Analyzing...
Good afternoon. A very good afternoon. Milesh Gandhi here.
I would like to convey that we have secured orders during the quarter worth Rs. 1,522 Crores to be executed over a period of 4 (four) years. Against the Rs. 1,522 Crores orders, we have
Page 4 of 17 received from North America orders worth Rs. 1,475 Crores, in which we have secured Rs. 1,312 Crores from the auto segment and from the non-auto segment we have fetched orders worth Rs. 163 Crores. From India, we secured Rs. 47 Crores orders in which non-auto represents Rs. 39 Crores and railway represents Rs. 8 Crores order win. This is from my side. Thank you.
Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go Thank you, sir, for the opportunity and happy festive season to the management and congrats on the strong order wins for this quarter. Sir, firstly, this quarter we have seen very good growth from the domestic revenues. Can you help us understand because the MHCV which was very muted this quarter, so we notably outperformed that market. I just want to understand which orders have seen the ramp-up and which segments are doing well in domestic markets, sir?
I think in this quarter we have seen a degrowth in the commercial vehicle sector, but we have grown because of share of business going up in a lot of businesses and also new pipelines of new components which we have introduced in our business scenarios, that has resulted in strong revenue from the domestic sector.
And so, this kind of outperformance we expect to maintain based on these new orders ramp-up, right, sir?
We expect to grow from here. I think domestic business will further grow from here.
And sir, this year first half has been around 7% growth on the revenue side and we have a target of 15% growth. So, do you see this year it'll be a little lower than the guidance, but from next year onwards we should see much better growth, right, sir?
No. I think we will stick to our guidance of 15% to 20% growth. And if you see, realization from raw material basically has gone down by 4% in this quarter. That also has resulted in lower revenue. But overall, we expect 15% volume growth for the full year.
And just on the overall medium to long term, sir, you talked about multiple segments expected to do well for Ramkrishna. So, I just want to understand, do you see the pace of growth of 15% to 20% further increasing over medium to long term, sir?
I think we are right now well positioned for 15% to 20% growth. And with new sectors coming in, like two-wheelers and passenger vehicles in the coming months and coming quarters, we will see further growth coming from the automotive sector, which were not present. So, all these levers will help us to maintain the growth trajectory with the capacity additions which we are having. This will surely help us in getting into the trajectory on a continuous growth basis.
Page 5 of 17 So, one year target also would be there, sir, 15% to 20% is what we are looking out, sir, in terms of growth side?
Yes, we are confident of 15% to 20% year-on-year growth also.
Just lastly, sir, on the other expenses, last quarter we had this one-off item of electoral bond trust and the freight costs were higher. This quarter also we saw other expenses on the rise only. So, any reason for the high other expenses, sir?
So, other expenses, the only reason this quarter is due to that export expenses, the carriage cost has increased on exports during the Quarter, so that's why it looks flat quarter-on-quarter. That decrease of one-time expense has been offset by the increase in export carriage cost.
Thank you. The next question is from the line of Shaleen Kumar from UBS. Please go ahead.
Thank you so much for the opportunity. Sir, this is more of a near to medium-term question.
Like we are facing challenges in the HCV market and it's like both domestic as well as global, that's what we have been hearing, right? So, understanding that, how do you see us delivering the growth which you are talking about, right? If let's say this continues for this year as well as the next year. I mean, that's the one of the big concerns which I feel we have been hearing from investor community. So, how do you see that?
I think in the CV sector, it remains flat or where it is today also we are sure to grow by 15% to 20%. I think with the introduction of new components as well as new assemblies, we have been able to get better share of businesses. And this better share of businesses is resulting in a strong momentum in the domestic order book growth for us and revenue growth for us. So, we are very confident with the addition of capacities and the new, more automated lines and more value engineered lines, we will be able to still further grow in terms of our value add with our existing customers and continue to add on to our order book.
Shaleen, I would like to add a little bit here, we have a lot of new product development being done above the past order wins, which will also help us in fueling this growth. Plus, the capacity we are putting on the cold forging and aluminum forging also will give us that kind of growth.
