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Ramkrishna Forgings Ltd
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Good morning, ladies and gentlemen. Welcome to Ramkrishna Forgings Q4 FY '22 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Basudeb Banerjee from ICICI Securities. Thank you, and over to you, sir.
Thanks, Lisan. Good morning, all participants. Thanks to Ramkrishna Forgings management for giving us the opportunity to host the call. We have the management represented by Mr. Naresh Jalan, Managing Director; Mr. Chaitanya Jalan; Whole-Time Director; Mr. Lalit Khetan, ED and CFO; and Mr. Rajesh Mundhra, Company Secretary and Senior General Manager, Finance. So over to you, Jalan, sir.
Good morning. This is Lalit Khetan. A very warm welcome to everyone again on the call. We hope and pray for the safety, health and security of you and your loved ones. Along with me, I have Mr. Naresh Jalan, our Managing Director; Chaintanya Jalan, Whole-time Director; Mr. Rajesh Mundhra, Company Secretary; and SGA, our Investor Relations advisers. Hope you all have received our investor presentation by now. For those who have not, you can view them on the stock exchange and the company website.
We had a good fiscal year with revenue increasing by 77% over FY '21 due to a strong recovery in the CV industry from the impact of COVID-19 and efficient other excuses. We were also able to sign new businesses across segments and geographies, keeping our order book healthy.
Our EBITDA margin increased by 521 basis points over FY '21 to improve capacity utilization, various cost-cutting initiatives, increasing automation and incorporating latest technology into our manufacturing process. We also completed our expansion plans, and we are ready with a capacity of 187,100 tonnes.
During the year, overall capacity utilization was about 77%, which we believe will improve in the next couple of years, resulting in operating leverage benefit. When compared to FY '21, our export sales increased by 96% and domestic sales have increased by 66%, as we dig deeper into the customers by increasing content for vehicle. We have introduced new products, added new customers, expanded into new geographies. As the economy improved, we reduced sales to South American markets, allowing us to expand our export business. We also saw strong demand for Europe, which led to delist our export plans from the United States.
In Q4 FY '22, we managed to back new 3 contracts aggregating INR 144 crores. And during the entire year, where new businesses were INR 984 crores from 18 contracts. We received EPAP clearance and confirmation from an European OEM for a multiyear order. Our new Jamshedpur fabrication facility was approved by one of the leading European OEMs in the mining and automobile industry, resulting in the start of the year production. This was really also enabled us to expand our presence in the railway sector, which is an important component of our diversification strategy.
We have commissioned our one Forging plant and with vision shipping product samples, and this will enable us to added new products to our baskets. Furthermore, to expand our global reach and strengthen customer licensing, we have opened new offices in various geographies, these new offices, which will be added to our existing offices in locations, Mexico and Turkey will allow us to pursue our aggressive strategy of increasing our export business even further.
While talking about the industry dynamics despite fuel inflation, chip shortage and geopolitical concerns, the commercial vehicle industry remains optimistic about its growth prospects due to favorable growth drivers. Aside from the e-commerce room, increased activity in road construction, mining and improved infrastructure spending by the Central and State government added the CV industry growth in '21, '22.
Medium and heavy commercial vehicle sales increased by double digit as a result of increased fleet utilization levels caused by increased economic and infrastructure activity. The semiconductor shortage is likely to persist for some time, the industry has been coping by implementing alternative measures, which we expect to resolve in coming quarters, however central governments increase in prices on infrastructure and road development is likely to drive demand in the CV industry. We also see good demand coming from railway and oil and gas segment within the coming period. We are continuously working to derisk our business by diversifying across segments, customers and geographies. We will continue to focus on debt reduction by utilizing a major portion of net operating cash flow to our debt payment.
PwC has been engaged in the integration and implementation of ESG, which will be environmentally sustainable and socially responsible, and will be supported by a strong corporate governance road map. That's all from my side. We can now open the floor for Q&A. Thanks.
Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Mumuksh Mandlesha from Emkay Global.
