Sundram Fasteners Limited (SUNDRMFAST) Q4 FY23 Earnings Concall Transcript

Sundram Fasteners Limited (NSE:SUNDRMFAST) Q4 FY23 Earnings Concall dated May. 08, 2023.

Corporate Participants:

Ram Prabhu — Deputy Manager

R.Dilip Kumar — Chief financial Officer

Unidentified Speaker —

Analysts:

Vimal Gohil — Alchemy Capital Management — Analyst

Dipen Sanghavi — Enam Asset Management — Analyst

Senthil Maniikandan — Itau BMS — Analyst

Sonal Gupta — HSBC Mutual Fund — Analyst

Prolin Nandu — Goldfish Capital — Analyst

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Sahil Sanghvi — Monarch Networth — Analyst

Karan Sharma — Credit — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day and welcome to Sundaram Fasteners 4Q Results Call, hosted by Avendus Spark. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [ Operator Instructions ] Please note that this conference is being recorded. I now hand the conference over to Mr. Ram from Avendus Spark. Thank you and over to you sir.

Ram Prabhu — Deputy Manager

Thanks Aman. Good evening everyone. Really appreciate you guys logging in. Very pleased to be hosting Mr. Dilip Kumar, CFO of Sundaram Fasteners; and Mr. R. Ganesh of the corporate finance team.

We will start with opening remarks from Mr. Dilip and then follow it up with Q&A, as always. Mr. Dilip, would you like to start.

R.Dilip Kumar — Chief financial Officer

Yes. Good evening to all. Welcome to this earnings call. And I appreciate the announcement made by the host the information, which is shared. Keep it confidence or if you have circulating anymore to our clients. We want to validate anything, please do not hesitate to reach out to me, so that I’m not quoted out of context. So, just wanted to give you a brief economic background and the inflation continues to be sticky as we have seen the March numbers are high. But fortunately, RBI has not raised interest rates in its last meeting. So which is a good sign and but the FOMC continues to raise interest rates and outlook does not look so good. I think they’re cutting interest rates for the rest of the year. There are conflicting reports, we are hearing that there has been increase the unemployment rate has come down to the US. And the wage rates are grown, but people are talking about a potential slowdown recession, but we have not sure. The oil prices are low in India. I mean the world over and which augurs well. Rupee [Foreign Speech] depreciating, but largely, it’s stable between INR81.5 to INR82, which is good for a company like Sundaram Fasteners, where we have nearly $200 million of exports. So with that as a background the company has achieved twin milestones or should I say three in fact that because we have crossed INR5,000 crores of consolidated turnover. We have done–achieved a PAT of INR500 crores for the first time. And we also declared the highest balance industry as a company. The dividend was INR8.63 per share. The revenues have grown well from INR4198 crores to INR4949 crores registering 18%. This growth has been broad based across most of our divisions. And also across all verticals, all segments the date commercial vehicles, or passenger vehicles or stationary engines, tractors. All have done well for us. And even the export market go in dollar terms may have been flat as compared to FY22. But thanks to larger Rupee depreciation the first nine months and the little extent in Q4. We have benefited from the rupees free fall. And the so overall we finished at INR4949 crores. The profit before tax has come in at INR615 crores, and increase of 11% and profit after tax at INR464 crores at growth of 14%.

Now the raw material prices were we experienced a few challenges this year, the prices went up steeply by INR8500 per ton. In the first quarter and thereafter from July 1,Q2, the RM prices dropped by INR4750. All of which had an impact in our results. And unfortunately, in Q4, the raw-material prices have been soft and which is reflecting in a better gross margin. But going forward there are expectation of the product like increase, but which we are not sure at this point of time because these settlement we tested reached between steel suppliers and OEMs are giving our fingers crossed. As whereas the other operating cost elements we have been in-line with the previous corresponding quarter for the previous quarters. There have been no major surprises. But barring one pleasant surprise, which is the freight outward, which has fallen sharply, which was as high as $11,000 per container in Q1 has now dropped to about $3500 to $4000 which is reflecting in our freight forward — freight outwards have fallen. The other element is the power cost which continues to be a challenge, because most of our plants are located in Tamil Nadu and 75% of our energy consumption within Tamil Nadu. So as many of you may know, which we’ve also discussed in earlier calls, the government as given a five year plan and they have revised these prices tariff after a gap of 9 or 10 years. So going forward, there is going to be year-on-year increase. Just to give you a flavor what was INR6.33 paise per unit has moved to INR6.75 last year different last year. And the between surcharge and the peak hour utilization weighted average rate is actually INR7.19, which is slated to go up to INR7.57 per unit this year. So what the company is doing you may wonder. So we are trying to invest and more-and-more into group captive power policy of the government of Tamil Nadu whereby we buy from private power producers either solar power or wind power or blended power. So we hope to keep our costs under control not at the TANGEDCO price, the discom price, but we hope to keep this much lower also with more-and-more of power with energy and solar energy. This will also bring in more green energy into our mix, which addresses the ESG perspective also. So these are the two elements which. I want to touch upon as well as variable cost is concerned. The contribution for the quarter as well as for the period for the entire year it’s hovering around 25 %.

