Alicon Castalloy Ltd

NSE:ALICON

Earnings Call Transcript 2025-Q2

[Operator]

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

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

[Mayank Vaswani]

Thank you, Michelle. Good morning, everyone, and thank you for joining us on Alicon Castalloy Limited's Q2 and H1 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 Business Development at Alicon Castalloy Limited. Mr. Vimal Gupta will provide an overview of the operating and financial performance for the quarter and half year, following which, Mr. Agarwal will walk us through the operating highlights. Mr. Rajiv Gupta will then provide insights on domestic business and developments in the global markets. 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 earnings call. We appreciate you taking the time to join us on a Saturday. I hope you have had a chance to review the earnings documents shared earlier. We are pleased to announce that Alicon has achieved record-breaking quarterly revenue of INR 465 crores for quarter 2, making the fourth consecutive quarter in which revenues have surpassed the INR 400 crore mark. This growth has been contributed by the segments of passenger vehicles...

[Operator]

Sorry to interrupt you, sir, you're not audible right now [Technical Difficulty].

[Vimal Gupta, executive]

Now, is it audible?

[Operator]

Yes, sir. Can you please repeat your last line, please?

[Vimal Gupta, executive]

Yes. So we are pleased to announce that Alicon has achieved a record-breaking quarterly revenue of INR 465 crores for quarter 2, making the fourth consecutive quarter in which revenues have surpassed the INR 400 crore mark. This growth has been contributed by segments of passenger vehicle and 2-wheelers and supported by traction of non-auto segment.

Revenues from both domestic and international market have grown, supported by our strategic focus on developing new technology platforms, expanding into new regions and prioritizing value engineering and capability enhancement, all complemented by positive trends in our established lines of business.

Our business momentum remains strong, outpacing both global and domestic automotive industry growth. We are engaged in advanced discussions with a number of high-profile clients, including leading global OEMs and Tier 1 suppliers, who are drawn to a high-quality, competitively priced solutions we offer. Alicon's differentiation is [Technical Difficulty].

[Operator]

I'm sorry to interrupt, sir. We are not able to hear you. Ladies and gentlemen the line for the management has been disconnected. Please stay connected while we reconnect them. Ladies and gentlemen, thank you for patiently holding. The line for the management has been reconnected. Over to you, sir.

[Vimal Gupta, executive]

Sorry for this disturbance. Alicon's differentiation is anchored in our expertise in low pressure die casting and gravity die casting, processes that are gaining wider acceptance among our clients. Additionally, we're steadily transitioning from supplying as cast product to providing full machined components, evolving from a casting provider into a solution provider. This shift will increase value addition and enhance our overall margin profile.

Our progress can be tracked through the 3 key metrics. The share of passenger vehicle and commercial vehicle in our product portfolio continues to rise, now accounting to 51% of sales in quarter 2 of FY '25 compared to 49% in quarter 2 of FY '24. Our customer base has evolved significantly, adding prestigious global OEMs and Tier 1 companies, reflecting Alicon's growth industry's pressure. We continue to expand our client roster each quarter.

Our investments in design, R&D and value engineering have positioned Alicon as not just a supplier to build up build to print component, but as an innovative solution provider recognized for technology and design excellence.

Based on strategic initiatives undertaken, Alicon has transformed substantially from 2018 to 2024 in the following manner. In 2018, we were heavily relied on 2-wheeler customers. Today, we have a well-diversified portfolio, including passenger vehicle and commercial vehicle. Our customer base once primarily domestic now includes major global names and leading Indian OEMs that have themselves scaled significantly. Our product portfolio has expanded beyond cylinder heads to include a range of critical components. This diversification has improved our margin profile from 8% to 9% in 2018 to around 13% at present, with ongoing efforts to enhance it further.

Turning to our financial performance for quarter 2 and first half of '24-'25, we achieved revenues of INR 465 crores, representing a 22% increase from INR 382 crore in quarter 2 of FY '24. This growth was fueled by the scaling up of production for new parts, notably for passenger vehicle customers. There has been a recovery in volumes of 2-wheeler too.

The gross margin for quarter 2 of FY '25 was 47.55%, down by 253 basis points from 50.07% in quarter 2 FY '24, reflecting the change in our product mix, which saw a bit of moderation in sales of commercial vehicle segment, offset by strong pickup in volumes of 2-wheeler segments.