Sir, revenues from EV is expected to grow strongly over the next few years. Can you share which products company is targeting any order book size? And what are plans to reach the target?
I think we cannot name the product because of the policy of the company. But actually, in our presentation, if you see, we have already put in the geographies we are already working on the programs which are going to result in these volumes as directed in the market in terms of total equipment sales. And accordingly, we have budgeted the total volumes, which we are going to clock in the next couple of years.
If possible like it's for CV segment, PV segment?
It is actually for mix of 3-wheelers and PVC.
Okay. And sir, companies targeting to increase the addressable content per vehicle to 84% by FY '27. So which are the products companies targeting? And what is the plan to reach the target?
So I think, if you see our presentation, you will be able to visualize that when we started our journey in the auto, we started at the back of the vehicle. And now we are almost at the entire -- when we are targeting, we are looking at reaching the entire platform of the whole vehicle. So that is the way we are targeting. We are into -- we were one of the biggest suppliers for rear axle. Now we have got into front axle, and we are looking at complete value-add fully built front axle. And that is our target by 2027.
Okay. And sir, non-auto, which counter about 19% of revenue in FY '22. So outlook was some 10% comes from railways, mining construction and oil and gas. So can you share what are the other 9% of the revenues?
There are a mix of industrial components in the different industries. It may be from steel. It may be from cement. There are a lot of industries where we do small portion of activities, which result in higher value but not volume. So in the total together, this is like power sector, these are the places where we cannot exactly plot the percentage, but it is -- we have kept it as others, basically.
And sir, what would be the outlook for FY '23 for the Industrial segment, sir?
We are looking to maintain the same volumes and same revenue.
So next year, the mix should be similar compared to FY '22?
It is similar. Yes.
And sir, the last question. Has there been any change in the outlook by overseas CV players on account of chip shortage and slower freight rates?
I think if you see our exports, while this problems are there since about 3 quarters now, we have been constantly able to maintain our exports because of the breakup in the geographical segments. And we believe that with addition of new segments such as South America, Thailand and other places, I think we will be able to maintain the same growth, maybe some country specific, it goes further down. But are we -- as RKFL do not believe that our overall portfolio is going to decline in terms of exports.
So also, basically, there's no change has happened recently, right, in terms of a demand outlook by OEMs?
No, there has been demand. But changes by the OEMs, but we cannot reflect on a particular OEM who has changed. But overall, if you see country-specific or our journey in exports, we have been able to grow or maintain the same levels despite these challenges already being there.
Okay. And sir, you mentioned that there would be some inventory correction over next few quarters. So what kind of impact would be there, sir?
No, we do not foresee any impact due to any of this. And we as projected, we will continue to grow. And we have never said that there is going to be an inventory correction because the build rate is so slow, I don't think there is any buildup of inventory at the export platform.
The next question is from the line of Agastya Dave from CAO Capital.
And I must congratulate you some of the cost-cutting measures that I can see in the line items they are really impressive. I was expecting quite a bit of hit on your P&L, but you guys have managed costs very well.
Sir, my first 2 questions, sir, on cost itself. Sir, is there any component of the RM pricing, which has not been passed given as a pass-through by our clients and which we can expect going forward? And what would be the impact of gross margins on the -- because of that? And a related question is on fuel. Can we expect these prices as a percentage of revenues to be constant going forward or get slightly better -- is this the peak fuel cost that we have seen?
I think in terms of peak fuel, we are trying to make some changes in terms of our usage, converting a lot of our internal capacity is moving out from usage of gas and furnace oil or LDO to electricity. So I think you will be able to see in this year, a lot of these things happening by which it may not happen in the next quarter itself, but over the whole year, you will see that a lot of actual fuel usage going down and electricity usage increasing by which I think we will be able to save huge both on cost in terms of fuel as well as we will be saving RM because of the heat loss.
Okay. Brilliant, sir. And sir, on RM cost, is there any component of the normal pass-through mechanism, which has not been paid because of lack?