The next major element is the employee cost. The installation of Sundram Fasteners as kept below 7% which is a good metrics to achieve in line with the probably of our peers in the auto component industry. And the fixed cost apart from several cost, all other cost elements are fairly stable around 8.5%. So the EBITDA for the quarter has come in at 16.2% and entire year at 16.1%. Now there has been a big increase in our borrowing cost. While borrowing by itself have fallen a bit, debt equity ratio is only 0.15 at the group level we are at 0.23. And as you know there have been repeated hikes in interest rates in India and what was available money at 2.5% to 3% for a good company [Indecipherable] perspective, now it’s almost doubled. And RBI also strictly [Indecipherable] rate available for export finance.

And in parallel FOMC also raised dollar interest rates. So we have a small ECB book. So the interest rates, interest cost has gone up. The company has spent about close to INR300 crores on capital expenditure largely on plant and machinery. Most of them have got capitalized in Q3, Q4. So the depreciation impact has not been steep. The effective tax-rate has dropped marginally because we had been some cut-back the viewpoints and which is already provided for completely. So we had the benefit of– we could take some of those credits in our tax elements tax cost. And overall the net profit after tax for the quarter was around INR16 crores compared to INR71 crores, but the INR71 crores had extraordinary exceptional cost last year, which was an impairment provisions which we have taken based on the under performance of one our subsidiaries. And if I’m happy to report in this context that subsidy is also turnaround, the UK subsidy and it has come into black. And the profit for the year at INR464 crores at 9.7%. Just give me a moment please. The subsidiaries also have done well and Upasana our domestic subsidy at a reasonably good Q4 compared to the first three quarters where more sales come from our Hosur factory where the value addition testing right because of the critical parts engine parts, and break components, which we supply. Our IT arm TVS Next has also performed well, and they just start reduced managed to reduce some outsourcing costs though the break costs have gone up. And it was also done well. And I’m happy to report that Cramlington Precision Forge our UK subsidiary has done exceedingly well from a loss position it has turned around. Because the customers, it has been because of many things, the customer mix has changed and where we are selling more to customer where margins are high our material content is slow. We also managed to get compensation from our customers for the item price increase. We have ensured sufficient availability. So there big savings in the logistics cost and subcontracting costs were material used to move out. So we are able to send out at reasonable batches. And so you are seeing the benefit of all this. in the performance of [Indecipherable] forge. The Chinese subsidy which had difficult year and continues to make profits. But we crossed quarter performance has been encouraging current year’s performance. It had a subdued year last year and in-line with the issues that the Academy slowing down, they had COVID. They had extreme weather conditions. So they are many challenges, so I think the economy is coming out of this and we will see hopefully a good number in Q1. So otherwise I think it has been a very good year for Sundram Fasteners both in terms of the year performance as well as the quarter and we are delighted to report and like I said, more than INR5700 crores turnover and INR500 crores of profit with the highest dividend payout in the history of the company. So with this opening remarks I would throw the floor open to the participants to ask their questions. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions ] The first question is from the line of Ram [Technical Issues].

Unidentified Speaker —

Hi, I’ll go first while the queue assembles. I’ll like the other participant to ask the more addressed questions on EVs [Technical Issues].

Operator

When asking the question please use the handset there is some [Technical Issues].

Unidentified Speaker —

Yes, is it better now.

Operator

No the disturbance is still there.

Unidentified Speaker —

I’m using the handset now, this has to be better.

Operator

Yes.

Unidentified Speaker —

Yes my questions is rather basic, it’s on capex. The company has incurred significant capex over the last five years in the standalone operations. I think we’ve spent cumulatively more than plus INR1,000 crores. Could you give a very broad break-down of the product categories or the segment this capex has been spent on, that’s number one. And number two, I’d also like to note the guidance for capex over the next two-three years.

R.Dilip Kumar — Chief financial Officer

Yes, so actually we took about after the initial. INR1,000 crores odd we spent the last cycle in FY20-21 and ’22 last three years have muted, then we had resumed in FY23. And we saw in the last AGM we spent about INR1000 crores and have spent about INR300 crores this year and we are likely to spend the targeted INR1000 in the next couple of years, that is a balance INR700 crores. And these — in-line with our revenue growth, these are being broad-based across our fastener division, our engine components business, powder metal or hot forging. We have spent across all our verticals and and also wind energy most importantly, and the expansion is most likely to happen more in the next couple of years in wind energy and in our forging vertical where we are as speedy as you know, we came up with a press release. Some time back we announced a $250 million order for EV and sub-assemblies. And the capexes are likely to be in the wind energy space and the electric vehicle space.

Unidentified Speaker —

All right, thanks for that.

R.Dilip Kumar — Chief financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Vimal Gohil from Alchemy Capital Management. Please go-ahead.

Vimal Gohil — Alchemy Capital Management — Analyst

Yes, thank you for the opportunity, sir. I hope I’m audible.

R.Dilip Kumar — Chief financial Officer

Yes.

Vimal Gohil — Alchemy Capital Management — Analyst

Thank you. Sir, just wanted to get a sense of sense on the performance for Q4 versus the production. Now, if I were to observe M&HCV this quarter has grown at 18%. Cars have grown or rather passenger vehicles have grown in excess of 15% to 20% two-wheelers, have been weak. Now in light of that, a 9% growth in standalone domestic division, is it seems to be a bit weak. That is one. Even in exports, if. I were to look at on a Y-o-Y basis, the dollar as you rightly pointed out, the dollar has depreciated by close to double -digits. So over there also a mid single digit kind of a growth seems to be a slightly sub par. So if, are we missing something here, how structural is it, how can we sort of improve this going forward, would be question number one.