Employee costs rose by 5% year-on-year, driven by salary increment, higher minimum wages and new hires aligned with our growth. If you compare employee costs for quarter 2 of FY '25 with quarter 1 of FY '25, you will notice that this has declined 5% quarter-on-quarter basis. The reason is that the higher cost temporarily higher in our European operations, have completed their tenure and we are back to regular staff levels in Europe.

The EBITDA for quarter 2 of FY '25 came in at INR 57 crores (sic) [ INR 56.80 crores], up by 21% from INR 47 crores in quarter 2 FY '24, with a margin of 12.2% compared to 13 point -- 12.3% last year, higher volumes of 2-wheeler products and reduction in the higher value-add products for commercial vehicle has impacted the sales mix this quarter, which moderated the gross margin and has impacted EBITDA margin. We are pleased to share that despite these factors, the impact of -- on EBITDA margin is modest 9 basis points.

On a sequential quarter basis, we have seen that the EBITDA margin moderated from 13.2% in quarter 1 to 12.2% in quarter 2 of FY '25. This is again due to the shift in product mix, resulting in the impact on gross margin which has flowed through to the EBITDA margin compared to quarter 1 of FY '25. EBITDA of INR 58 crores, the absolute EBITDA of INR 57 crores in quarter 2 signals another strong quarter. Finance costs increased by 11% year-on-year to INR 11 crores (sic) [ INR 11.29 crores ] driven by higher borrowings and 9% sequentially from quarter 1 of FY '25. Depreciation rose by 26% to INR 23 crores, reflecting investment in machine and tooling.

Pretax profit, the PBT, grew by 20% year-on-year to INR 23 crores (sic) [ INR 22.51 crores ], up from INR 19 crores in quarter 2 FY '24. So net profit, the PAT, for quarter 2 FY '25 was INR 17 crores (sic) [ INR 16.81 crores ], a 16% increase from INR 15 crore in quarter 2 FY '24. For H1 financial year '25, total revenue reached INR 905 crores, up 23% from INR 737 crores in first half of FY '24.

Gross margin was 48.8%, down from 50.2% in H1 FY '24. EBITDA for H1 stood at INR 115 crore, a 32% increase year-on-year. And the profit after tax for H1 of FY '25 was INR 36 crore, an increase of 49% year-on-year basis compared to INR 24 crores in H1 of '24. Our quarter 2 capital expenditure totaled approximately INR 54 crore and for H1 CapEx is around INR 100 crores focusing on machinery and new product development. For FY '25, we anticipate CapEx of around INR 150 crore, underscoring our growth initiatives.

Coming to our earlier guidance of INR 1,800 crores for FY '25 targeting 15% growth. We are seeing signs of softening of demand in India as well as in markets such as Europe and USA. We are closely monitoring the situation, and we'll update on this in quarter 3 as we get more clarity on OEM schedules.

Despite the cautious tone for the immediate future, we remain excited about our prospects bolstered by ongoing client discussions. While current sentiment around electric 4-wheeler is subdued, we are well positioned in hybrid technologies with promising engagement with domestic leaders like Toyota and Maruti.

With that, I will now turn the call over to Mr. Shyam Agarwal for the operating highlights of the quarter.

[Shyam Agarwal, executive]

Thank you, Mr. Vimal. Good morning, everyone. I'm pleased to share that we once again achieved our highest-ever quarterly revenue in quarter 2, marking the fourth consecutive quarter with revenues surpassing INR 400 crores. Alongside a 22% year-on-year revenue growth, we also posted a healthy increase in both PBT and PAT. This performance underlines our strong momentum as we progress through financial year '24-'25 on a solid trajectory.

This quarter performance is more impressive when viewed in the context of a decline in the global automotive market. In Q2, global production was lower by 4% on Y-o-Y basis. In the same period, the Indian automotive market has reported an increase of 9% in overall vehicle sales, driven by the recovery in 2-wheeler sales despite a decline in passenger and commercial vehicle segments.

Against the decline in the global market and modest single-digit growth in the India market, Alicon achieved a solid 22% increase in sales, this includes 59% Y-o-Y growth in the passenger vehicle segment, a 19% rise in the 2-wheeler sales and 28% growth in sales to the nonautomotive segment.