I would not be able to comment on this because I am exactly not aware in terms because this is being dealt by marketing. But as we know, we have -- most of the RM is we have a contractual obligation with all our OEMs to pass on RM with one quarter lag or one month lag.
So if this happens on a cyclic basis. So I think as far as balance sheet is concerned, 99% of the RM has been captured in terms of pass-through. But if it happens in a due course, so complete P&L will never get hit because of non pass-through. It may happen with one quarter lag, but it's not that it is going to have a P&L effect.
Right. Sir in terms of additional freight that we have paid because of extraordinary rates as of now, can you quantify that number? And what are you seeing on the freight side? Because at least as far as U.S. shipments are concerned, there are like some reports which are coming out, that situation is improving. It is not as bad as it was earlier. So first of all, can you quantify the additional extraordinary freight costs that you have incurred during the year? And what is the situation as of now?
I think quantum of exact freight, I think Lalit will be able to answer this question. But in terms of availability of containers right now, yes, situation has -- is better than what it was in the month of December, but most -- this war again, things have started becoming difficult because of the crude oil prices, the cost, what we thought will come down, we are not seeing the same happening. But yes, in terms of availability. Availability has improved, but it is at a cost. It is not without a cost.
Right. Sir -- yes, sir, sorry.
Lalit, can you answer the quantum of freight cost we have incurred extra?
Yes, the freight cost has raised in all the geographies and its steepest being in the North America, it has gone to almost 4x, 4 to 4.5x up from the rates what we are paying in the last year.
Right. Right. Even though, sir, as of now, are you saying for the entire year as an average?
Yes, yes. So it's almost 5x right now, more than 5x, but it is 4, 4.5x.
Okay, okay, okay. And that is hitting you primarily on the export side?
Yes. That has eaten up some part of our margin. We have been able to recover some part of it from the customers. But entirely, it cannot be recovered.
Sir, could you quantify that part, how much you have been able to recover?
I think in the full year, we have been able to recover around INR 60 crores from the customer on account of freight.
Sorry, sir, how much?
INR 60 crores.
INR 64 crores?
INR 60 crores. 6-0?
6-0. INR 60 crores.
6-0 percent, right -- crores, INR 60 crores. As an absolute number. Okay. Okay. Okay. Sir, one final question. This is on the nature of the cost we incur when we ramp up. So you mentioned that in the guidance that you have said that next year, we expect the turnover to go by 20% to 25%. I'm assuming that is mostly volume. And if you actually achieve that kind of volume growth, like is the operating leverage as linear as it appears on the P&L, especially during this year that when our utilization went up by so much, our margins expanded by 500 basis points. Can we expect a similar trajectory going forward? Or will it be more of a diminishing return kind of a situation?
No, I think you will be able to see still growth, both in terms of top line and bottom line. But the amount of inflection which has happened of 500 basis points, it may not happen as that much. But yes, you will be able to see continuous growth in terms of overall margins, which we feel that is going to continue for at least 6 to 8 quarters.
Sir, at deep utilization, what kind of ROEs can you generate? And what kind of margins? Is there a cap to it? Let's say, INR 10 crores at 25% or 27% margin, EBITDA margins, and probably 20% ROEs. Is there a cap to the number? Or you can actually, the more efficient you become, you get to keep the efficiency gains that you generate?
More efficient we become, more ROE is going to happen. We are looking somewhere in this year, you will be able to see a 20-plus ROE. I think we are very extremely positive on it. And I think going forward within this year, only you'll be able to see those kind of ROEs. But we can easily say that as we write up the value-add chain, and as we improve our internal efficiencies, I think you will see much better ROEs going forward.
Excellent, sir. One final question, which were the previous participant also asked about any order cancellations, especially in North America. Because of freight rates, they are slightly wobbly as of now. So are you seeing anything from the OEM side? I'm specifically asking for North America, sir, not for your export markets?
I think I will not -- I can only tell you it's a big no. We have had no order cancellations. Whether it is North America, whether it is Europe or anywhere in the world, my contracts with my customers are strong, and it will be till FY '24 end.