R.Dilip Kumar — Chief financial Officer

Yes. On the dollar like I said, we set out to achieve about $200 million, and we probably ended with around $185 million and the — whatever growth in rupee terms you have seen has largely come from the rupee weakness. So it’s moderated a bit in Q4,rupee weakness, but largely moved from INR74, between INR74 and INR75 levels at the beginning of the year to INR82.18 if I remember and it was around $82.5 at the end of Q3.

Vimal Gohil — Alchemy Capital Management — Analyst

Yes, you’re right about the export performance.

R.Dilip Kumar — Chief financial Officer

As far as the domestic is concerned, if I look at the, not look at the quarter-by-quarter, but if I see the entire year we were running the data. And in terms of the components where we participate the growth of the industry has been around 23%, and whereas Sundaram Fasteners had reported 26%, but there may be some wavering, between quarters depends on the customer pull the products in which we participate. But if I look at the entire year data points I get that we have grown higher than the industry.

Vimal Gohil — Alchemy Capital Management — Analyst

So for this particular quarter the reason for underperformance could be some platforms that we were catering to maybe the production was lower this quarter. Could that be the reason.

R.Dilip Kumar — Chief financial Officer

That would be the, that would be the main reason.

Vimal Gohil — Alchemy Capital Management — Analyst

We have not lost any share. Right.

R.Dilip Kumar — Chief financial Officer

No, we’re not lost any share, but our share own business in the platform. So the products we participate tends to be fairly high.

Vimal Gohil — Alchemy Capital Management — Analyst

Understood. All right. Sir, could you comment on exports what’s the outlook for in volume terms, we’ve sort of had a decline in Q4. It seems from your commentary, but what does it look like for FY ’24.

R.Dilip Kumar — Chief financial Officer

FY ’24.

Vimal Gohil — Alchemy Capital Management — Analyst

Yes.

R.Dilip Kumar — Chief financial Officer

For FY ’24 with the new platform and EV participation, it looks strong, but given the recessionary trend both in Eurobond and America we see sort of lull in the the current quarter April to June and going forward, it should become. That is one the indication that we have.

Vimal Gohil — Alchemy Capital Management — Analyst

Right. So the growth could be back ended in FY ’24 is that.

R.Dilip Kumar — Chief financial Officer

Not only the export market. Even in the domestic market. The growth could be bit back-ended.

Vimal Gohil — Alchemy Capital Management — Analyst

Understood, sir. Understood. And sir, lastly if I can just slip in one more. One of your competitors [Indecipherable] has has gotten to shocks and cold forge parts. So in light of increasing competition there, how do we place ourselves with customers. If you can just give a.

R.Dilip Kumar — Chief financial Officer

[Indecipherable] differential case assembly. We are also into different case assembly. So I think the scope is huge and wide and the components of the parts we’re talking about very highly critical parts. So one is the customer validates, it is not about the competition where somebody dropping the price by a few cents and taking and taking away the business. This may be true to some extent in a commoditized products such as fasteners, but in hot forging business where the validation has happened meticulously over a long period of time and the validation itself will take take a long-time and costs quite a bit. So therefore another computing or so now coming in are we are getting into getting into differential assembly will not make a difference to either our positions.

Vimal Gohil — Alchemy Capital Management — Analyst

Understood, sir. I’ll again get back-in the queue for further questions. Thank you so much.

Operator

Thank you. The next question is from the line of Dipen Sanghavi from ENAM Asset Management. Please go ahead.

Dipen Sanghavi — Enam Asset Management — Analyst

Yes, hi, am I audible.

Operator

Yes sir. Please go ahead sir. Your line is unmuted, request you to please proceed with your question.

Dipen Sanghavi — Enam Asset Management — Analyst

Can you, can you hear me.

Operator

We can hear you.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay. Thank you. So sir, in our previous interaction you had mentioned some time ago. I think last quarter that they were some some under recovery in the raw-material and you had indicated that a large part of that under recovery could be taken care in Q4. So, has that happened. Is there any further under-recovery left in the raw material.

R.Dilip Kumar — Chief financial Officer

Yes, so the, for the quarter, the recovery has been very-very good. We’re almost recovered most of it. But if I take the entire year, there is a gap. And this will continue to be there, because our contracts do not provide, especially in the export business, do not for 100% recovery. Also, In the domestic businesses also such as in the wind space and the aftermarket, which is central to our business. The price increase can only be perspective because we are dealing with dealers and which is the most consumer-facing business. So this recovery has to be there and it has narrowed down in Q4, but the gap will be there.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay. Secondly, on the exports and you highlighted that there are near term, this quarter is likely to be little sluggish, but you are expecting the growth to be back-ended. So on, as as compared to $185 million exports that we’ve achieved in FY23. If you to put any number at the moment, what kind of number would you indicate for FY24.

R.Dilip Kumar — Chief financial Officer

I think we will be looking at say $190 million to $195 million for the current year as far as our estimate.

Dipen Sanghavi — Enam Asset Management — Analyst

So, not more than 5% type of growth is what you expect.