Sir, about the acquisitions which you have done like ACIL and JMT, are we getting exposure to the new segments or new clients as well?
Yes, we are getting exposure to new segments, new clients across the globe right now. I think Milesh in his opening statement has announced that around Rs. 1,500 Crores of new order book which we have won for this quarter, almost Rs. 1,300 Crores is from the North American industry. So, they are all from new clients and new businesses.
Is it possible to share what the new segments are or the clients? Anything, I am not sure, if you can share something there.
Page 6 of 17 Shaleen, can you repeat the question? I could not hear you.
Sir, is it possible to share the names of these segments or the clients, anything that is possible from your side.
It is basically automotive segment, Shaleen.
Clients, sir, any new clients that you've added? I do not know if you can share that again or not. No, we actually cannot name the clients.
Okay. Sir, just switching on now, Rs. 100 Crores for aluminum. Sir, can you talk about like economics of this segment? And second, Rs. 100 Crores, at least I think it's a starting point, right, and that's my understanding, you can correct me. So, do you think that if it's a starting point and more just testing the product going to the market, we should be able to do much more bigger CAPEX here and the opportunity is much bigger here?
Shaleen, we are just I think at the starting point, there’s 3,000 tonnes of capacity addition in aluminum and with only around Rs. 60 Crores of CAPEX, this is just we are testing waters. And while our customer, for whom we are building this capacity, is wanting much more bigger capacity, but we would want to test waters because we have never ever ventured in non-ferrous ever before. So, we want to enter into non-ferrous in a very cautious mode because of the volatility in the pricing and other things.
We would want to test waters with a small capacity of 3,000 tonnes and then put a larger sum of money, but the opportunity is, I think, almost 30x of the capacity which we are putting in right now. So, it is just a tip of the iceberg, and I think gradually we will see much more bigger CAPEX coming into it and much bigger non-ferrous activity starting post this is done.
And sir, in terms of profitability, returns, is it comparable better or inferior compared to the current?
In terms of EBITDA Percentage margins, it is lesser because the commodity pricing is much higher than current commodity. But in terms of realization or in terms of return ratios, it is much faster than what we are doing for our customers currently.
Thank you. The next question is from the line of Mitul Shah from DAM Capital. Please go Sir, thank you for the opportunity and congratulations on a very strong performance. Sir, first question, again, clarification on this 15% plus volume growth. Based on the first half number, then it implies that second half growth would be like a 20% to 25%. So, do we have that type of order in hand starting from October itself or it will be back ended in Q4? And we have concrete visibility on this second half, this type of growth of about 25%?
Page 7 of 17 Mitul, we are very confident on what we are commenting. And more than that, I think we would not like to substantiate, but we would only say that whatever we are saying, we have a concrete plan for that and we will be able to meet what we are saying for 15% plus growth.
Second question on, sir, casting business where we have now increased our focus, including CAPEX and all. So, the majority of these are new clients or existing clients we are trying to cross-sell? How much clientele base would be overlapped and how much would be incremental clients, sir, where we can also cross-sell our forging products also?
I think by next year FY '26 we will be having almost 60,000 tonnes of casting capacities, and we are going to sell casting both domestic and international. Right now, we have no international business as such. We have just started getting orders from international businesses. We are focusing both on our existing clientele as well as the new clientele. So, it is a very, very exciting opportunity for us, and our overall aim is to double our capacity in the next two years. And we have confirmed visibility from our existing clients also and we have extremely strong RFQ pipeline from new customers.
But sir, would there be more new clients or the majority would be existing and maybe about 20%, 30% only new clients?
I think, Mitul, whoever gives me business, whether it is existing or new, it does not make a difference for me. As far as I am concerned, I am ready to set up a capacity of 60,000 tonnes.
We are on path. By next year, we should be having this capacity. And we are confident, our marketing team is confident of selling the entire capacity.