Excellent, sir. Great performance. One request, sir, if you can improve the quality of the P&L that you publish on BSE and NSE, the presentation is amazing. But the actual result document, the line items are not very clear. It's very hard to read. That is my only request sir. I know this...
Will take the suggestion on board, and we will surely try and implement whatever.
Your disclosures have improved dramatically. Your presentations are very, very useful, sir. So all the best, sir.
Thank you.
The next question is from the line of Abhishek Jain from Dolat Capital.
Congrats for a strong set of numbers. Sir, going ahead, domestic revenue mix will improve. So how it will impact the overall gross profit margin of the company?
Can you please repeat the question? And can you use the handset of ours.
Hello?
You have a background noise. I think we are not able to hear your question.
Hello? Yes, sir. Are you able to hear me?
Yes.
Sir, my question was related with the...
Mr. Abhishek Jain, we are not able to hear you. There's a lot of disturbance from your line.
Hello?
Yes, sir. Please proceed.
So my question was related with the gross margin. Basically, going ahead, the domestic revenue mix will improve. So how it will impact the overall gross margin of the company.
I think gross margin is going to remain strong. I think with -- right now, we are at a threshold wherein as our capacity utilization improves, we will continue to improve on the margin side.
So going ahead, we are expecting that domestic revenue will also form the export revenue. So in that case, can we expect that margin from -- margin will go down slightly.
I think in terms of our revenue mix, we still believe that we will be able to sustain 50-50 or 45-50. So I don't think there is going to be much change in the premix in terms of export and domestic volumes going forward also. And I think in terms of margins, the capacity utilization ultimately is going to decide how better we perform on our gross margins.
And Abhishek, I would like to add here because if you look at the result for the Q4, we added INR 421 crores of domestic sales and INR 260 crores of export sales. So revenue mix age already to us domestically heavy, but we have been able to post a decent margin in the quarter also.
Okay, sir. Sir, in the last quarter, you had mentioned that there was a high inventory lying at our warehouses. And this quarter is also production is higher than the sales. And if you see that range production versus sales, so in last year, production was 35 -- 32,000 metric tonnes higher than the sales. In that case, what is the outlook for the margin, especially when inventory buildup is high at -- for the exports?
So I think inventory is not high at exports. There are -- because the shipping time earlier from last year, if you see the shipping time was 45 days from plant to warehouse. Now shipping time is almost 85 to 90 days. That's the reason flow -- material and float have increased. So -- and that is we have to do because we are committed to maintain JIT at customer end. So obviously, we will need to build in the shipping time in terms of our inventory is concerned.
Sir, during this quarter, we have also seen the export realization has gone down, while the domestic realization has gone up. So is it because of the correction of the international fee rate that export realization is going down.
No. It has nothing to do with the correction, in international freight rate. It may be minorly due -- and I don't think that has gone down drastically. It is just a minor, small.
No, no. This is an increase -- increased by INR 5 per kg in the quarter. It has not gone down.
That is also because of premix. And I think if you're comparing it with the domestic, it is only because of the premix changes and all I don't think that there is any realization change across the board.
Okay. And sir, you are looking at strong revenue on the LCV side, especially from the Russian regions also? So how do you see business ahead given the ongoing war in the European region?
I think Russia was never a very big order book. It was a small order book, and I think we would not like to comment right now on that we would like matters to settle down in Russia before we would like to comment on that.
So what is the current outlook for the European business for the FY '22?
European will continue to grow. And we, as in my earlier answer also, as I said our exports are having robust growth with new order wins, new components getting added to the segment, and we continue to maintain that this next couple of years in exports look to be bright with this -- those additions are concerned.
Okay, sir. And my last question is related with the current order book in this non-auto segment.
Hello.
Hello. Sir, my last question is related with the -- how much is the current order book in the non-auto segment?
No, we will not be able to put any number to it. As a percentage, we have already shown it in our presentation, and we believe that we will be able to grow further on the non-auto segment. From 18%, I think we will see further non-auto segment to grow further in coming years in terms of absolute percentage of our revenue.
