what kind of a ramp up do we expect some them?
And number two, on the new product portfolio or new customers, I understand that the legacy products are very difficult to break into. So, how are we approaching this side of the business? Thank you.
Jayant Davar
Well, we personally believe that while there are many, many, many new EV players that have entered the market, it seems that the legacy players who have entered this particular area, whether it be Bajaj or whether it be TVS or whether it be Hero may finally get to rule the roost, because they have established R&D centers. They have a lot of money that can be thrown behind these new products, and they are waiting largely for the market to kind of mature.
You are aware that the market is still very patchy in some sense. And from what I understand, and I’m sure all of you have seen, the statistics say that 56% of the people who bought electric vehicles don’t want to buy electric vehicles any longer or again. So, it’s a mixed bag right now. However, having said that, there are players in place, the new ones you’ve heard of Ola, you’ve heard of Ather, you heard of Simple, you’ve heard of a few others who seem to be doing well, but we’ll have to wait and see how these kind of pan out. Obviously, I don’t think there is going to be space for 50 new EV players who can establish and come out with model changes that are required in our industry at the speed, which requires much higher levels of investment. We will have to wait and figure that out.
In terms of our plan, like I said, we have a premium product that is localized completely. And that is a big attraction for the OEMs to play with. So, we are in discussions. We’ve already started supplying to three customers. We are also in discussions with several others. And we are hopeful that over a period of time, the EV play that we are in will start to have a significant revenue percentage as a part of our entire revenue.
Aditya Kondawar
Thank you, sir.
Operator
Thank you very much. We have next question from the line of Pavitra Godara from Mahadev Road Carrier [Phonetic]. Please go ahead.
Pavitra Godara
Namaste, sir.
Yashpal Jain
Namaskar ji.
Pavitra Godara
[Foreign Speech]
Jayant Davar
Yashpal ji?
Yashpal Jain
[Foreign Speech]
Pavitra Godara
[Foreign Speech]
Yashpal Jain
[Foreign Speech]
Pavitra Godara
[Foreign Speech]
Yashpal Jain
[Foreign Speech]
Operator
Thank you very much. We have next question from the line of Udit Gupta, who is an individual investor.
Udit Gupta
Good morning, sir. Sir, how are we doing in terms of the four-wheeler business, sir? Like on an earlier call, you had said that we had won some orders from Hyundai. So, how is that progressing?
Jayant Davar
Yes, Hyundai is going through. Again, I think there was a delay in the product that we have. It’s a very good product, which was supposed to launch off in November and December. That was the initial target. We’ve now been told to start pilots in the month of March, which means the effect of that revenue will come in the next financial year.
Udit Gupta
Sir, any plans for capital raising or to retire debt?
Jayant Davar
Nothing so far, but we are looking for opportunities. As far as debt is concerned, of course, Yashpal ji will supplement me. We do feel that while we are comfortable enough to be able to service debt, we are looking for other opportunities, some inorganic or otherwise or other growth channels, which will then necessitate the need for additional capital when we will look at those particular opportunities to be available.
Yashpal ji, do you want to answer?
Yashpal Jain
Yes, sir, perfectly right. Sir has said, like, that debt repayments are going as per the schedule. But yes, if we are looking for some growth opportunities might be inorganic. That time, we’ll be thinking of raising some capital.
Udit Gupta
And sir, how is the export business doing in terms of the ramp-up there? And how is the growth there?
Yashpal Jain
You are referring to the overseas operation?
Udit Gupta
Overseas, sorry. Not the export. The overseas operation, sorry.
Yashpal Jain
So, overseas, like the first half was a little bit, I would say, stagnant. But second half, we are projecting that it will be showing us a growth of around 12% to 13% over the last year’s number.
Udit Gupta
And the margins in the overseas business, sir?
Yashpal Jain
It’s a double digit since inception. The EBITDA margin is close to 10.98% in this half year. The challenge is the Romania plant that in the initial remarks also, sir has told that by the end of this year, we expect it to be breakeven. So, earlier, we used to operate at an EBITDA level of 13.5%. And once the Romania plant breaks out, I mean, it achieves a breakeven point, we might go back to the earlier level.
Udit Gupta
Thank you so much, sir.
Operator
Thank you very much. [Operator Instructions]
We have a question from Shailly Jain from Dolat Capital. Please go ahead.
Shailly Jain
Hi, sir. Sir, can you please give me the performance of all of our subsidiaries? And what are we — how are we looking ahead?
Yashpal Jain
So, subsidiaries, Shailly, if you see the difference between the stand-alone and consolidated financials, the remaining revenues coming from subsidiaries. So, the total revenue from the subsidiaries for this half year is INR482 crores.
Shailly Jain
Sir, I wanted subsidiary-wise performance.
Yashpal Jain
So, subsidiary-wise performance, like, the biggest subsidiary in Indian operations is Sandhar Engineering, which is taking care of the sheet metal business, the new business that we have set up. So, Sandhar Engineering has done fairly well compared to the year-on-year, I mean, the comparison. For this half year, it has registered an income of INR192 crores versus INR87 crores of the corresponding. So, it’s just — you can see the growth is more or less a double growth. And as far as the EBITDA is concerned, they are well at the, I would say, breakout level. They have already achieved EBITDA of 7%. And going forward, when the volumes ramp up in the Mysore and the Halol plant, the double-digit margin that we have projected will be achieved. So, this is how the sheet metal is working, Sandhar Engineering.
The — and overseas operation, as I just said, overseas operation by the end of this year, once Romania plant stabilizes, might see a turnaround, and we might go back to earlier levels of 13%, 13.5% of EBITDA margin. For this half year, they have given us an income of INR234 crores at EBITDA margin of 10.9%. So, these are the two bigger subsidiaries. And third one is the machining business. It is going as per the schedule and as per the margins that we have projected.
Shailly Jain
Yes, sir. That was helpful. And what is our current level of localization? And what are we planning for it ahead?
Yashpal Jain
Localization in terms of, I mean [Speech Overlap]…
Shailly Jain
In terms — yeah.
Yashpal Jain
We are procuring components and materials locally only, except a very small, I would say, import content. Otherwise, we are largely procuring locally made.
Shailly Jain
Okay, sir. That was…
Jayant Davar
I would imagine, Shailly, that more — 98% of our — or even 99% of our procurement is local. There is less than 1% or a couple of percent, which is imported for some of our locks for the four-wheeler segment. But beyond that, everything is localized.
Shailly Jain
Okay. That was helpful. Thank you.
Operator
Thank you, ma’am. Thank you, sir. As there are no further questions, I would like to hand the conference over to management for closing comments.
Jayant Davar
Well, thank you once again to Dolat Capital, to Shailly and the team and the facilitators. Thank you to the audience and to the investors who took time out to participate in our con-call this morning.
We, as a company, are very, very bullish with the new areas that we’ve entered with the new investments we’ve made. And we are very prudent in ensuring that all investments that are being made, that have been made will be utilized to their full extent in the shortest time possible. We are also very, very hopeful and bullish on improvement of margins, as you will see in the coming times.
With that, I want to wish you all a very happy New Year to you and your entire families. God bless you all, and thank you once again.
Yashpal Jain
Thank you.
Operator
[Operator Closing Remarks]