Contribution of the CV segment has declined, aligning with the segment's overall volume reduction. This quarter saw continued momentum with Maruti Suzuki, driven by an increased ramp up in cylinder head supplies to support an additional model and the commencement of deliveries to their Gujarat plant. As anticipated, this resulted in higher volumes supplied to Maruti Suzuki.

At the beginning of 2024, we initiated the supply of cylinder heads to Stellantis India. With the successful ramp-up in quarter 1, I'm delighted to report that this momentum continued into quarter 2, with a further scale up in volumes. Consequently, quarter 2 marked our highest-ever supply volume to Stellantis significantly surpassing quarter 1 level.

Toyota maintained its steady demands for cylinder head for their 4-wheeler hybrid models. Toyota has planned a new TNGA line capacity expansion from January 2025, for which in-house line modification has been planned in November. The modification will require shut down for a brief period in November, but the line expansion will result in higher volume requirements from quarter 4 onwards. The strong performance of hybrid models from both Maruti and Toyota, coupled with scale-up of volumes in Stellantis has enabled the growth of 59% Y-o-Y in the PV segment.

In our European operations, the battery housing product for hybrid vehicles that we are supplying to Samsung, our Tier 1 supplier, is progressing well. This product is supplied to 3 different vehicle models and volume has stabilized after ramp-up in quarter 1.

Last quarter, we highlighted a development project for Volkswagen, autonomous driving initiatives, with ADAS technology set for widespread adoption across the automotive industry. This venture positions us to tap into a high-growth market segment. Our success is delivering a precise design and specification on the first attempt has earned high grades from Volkswagen. The Volkswagen R&D team has recommended us for the future power development activities.

We have positioned ourselves to capitalize on the large [ dent ] defining the auto industry today. Today, we supply nearly 90 components to the EV industry with our European plant providing a strategic advantage in advanced tech capabilities. Our expertise in the thermal engineering has set us apart, exemplified by the [ EXL ] development for Jaguar and Land Rover.

While electrical vehicles have witnessed early success and generated a lot of wealth. There are now some concern over charging availability and range as well as battery replacement and resale value. As a result, hybrid vehicles have now started to catch up in terms of interest generated due to their position as a practical bridge between traditional and fully electrical vehicles.

In the first 9 months of the calendar year 2024, hybrids recorded higher sales growth than EVs in key markets like Europe, USA as well as in India, driven by consumer preference for their flexibility and compatibility with existing fuel infrastructure. A global automaker, like Toyota, has invested significantly into hybrid production, positioning hybrid as a pivotal growth segment in the automotive industry. And in India, Maruti Suzuki among the leaders to incorporate this technology with a strong portfolio towards this segment, we are well positioned to capitalize on this trend also.

Another element of our growth strategy is to increase the share of customer wallet. We are doing this by pursuing more contracts for end-to-end fully machine part, as the proportion of as cast parts reduces in favor of fully machined parts, there will be greater element of value addition.

Our customer value proposition is rooted in technology-driven innovation powered by our state-of-the-art advanced technology center, equipped with high-end machines and driven by a team of 20 researchers, the center spearheads R&D delivering groundbreaking, cost-effective and eco-friendly products and processes.

Recent additions to our technology capabilities includes the state-of-the-art cold core box manufacturing facility at our Shikrapur plant in Pune, enabling the production of high-precision components that meet stringent industry requirement and strengthen our market position; integration of robotic arms into production processes, enhancing precision, efficiency and safety while ensuring consistent quality and improved output; integrating advanced digital process control across our operations; leveraging machine intelligence to enhance precision and efficiency on the production floor. These controls provide real-time data and actionable insights, enabling smart decision-making and aligning our processes with global best practices to meet the evolving needs of our customers and products.

We have added AI and IoT into our operations, which have contributed to productivity enhancement as well as reduced rejection rate. This helps in optimizing manufacturing processes, making them more efficient and responsive to real-time data.

Moving up the value chain, we are now working on highly complex HPDC parts with the aim to shift the process architecture into LPDC, highlighting our exceptional design and technology progress, transition from high-pressure to low-pressure die casting enhances structural integrity, detailed precision and material efficacy, meeting diverse customer needs while advancing sustainability goals.