R.Dilip Kumar — Chief financial Officer

Yes, if in dollar terms.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay. Yes sure in dollar terms, because lastly, we are unlikely to probably not likely to see the kind of INR depreciation that we’ve seen in FY23. So overall reported export revenues in rupee terms this year probably likely to be a single-digit growth or sub 10%. So this is where we have always been quite bullish and then now talking of beyond couple of quarters or one year. You know as directionally you always spoken of very strong potential of growth in exports. So despite the orders of EV, the execution of the EV order and from some new platform if you are indicating only 5% of constant-currency growth. Are there other segments where do you see some kind of stress or declining some orders

R.Dilip Kumar — Chief financial Officer

No we are not seeing any decline in orders. The efforts are on and we also want to achieve profitable growth. So. This across it takes time and EV order execution will happen, will start happening from next year and peak the year-after. So you will see a good shift in our constant currency towards the dollar sales. We are– but right now taking into account the possible slowdown in the US, this is what we expect in dollar terms. But we are not losing any share with the customers or we’re not having, we’re not [Indecipherable]

Dipen Sanghavi — Enam Asset Management — Analyst

Sure, and lastly we had our standalone business, we had been operating at about in 17% to 18% EBITDA margin. Still of — except for last few quarters where we’ve been hit by RM cost [Indecipherable]. So, you had kind of indicated that low margins will come back to that level with deposit with some kind of lag. Are you still maintaining that view that margin can go back to closer to that 18% level in towards the second half of FY24 or is there likely to be little more deviation.

R.Dilip Kumar — Chief financial Officer

We’re at, at the EBITDA level we’re at 16.1%, we will be happy to achieve around 17% this year.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay 17%. So despite the freight cost and the other cost coming down as you highlighted earlier in the raw material under recovery largely been behind. We have still not expecting the margin to cross 17%, that is what if my understanding was correct.

R.Dilip Kumar — Chief financial Officer

Just to give you a perspective, if I eliminate the inflation. I probably 20% or 31% if taking into account recovery and what I consider to arms suppliers, but unfortunately we cannot conclude rhythms that matter and therefore factoring the inflation of the revenues funding RM cost. We are at 16.1 and given that the measures we are taking to contain energy costs and the sharp fall in the freight outward and as more-and-more value added products we sell and the standalone especially the EV sub-assemblies, we expect the margin to improve.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay. Sure. I’m sorry, one more question if I may, what all subsidiaries in all Chinese subsidiary had a very tough last year end, you had indicated that now things are getting back to normalcy. So what kind of growth, all subsidiaries put together only business specifically for Chinese subsidiary, which you can highlight. Are we likely to see in the current in FY ’24 financial year and are you likely to see margin expansion on the overall subsidiaries level this time has been.

R.Dilip Kumar — Chief financial Officer

Yes. So we are likely to see growth in obtaining subsidies both in terms of revenue and in terms of margin. Because last year the raw material prices were very-high and the availability of resources that a challenge because the last quarter of Q4 they relaxed the COVID. So there were many, many challenges which is beyond the control of the company, but right now the prices are softening a bit. We’ve also penetrated more Chinese customers. It has it’s pluses and minuses but we are happy not depending on only multinational customers there and we are seeing that margins are having an uptick going by the first quarter performance.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay sure. Thank you I will get back in the queue.

R.Dilip Kumar — Chief financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Vimal Gohil from Alchemy Capital, please go ahead.

Vimal Gohil — Alchemy Capital Management — Analyst

Yes. Thank you sir. Sir, just one clarification on the comment you made on domestic growth, while exports is understood that we have a large order and that will sort of peak start picking in the end-of-the year, but within domestic why are we expecting the growth to be back ended, because if we were to hear the production schedules and etc, the growth seems to be fairly okay.

R.Dilip Kumar — Chief financial Officer

What I’m telling you that we plants which we are supposed to achieve and we expect overall for the year good growth in the domestic onshore, but we expect because we had a good March, and therefore, we think that first quarter maybe a bit of a slowdown and because we as the government spends more on the infrastructure, the vehicle cabin policy kicks in and being an election year. So we expect the Q2, Q3 to be much stronger than Q1. So that is the context, it’s not that we will have a slowdown or we expect things to be would be rear ended, meaning we will have a strong Q3 or Q4. Right now, our sense is that the Q2 and Q3 are far stronger than Q1. I hope I put it in the correct perspective.

Vimal Gohil — Alchemy Capital Management — Analyst

Right, right. If I understood you correctly, sir, if I understood you correctly, maybe some of the newer projects that you’ve received or would take some time to ramp up.

R.Dilip Kumar — Chief financial Officer

Absolutely.

Vimal Gohil — Alchemy Capital Management — Analyst

And earlier expected.

R.Dilip Kumar — Chief financial Officer

With energy and space, we expect the uptick to start happening from October, so projects are longer stages, so I was selling more from that context.

Vimal Gohil — Alchemy Capital Management — Analyst

Understood, understood, sir. Understood. Thank you. Thank you so much.

R.Dilip Kumar — Chief financial Officer

Thank you.

Operator

The next question is from the line of Senthil Manikandan from Itau BMS. Please go ahead.

Senthil Maniikandan — Itau BMS — Analyst

Hi Sir, first congrats n the achieving the milestone INR5000 crores on topline. Just a couple of questions from my side. Firstly, just continuing from the last question on the wind energy. So you have been on the earlier interaction, you’ve been saying about the expanding the capacity, so any update on that.