Yes, sir, great. Sir, I am just trying to analyze whether there is a possibility of cross-selling forging products to these new clients, from that perspective I was trying to understand.
No, basically, Mitul, we are always looking for new clientele. So, I think this new order wins we have announced right now from North America, these are from new clientele. So, obviously this forging, also we are pitching castings too also them. So, cross-selling, because RKFL as one, we have different bouquet of products to offer to them. It is up to client to choose which one they want to source from RKFL.
Lastly on railway side, we are hearing slowdown and some ramp down by government orders getting delayed, etc. Anything on that for our JV business?
We are not into wagon building, so we cannot comment anything on the wagon side of it. But in terms of passenger, I do not think there is any slowdown. I think the entire focus of government CAPEX is improving passenger comfort and passenger safety. So, their focus and ramp-up is continuously there and we have a very strong pipeline in terms of order book from the railway.
So, we are not at all impacted by any news which is coming in terms of there is going to be a slowdown in railways.
Page 8 of 17 Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Sir, just like you mentioned, we are having an impact from the Red Sea side. So, I just wanted to get the idea on the Red Sea side that which country and geography is benefiting with the export, because we are not able to export at this time.
So, we have never said that we are not able to export. We are obviously able to export. Our sea time or transit time has increased because of the Red Sea issue, because the ships are taking divergent route. That's the reason our transit time has increased, but it is not that we are not able to export. So, we are exporting full-fledged?
Yes, yes, we are exporting full-fledged, and we are doing extremely well in exports.
So, sir, isn't China benefiting as they can export directly?
We cannot comment on this. I think it is extremely difficult for us to comment about China.
Thank you. The next question is from the line of Raghunandhan from Nuvama Wealth Management. Please go ahead.
Congratulations, sir, for another set of strong numbers. Sir, firstly, in terms of subsidiary performance, MAPL in Q1 had seen Rs. 86 Crores of revenue with 16% kind of margin. Can you talk about the Q2 performance and whether we are on track for the Rs. 5 billion target for the full year with a 17%, 18% margin?
So, Raghu, coming to the subsidiary performance, yes, we have just started ramping up the subsidiaries JMT and ACIL. And if I look at the performance, Multitech is already established.
And we have done a turnover of about Rs. 94 Crores in this quarter in Multitech and about Rs. 30 Crores in JMT and Rs. 20 Crores in ACIL. There has been some elimination due to the material being shipped from RKFL to the other entity or another entity for the value-add. So, that's why the consol number is Rs. 1,053 Crores. But this is going to improve significantly in upcoming quarters.
And coming to the Rs. 5 billion target of top line, I will say we are very much on course. We have already disposed of our subsidiary Globe, so that will have a commensurate impact on that.
Otherwise, if there is a material decrease or a raw material decrease, that can have an impact.
Otherwise, we are very much on course for the top line guidance what we have given on the consol basis.
Good to hear that. Sir, in terms of your product portfolio, you have been continuously expanding and adding new products. And in one of your slide, other categories you have displayed products
Page 9 of 17 relating to the trailer axle assembly and suspension. Just if you can spend a little time explaining the potential for these products.
I mean, trailer axle assembly, we have just launched in this quarter, and we have achieved a sales of almost Rs. 20 plus Crores. This is a Rs. 2,000 plus Crores market and growing at a very rapid pace of 17% to 20% every year. And it's that we are expecting to at least by this year-end or first quarter of next year to get to almost 25% market share in this segment. And we have patented our axles and this is a proprietary item going directly to the consumer, and we expect a very large growth in next two years to come from this portfolio. And in coming months in this quarter or maybe by next quarter, we are launching some more proprietary parts which is going to be exceptionally good for our growth in terms of our assembled verticals which we are launching.
That's good to hear, sir. And in terms of order book in this space, you would be in a discussion with the customers and what would be the status kind of orders you would have already received?
No. It is a B2C segment and directly to the consumer, this is not with the OEM. So, there is no confirmed order book. It is tailor-made to the requirements, but we expect quarter-on-quarter at least 40% to 50% growth till we achieve a 25% to 30% market share. And for us, the current market today in India is close to around Rs. 2,000 Crores for this.