In fact, we are striving to enhance sustainability through multiple initiatives, transitioning products from HPDC to LPDC reduces power intensity and minimizes waste, while our new model plant and automated facility optimize resources used. Alongside water conservation efforts, we are diversified our energy mix, with solar panels at our India and Europe plants now generating 1/3 of our energy from renewables. We aim to increase this to over 50% by next year, further enhancing resilience and cost efficiency.

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 2 FY '25, global auto industry witnessed 4% Y-o-Y degrowth in volumes. Within this, there was 1% growth in North America and South America markets. Degrowth of 25% in Middle East and Africa and Europe volumes declined 4%, China degrew by 6% and South Asia down by 3%. In the contrast, the Indian auto industry reported a healthy performance with 9% volume growth driven by the 2-wheeler segment. Analysis of the growth by segment indicates 12.5% growth in 2-wheeler segment on a year-on-year basis, 0.7% degrowth in the passenger vehicle segment on a year-on-year basis and 13% degrowth in the commercial vehicle segment on a year-on-year basis.

Auto volumes could have been better in quarter 2, but the [ short ] period negatively affected sales. Despite the weakness towards the end of the quarter, 2-wheeler sales posted growth of 12.5% with the momentum continuing from earlier quarters. Within this, scooters growth was 16.3% Y-o-Y while motorcycles grew by 10.7%. This growth was largely driven by recovery in the rural market and increased financing penetration.

For quarter 3 FY '25, the market outlook remains positive, bolstered by ongoing rural recovery and expectations of festive season demand along with expected offtake from the wedding season sales. In the passenger vehicle segment, utility vehicles continued to witness favorable momentum. Further, the segment around EVs is somewhat subdued while demand for hybrid vehicles remained strong.

Having built up offerings for hybrid vehicles, we are well positioned to take advantage of this trend. In quarter 2 FY '25, the retail volumes of commercial vehicles declined further due to the seasonal slowdown around monsoon and is expected to improve slightly in quarter 3.

Coming to the business wins. In quarter 2, we added 13 new parts from 5 existing customers. This includes 5 parts from the carbon neutral segment, 7 parts from ICE and 1 part from a structural business. Of these 13 parts added, 6 parts pertain to the domestic business and 7 parts for the international business. The 7 parts of the international business catered to requirements of marque global customers like Scania, TACO, JLR, Daimler and Honda cars. This includes another order win for a structural part for Jaguar.

This is a significant win with around INR 850 million like overall a lifetime. We expect the balance in our product mix to improve further as all of the new business that we have won this quarter is supplying parts for a four-wheeler, which we align to our strategy of focusing on higher value parts. The global business contributed to 23% of the total revenue during the quarter. Further, 94% of our business is from auto and 6% from non-auto customers.

During quarter 2 FY '25, Alicon booked new orders aggregating INR 37 crores. The new business added is aligned to our strategy of higher value and -- as it is all towards the four-wheeler part supplies. With this, our total new order booking has surpassed INR 9,000 crores, which is executable over a period of 6 years from '23-'24 up to '28-'29.

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

[Operator]

[Operator Instructions] The first question is from the line of Umesh Matkar from Sushil Financial Services Limited.

[Umesh Matkar, analyst]

Sir, my first question would be the gross margins were down 200 basis points. If you can elaborate on whether there was a change in [indiscernible] position?

[Vimal Gupta, executive]

The main reason we have explained that the -- there is a decline in the commercial vehicle because the change of the sales mix because the commercial vehicle where we are having the higher margins and major contribution for our exports. There, we have seen some decline softness. And on the other side, we -- there is increase in the sales of 2-wheeler. So where the margins are -- especially on the gross margins are lower. So that is the main reason for this some decline in gross margins.

[Umesh Matkar, analyst]

Okay. And sir, do you expect it to -- the composition to change going forward?

[Vimal Gupta, executive]

Yes, definitely, because you know that the auto industry some softness is there in the exports, especially the U.S. market, what we are seeing in the Europe market. So hopefully, maybe next 1 or 2 quarters, I think there will be some softness. After that, we are seeing a good recovery.

[Umesh Matkar, analyst]

Okay. Sir, and what would be the impact of U.S. CV and global EV slowdown on us?