R.Dilip Kumar — Chief financial Officer

Yes, so the capacity expansion has started happening. And like I explained to the previous question, we expect the project to be fully operational and get the benefit of the capital expenditure from overlapping between September and October Q2 and Q3.

Senthil Maniikandan — Itau BMS — Analyst

And the demand-side, particularly for the wind segment. How do you see it for the next year.

R.Dilip Kumar — Chief financial Officer

Next year looks quite strong. Even the year-after that looks quite strong. And like we’ve been saying we are based on the project which we are exhibiting. We’re hopeful of further expansion in the wind and energy space.

Senthil Maniikandan — Itau BMS — Analyst

Second question is, so broadly. What would be the company’s medium-term aspiration for the next three-four years on the revenue diversification on the margin trade.

R.Dilip Kumar — Chief financial Officer

Can you repeat the question properly.

Senthil Maniikandan — Itau BMS — Analyst

So broadly over the next two to three years, if you can see share some medium term aspiration of the company.

R.Dilip Kumar — Chief financial Officer

So the growth in terms of revenue, we are likely the same consistently, we will outpace the industry by 2% to 3%. Like we’ve seen even this year, the industry has grown by 23% and the products, the [Indecipherable] participating. We have grown by 26%. So that is the broad guidance at the revenue level. So, the middle line, which is where the bulk of the cost account are accounted by RM, which is not entirely under our control and we can keep our fixed-cost constant. So therefore, to answer you question on margin, we are hopeful that we’ll be able to move from 16% to 17 factoring in the growth plan this year and probably to bridge or back to ’19 OR ’20 levels will depend on the RM inflation dropping further.

Senthil Maniikandan — Itau BMS — Analyst

Okay, thanks.

R.Dilip Kumar — Chief financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Sonal Gupta from HSBC Mutual Fund. Please go ahead.

Sonal Gupta — HSBC Mutual Fund — Analyst

All right. Good evening, sir and thanks for taking my question. Just coming back to the domestic business. I mean, like if I look at the standalone quarterly numbers, right. Broadly we’ve been more flattish, I’m just trying to understand like Q4 was an extremely strong quarter for the industry. If you look at sequentially. I mean, double-digit growth in PVs, tractors, CVs, everything. So and we don’t really have much exposure to two-wheelers. So I’m just trying to understand that and last year’s base was also not very-high. So was just trying to understand why it seems that the domestic is sort of been very slow in Q4.

R.Dilip Kumar — Chief financial Officer

Well. I think the, for us the last year if you can see we have done about INR750 crores Q4 and we have moved to INR850 crores. So it’s not that the base does not bee high, the base has been fairly high from our perspective. Yes, so like we explained, the other part of the call in the. Platforms where we participate, our share on business is very-high. And this is what reflects in the quarterly numbers. So if segments where we are not participating or platforms we’re not going to have grown. To that extent, it will reflect in the quarterly revenues.

Sonal Gupta — HSBC Mutual Fund — Analyst

Okay. And sir could you give us you usually do for the full-year. Maybe the breakup in of sales mix in PV, CVs, series. I mean like domestic tractors, industrial aftermarket.

R.Dilip Kumar — Chief financial Officer

Yes sure. Yes, I think with respect to the industrial segment based breakup. Cars and utility vehicle accounts for roughly about 40% for us in the domestic stand-alone business. And with respect to the commercial vehicle, LCV and the engine, it would be in the range of about 25%. And tractors would constitute about 10%. The balance will be represented by the industrial segments where we service the aftermarket requirements and roughly about 5% from the wind energy fasteners and radiator cap would account for for 3%. This is the broad industry-wide segment.

Sonal Gupta — HSBC Mutual Fund — Analyst

This is just domestic right.

R.Dilip Kumar — Chief financial Officer

Yes, domestic.

Sonal Gupta — HSBC Mutual Fund — Analyst

And our domestic sales.

R.Dilip Kumar — Chief financial Officer

In terms of exports, if you look at predominantly the presence is between CVs and cars and multiutility vehicles. Those are the broad. segments where we participate.

Sonal Gupta — HSBC Mutual Fund — Analyst

So we would, I mean, how much would be industrial exports for us.

R.Dilip Kumar — Chief financial Officer

The industrial export this minimal. When I meant industrial sales. It is through the aftermarket within India. Where we sell multiple industries. In the export market, between commercial vehicles they account for 80% of our business. There will be balance in the, probably in the aftermarket. But not in industrials.

Sonal Gupta — HSBC Mutual Fund — Analyst

So balance would be aftermarket. So you will say that industrial is very low, right. Like earlier we’ve sort of shared that I think our industrial revenues last year were around, maybe less than INR100 crores, is that on the export side, would that have improved a lot.

R.Dilip Kumar — Chief financial Officer

No industrial side our presence is only in the domestic market that is within India. In the export side, our presence is predominantly in the cars and PV segment, which would account for 80%, tractors around 5% and the rest of it goes to off-road vehicle, stationary engines.

Sonal Gupta — HSBC Mutual Fund — Analyst

Got it, so as of now you are saying that — because the wind energy project. I thought that wind was a meaningful portion something meaningful even last year, right.

R.Dilip Kumar — Chief financial Officer

No, it will,. During the current year, already we are serving — servicing the wind energy market requirement, that is predominantly within India. So once the project is on-stream starting from Q2 of the current year, we should see good pickup in the export revenue for wind energy.