Got it, sir. Wishing you all the best there. And sir, in terms of the railway business and we had the Vande Bharat related orders of Rs. 270 Crores, so would it be right to understand that these orders would be executed over FY 26-27?
Yes, it is right, it is going to be executed over FY 26-27.
And one clarification on the aluminum forgings. So, the capacity we are putting up would be backed by the order, sir?
It is already backed by an order. The entire capacity of 3,000 tonnes is completely backed by a firm order for 5 (five) years.
In terms of our growth, the share of North America has been consistently going up and we have been doing very well, both in terms of order wins and growth in that particular market. Your thoughts on how the demand is there, how do you expect the outperformance to continue?
Recently, there were comments by Volvo that the 2025 North America EV market should see a positive growth. So, in terms of what you are hearing from the clients, how is the share of business increasing?
Raghu, right now the market is flattish. We are growing and we are doing exceptionally well because of our marketing has been able to penetrate new segments and new customers in North America. And that's the reason we are growing. And with setting up of a facility in Mexico, we expect this to further consolidate and grow. We are extremely bullish on our North America segment with setting up of this facility, which is going to be upstream from this quarter onwards.
And next quarter onwards, we are going to see revenue coming in from that sector. So, the
Page 10 of 17 current pipeline and the current visibility which we have, gives us extreme confidence that in North America we will continue to grow and continue to consolidate in coming quarters and coming years.
And in terms of the PV space, how do you see your share in the PV space to increase and which regions will contribute to that?
PV space, I think, Raghu, we have just entered. It is very, very minuscule right now. But I think the biggest PV chunk is going to come by FY '26, both from North America and from India.
Thank you. The next question is from the line of Dhaval Shah from Girik Capital. Please go Hi, team, great set of numbers. My question is for Mr. Gandhi. Sir, I read somewhere that in 2027 the North American heavy commercial truck market is having some emission norm change.
So, could you share your thoughts on it with respect to that norm change, how would the customer buying be, how does it happen, how does it work there?
So, I heard your question. See, whenever any norm change comes in, there is always a pre-buy that is always expected. But obviously, when the norm change comes in '27, '26 is going to be a very strong year and North America has already been spelling so. But because of many of the infrastructure demands and the way America is trying to rebuild itself, the demand is going to be very strong for the next 2 (two) years. And we foresee even if the change is going to happen, but the demand will still change when the emission norms get changed. I hope I answered you.
Yes. And this is for Class 8 specifically, or is it for other classes trucks also?
Class 8 makes the maximum effect because the long haul comes under the Class 8, so that is going to be the primary market. And vocational trucks along with dirt trucks also come into the same freight. So, it is going to be an effect across.
So, you feel that due to pre-buying, the growth could be better in calendar year '26? I did not hear your last point.
I am saying, because of the pre-buying the growth could be better in calendar year '26?
America has been stating very clearly that demand is going to be good over a period of time in the forthcoming years. So, even I think the demand will continue to remain so. And I think the pre-buy can always give better numbers, but with the amount of demand on account of the construction and with regard to infrastructure, that should continue in the same pace.
Thank you. The next question is from the line of Rakesh Roy from Boring AMC. Please go
My first question regarding, sir, you are setting up a new plant in next 12 months of 3,000 tonnes, sir. So, mostly we are focusing on EV segment or other also? On EV segment, what we are going to make?
I think we are focusing on EV segment. What we are going to make, I think we would not like to name the product. Basically, it is the transmission components which we are going to make, but exactly the component we cannot name. Primarily, the entire capacity is for EV segment.
And can you highlight, sir, the North America truck market in specific to the Class 8 truck market, how is it doing and for next 12 months what is your outlook?
I think we will not be able to comment on Class 8 in particular, but overall, as far as RKFL is concerned, we are doing extremely well in the North American market. And we foresee going forward also our operations and our volumes from North America is going to continue to remain strong.