So what mix can we expect going ahead? Right now, it is 18% to 19%. Can we expect 25% to 30% in next 2 to 3 years?
We are getting the same. I think by next 3 years to 4 years, we should be looking at close to around 75%, 25%.
The next question is from the line of Amyn Pirani from JPMorgan.
Yes. So my question was mainly on the cost side. In terms -- obviously, your industry is a big consumer of power. So are we seeing any risks in terms of power availability or in terms of an increase in power costs given the kind of crisis that we're seeing in the country right now?
No. I think we are not experiencing any power shortage right now as well as we have a systematic revision system, which we have already built in the cost while calculating I don't see any steep hike going forward uninformed.
Okay. And there are no -- an increase in any power availability or power cuts for...
We are not experiencing any power outage.
Understood. Understood. That's helpful, sir. And sir, on the domestic side, given that commercial vehicles continue to be good and you have also mentioned that, obviously, we're seeing an improvement in volumes. But again, in terms of pass-through of raw materials, you mentioned that it's generally a one month to a one quarter lag. But has that changed given the kind of price hikes we have seen in commodities like are customers as willing as they were in the past? Or there is some slightly more delay than we are used to in the past?
No, I think for us, commodity is not a cost, which we discuss directly with the suppliers. It is the OEM more directly discussed the price increases with the suppliers, and they fix up the price increases and the debt. And accordingly, whenever they fix up they inform us and accordingly, we pass it on. So it is basically we don't negotiate. So we don't -- that affected also on that.
The next question is from the line of Subrata Sarkar from Mount Infra Finance.
Hello? Hello? Yes. Am I audible, sir?
Yes, you're audible.
Yes. So my questions are more on the cash flow side. Even if this year, whatever cash flow with whatever profit we have generated, our profit is around INR 250 crores PBT. Whereas in terms of cash flow from operations, it's going down INR 42 crores. So because of the -- I can understand because of using that we are growing. So we have invested revenue on CapEx as we move forward. It has got used in inventory as well as like onstream deposits. So my bigger question is from now onwards, since we have already disclosed in your revenues objective with base reduction. So what kind of base reduction can we expect in next 1 year? It is like added cost.
So we have mentioned very clearly the capital allocated -- my finance team has very clearly defined the capital allocation policy for next 3 years. I think that is in line with what company feels going forward.
Yes, sir. But historically, we have not really concerned on, repaying a lot of loans basically. So that's why my question is rather. Now, onwards, sir, if this -- what will be the...
I think you need to see historically how the company has grown. So obviously, growth cannot come without CapEx.
No. No, obviously, sir, growth cannot comes without affected. But what I mean to say, since we have now this muted, what I mean to say historically, we had now a lot of loans there...
Till now, we have not given any capital allocation policy. And now when we have given a capital allocation policy very clearly defined on the presentation, so obviously, company has something in mind that the company wants to stick to.
Okay. So in that respect, sir, we expect that there is a what has -- we have seen in last few years historically. And what is our current policy, there is some change on that because restriction is we have not really received a lot of loans, but now we are talking about repaying debt, basically.
No, I think, obviously, we have repaid debt. That's the reason we have been able to get new debt. So obviously, I am not able to -- historically, the debt has not been repaid. I'm not able to understand that.
No, I'm talking about the deduction in net debt sir, that's my obviously. I'm talking about deduction in net debt, sir. It is not really -- whenever we have repaid loan, we have taken a loan again back also. So I'm talking about net debt.
The balance sheet with debt figure, basically.
Hello?
No, that was I was saying, that's not my only point, sir.
Are there further questions from you.
No, this is primary question, sir, so.
Sir, I think I have properly explained, I think -- Lalit, can you please answer to what exactly he needs?
No, no. See, we have already clearly find that whatever we are generating cash surplus in the upcoming years. We will deploy 50% to 60% of that to the reduction of debt or payment of debt. And about 30% to 40% will be to deploy to our CapEx and working capital. So yes, if there is a higher price increase and there may be some other requirement, it may change a little bit, but my policy now we have clearly stated it will be towards debt only, and we will stick to that.
