Alicon Castalloy Ltd

NSE:ALICON

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Alicon Castalloy Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Mayank Vaswani. Thank you, and over to you.

[Mayank Vaswani]

Thank you, Yashaswi. Good morning, everyone, and thank you for joining us on Alicon Castalloy Limited's Q1 FY'25 earnings conference call. We have with us on the call today Mr. Vimal Gupta, Group CFO; Mr. Shyam Agarwal, Chief Marketing Officer; and Mr. Rajiv Gupta, Head of Domestic Business at Alicon Castalloy Limited. Mr. Vimal Gupta will cover key developments and the financial performance for the quarter, following which Mr. Agarwal will walk us through the operating highlights. Mr. Rajiv Gupta will provide insights on the domestic business. Thereafter, we shall open the call for the Q&A session.

Before we begin, I would like to point out that some of the statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings documents that have been shared with all of you earlier.

I would now like to hand over the call to Mr. Vimal Gupta for his opening remarks. Over to you, sir.

[Vimal Gupta, executive]

Good morning, and welcome to our earning calls. Thank you for taking the time to join us on a Saturday. I trust you have had the opportunity to review our earnings documents, which was shared earlier.

We are delighted to share that Alicon has achieved its highest ever quarterly revenue in quarter 1 of INR 440 crores. This marks the third consecutive quarter where we have surpassed INR 400 crore milestone. This is driven by momentum in all our key segments of 2-wheeler passenger vehicle and commercial vehicle. Both domestic business and international business have done well. Further, this has been helped by efforts to build capabilities for new technology platforms in the automotive industry, expand into new geographies and focus on value engineering and capability enhancement, all supported by positive trends in our established business lines.

The business is witnessing strong momentum and has outperformed the growth of the global and domestic automotive industry. We are in negotiations with more high-profile customers, including several leading global OEMs and many Tier 1 suppliers representing the best in the world in the auto industry. These customers are noticing the solutions that we offer, which include supply of world-class products at highly competitive prices. We have differentiated ourselves through expertise in low pressure die casting and gravity die casting. And these processes are now gaining greater acceptance from customers.

We are also in the initial stage of moving from [ as cast ] product to provide full machined products. As we start to increase the proportion of fully machined products, there will be further improvement in value addition. As we have shared earlier, this transformation can be monitored across 3 key metrics. We continue to increase the share of passenger vehicles PV and commercial vehicles in our product portfolio. This segment now represented 57% of our sales in Q1 of '25, up from 50% in Q1 of '24. Our customer profile is evolving with the addition of prestigious global names, including leading OEMs and Tier 1 companies. This reflects Alicon's growth stature in the industry, and we continue to add to our client often each quarter. A focus on design, R&D and value engineering has ensured that Alicon is now increasing recognized not just as a source of build to print components, but as a solution provider known for innovation, technology and design.

If we compare Alicon of 2018 with Alicon 2024, you will notice the following progress. In 2018, there was an overdependence on 2-wheeler customers. While today, we have a more varied mix of 2-wheeler, passenger vehicle and commercial vehicle segment in our portfolio. In 2018, our customer list comprised largely domestic customers, while today, we have some of the largest, most prominent names in the world, including Indian OEMs who have scaled themselves to. In 2018, we were reliant on cylinder heads while today we operate a diverse mix of critical products. As a result, the margin profile in 2018 was in high single digit of 8% to 9%, while today we have a margin profile of around 13% and are working on further improvement for that.

Now let's turn to our financial performance quarter 1 of FY'25. We reported revenue of INR 440 crores, representing a 24% increase from INR 350 crores in Q1 of FY'24. Revenue growth has been driven by the scaling up of production for new product parts, many of which are critical components being supplied for passenger vehicle and commercial vehicle customers. Our gross margin for quarter 1 of FY'25 is 50.42% as an increase of approximately 25 basis points compared to 50.17% in Q1 of '24. This is due to the improved product mix on a year-on-year basis. Employee costs have risen by 19% year-on-year, driven by increments, rising minimum wage and cost of new hired alliance with our operational growth, while the impact of ESOP cost has reduced. As anticipated, there were some temporary additions in the European operations, which have driven employee costs.

In terms of profitability, EBITDA for quarter 1 FY'25 was INR 58 crores, a 46% increase from INR 40 crores in quarter 1 of FY'24. The EBITDA margin improved to 13.2% from 11.3% in the previous year, despite the rise in employee costs and other expenses, reflecting a year-on-year improvement of 194 basis points. On a quarter-on-quarter basis, the EBITDA of INR 59 crores in quarter 4 of FY'24 has been largely maintained, while the EBITDA margin has moderated from 14% in quarter 4 to 13.2% this quarter. Absolute EBITDA of INR 58 crores in quarter 1 represents a strong start to the fiscal year. Further, it would be important to note that wage hikes have been implemented this quarter and certain expenses have been provided estimated this quarter, on which we will get greater clarity as we progress through the year. Going by the trend in earlier years, the quarter 1 margin tends to represent a base, and we expect to see some improvement through the rest of the year.