Thank you. The next question is from the line of Prateek Bhandari from ART Ventures. Please Hi sir, thank you for the opportunity. I just wanted a break-up of order wins during the quarter, if you can just repeat the same. Milesh, can you repeat it, please?
So, I will repeat what I stated. Against the Rs. 1,522 Crores orders that is to be executed over a period of 4 (four) years, for North America we won Rs. 1,475 Crores orders, in which auto constitutes to Rs. 1,312 Crores and non-auto constitutes to Rs. 163 Crores. Further, from India we secured order of Rs. 47 Crores in this quarter in which non-auto is around Rs. 39 Crores and railways specifically is Rs. 8 Crores.
Thank you. The next question is from the line of Khush Nahar from Electrum PMS. Please go
Hello. Thank you for the opportunity, sir. Sir, one question, is there any update on the Ramkrishna Titagarh JV, what is the expected timeline of our first product?
I think we are doing extremely well in terms of our Titagarh JV is concerned, and project is moving as per timeline.
Sir, if I am not wrong, that would by FY '26, I think?
Last quarter of FY '26 we will start producing wheels and delivering to railways.
Thank you. The next question is from the line of Mr. Raghunandan from Nuvama Wealth Management Limited. Please go ahead.
Page 12 of 17 Thank you. Raghu here again. So, sir, on the CAPEX and investment side, first half this year we have done Rs. 400 Crores plus of CAPEX, and investment has been Rs. 100 Crores plus. How do you see the CAPEX for the full year? And also, in terms of the debt, if you can talk about how you see the debt reducing as working capital normalizes and your efforts on improving the cash flows?
So, Raghu, on the investment side, I think we have largely done on the investment with subsidiaries. There will be a small amount on the subsidiary side. And what we have given the guidance of about Rs. 500 Crores of CAPEX initially, it may increase by another Rs. 50 Crores during the year. And on the subsidiary side, it remains the same. On the investment side also we only need to invest on the JV with Ramkrishna Titagarh, and for that also we have given a guidance of Rs. 100 Crores for the full year. We have already given Rs. 53 Crores in the first half, so another Rs. 47 Crores or Rs. 50 Crores is going to that.
And in terms of the EV space, how would you look at the aspiration you would have to improve your presence on the EV given that you are putting in more efforts? It helps both on the diversification side and also is opening up new opportunities for you. Over a medium term, how would you look at EV contribution to your overall business?
So, Raghu, on the EV side, I have already explained that initially we have just started and this aluminum forging is for the EV. We are also doing currently EV but specifically this aluminum forging will go a long way on the EV side. Let us first stabilize and then we will comment on how we are moving ahead on the EV. Let’s just wait for some time.
But I think Raghu, just to update on what Lalit said, our internal vision in next 2 (two) years by FY 27, is that our 15% to 20% revenue should be coming from EV or hybrid vehicles. That is the vision we are working with and I think we are on track to achieve our vision.
And would TSUYO also form part of that vision? Hello? You had one investment in TSUYO.
No, TSUYO investment, I think last call also we have said, we are not expecting anything from that. We have withdrawn from that investment and Rs. 10 Crores which we have paid and we will be getting the refund.
Thank you. The next question is from the line of Vidrum Mehta from ASK Investment Managers. Please go ahead.
Firstly, season's greeting to you and the entire team of RK Forging. Sir, my question was more related to the standalone business revenue growth of 10% which we reported as against MHCV industry volume which reported high-single-digit or a double-digit decline. So, if you could
Page 13 of 17 share broadly what could be the growth in terms of, if you can break the growth with respect to the new products, the increasing share of business and pure organic volume growth?
I think it is extremely difficult for us to break it down in terms of product, but we can only say that overall in terms of our ambitions and our hard work for the last few years in terms of getting into more value-added products and assemblies have resulted in higher share of business across the vehicles and that has resulted in an extremely strong domestic market for us and getting into strong volumes with even the drop in overall MHCV demand. And I think going forward also, we foresee the same pattern to continue with the kind of work we have done, and our continued progress in new product development and getting into higher value-add. We will continuously work on the same momentum to get us a higher share of businesses and a strong domestic market.