Sonal Gupta — HSBC Mutual Fund — Analyst

Okay, okay, so sorry if I’m wrong, but I’m just, because I have something like 5% of last year exports was wind energy-related. So that, and that goes for FY22. I mean would we have something in that ballpark or it’s not that is an incorrect, that’s an incorrect number that I’ve noted.

R.Dilip Kumar — Chief financial Officer

I mean 5%, is the overall wind energy exporter of Sundaram Fasteners.

Sonal Gupta — HSBC Mutual Fund — Analyst

Okay. Got it and between, I mean, like just trying to understand your guidance on the export side, which I understand is conservative. You’re building in some sort of a US recession or slowdown. So from that perspective. I mean, like what sort of underlying market decline in our coal business decline are you building in.

R.Dilip Kumar — Chief financial Officer

We are not building any decline. We are working based on the customer schedule or requirement. The indication for us is, yes the class 8 trucks would be doing in the range of higher single digit. So that addresses the CV segment and the cars and multiutility vehicle, we are performing based on the lines of the customer’s requirement. Got it, sir. And just on the EV export orders. I mean, like. Are you saying they all expect it to peak or reach the peak revenue potential by FY25, is that correct. Yes, yes.

Sonal Gupta — HSBC Mutual Fund — Analyst

So and then large order, right. Like, will INR300, INR400 crores of annualized run-rate, right.

R.Dilip Kumar — Chief financial Officer

Yes, yes.

Sonal Gupta — HSBC Mutual Fund — Analyst

So by FY25 you expect to hit that run-rate.

R.Dilip Kumar — Chief financial Officer

Yes, between FY25 and FY26, yes, around that 12 month period, it should peak.

Sonal Gupta — HSBC Mutual Fund — Analyst

Got it, but ’24 would be fairly, fairly slower or it’s it’s not much revenues on that.

R.Dilip Kumar — Chief financial Officer

When I said 60 odd program and. We expect things to be between second to fourth year with a peak volume of. $52 million either in ’25 or ’26.

Sonal Gupta — HSBC Mutual Fund — Analyst

Got it, great, sir. Thanks. Thanks for taking my question. Thank you so much.

Operator

Thank you. The next question is from the line of Prolin Nandu from Goldfish Capital, please go-ahead.

Prolin Nandu — Goldfish Capital — Analyst

Yes, hi, thanks a lot sir for taking my question and sorry to repeat the question. But to get more clarity. First, on the domestic side of it, right. I mean. You mentioned that there might be some growth in the platforms in which we are not present. So I’m just wondering whether is there a very-high concentration of these platforms in our, In our sales revenue that in case if one platform does not does well, it affects our overall revenue. So, is there a very-high concentration there and how do we diversify within getting into different different platforms.

R.Dilip Kumar — Chief financial Officer

No, with respect to our participation, we are there in all the segments, whether it is M&HCV, CV, or LTV, cars and multiutility tractors, engines. So our participation is widespread.

Prolin Nandu — Goldfish Capital — Analyst

Sure. So I mean. Yes, but then. I mean, let’s say, for example in Q4, what you’re saying is that maybe in some of the platforms where we are present, that did not do well and that is the reason why we are growing lower than the industry level, right. Am I correct.

R.Dilip Kumar — Chief financial Officer

Yes,, so that was with reference to one of the data points as pointed out, somebody else had Q4 market has grown much higher than our performance. So we have to validate that. But if that was the case, I already have data point for the entire year, if that was the case you are sometimes the things happen where the platforms re-participate, there is no growth and therefore our sales tends to be moderate or flat in that quarter, that was the context.

Prolin Nandu — Goldfish Capital — Analyst

Right. Okay, understood. So I mean, is there a number where, let’s say for example any one platform would be contributing about pipe fortunate over revenue or that’s a too large number to probably work with.

R.Dilip Kumar — Chief financial Officer

See. We don’t have concentration of revenue coming from particular platform. So it’s very difficult to quantify.

Prolin Nandu — Goldfish Capital — Analyst

All right, no worry. sir. But again, the second part of the question would be on your guidance for for FY24 on the export market and I mean, the previous question you answered that you have assumed a high-single-digit kind of growth for Class 8 trucks and that’s the, that’s broadly the number that you have also given us for the next year’s export in constant currency basis. So I would have thought that maybe Class 8 truck would be the most volatile part of it. So. I mean, is this is not a very-very conservative kind of a guidance because and also to add to that is there no scope to gain market-share irrespective of however, the market is growing. Are there not any couple of basis-points, which you can gain in terms of market-share over and above the industry growth in the export market.

R.Dilip Kumar — Chief financial Officer

Yes, a couple of things. So, market-share, gaining market-share it’s not easy. Like I said, especially due to the critical component. The OEMs are not comfortable replacing. In that sense, virtually there’s no competition. For instance, the $250 million program which we have won. If some other supplier either in India or some other part of the world offers a better price, the OEM will not will not change the source. So they’re continuing t o buy from Sundaram Fasteners. So it cast in stone in the perspective, from that perspective. But you are right about we being bit conservative in the, in our guidance on growth in dollar terms, but would be happy to report more optimistic scenario in our Q1 call.

Prolin Nandu — Goldfish Capital — Analyst

Right. Thanks. Great. I think good to know. And the last question would be, you mentioned that there are, this EV order that you have won that takes lot of time in terms of validation. So are there, and this point of time are we going through a lot of refuse and validation and are we expected to drop probably softness in some of these orders in which we are going to be validation thing. Can you just help us understand as to what is the sole, I mean the current levels of RFQs and validation that we’re going through right now.