Finance cost has increased by 9% year-on-year to INR 10 crores, in line with the increased borrowings. Finance costs are, however, lower by 5% on a quarter-on-quarter basis when compared to quarter 4. Depreciation rose by 22% year-on-year to INR [ 22.44 ] crores, driven by new asset additions comprising machines and tools added or replaced in our production lines. After absorbing the higher finance cost and depreciation, PBT has more than doubled on a year-on-year basis as it was higher by 109% from INR 12 crore in quarter 1 of FY'24 to INR 25 crores in quarter 1 of FY'25. The PAT for quarter 1 FY'25 stood at INR 19 crores, higher by 2x from INR 9 crores in quarter 1 of FY'24.

Regarding capital expenditure, we have spent approximately INR 49 crores in quarter 1, primarily on machinery for production and investments in new product development for the full year. We have a target of roughly INR 150 crores for FY'25, reflecting the heightened level of activity. In terms of our growth outlook, we continue to anticipate revenue of INR 1,800 crores this fiscal, representing around 15% growth for the fiscal year, while our strong quarter 1 revenue performance of INR 440 crores represent a nearly 25% of the annual target. We are carefully watching the global macroeconomic backdrop and the volatility that could emerge from the intensifying conflict in the Middle East, and we'll update on this target in quarter 2.

We are highly excited and energized by our business prospects and the discussions that are going with several potential customers. While sentiment towards electric 4-wheeler vehicle is currently muted, we have strongly positioned ourselves on hybrid technology and 2 key customers in this domestic market, Toyota and Maruti are indicating exciting potential for their hybrid vehicles. Further, volume of 2-wheelers have picked up well given the improving rural backdrop.

With that, I will now hand over to Mr. Shyam Agarwal to share the operating highlights for the quarter.

[Shyam Agarwal, executive]

Thank you, Mr. Vimal. Greetings. We are delighted to report our highest ever quarterly revenue in Q1 as well as reporting revenue of over INR 400 crores for the third successive quarter. In addition to revenue growth of 46% on Y-o-Y basis, we have reported growth of over 100% in PBT and PAT, respectively. With this performance, we have started FY'24-'25 on a strong note.

Coming to some of the key business programs this quarter, we have witnessed further ramp-up from Maruti this quarter. We had indicated that the supply of cylinder head to a second model combined with the start of supply to the Gujarat plant of Suzuki would lead to increased volume. We are pleased to share that with this ramp-up, the volumes being supplied to Maruti have tripled on a Y-o-Y basis.

For Toyota, where we supply cylinder heads to their hybrid models, we have witnessed further rise in volume this quarter. We have augmented the production lines to meet the demand and are in discussion with them to assess further ramp-up of requirements in the [ near 3 ]. Over the long term, we see further demand requirements given that Toyota will be adding to their manufacturing capacity. Our position as an approved supplier provides an opportunity to increase volume with its enhanced capacities.

We had recently commenced supply of cylinder heads to Stellantis India. Volumes to their Hosur plant have been ramped up in quarter 1. I'm sure some of you are aware that Stellantis is seeking to make the Hosur facility into an engine manufacturing hub, which will serve to the domestic market and from which engine will also be assembled and exported to Europe. Alicon has developed a model plant, imbibing cutting-edge technology and automation for the Stellantis product. This plant serves as a reference point for other potential customers as well. As a single source supplier of cylinder head for the Stellantis, we are closely monitoring the requirements to ensure that we scale up our capacities in alignment.

In our European operations, we continue to witness strong momentum. The production of eAxle for Jaguar and Land Rover continues on schedule. Production will continue into the third quarter, following which supplies will shift to the Indian plant in order to produce scaled up volumes.

Further, we see strong momentum in the battery housing product for hybrid vehicles. that we are supplying to Samsung, a Tier 1 supplier. This product is supplied to 3 different vehicle models, and there has been a steady ramp-up in the volumes in quarter 1 with indicators for the further ramp-up in financial year 2025-'26.

I would also like to touch upon 2 exciting projects that our European team is working on. The first one, we are currently developing a product for Volkswagen autonomous driving, positioning us at the cutting edge of the emerging technologies in the auto mobility sector, a well-defined schedule guides our product development, and we have already commenced manufacturing of the tools needed for the production. This initiative opens up new market segments for us with the application of ADAS poised for widespread adoption across the automotive industry.

Secondly, we are actively contributing to the eHighway project, a groundbreaking initiative jointly developed by Siemens and the Continental. This project aims to electrify highways allowing electric trucks to recharge while in motion. Our role in this venture includes the supply of 8 distinct components, which will be integrated into the top of the trucks to facilitate electrification. We have already delivered initial samples and further evaluations are currently in progress.

As Europe enters the summer season, we have also begun manufacturing swing arms for our European 2-wheeler clients. As many of you know, we are proudly supply to each of the top 4 premium motorcycle manufacturers in Europe. That is KTM, BMW, [indiscernible] and Ducati. Initial shipments started in Q1, and we are gearing up to significantly increase volume in quarter 2.