So, sir, in that case, how much should we outperform the overall industry, could you give some sense on that?
No, I think we do not have a definite number to it, but I think we are working towards our overall objective of 15% to 20% year-on-year growth for near foreseeable future. So, with this kind of thought process, we are on the track to continuously keep on adding new products and as well as keep on working on the existing products to offer better solutions to our customers by which we can gain market shares.
Sir, secondly, I understood the point on the volume growth that we expect 15% to 20% growth.
But obviously it is because the lower RM cost is resulting into lower realization. And so, if I look at for H1, our realization is down roughly 3% odd, despite volume higher in H1 of FY '25.
So, how you look at realization or probably the RM basket moving in H2 of FY '25?
I think it is extremely difficult. I think raw material price is something which we cannot comment on. We would love to have stable raw material, but I think it is next to impossible for us to comment on whether raw material prices are going to fall from here or going to correct further from here or not. So, we have to live with that. We only can say that we would continuously keep watch on it and we will, on our side we will be able to only keep on maintaining our conversion margin and keep on adding value to the products by which we are going to try and see whatever best we can achieve in terms of our top line.
Sir, in terms of procurement, would it be a quarter lag or how should one look at it? No, it is a quarter lag. It's a quarter lag, right? Yes.
And sir, one more question from my end. So, you gave a breakup of revenue from the subsidiaries, which works out to be north of Rs. 140-odd Crores, but the reported number states
Page 14 of 17 that it is Rs. 100-odd Crores, if I just subtract consolidated minus standalone. So, you said there is some related-party transfer or -- No, basically, like a lot of forgings are going from the parent company to the subsidiaries, but ultimately they have not been sold to the customer yet, so that sales have been knocked off.
So, how much percent should we assume in this knocking off?
That I have already told, about Rs. 40 Crores has been knocked off, and that number itself stays.
So, broadly that should continue in coming quarters as well, right?
No, so it depends upon the ramping up and how much the material is produced and sold. The number will certainly change, the percentage will change.
It will drop somewhat because lot of samples and other things have been developed in this quarter. So, that has slowed down, but that will get further ramped up in this quarter wherever sample approvals and other things have come in. So, all those inventories will get liquidated, and it will come into regular cycle. That is the reason we have mentioned in our presentation also, the working capital is going to moderate, which is seen at an elevated level right now, is going to moderate in coming quarters with all these samples getting converted into bulk supplies.
So, sir, then Rs. 5 Billion target of top line from subsidiaries is including that or excluding that?
No, we have never said Rs. 5 Billion revenue from subsidiaries, I think Lalit, can you clarify?
So, you are talking about Rs. 5 billion consol, that guidance is given by me earlier also, including my driver subsidiaries that has already gone. And certainly, you have to look at the consol number and certainly, I said you have to adjust it for the raw material impact. So, considering 15%, 20% growth, we are there almost for that kind of number. But certainly, now it will be not a Rs. 5 Billion, it can be somewhere between Rs. 4,500 Crores to Rs. 4,600 Crores kind of thing, right now, on the consol basis for FY '25, considering that adjustment .
Thank you. The next question is from the line of Karan Gupta from InvestSavvy Portfolio Management. Please go ahead.
So, first question is on the inventory receivable side, compared to H1 of last year, H1 of this year has increased significantly. So, can you comment on that? And the second one on the CAPEX breakup across the facilities you are starting or increase in capacity. So, that is the second one.
So, looking at those receivables, if you look at it on a consol basis, it has gone up by Rs. 119 Crores and that's mainly due to a little bit on the certainly a delay in receipts from the overseas customers, which is likely to moderate and improve in the upcoming quarter. So, I will say it's a marginal impact in terms of days because there is an increase in sales also commensurate with
Page 15 of 17 revenue. So, it's about Rs. 80 Crores to Rs. 94 Crores increase, which is likely to correct it in the next quarter.