R.Dilip Kumar — Chief financial Officer

It’s a continuous process. So we have subsequently won small orders also in EV space when, we’re not very big of that to the extent what we announced earlier. So there are small wins with the customers. And the RFQs and evaluation of new opportunities is a continuing exercise by marketing in the areas that it fits into our growth strategy. And like I said, we also want to have a profitable growth. So we are not there merely for market-share. And so the return ratios also get met. So keeping all this into account, yes the RFQ pipeline is strong.

Prolin Nandu — Goldfish Capital — Analyst

Sure, sure. And what could be the historical conversion rate that. I mean, we will be having of all these RFQs.

R.Dilip Kumar — Chief financial Officer

With respect to the RFQ conversion, the number could be in the range of double digit with respect say if I’m handling 50 RFQ, it would amount to 25% to 30% with respect to hit ratio, that has been our experience.

Prolin Nandu — Goldfish Capital — Analyst

Sure sir, sure. And last question would be on this wind energy capex that you are undergoing right now. Now, when we talk to other players, we are getting slightly contrary view that may be this wind energy turbines capex is probably going down or the demand is not that strong as what it was expected. Are we hearing anything from our customers about any slowdown or this is in-line or on time. In terms of whatever we had planned in terms of execution timeline.

R.Dilip Kumar — Chief financial Officer

Yes, we are on course in terms of our execution timeline and our revenue plan for the year. We have not heard anything to the contrary.

Prolin Nandu — Goldfish Capital — Analyst

All right, that’s it from my side. Thanks a lot and all the best.

Operator

Thank you. The next question is from the line of Rahul Ranade from Goldman Sachs Asset Management. Please go-ahead.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Yes, hi sir, thanks for the opportunity. Just a classification. So what would be our revenue from non auto and standalone. So last year the revenue that we had called out was INR500 crores. So what would be the numbers for fiscal year.

R.Dilip Kumar — Chief financial Officer

So, roughly over non-auto business is about one-third of our standalone revenues.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

One-third of the standard revenue.

R.Dilip Kumar — Chief financial Officer

Yes, this comprises of wind energy, then aftermarket, our tractor business.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Okay, no. So, tractors would be how much of this.

Operator

Ladies and gentlemen, thank you for patiently waiting. The management line has been disconnected. We request all participants to remain connected while we reconnect them. Thank you. Ladies and gentlemen, thank you for patiently waiting. We have the management line reconnected. Sir over to you.

R.Dilip Kumar — Chief financial Officer

Yes.

Operator

The current participant has dropped off from the queue. Hence, we will move to our next question which is from the line of Sahil Sanghvi from Monarch Networth. Please go-ahead.

Sahil Sanghvi — Monarch Networth — Analyst

Am I audible.

Operator

Sahil your line is unmuted, yes, please go ahead.

Sahil Sanghvi — Monarch Networth — Analyst

Am I audible.

Operator

You are audible.

Sahil Sanghvi — Monarch Networth — Analyst

Yes. Thank you for the opportunity and congratulations sir for the improved performance. My first question is regarding on the cost front as we have seen SUV prices moderating domestically also and in the foreign market. Can we expect the prices to stay at that place and hence a bit of margin expansion or the price pass on will happen immidatelyl.

R.Dilip Kumar — Chief financial Officer

The RM prices have been soft or constant in Q4. But there are expectations that then maybe one more round of hike. This is our understanding, but you are keeping our fingers crossed, but if it were to happen, it is generally instantaneous in terms of pass through. There may be a one month lag, may spill over to Q2, but most of it happens within the Board.

Sahil Sanghvi — Monarch Networth — Analyst

Right sir, right. And are you seeing the trends of correction in RM cost further.

R.Dilip Kumar — Chief financial Officer

No not really. Like I said the steel mill sounded out a price increase, but it is not had been agreed by the OEMs. The two Q4 was quite silent quarter. But there are once again whispers and noises about pricing.

Sahil Sanghvi — Monarch Networth — Analyst

Got it sir. Second question is regarding the wind energy business like we have said supposingly roughly 5% of our total revenue, which is I mean roughly, it is around say INR280 crores, INR270 crores to INR280 crores. If you correct me if I’m wrong, but so what could this number scale to FY ’24 or FY’25. I mean, what kind of visibility you doing do we have on the wind energy side, if you can throw some numbers to us. I mean.

R.Dilip Kumar — Chief financial Officer

Yes. So currently we are around INR200 crores. We expect that to go to let us say from at 12 month period from September 2023 to August of next year in that cycle to go up by another INR80 crores to INR100 cores.

Sahil Sanghvi — Monarch Networth — Analyst

INR80 crores to INR100 crores it should grow.

R.Dilip Kumar — Chief financial Officer

Yes.

Sahil Sanghvi — Monarch Networth — Analyst

And that should be count over and then it depends on how things evolve after that. Yes. We get this kind of lock in, yes. Okay, okay, okay, got it sir. And thirdly, do we do we get any kind of once major kind of price hikes from our export orders or I mean that is already happened. Is it in Q4 usually.