Overall, our European operations remained stable with no significant risk on the horizon. Gas prices, power availability and overall costs are largely smooth, and we have not observed any upward pressure on commodity prices thus far. We expect the balance in our product mix to improve further as most of the new business that we have won this quarter is supplying for 4-wheelers or for the global customers. This is aligned to our strategy of focusing on high-value parts.

In terms of industry trends, we see that hybrid vehicles are currently outpacing electrical cars in market growth, driven by their appeal as a practical transition between traditional and fully electric vehicles. In 2023, hybrid saw higher sales growth than electrical vehicles in major markets like Europe and Japan, reflecting consumer preference for their flexibility and the existing fuel infrastructure. Many buyers favor hybrid over electrical vehicles due to concerns about charging availability and range limitation. In response, automakers like Toyota have strategically increased hybrid production, recognizing the strong demand in this segment. As a result, hybrids are emerging as a key growth interest area within the automotive industry, offering a compelling investment opportunity. We are well positioned to capitalize on this both in terms of offering as well as association with some of the largest global and domestic customers spearheading this.

Another interesting update to share with you is the addition of the cold core box manufacturing facility this quarter.

[Operator]

Sorry to interrupt. Hello, sir, this is the moderator here. We're getting some disturbance on the line. I will reconnect you. Okay, kindly disconnect. Ladies and gentlemen, please stay connected while we rejoin the management team. We have the management team back on the call. Sir, please go ahead.

[Shyam Agarwal, executive]

Yes. Another interesting update to share with you is the addition of the cold core box manufacturing facility this quarter at our Shikrapur plant in Pune. This is a new technology for the critical parts. With the installation of this advanced equipment, we have enriched competencies further. This technology will open up several new opportunities, enabling us to further enhance customer wallet share.

We are also taking decisive steps to enhance our manufacturing capabilities by integrating advanced digital process control across our operations. By leveraging machine intelligence, we are adding a sophisticated layer of oversight that boost both precision and efficiency on the production floor. These controls are designed to provide us with real-time data enabling us to actively manage our operations with greater accuracy. More importantly, this technology will equip us with the insight needed to make smarter, more informed decisions that ensure that we make our manufacturing processes more efficient and benchmark them with global best practices to reflect our evolving customer and the product profile.

The other area in which we have made considerable progress is in diversifying of our energy mix. As we have shared earlier, we have installed the solar panels on the rooftops of our plants in both India and Europe. We have generated about 30% of our energy consumption in Europe from solar energy, which has made our operations more resilient and more competitive. Additionally, in India, we have invested in a solar installation and entered into a 5.2 megawatt solar power agreement, which will allow us to gain equivalent credits for the energy we contribute to the national grid. Part of this has gone live with the remaining infrastructure set to go live in January 2025. The energy fed into the grid will offset the power we consume at our manufacturing facilities. With this step, solar energy already contributes 40% of power and will soon account for over 50% of our total energy mix once the next phase is commissioned.

With that, I will now hand over to Rajiv Gupta for his comments. Thank you.

[Rajiv Gupta, executive]

Thank you, Mr. Shyam. Greetings to all of you. In quarter 1 FY'25, auto sales showed a healthy performance, especially the 2-wheeler segment, which continued to outperform. So in quarter 1, we noted 20% growth in 2W segment on a year-on-year basis, 6% growth in passenger vehicle segment on a year-on-year basis and a dip of 1% in commercial vehicle on a Y-o-Y basis. In the domestic market, we experienced a strong resurgence in the 2-wheeler market, reflecting a significant rebound in demand. Last quarter, we had projected an increase in the 2-wheeler volumes in anticipation of the upcoming elections, and this forecast have been realized with substantial growth. Additionally, we observed an encouraging improvement in the rural demand, which has further contributed to the robust year-on-year increase in volumes. This positive momentum suggests that the demand for 2-wheelers is likely to remain strong throughout FY'25 supporting our outlook for sustained growth in this segment. Overall, the market conditions appear favorable, and we remain optimistic about the continued performance of the 2-wheeler business.

In the passenger vehicle segment, utility vehicles continue to witness favorable momentum. Further, the sentiment around EVs is somewhat subdued and customers who were unable to decide are now more firmly in favor of hybrids or internal combustion engines. Having built up offerings for hybrid vehicles, we are well positioned to take advantage of this trend. In quarter 1 FY'25, the retail volumes of commercial vehicles saw a marginal decline. The global markets have been sluggish due to uncertain economic outlook and persistent inflation and increase in conflicts and unrest in various parts of the world. With the heightened uncertainty, we anticipate that there will be apprehension and cautiousness from customers and are closely monitoring the situation.

In quarter 1, we added 8 new parts from 5 customers. This includes one part from the carbon neutral segment, one part from the non-auto and 6 parts from the ICE segment. Of these 8 parts, 4 parts remain to the domestic business and 4 parts remain to the international business. In an exciting development, a global automotive customer has awarded us an order for 2 critical parts. This will be produced in India for supply to U.S.A. We estimate that the potential size of this order over its life can be over INR 500 crores. Interestingly, this will evolve supply of machined and assembled part enabling us to capture a higher amount of the value addition. This will add to the USP, which we can demonstrate to existing and prospective customers.