[Rajiv Gupta, executive]

Yes, Mr. Umesh, thanks for the question. On the commercial vehicle, if you see the more impact is in Europe and a little bit impact on the -- in the U.S., if you see for the commercial vehicles. So there, we are seeing some of the customer or rather all the OEMS. They are seeing that demand is not there. However, there are -- new Euro norms are coming in 2026 and '27.

So there may be a prebuying because the cost of the vehicle will increase. So we -- there may be impact that prebuying may come in the next year. So we are hoping, and we are keeping a close watch on the EDI release, which comes every month from all OEMs. So we will keep a track. And maybe in the next con call, we will be able to give you a much clearer picture because in the -- by the time of the next con call, we will be having the yearly projections also from the European customers.

[Umesh Matkar, analyst]

Okay. And sir, what are the new logos added or contracts signed during the quarter?

[Shyam Agarwal, executive]

Yes. As Rajiv has explained, so we have in the con call. So we have added the new businesses from Jaguar and Land Rover, then Scania, then TACO. So these are the new customers from where we have got the new businesses.

[Umesh Matkar, analyst]

Yes, sure. Sir, and any view on life beyond FY '27, if you can give us? And also INR 2,200 crores, what kind of business plan we are shaping up? Any color on the same if you can give us, that would be very helpful.

[Shyam Agarwal, executive]

Umesh, very good question actually, but I tell you we will be in a better shape in the next con call because we will be compiling all our yearly projection for the next year and the forthcoming year.

Secondly, you know that lots of the global events are happening, like the election in the U.S., the softening of the Europe and the U.S. market, then the tension in the Middle East. So global market is very volatile. And we are seeing the government spending in India is also down in this financial year. So we also expect that something should come in the budget. So maybe we will be having more inputs, more detail for you in the next con call.

[Umesh Matkar, analyst]

Okay, sir. Sir, Middle East, there are some issues going on, so any impact that we are having on the business? And are we seeing that reducing it?

[Shyam Agarwal, executive]

Umesh, I tell you, it is having the impact, no doubt. We can see sometimes the freight cost to our Europe and USA customer that keep on changing, and -- as well as the lead time for the freight, what we are supplying that increase or decrease. So it impacts the businesses with respect to export that we are seeing. And also, these things impact the cost of the fuel, the crude rate increases with the tension in the Middle East, you know very well.

So these things are having the impact and more confidence -- of the customer confidence comes when there is peace in the -- globally. So we see it should improve as victory with the Trump, he already said he will work for the peace globally, including Russia, Ukraine. So we are keeping our finger crossed for the better global environment.

[Umesh Matkar, analyst]

Okay. Sir, our medium-term goal of attaining 15% EBITDA margin and 20% ROCE is in track, so -- or is there any change in this?

[Vimal Gupta, executive]

No. We are on track, and the target is clear, only that due to some little bit softening in the market that for short term, there is an impact we are seeing. But definitely because there for our order book, the kind of businesses we have already booked and the kind of margins these businesses are having. So I don't see any impact on that in the coming years.

[Umesh Matkar, analyst]

Okay. That's good to hear. Sir, what is the contribution from the high-pressure die casting in H1?

[Vimal Gupta, executive]

We are not in high pressure. We are doing the low pressure, gravity and some sand casting.

[Umesh Matkar, analyst]

Okay, okay. And will new parts starting production in Q3, Q4 offset the overall slowdown in EV and CV?

[Shyam Agarwal, executive]

Umesh, as you know, in the automotive industry, when we acquire new businesses, the implementation period for the new product is 1 year to 1.5 years, okay? So it is having the development lead time, then productionization, then the feedback from the customer. So lots of activities are there. So if there is an immediate drop in the sales, you cannot cover up with the new businesses. However, we have -- new business bookings are there and there is a pipeline with which the SOP of the new products will come.

So it is very difficult to say whatever softening is there, it will be covered up because it depends in which sector it is coming, whether it is a high volume, high value. So lots of factors are there. So a generic statement we cannot make, but we understand the intention of your question. So we always work to reduce the impact of the market softening with the addition of the new products, new customers, new segments. So we will keep on working on that, and we will keep you posted on that.

[Operator]

[Operator Instructions] The next question is from the line of Jyoti Singh from Arihant Capital Markets Limited.