R.Dilip Kumar — Chief financial Officer

No. There are no price hikes separately. So if there is a compensation request to the customer can be made for freight rate if it’s fallen, and if raw material prices go up, we may go back to them for a price increase, but otherwise there are no price increases.

Sahil Sanghvi — Monarch Networth — Analyst

Got it. Got it. Got it, sir. Thank you so much. All the best.

R.Dilip Kumar — Chief financial Officer

Thank you. Yes.

Operator

The next question is from the line of Rahul Ranade from Goldman Sachs Asset Management. Please go head.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Yes. Hi, thanks for the opportunity. I think I got dropped off. So you were explaining in terms of the non-auto piece of the standalone.

R.Dilip Kumar — Chief financial Officer

So like I said, it’s one-third our revenues currently. And the management appliance aspiration to take that to 50% to mitigate the cyclicality of the domestic commercial vehicles and battery vehicles industry. So currently it stays at one-third.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Okay and does this also include some aftermarket also, because I think the last the same split was given us to be 10% is aftermarket. After standalone revenues.

R.Dilip Kumar — Chief financial Officer

Yes. According to the aftermarket with is for business about 600 crores about 300 crores the industrial segment both.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

And non-auto includes tractors and in the near kind of the mark, where you mentioned that tractor is around 10% of the domestic right so. Okay, so tractor would be then 10% of some INR3,200 odd. So INR320 odd crores would be tractors book of business.

R.Dilip Kumar — Chief financial Officer

Yes, yes.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Okay, okay. So out-of-the INR1500 crores, INR1600 odd crores one-third of those standalone in INR1500 corers INR1600 odd crores, INR300 crores is from tractors and the rest around INR1200 crores is a non-auto non tractor.

R.Dilip Kumar — Chief financial Officer

So currently, you take it as INR450 crores of tractors and INR350 crores of industrial.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Okay.

R.Dilip Kumar — Chief financial Officer

For FY23, between these two, you get 800. Then the stationary engines, infrastructure, wind energy, off load vehicles, will account for the balanced INR400 crores to INR500 crores.

Rahul Ranade — Goldman Sachs Asset Management — Analyst

Got it. This is very helpful. Thank you.

R.Dilip Kumar — Chief financial Officer

Yes.

Operator

The next question is from the line of Karan Sharma from Credit. Please go ahead.

Karan Sharma — Credit — Analyst

Hello. audible.

R.Dilip Kumar — Chief financial Officer

Yes, Karan Please go ahead with your question.

Karan Sharma — Credit — Analyst

So I was going to ask regarding with respect[Technical Issues].

Operator

Can you use the handset please.

Karan Sharma — Credit — Analyst

Yes, I will. Hello, yes, with respect to fast pace specifically, can you tell us the total size that is there in the global market in the automotive and non-automotive segment.

R.Dilip Kumar — Chief financial Officer

Please repeat the question, it’s a fastener [Indecipherable]

Karan Sharma — Credit — Analyst

Yes, with respect to fasteners, can you tell us the total market that is there in the global markets and related to the automotive and industrial segment.

R.Dilip Kumar — Chief financial Officer

Yes. I think the fastener segment on a global side, no it would include whatever from your, apart from nuts and bolts, it will also include many categories, but we are more focusing on the heightened sales partners.

Karan Sharma — Credit — Analyst

And sir, what would be the size of..

R.Dilip Kumar — Chief financial Officer

By definition.

Karan Sharma — Credit — Analyst

Sir, what could be the size of that high-tensile fastener. Globally or domestic.

R.Dilip Kumar — Chief financial Officer

Probably, we need to validate it.

Karan Sharma — Credit — Analyst

Okay sire, sure thank you.

Operator

Thank you. Ladies and gentlemen, we will take the last question that is from the line of depends from Dipen Sanghavi from ENAM Asset Management. Please go-ahead.

Dipen Sanghavi — Enam Asset Management — Analyst

Yes, thank you again sir. Just a clarification. When you mentioned [Indecipherable] 5%so around $195 million exports for FY24 in US dollar terms. Does that include the contribution from the EV order of year one.

R.Dilip Kumar — Chief financial Officer

Yes sir, it includes. It includes the businesses all our businesses.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay, okay and approximately what kind of number that you said peak revenue will be from year two, which is more $50 million or there above. Year one wonder be a much smaller number.

R.Dilip Kumar — Chief financial Officer

It will be less than $5 million this year.

Dipen Sanghavi — Enam Asset Management — Analyst

Less than $5 million. Okay. So that means that that 5 going to 50 from year two, which is FY25 and the usual usual growth, hopefully in the normal, the rest of the exposure is maxed out. That will, the FY 25 should be your, we should see a significant jump in your over the next quarter right.

R.Dilip Kumar — Chief financial Officer

’25 and ’26 also you will see us peaking, ’25, it will accelerate and ’35 it will peak.

Dipen Sanghavi — Enam Asset Management — Analyst

Okay, got it. Thank you so much for the clarification.

R.Dilip Kumar — Chief financial Officer

Thank you sir.

Operator

Thank you, ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for their closing remarks. Thank you and over to you.

R.Dilip Kumar — Chief financial Officer

Hello.

Operator

Yes, sir. Over to you for any closing remarks sir.

R.Dilip Kumar — Chief financial Officer

Nothing specific. I think we have answered, I’ve set the context in the beginning to the results and we have taken the questions. There are no specific closing remarks from my side.

Operator

[Operator Closing Remarks].