We have also received orders for one part, each from Daimler and Danfoss this quarter. These pertain to applications in commercial vehicle and will entail exports from India plants. The part from Danfoss pertains to on carbon-neutral segment, while apart from Daimler, will find application for ICE towards a new generation engine with enhanced vehicle performance. In the domestic business, we have received 3 parts from Mauti Suzuki, which will increase our wallet share. This adds to our business from the passenger vehicle segment, all these parts pertain to the ICE business.

In the non-auto business, we have added a product with BEML for defense segment. The increasing spends towards infrastructure and defense should lead to further opportunities in this space.

The global business contributed to 26% of the total revenue during the quarter, which is higher than 23% in quarter 1 last year. Further, 94% of our business is from auto and 6% is from the non-auto customers. During Q1 '25, Alicon has booked new orders aggregating to INR 650 crores, but new business added is aligned to our strategy of higher value add and it is largely passenger and commercial or global business. With this, our total new order bookings have surpassed INR 9,500 crores, which will be executable over a period of 6 years from '23-'24 up to '28-'29.

On this note, we shall open the floor for questions.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] We'll take our first question from the line of Yash Dalal from Sushil Financial Services.

[Yash Dalal, analyst]

Firstly, congratulations to the management for again recording your highest ever quarterly revenues for the third consecutive quarter. So I had a few questions. The first one was, what is the new business contribution for the quarter? You had mentioned last quarter that majority of the new business added pertained to 4-wheelers and was for international markets as well. So will this trend continue in FY'25? And what is the order pipeline for this as well as for the overall business?

[Vimal Gupta, executive]

So on the new business, yes, rightly said, you have noted a good performance last fiscal, where our order bookings were around 95% to the 4-wheeler market and 85% to the international markets. And this quarter also, we noted a good momentum. So in this quarter, we booked a business of around INR 650 crores. Out of that, the major addition was from a global market for a 2-wheeler premium high-end segment. And this is also good for it to add and demonstrate our existing and global customers about further value-add what Alicon can add. So good momentum.

[Rajiv Gupta, executive]

Yes. Maybe I would like to add here. But putting more on the 4-wheeler customers, considering the value addition which we are getting is higher than the 2-wheelers. But in this business, we have got the good value addition as compared to our 2-wheeler customers and even more than the 4-wheeler customers. So it's a good business acceleration for us.

[Yash Dalal, analyst]

Okay. And then my next question is, what has been your volume growth for the quarter? And you had mentioned that in FY'26 revenue target is at INR 2,200 crores with around 14%, 15% EBITDA margins. So beyond this, what does the future hold for Alicon beyond FY'26?.

[Vimal Gupta, executive]

So beyond '26, yes, that what we were talking about earlier also that we are expecting a CAGR of approximately 15% to 16% in the top line.

[Yash Dalal, analyst]

Okay. And what about your volume growth this quarter?

[Vimal Gupta, executive]

So this quarter, we quoted an increase of 24% growth over the last year same quarter. And this was mostly with the accounts, the cylinder heads, which is going into SOP customers like Toyota, Maruti ramp-ups we noted. And also we noted this time a good increase from the 2-wheeler markets that added to additional jump over the last fiscal.

[Rajiv Gupta, executive]

And yes, I would like to add here. And if you see the global automotive market, that has grown only by 0.5% while Indian automotive market that has grown by 16%. And with the growth of Alicon of 24%, so we have surpassed the growth of both global market as well as the domestic market.

[Yash Dalal, analyst]

Okay. Okay. And just the last question. In the presentation, you have mentioned your onetime item for your quarter-on-quarter EBITDA drop. So what is this exactly this onetime item? And will they be seen in the coming quarters as well?

[Shyam Agarwal, executive]

So yes, mainly that actually what has happened in the Europe, I think when you have gone through the numbers. So the drop you have seen in the Europe side. So we have seen some issues of the availability of the people because we are having the plant in Europe and a lot of big OEMs, they have put up their plants. So suddenly, shortfall of the operating people, so those are working on the shop floor due to the huge demand. So that has created a little bit pressure on the cost in the quarter 1, so that we had to hire at high cost from the competitors or from other countries, we have took the people. But now the things are going streamlined and we have now put some people from India and further some operating people are also in coming months, we are also going further more people from India. So now things are coming under control. Due to that, there was a pressure on the operational cost as well as on the manpower cost.

[Operator]

We'll take our next question from the line of Raghunandhan from Nuvama Wealth Management.

[Raghunandhan N. L., analyst]

Congratulations, sir, on strong results, and thanks for the comprehensive opening remarks. Sir, firstly, what would be the SOP share in revenue for FY'25? And in opening remarks, you referred to Maruti, Toyota, Stellantis where you're seeing very good traction. Can you also talk about the JLR order, how you see the execution time line? I'm referring to the eAxle housing order.