[Jyoti Singh, analyst]

And sir, congratulations continue maintaining a top line above INR 400 crores. And sir, my question is on the revenue mix side, like on the PPT, we have given 94% in the auto and 6% non-auto. So if you can explain segment-wise?

[Rajiv Gupta, executive]

So we have noted in the last quarter, the contribution mix. Passenger vehicle were around 38%, then 2-wheelers were around 43%, commercial were around 12% and non-auto were around 6%. So we have noted this there was a movement, particularly in passenger vehicle. When we compared with last year quarter 2, we noticed a growth of 59% in the passenger vehicle, even we noted 2-wheeler increase of 19%. But as Mr. Shyam explained, we noted -- I mean as you all know the downfall of market especially for U.S. and Europe for the commercial segment because we are mostly into exports when you talk about commercial. We saw a dip of around 12.1% -- 21% in commercial. And that would be one of the factors why even our gross margins have -- were on the lower side than what we anticipated.

[Jyoti Singh, analyst]

And sir, I just wanted to know like earlier, we changed our strategy to diversify it more on the passenger vehicle compared 2-wheeler, but now because of the rural recovery another factor which is supporting 2-wheeler. So now what are strategy-- like CV also not doing very well, so now what are the strategy going forward? And like how much we are confident to maintaining that INR 2,200 crores target by '27?

[Shyam Agarwal, executive]

Yes, Jyoti, thanks for this question. So our strategy is very, very consistent. And we are focusing more on the 4-wheelers, especially on the passenger vehicles, commercial vehicles and also more focus on the export businesses. As mentioned by Mr. Vimal in his speech, we are also focusing more on high value addition with shifting from as cast to as machine part, so our endeavor is there. However, as you mentioned correctly, we have seen in the last quarter, the sales in the commercial vehicle and the passenger vehicle were not good, and we have seen the decline.

So to fill up the idle capacity, we increased our share of business for the 2-wheelers. So those options are already available with us, if we have to fill the idle capacity. But the long-term strategy will not change with the performance of the market in the 1 quarter. We are very much consistent with our thought process and the strategy, which our group has defined that we have to increase the top line, but we have to maintain very healthy bottom line also. So our strategy will be quite consistent in that.

[Jyoti Singh, analyst]

And sir, on the margin side, what are our targets and how we are targeting on the margin side, if you can guide us?

[Vimal Gupta, executive]

So margin side, what we are doing there, first of all, definitely, there is an impact on the change in the sales mix. But continuously, one is that we are more focusing like what we are talking about. So we will see further improvement in the sales of passenger vehicles. We are having a good margin. And second is now due to the -- seeing the global issues, all these things, the market pressures. So in-house this -- the cost reductions, those activities also started to reduce the costs. So maybe we will see that the impact in coming quarters, quarter 3 and quarter 4, how the costs are going down as well as maybe some improvement in the gross margins. So that is the way we are working to improve our margins.

[Jyoti Singh, analyst]

And sir, if you can guide me on the market share side, with the cylinder head and other parts?

[Vimal Gupta, executive]

One minute.

[Shyam Agarwal, executive]

Can you just repeat the question?

[Jyoti Singh, analyst]

Yes. Market share on the cylinder head and new part side if you can explain.

[Shyam Agarwal, executive]

Okay. On the cylinder heads, yes, particularly 4-wheeler, there is definitely a movement. This was also noted in the results. One is, yes, the volumes, what we are adding up at Maruti with the upcoming launches and also now addition to 1 location that has added to our sales opportunity. Second, also, we explained on Toyota, where even they are going to come up with -- they're talking about capacity expansion. So there is also an opportunity. Third is the Stellantis. There was a momentum in last quarter, volumes have picked up. So that will also add to this bucket.

And now what is happening when we are supplying to these OEMs to domestic as well as global, a lot of companies have recognized about the capacity capability of the volume what Alicon can deliver. So the inquiries have increased in that area. So we'd like to -- going forward, definitely, we see an opportunity to add further businesses with existing as well as some new customers in this domain.

I'm talking about the new business, yes, basically as we have aligned our strategy where we have defined very clearly which segments, which market, which customers to tap, and we have delivered a few of the niche parts in past. So this is now demonstrating our existing and prospective customers. Also, what we have done is a lot of parts are of critical nature. A lot of parts are critical than the original ICE traditional parts, where even we talked very low thickness compared to what traditionally people were manufacturing in this process of low pressure gravity.