Okay, sir. That clarity, I was looking for that clarity, that's the only question for my side.
The next question is from the line of Akhil from VT Capital.
Yes. Hello, am I audible?
Yes, sir. You are audible. Please go ahead.
Yes. Congratulations on a great set of numbers. So my question is a little more broad-based. I want to understand how you are thinking from the Indian CV point of view because we talked to some state operators, and they said that their margins are higher, they are extremely bullish on the CV cycle for the next 2 years. So internally, what is the sort of projection you're having? What sort of capacity do you plan to ramp up maybe in the future? I want to -- I just want your understanding on that.
In terms of CV, we are also in the overall segment. In domestic segment, we are extremely bullish with the amount of infras spending, which the Government of India projects. And we are CapEx ready in terms of utilizing this opportunity to grow the company.
Akhil, are you done with your questions?
Yes, ma'am. I'm done. Thank you.
[Operator Instructions] The next question is from the line of Aditya Makharia from HDFC Securities.
I just wanted your thoughts on the U.S. Class 8 cycle. On the one hand, you've been saying that there is a chip shortage, so the orders are really not that strong because there's a long waiting period. But on the other hand, we heard that the U.S. infrastructure build is getting delayed in the U.S. and also manufacturing is slowing down there. So what do you expect the Class 8 sales to be this year? And can you just separate the noise from the fact for us?
Aditya, I think I am not the right person to or we are not the right person to define what is happening with the Class 8. So -- but in terms of overall U.S. market, whatever we hear is that the build rate is low because of nonavailability of chips. And a few other components because of the pig iron shortage because of the Russian war, right now. But in terms of backlogs, yes, there is a huge backlog in the system, which may cover almost 8 to 10 months of the build rate at a full volume.
And whatever we hear from the OEMs, things are stabilizing. But if everything -- if you want to know is, okay, I don't think we'll be able to comment, but I think we are seeing much green shoots in U.S. build rate right now. And I think we will continue to see in the next couple of quarters with the build rate -- with the backlogs, which are already there in the system.
Okay. And how much is U.S. as a percentage of sales for you? .
Right now, I don't remember. But on the presentation, it's completely there. U.S. sales what is there. We have defined geographies very clearly.
Got it. Now I just said it's a significant portion for us. So it sort of moves the needle materially if the Class 8 truck sales pick up.
No, we are not only in our Class 8 right now. As we speak, we are across all segments except passenger vehicle in the U.S., be it LCV, Class 8, Class 5, Class 7, all the classes we are there.
The next question is from the line of Raghunandhan N.L. from Emkay Global.
Congratulations on stellar numbers. Firstly, sir, my question was on the revenue side. Thank you for providing the revenue growth outlook at 20%, 25%. Can you indicate how much revenue could approximately get added in FY '23 because of new orders? And also, on the fabrication business. What was the revenue in FY '22? And how do you see it increasing in FY '23? Would it be roughly around INR 100 crores in '22?
No. Fabrication business, the revenue is not because we only started facility in the month of October only. And for '22, it was on fabrication. Turnover was in the range of around INR 10 crores. But certainly, in FY '23, we are looking it to jump multifold.
And approximately how much could be the addition because of the new orders?
Raghu, I think...
I guess, we are not...
Exactly to quantify the new orders because most of the orders are in sample stage or field trial stage. So we will wait till each order starts moving into the larger platform. So we exactly cannot predict when each component comes out of field trial and get into larger production.
Understood, sir. And sir, is it right to assume that with the current capacity, we can go up to a revenue potential of INR 3,500 crores to INR 4,000 crores? And also, can you kindly indicate what could be the CapEx plan for FY '23?