[Vimal Gupta, executive]

Coming to first on the SOP business sales for this year, so we see approximately INR 1,200 crores sale from the new parts what we added. And I mean, whatever we plan, we are going to meet that. There are some areas where we see a dip, but we are going to cover up with other accounts. Like PSA, they're not able to cope up with those volumes, but we are trying to generate how we can cover up. But we are going to hit what we have committed.

Coming to the JLR project now. The JLR project is going very good. I mean, we already mentioned in the script that the proto sales are on track with the plan. And in fact, we're able to build good confidence to JLR, frequently, our team are visiting at that location. And I mean, 2 or 3 visits of JLR management is being done at our locations also. So we are working well in the synergy. And also, now we are aiming to support samples in next month to trigger the supplies from India. So we are expecting volumes ramp up from India, small batches to start with in the next quarter and aligned with the numbers to cope up in the next financial.

[Raghunandhan N. L., analyst]

Got it. 2-wheeler segment has witnessed growth in Q1. How would be the revenue mix in Q1, 2-wheeler, 4-wheeler, commercial vehicle, 4-wheelers plus commercial vehicle, you said has gone up to 57%. How would be the 2-wheeler share be?

[Rajiv Gupta, executive]

Yes. So in quarter 1, we noted, yes, there was a good increase in 2-wheeler segment around 20%, but still our contribution were just 37%. So we have ideally reduced our contribution from last year, 40% to 37%. And if you talk about 4-wheelers, yes, this has increased, passenger increased to 39% and commercial increased to 18%. So this is a good momentum what we have following compared to the previous years. Overall about 4-wheeler, 4-wheeler is 57% versus last year quarter 1 at 50%.

[Raghunandhan N. L., analyst]

Got it, sir. And in EV and hybrids, what would be the share in Q1. If I remember correctly, FY'24 was 12%. And what would be your expectation for FY'25?

[Rajiv Gupta, executive]

On EV and hybrids, what we have done this time, we have understood there will be I mean sentiments of consumers are heard, especially on the new technologies where a couple of articles we have followed, which talks about the traction in the U.S. market where more than 50% of the EV users would like to switch to hybrid or ICE and similar traction we are noticing in India market, more On infrastructure and other issues. So that's the reason what we have done, we have not added one more strategic segment internally to bring our focus, and we have added a hybrid segment to monitor its momentum because we have noted, especially the Japanese OEMs are focusing on hybrids. And we know in India also the hybrid models are picking up. On the hybrid models, what we noted, is this quarter, hybrid contribution was around 9% and PV was around 10%. And going forward also, hybrid will remain to around 8% to 10% at this moment with the current booking. And our plan is further to increase going forward. For us, the Toyota volumes are picking up, that's a good sign, even the part which we developed in Europe, the battery housing, which we developed in '18, '19. The volumes of that part also is increasing, which we have noted in last quarter. And that is, again, because all that model, that part is going to all the hybrid models of Jaguar Land Rover. So we are concentrating on that area to... So Raghu, total contribution for hybrid and HV is now 19%.

[Raghunandhan N. L., analyst]

And then you referred that through Samsung, 3 models are being catered, would it all be related to JLR, sir?

[Vimal Gupta, executive]

Yes, correct. All the 3 are for JLR Land Rover, correct.

[Raghunandhan N. L., analyst]

To Vimal sir, 2, 3 questions. One on the aluminum prices. Recently, we have seen an increase in aluminum that gets passed on to customers, but with some lag. Would that be the reason why RM cost to revenue on a Q-o-Q basis has gone up?

[Vimal Gupta, executive]

No, that is not the cost absorption. That is the sales mix impact because when the contribution of 2-wheeler goes up, because these 2-wheeler components are the unmachined, these are the only as cast parts. So that is the reason. And because you know that it is a pass-through, but the price is when we compare the prices. So that's also giving the impact in the consumption because when aluminium price goes up. So automatically, the consumption rates goes up.

[Raghunandhan N. L., analyst]

Got it, sir. And ESOP cost has come down in Q1. What would be the number, sir, for Q1?

[Vimal Gupta, executive]

Approximately now cost is down by INR 2.5 crores because the quarter 1 last year, we had around INR 3.5 crores, now this quarter, INR 1 crores.

[Raghunandhan N. L., analyst]

And for the full year FY'25, what would be the number?

[Vimal Gupta, executive]

The total cost will be INR 4 crores, fully.

[Raghunandhan N. L., analyst]

INR 4 crores. And margin, 13.5% would be a fair number to assume for FY'25?

[Vimal Gupta, executive]

You have to take a call. We cannot give such type of statement, you know that.

[Raghunandhan N. L., analyst]

Just the last question, so addition of this cold core box manufacturing facility, if you can elaborate on that, what could be the benefit for the company going forward?