One example I'd like to share with you, it's a Volkswagen automation part. It's a very critical part for 1.2 meter, weighing around 18 kg, which Volkswagen has given us an opportunity to excel how Alicon is. And we have delivered this part in the first sample, a very good sample. We've submitted this sample and to their surprise we have maintained the wall thickness, which is ideally being achieved within a HPDC process. So this gave a lot of recognition. And we are -- I mean they have shared with us recognition, appreciation mail to us. And now even they are talking about adding new other opportunities with the group company and other players in this space also.

Also, secondly, we are working aggressively on automation. So in the last quarter, we have added 6 new robots in existing line because whatever parts we are adding, it's critical in nature, bigger in nature. And even now, we have already submitted the samples of such critical parts. And in the coming quarters, we are working on the SOP of those parts. So these parts will demonstrate that, yes, Alicon have crossed or come to a second level of manufacturing when you talk about critical parts. And we are quite confident these products once we go in SOP will give opportunities to add business with existing and add new customers in this space. So that is how we are working on new business going forward.

[Operator]

[Operator Instructions] The next question is from the line of Amit Agicha from HG Hawa and Company.

[Amit Agicha, analyst]

Sir, am I audible?

[Unknown Executive]

Yes. Yes, sir.

[Amit Agicha, analyst]

And congratulations for good set of numbers. Actually, I joined the call late. I apologize for that. My question was with respect to the CapEx guidance for '25 and '26?

[Vimal Gupta, executive]

So for '24-'25 already given INR 150 crores. So maybe '25-'26, there will be further addition in the capacities for the new businesses. So -- but it will not be in the range of INR 150 crores or maybe INR 200 crores, but expectation is between INR 90 crores to INR 100 crores.

[Amit Agicha, analyst]

INR 90 crores to INR 100 crores?

[Vimal Gupta, executive]

Yes.

[Amit Agicha, analyst]

And any revenue guidance with respect to like focus on the international market?

[Rajiv Gupta, executive]

Yes, definitely. This will be more towards the critical parts what we added. Like, for example, we explained we have worked actively on automations, adding robots because whatever parts now we are adding, it's of higher weight like a Jaguar part, which we have developed in the past, the short weight of that part is 30 kg, and it's with the high volume. So we know very well -- I mean, in conventional rate with the manual operation, it's not possible. So we're working actively.

And these are very critical parts. And also to add precision and increasing our manufacturing capabilities on that ground. So going forward, investments definitely will come up in such projects where we can offer solutions in more of the automations.

[Vimal Gupta, executive]

So mainly what we are seeing there when we are moving towards the bigger parts, more critical parts, so somewhere we have to invest in our new equipments to handle those and more automation, so that -- for that we need additional CapEx.

[Amit Agicha, analyst]

Understood. Sir, that guidance for '25 given was INR 1,800 crores, am I right?

[Vimal Gupta, executive]

Yes.

[Amit Agicha, analyst]

And for '26?

[Vimal Gupta, executive]

For '26 now, that's why we are saying that maybe in the next quarter, we will be able to give more clear picture because you know that we have -- we will have more clarity from the OEMs when they will give the full year volumes because you know -- because there is no consistency. We are seeing some softening in the market -- in the global market. So that -- at this moment, it looks a little difficult to give the guidance for that next year.

[Amit Agicha, analyst]

Understood. Sir, the last question was with respect to the blended interest cost on the borrowings that we have?

[Vimal Gupta, executive]

Yes. So for the CapEx we need the -- this debts, but if you see on the other side, even after having this -- the addition of INR 100 crore CapEx during the 6 months, still there is no big increase in the interest cost. So maximum we are managing through our internal accruals. So definitely we are focusing on...

[Amit Agicha, analyst]

My question was interest rate, the blended interest rate on the total borrowings.

[Vimal Gupta, executive]

Total is in the range 9%, 9.5%.

[Amit Agicha, analyst]

9%, 9.5%. Okay.

[Operator]

[Operator Instructions] Ladies and gentlemen, as that was the last question for today, I'd like to hand the conference over to the 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 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 interesting next quarter. Thank you very much.

[Operator]

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