I think, Raghu, our capital allocation is very clear. In terms of specifically for FY '23, we would not like to indicate anything. But overall, what we have said is whatever is our cash flow from operations from that, 60% -- 50% to 60% will be paid as debt and balance, 40% around we will be utilizing for CapEx for the next 3 years. And the CapEx mainly will be on the value-add side, not on the net forging capacity increase. Most of the CapEx will be only on the value-add side.
The capital allocation strategy slide is very helpful. On my last question, on the cash conversion cycle days, can you indicate the strategy for improving it going forward?
See, Raghu, the cash conversion, what is happening on the debtor days, it can't tell on the inventory side. I think we have the segment level due to the continuous increase in the prices, commodity prices. If it remains at that level, it will be optimized and there will be an improvement in the cycle. And only cash conversion can be held if we are able to improve on the inventory and top line grew. So we have to see over the period of time whether -- how it evolves and how the prices remains on that, it will depend.
The next question is from the line of Abhishek Jain from Dolat Capital.
Sir, as ring rolling and the forging capacities over utilized and demand is strong. So immediate CapEx is required there. So how much CapEx you are looking in that -- in these 2 business?
No, we are not -- we are looking at 0 CapEx in this region right now. We are not adding any capacity. We are doing kaizen to improve productivity. But there is no budget right now to add capacity in ring rolling out of forging section now.
But capacity utilization, we are already 110% in this 2 segments?
So I think it is good to have a good capacity utilization. It does not predict that we need to add capacities over there.
Okay. And sir, your baseline capacity that utilize is still low around 65%. So how much growth you are looking there?
This year, we are expecting this capacity utilization to move to 80% plus.
Okay. And that's why can we expect some improvement in the realization?
We are already expecting top line to grow -- bottom line to grow, obviously, realization has to grow. And realization is not all about -- it is all about how much value add we are able to bring into the system. But if the production grows up in first line. Part time realization does not go up. Part time realization only goes up because of either commodity increase or because of value-add increase.
And sir, how much revenue are right now from the LCV segment?
To give a number to it is extremely difficult, sir. I think our dependence on only heavy vehicles have decreased dramatically over the last couple of quarters, 8 to 10 quarters. But to give a number to LCV, it is extremely difficult.
Okay. And sir, the company has signed an MOE with the U.S.-based company and you are developing also EXL products. So what revenue incremented revenue can we expect from this graph?
No, we have never said we have developing EXL with any company. We have already given our EV strategy going forward and the growth and we are expecting in terms of volume in EV for next 3 years or 4 years. So that is all we would like to comment on that. We would not like to be component of -- component specific or geographic specific in terms of EV.
Okay. And then my last question is related with this nonauto segment. So in last couple of quarters, we have seen that growth is not coming in the Railway segment. So what is the outlook going ahead in this segment?
No. I think if you see last quarter, Railway has grown very well. Over the last 3 quarters, I think last quarter, we have performed one of the best in railways. And I think with the railways running up in full swing, you will see this year, we do -- we will do excellently well in railways.
So what is your revenue target in the Railway in FY '22?
Number is extremely difficult. I will not be able to give any numbers to specific sectors.
And sir, the company has commissioned one forging plant in this quarter. So after complete -- completion of this plant, how much would be the total capacity?
We already have given the one forging plant already commissioned at the capacity right now changes 187,000 tonnes. Apart from that, we have the fabrication facility for the component of automobile, mining and railway industry.
Okay. So it is already included in the 187,000?
Yes.
The next question is from the line of Vignesh Iyer, an Individual Investor.
Yes. My questions got answered. Anyways congratulations on maintaining EBITDA margins in such a tough environment.
The next question is from the line of Dhiral from PhillipCapital.
Congratulations for the good set of numbers. Sir, what is the capacity utilization for the larger first line terms that 12,100 or 6,300?
No, I think we don't track individual process. I think as a whole press, we have given a capacity that was 60% of our utilization, the press plant. And I think we don't track individual process basically.
Okay. And sir, our order book just for clarification it is around INR 984 crores, right?
That's the new order win in last 1 year, not that order book, as for the new product -- on the new product. There are products, which we continue to flow.