[Vimal Gupta, executive]

This is a technology. Majorly, a lot of foundries across Europe is using such technologies. And this is used especially for the structural parts. So we're having this technology way back in a European facility because we are supplying swing arms to customers like KTM, BMW, Ducati and many more. So recently, in India, we added a structural part for the EV variant for Jaguar Land Rover a bigger part of around 18 Kg with a length of 750 mm. So for that, when we took business, we understood that part called for a better reserves in terms of strength, in terms of shrinkage, porosity and other aspects. And that season, we understood it better to use the cold core box technology to give unique solutions to our customers. With that approach, we added this technology. And now this technology is we are seeing a good opportunity to add further from India business swing arms. At this moment, motorbikes, high-end CC is a trend even in India, and a lot of OEMs have started in discussion for development of aluminum swing arms. So on such approach, we see adding up of this technology and then pitching to customer helps us as a USP and differentiates with other competitors to grab that business. We see such technology will help us further to grab other customers in such structural parts.

[Operator]

[Operator Instructions] Next question is from the line of [ Devi Agrawal ] from [ Fecon ] Family Office.

[Unknown Analyst]

Congratulations on a great set of numbers. So my first question is regarding the sales in the U.S. So I just wanted to know what would be the share of U.S. in our total revenue? And what would be that number 3 years down the line?

[Vimal Gupta, executive]

At this moment, total is 30% of our exports roughly. And out of that 10% is to U.S. and 20% is to Europe. Going forward, we see this U.S. will increase from the current 10% to around 14% to 15% in the next 3 years.

[Unknown Analyst]

Okay. And like as the market situation there is tough there. So how do you see the market situation like improving there? Or how do you see the impact on the demand there?

[Vimal Gupta, executive]

We are working on addition of new components to the new market. So if we talk about ICE, we just mentioned we added a big order for premium 2-wheeler segment. And there also, we see a good volume. So this is addition to the market which we play. And this also will help us to demonstrate our unique USP and such products. Apart from ICE, we are also working on the EV portfolio, which Mr. Shyam will explain.

[Shyam Agarwal, executive]

Yes, maybe I understand what you mean. Currently, we are seeing some sentiments are down in U.S.A. So for that, we are keeping a high. We follow some lead indicators and also, we follow the ADAs from all the OEMs. So we are seeing some dip over there over the existing customers. But with the addition of the new products and also we are able to gain some share of business from our competitor. So that way, we are seeing we can nullify that effect, and we will deliver the numbers which we have committed.

[Unknown Analyst]

Okay. Got it. And second question on the Indian business. So I mean, there are news that there are increase in unsold car inventory. So what gives you the confidence about growing the business, achieving the INR 1,600 crore target there? And also the competition is built up in the die casting business. So recently, one of the competitor announced an acquisition of the domestic player. So how do you see the competition line there?

[Rajiv Gupta, executive]

Okay. If you see like the products where we are supplying the parts, like we mentioned in our speech, like we are giving the components for Toyota. So if you see the development of these parts takes 1 to 2 years of time and needs lots of know-how technology. And we are single source for these parts. So if customer is growing, we will grow with them and we don't see the competitor can come in because those are the entry areas. First is the lead time investment and the technical competencies. Second thing, if you have noticed from our introduction speech, we are also supplying to Maruti Suzuki. And there, our competition is only their foundry. We do not have any other competition with the Maruti cylinder head. And we are seeing that demand from Maruti is really, really good, and we have tripled our volume on Y-o-Y basis. [indiscernible] that's the third customer, which we have mentioned the Stellantis.So there, they have installed a capacity of 300,000 cylinder head. And again, we are the single source for them. So if we are single-sourced, so we do not have the impact from the completion and even if any competition will come, it will take minimum 2 years' time. to develop and complete the validation period. So I hope I'm able to answer your question.

[Operator]

We'll take our next question from the line of Aditya Sen from RoboCapital.

[Unknown Analyst]

Sir, I just talked about the order pipeline, but I couldn't follow exactly. So can you please throw some light on the upcoming or the order pipeline that we have and the order inflows that we see in this year?

[Vimal Gupta, executive]

On the order pipeline, yes, if you talk about total businesses, what we added since 2023, '24. So we have added a yearly average sales of around INR 1,500 crores. With this, our total project sales with the new projects will be of [ INR 9,500 crores ] over the year of 6 years. Of this, if I give you a bifurcation around 23% is for the carbon neutral, around 10% for the hybrid, around 5% to the technology agnostic and even 3% to non-auto. And of this, 54% are for the global markets and 24% contribution is with the new logos. And around 82% of this new added business is the 4-wheelers. So this shows that we are booking business after our strategy what we have defined.

Coming to this quarter, yes, we have added 8 parts from 5 customers. with a yearly average sales of around INR 150 crores and around INR 600-plus crores over the 5 years. This also we note around 68% of the orders are from the global markets. So same momentum we are going to follow the inquiries from customers existing as well as the prospective customers are increasing because today, be ICE, if you talk about expansion, be hybrids or new technology of the EV, almost all OEMs or major Taiwan companies are actively working on such developments. And also, if you talk about new technologies, they look for a supplier who have got hands-on experience of developing such parts. And why Alicon gets that edge because such products we have already developed in a European facility 4, 5 years ago. So for them also, they know very well. If they want to grab a business or enter the market, they have to go with a supplier having such experience and can deliver in a quick period of time. That's the reason they look for suppliers as Alicon, we are there with 2-wheeler, 3-wheeler, passenger commercial, all segments. So for them also, they are comfortable to discuss new opportunities with us, which we are looking forward to materialize in this financial year also.