So, coming to the next part of the question, that's on the CAPEX. The CAPEX I have already mentioned, there are CAPEX on cold forgings for 8,000 tonnes press line, and upsetter capability. And we have made significant progress on all these capacity. Apart from that, there is CAPEX in the ramping up of JMT, that is Ramkrishna Castings. We have already started the production in Ramkrishna Castings and we are in the process of adding up the capacity there.
And same is with ACIL, ramping up of the capacity is happening up and the renovation of facilities is happening up. All this together has led to this kind of CAPEX.
The last one is, can you just give some economic number of your aluminum capacity? What will be the asset turn? What will be the kind of margin and realization part?
So, we have already given that segment, there is a Rs. 57 Crores investment. And as optimum capacity utilization, it can give me around Rs. 250 Crores of top line. You can understand that it will be around 4 plus kind of asset turn. And in terms of percentage margin, certainly EBITDA will be lower, but in terms of realization it is much higher in terms of EBITDA per tonne. And that's why, if you look at, it will be a payback of less than 2 (two) years, if you go on the full capacity.
Thank you. The next question is from the line of Harsh Saraff from Yashawi Securities. Please I have one clarification question. If you could provide an update on the bogies that were planning to assemble for the Vande Bharat?
You are talking about the bogie frame basically? Yes.
Bogie frame, I think this month we are submitting the prototypes for Vande Bharat. And I think post the approval of prototypes, this will go into bulk production.
And just one clarification question on the comment you had made earlier. Have you said that you have divested from the TSUYO partnership and Rs. 10 Crores investment has been refunded? We have divested from TSUYO partnership.
Thank you. The next follow-up question is from the line of Prateek Bhandari from ART Ventures. Please go ahead.
Sir, about this aluminum forging press line, what quantum of CAPEX have we done?
We are going to do Rs. 60 Crores almost of CAPEX for setting up this plant.
Page 16 of 17 On that we are somewhere expecting Rs. 250 Crores of top line? Yes.
And you stated that the payback period will be two, two and a half years, roughly? Yes, roughly.
Thank you. The next question is from the line of Puneet Zaveri, an individual investor. Please Just one question on your aluminum forging capacity. You said that it's a small capacity, right now of 3,000 tonnes. Just wanted to understand how big is this opportunity within India? Any kind of number that you would have for the domestic aluminum forging capacity in India currently?
No, we are not setting up this facility for manufacturing any products for Indian OEMs, it's for overseas OEMs. And the total available opportunity in overseas market is 20x of the capacity which we are setting up for the customer which we are doing this. So, I think this is only a tip of the iceberg which we are setting up. And I think as we gain experience, we will add on more capacity.
So, is there any kind of, at least in the short term, maybe the next 12, 18 months, do you see that once after this customer as well, this will only be used mostly for the overseas facility and only when the demand comes in the domestic market is when you will then put up additional capacity. So, is that a safe assumption to make?
I think the demand in the domestic market is also there, but we are setting up this capacity for overseas. But once we gain experience in non-ferrous, I think post the development and post some bulk supplies for a few months, once we are confident of delivering goods, we will extend our CAPEX in this line to cater to the domestic market as well. So, opportunity overall globally is extremely huge. So, I would not be able to look substantiate or comment on exactly what is the total opportunity. But I can only say, we are setting up a very small capacity and opportunity for it is extremely big. And you will see in coming years a large amount of CAPEX being allocated to set up more capacities in aluminum in RKFL.
So, just one clarification, sir. Your current capacity, the opportunity is 20x with the current customer, right, which you are setting up the capacity for? Yes, 20x.
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you. We take this opportunity to thank everyone for joining the call. We hope that we have been able to answer and address all your queries. For any further information, kindly get
Page 17 of 17 in touch with the Investor Relationship Advisors. Thank you very much for sparing your time and joining us on the call. Thank you and have a good weekend.
Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.
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