So this will be -- this is would be anyone order there -- order run rate?
No. No, this is the order, we need to achieve some orders maybe in 2 years or maybe in 3 to 4 years, some maybe 1 year, it's depending upon the order contract entered with the customer. So order are must be 4 years.
Okay. And sir, lastly, what is the merchant revenue mix in the overall sales?
We have, I think, almost reached above 80% right now in terms of revenue mix in overall sales.
Merchanting, vehicles merchanting?
Yes.
The next question is from the line of Shashank Kanodia from ICICI Securities.
Congratulations on the superlative P&L performance. Sir, I have a small query on the balance sheet front. So there is a slight elongation of the working capital cycle in terms of number of days. So is it just primarily because of this increasing shipping time? Or is there some color to the quality of debtors, if you can highlight?
No. Basically, it is only because of the shipping time because right now, we cannot take any chances because of the market and our commitment as per contract to supply on a JIT basis. So we have some extra material in the boat so that we don't end up doing near shipments.
Okay. Understood. And sir, secondly, if you can help me the gross rate number as of FY '22 end?
So gross debt number as for the balance sheet is about INR 1,500-odd crores, but mid year it is INR 1,336 crores. And Shashank just 1 more thing. So the working capital cycle look a little bit elongated because we have used domestic sales and the major trend goes to Tata Motor. And the sales to Tata Motor, the BMI because it is being well discounted and added in the data actually, that is not the data. So that's why it is looking like that. Otherwise, there is not a material invention also on the working capital cycle. And net debt as on 31st March stood at INR 1,336 crores.
The next question is from the line of Agastya Dave from CAO Capital.
Sir, just a few follow-ups. So for the guidance that you've given for next year, 20% to 25%. Is there -- are you giving a volume guidance as well? Or are we just sticking to an overall revenue guidance?
We are sticking to overall revenue guidance.
Right. Sir, what would be -- like at our current gross block level, what would be a peak revenue potential because various facilities are at very different capacity utilizations. So can you give...
Roughly, we can say that we should be somewhere, definitely in between INR 3,600 crores to INR 4,000 crores.
Great, sir. And so for the next 2 years, you said that domestic is looking good and exports is also looking good. So is there one particular geography and/or one particular product where product segment which is critical for this -- for the coming 2 years? Or have you been able to well diversify your entire product basket?
Agastya, we are able to well diversify our product portfolio. And I can safely say that we are doing extremely well in all geographies right now, building in new customers as well as new products. So it is not all about only one customer. It is all about new customers as well as new products.
Both taken together, we are doing extremely. And that's the reason we are not much concerned on this chip shortage and the oil inflation right now. We are looking at doing much better than what we have been doing. And last quarter result has already proved that, and it will continue to prove when our couple of quarters more results are going to come.
Sir, the growth that we are talking about, should we expect -- should we just pay attention to a yearly number for the full next 12 months, you will be doing 20% to 25%? Or are we going to...
I think you should look at every quarter now. We'll be able to see every quarter, things are improving on a quarter-on-quarter basis.
[Operator Instructions] The next question is from the line of Nithayanand, an Individual Investor.
Yes. Hello, am I audible?
Yes, you are audible.
Yes, sir.
I just wanted to ask beyond 2023. What is your growth expectation you are having?
I think we -- as we speak, whatever market feedback or market we know, we can predict only for next 2 years. And beyond that, I think it is extremely right now, we cannot comment on beyond that. It will be extremely volatile if I start commenting on 3 years or 4 years.
Okay. And next question is, I mean, with the current capacities, how much growth is possible, amidst what do you think?
I've only answered the last question from the last investor that with the current gross block, what we have or work in progress, we are safely to say around INR 3,600 crores to INR 4,000 crores we can achieve in the next 2 years.
Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.
Thank you. I take this opportunity to thank everyone for joining this call. I hope we have been able to address all your queries. If you require any further information, you can get in touch with us or our Investor Relation adviser, Strategic Growth Advisors. Thank you, and have a good day.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.