[Unknown Analyst]

All right. And you also mentioned that we are single source supplier for Toyota. So is it only for Toyota or for all the OEMs that we supply to?

[Rajiv Gupta, executive]

No, Aditya. For Toyota cylinder head, we are single source, it depends on the customer to customer and model to model, okay? So not for all the parts which we are supplying will be the single source, but you can say more than 70% of the parts which we supply, we are single source.

[Operator]

We'll take our next question from the line of Jyoti Singh from Arihant Capital Markets.

[Jyoti Singh, analyst]

And sir, congratulations on the very good set of number in Q1. And sir, my question, largely on the revenue side. So if you can guide us in Q1 revenue, it is largely driven by Maruti or I mean, other client is also there, but it is largely driven by Maruti?

And the second question on the market share side on the part, like cylinder head, how much currently we have market share. And on the new product side, which are the major products like cylinder head we used to do.

[Rajiv Gupta, executive]

First, on the incremental increase in quarter 1. The major drivers for us just one was the market growth. like the 2-wheelers we noted a good momentum. Like HMSI more than 20%, Hero even 15% and so on. So that helped us to grab additional. Few were the new parts, which we will build to ramp up and deliver extra, like the major accounts like Jaguar, there we be able to generate additional. Few accounts, we noted for the global market, especially U.S., for the current part, there was a little increase in the numbers, which have added. So mostly was the market driven, you can say, around 50% and around 50% is the ramp-up volumes of the recent part we added like Toyota and Maruti Suzuki.

Coming now to the share of business. On the share of business to the Indian 2-wheeler industry, yes, it's around 35%, and we see a good momentum as the volumetric accounts like HMSI, Hero, their volumes are picking up. When we talk about 4-wheelers, in 4-wheelers, the share of business trend has mostly been compared with the OEMs. So we are into a phase where we are adding cylinder heads from Maruti Suzuki. So if you have noticed, last 3 to 4 quarters, every quarter, we are adding much cylinder heads. So we are further in discussion with Maruti to add, I mean, to transfer cylinder from their foundry to our location, again, in the local region. With that way, we are going to add share of business with OEMs like Maruti, even Toyota, we just explained. Toyota also, their volumes are increasing with the high demand of hybrids. You might read the article in last week where they have announced a new plant again in Maharashtra. So there also, we are aligned to increase the numbers. And also we explained on PSA, where they are actively working on ramp-up and we are aligned with them.

So going forward, yes, we see a good share of business opportunities also to add from 4-wheeler accounts.

[Jyoti Singh, analyst]

And sir, another question on the 2-wheeler side. Like in 2018, we were more diversified toward 2-wheeler compared to other segments. But now as 2-wheeler pickup started in the rural and also we are getting good business on that side. So going forward, it will alter the revenue much to favor 2-wheeler more? Or it remains at the same level as we now diversified 4-wheeler and 2-wheeler?

[Rajiv Gupta, executive]

As Mr. Vimal explained, our focus more on the VA side, like value addition. What happens with the 2-wheelers, most of the parts are air casted like the cylinder head, which we are supplying. But with the other customers like 4-wheeler customer supply we supply the other parts, so those are parts are the machined components. So we are focusing more on the fully machined parts where our value addition is more. So that is our focus area. However, whatever opportunities are coming for the 2-wheelers that also we are grabbing but more focus on the high value addition.

[Jyoti Singh, analyst]

Okay. So sir, going forward, we will see more expansion on the margin side? Or it will be remain our target to achieve 14%, 15%?

[Vimal Gupta, executive]

First target that what we fixed, I think, 2 or 3 years back is 14% to 15%. So first, let's hit that number. because everybody looks for every year improvement. So it doesn't stop our goals, our focus. So I think first, let's hit that number 14%, 15% and then further opportunities because it is a continuous process, the improvements on the both sides on the how to improve my value addition from the customer, how to reduce my cost and at the end, how to improve my bottom line.

[Jyoti Singh, analyst]

Yes, sure, sir. And sir, just last question on the aluminum side. As Alicon is the leader in the aluminum product, but now as the EV penetration is increasing more of the OEM targeting to be in the EV. So a lot of peers, they are also targeting new products in the aluminum. So are we facing competition or we are fine at this level?

[Rajiv Gupta, executive]

Jyoti, first of all, competition is always good for the health of any company. So we also don't want a weak competition. We also want a very strong competition. But just to add that, as you know, we were very strong in ICE and also in the EV, we have developed more than 90 components. And in the EV also, we are concentrating on very, very critical parts with the thermal management, where no other competitors are there, and this is also recognized by not only the domestic customers, but also the global customers. So that's why if you see we are supplying the part, which is going into the data vehicles, switch mobility, all the vehicles which we are on the Indian road and also the global customers like Jaguar and Land Rover. They have given us the business for the EV part, considering the capabilities, which we have developed for the EV component and especially with the thermal management. So we are equally excited if hybrid or the EV vehicle comes more on the ground and our aluminum content will further increase.

[Jyoti Singh, analyst]

Great, sir. Sir, just one last on the order side. Like our order execution is on the track? Just wanted your view on that.

[Vimal Gupta, executive]

Yes, orders execution is on track. So this year also, we see we are going to be very close to our targets. We also mentioned in the previous questions, we see a dip in a few accounts like PSA, they're not able to cope up with the volumes, especially the hit was when other suppliers were not able to catch up with some quality issues, but we are keeping a close eye to cover up such opportunities with other accounts. But we see we are going to hit what we promised or what we aimed in the new business.

[Operator]

We'll take our next question from the line of Raghunandhan from Nuvama Wealth Management.

[Raghunandhan N. L., analyst]

Two follow-ups. Firstly, in order book, what would be the share of cylinder head? And secondly, CapEx of INR 150 crores, how would you divide it between capacity expansion, product development, R&D and maintenance CapEx?

[Vimal Gupta, executive]

So Raghu, on the CapEx side, approximately now for this year, we are having around INR 150 crores. So on the maintenance, we can take around INR 30 crores. And then this year, we are also focusing on the automation side, the putting up a lot of robots, just to improve the quality, and now we have to control the manpower cost. So there also an allocation of around INR 25 crores for the robos automation and the balance amount is for the new projects.

[Raghunandhan N. L., analyst]

Got it.

[Vimal Gupta, executive]

4-wheeler cylinders would be approx 20% to 25% at this moment, which maybe...20% to 25%.

[Raghunandhan N. L., analyst]

This is as a share of order book. And in revenue, it will be over 50%.

[Vimal Gupta, executive]

In revenue, 4-wheelers, it's mostly into passenger vehicles because in commercial, those cylinders are into cast tariffs. But in passenger vehicles, yes, we mentioned the contribution. We are aiming to around 36% to 37% and major will be cylinder heads. So you can see around 30% will be to the cylinder business.

[Operator]

We'll take our next question from the line of Manas Jain from the line of Just Enterprises.

[Unknown Analyst]

You mentioned in the presentation, there are some onetime items. So I just wanted to understand, can you quantify what is the onetime item, and how much are you expected to carry on for the rest of the year?

[Shyam Agarwal, executive]

So onetime approximately, we have got a hit of around INR 4 crores in Europe that I have explained the reason keep people, the supply of the people. So that impacted people costs as well as the impact on the operational cost also. On a quarter-to-quarter basis, maybe there will be a little impact on the quarter 2, but in the quarter 3, there will be no impact.

[Unknown Analyst]

Okay. Got it. Fair enough. And also second question, I just wanted to know that, I mean, you are talking about it and other stuff. I also noticed that CNG is also picking up. So is there any place where we are also like supplying parts in this particular segment as well?

[Rajiv Gupta, executive]

Few accounts, we are there like Mahindra and Tata Motors where we see opportunity. But it's more of a small commercial. And even the Bajaj recently, they have launched, and we got this opportunity to develop cylinder for them. So that market also, we are touchbasing, good for us if it mixes up going forward.

[Unknown Analyst]

Okay. Because Maruti of late also has a lot of CNG vehicles they're offering. So that's why I had a question there...

[Rajiv Gupta, executive]

Yes. And if you see the cylinder head, which we are supplying, that is common for the ICE and the CNG vehicles. Whatever vehicle they sell, our product will go, Manas.

[Operator]

We'll take a next question from the line of [ Abhishek Kabra ] from [ AM Securities ].

[Unknown Analyst]

Actually, I just need to confirm that the 6%, the other segment that you have from the defense sector and the defense target for the 5 year export is very high. So is there any benefit that's going to come in?

[Rajiv Gupta, executive]

Sorry, Abhishek, if you can repeat your question.

[Unknown Analyst]

I was saying that the 6% other segment that is on the defense and all. So I was asking the defense sector, there is export driven by the government. So is there any benefit you're going to receive from that or not?

[Rajiv Gupta, executive]

No, no, Abhishek. The part which we are supplying for defense, it is for the domestic application. And mainly, we are giving to HBF and also to the [indiscernible], that is for the domestic application.

[Unknown Analyst]

Okay. And another question is that you have given more focus on the hybrid cars and all and seeing that the EV ratio is from your end, I'm seeing that there is more of an EV in the market. Will that be bad for the good for the company because seeing that you are more focusing on the hybrid items and development.

[Vimal Gupta, executive]

Yes. Abhishek, I just want to clarify. What happens with the aluminum content. If you see the ICE vehicles, the aluminum content is in the range of [Technical Difficulty] If you see the hybrid or the EV, the aluminum content increases up to 300 to 350 kg. So if more hybrid and the EV cars and the commercial vehicles will come in the market, it will be beneficial for all aluminum casting company. So it's good for us also.

[Operator]

Ladies and gentlemen, we'll take that as a last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir.

[Vimal Gupta, executive]

Thank you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call, and we look forward to interacting next quarter. Thank you very much.

[Operator]

Thank you, members of the management team. On behalf of Alicon Castalloy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.