Craftsman Automation Limited (CRAFTSMAN) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the earnings conference call of Craftsman Automation Ltd. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the opening remarks are concluded. Should you require any assistance during the conference call, please signal an operator by pressing star followed by zero on your touch-tone telephone. I now hand the conference over to Mr. Srinivasan Ravi, Chairman and Managing Director of Crouchman Automation Ltd. Thank you, and over to you, sir.

Good afternoon, everybody, and thank you very much for joining the earnings call for today. I just want to touch upon briefly on the last two quarters, and about the opportunity for Crouchman, As well as the headwinds we had with the war, as well as the commodity prices, which was spiking very sharply, and now it is on a lower trajectory. So we weathered all these situations, and we have put up a lot of capacity. Still capacity is getting created as we speak. Not all capacities have come into production, and some of the pipelines are not fully yet. Yes, we are on a growth path, and we will be continuing this growth path into H2 as well as in the next two financial years, and some of the orders what we are doing is some are short-term, medium-term prospects and also long-term prospects. The long-term prospects, the CAPEX has been done bulk in the stationary engine side, which you all are aware. The revenues will start from FI 29 and go into FI 30, where we'll peak at around $100 million. And the next level of peak we're expecting, the inquiries and outer portion is quite strong. Aluminum is having a strong headwind and we are adding more capacities across our plants and our subsidiaries also. The Deiraxian plant 2 started at its trial production, I would say, and the order book is also strong there. Sunbeam has gone through a very good and we are in close contact on the way forward. Q3 and Q4 will be looking better for Sunbeam. And next financial year, I think we will be also getting new orders from new customers while we are leveraging the capacities for them. And also, across all product lines, especially the legacy products, we are in contact with customers for the price rationalization or a price reset in cases of legacy products. And this has to be done for almost all suppliers is what we feel because of the sharp rise in manpower cost, energy cost, and all other asserted. The capital goods cost has been steadily rising. I mean that any new projects, so we are also very careful. One good thing about craftsmen is we have been continuously doing capex and bulk up the capex has been even before the big rise in capital goods. Also, it is not easy to put up capex because of the long gestation period, there is a huge bottleneck for supply of capital goods across the world. So we are in a strong position to win more orders, and also we are winning more orders as we speak. We are little more selective on the customers as well as the product, looking at the life cycle and profitability, since we have now the base which is stronger, and our ability to attract slightly larger customers with more profitable products for supply within India or outside India is in the position, Because of our bigger size. The growth in powertrain is expected to continue, and also strong growth in aluminium. Yes, we have seen some correction of the margins in aluminium. That is not a correction, it is a temporary correction. We had increased our inventory because of the shortage of raw material, and also the prices which were increasing dropped suddenly. So we had an impact of that. So, with the price increase, what we are negotiating with the customer or correction or compensation for the aluminum price correction also, which will play out in the coming two quarters. I think most of the customers are open to that discussion. We will see that benefits coming into the next two quarters. Now, I will leave the floor open for any Q&A.

Thank you very much. We will now begin the question and answer session. Participants who wish to ask a question may please press star and 1 on their touchstone telephone. If you wish to withdraw from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Please note that some of the statements made during this earnings conference call may constitute forward-looking statements, which are subject to risks and uncertainties and are not guarantees of future performance. We encourage you to refer to the disclaimer section in the company's investor presentation. Further, the management will now be addressing any customer-specific queries due to confidentiality obligations. Participants are requested to avoid mentioning customer names while asking questions. We also request participants to limit themselves to a maximum of two questions at a time, so that all participants have an opportunity to ask their questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The question is from the line of Chandra Mowli Mutia from Goldman Sachs. Please go ahead.

Hi, good evening, and thank you for taking my questions. My first question is just around the gross profit line. I think that's an easier line for you to manage growth on. First half, growth has been at about 30% YOY on gross profit. 2Q has also been around that range. So just related to a lot of the business that you've been winning and the capacity that you've been adding, just want to understand over the next 12 to 18 months when you expect the inflection in gross profit growth, just related to all this capacity that's coming on board and business that's being won.

Thank you for the question. I would say that this sort of growth will continue. We look at year-and-year basis for quite the next two quarters, three quarters. We are quite confident about the growth because of the past investments and past developments on the products and the pipeline which is already there, products being approved or plants coming on stream. Thank you. From that, on the powertrain, we will see growth. So overall growth on the powertrain is, we are quite confident about that. Similarly, on the aluminium, the pipeline is quite long for the, whatever outer winds we have. There, there is some headwinds on the new plants, where we have to put in the working capital in, and we have to start up the plants, which is also happening at sub-optimum as of now. So, the operating leverage on those plants will take another two quarters to get into a profitable situation, more profitable situation. So, this is dragging down a little, but this is temporary, I would say. But whereas the mature plants are having an advantage on the operating leverage. But as I said earlier, bulk of the margins also will come from the price correction, which has to happen across almost all the OEMs.

Got it. That's helpful. And just to follow up on the price correction, roughly what magnitude do you think you need to take price, price, price, for the factors you mentioned, manpower, energy costs, and so on?

See, it depends from customer to customer, product to product also, and the time of the first, when the order was placed. In the last few quarters, I don't think that is feasible for any customer to give, but if there are legacy products which are not corrected, and also the volume has contracted on some of the legacy products, where it is a drag. Yes, it requires a big reset, I would say, in that case, and in certain cases, yes, it is More on manpower and power and other regular inflation, which is related. It may vary, but anywhere between all the way to 15-20% will be there, depending on the commodity, the product, but on the gross margin or the value addition portion. So, it might not impact too much on the OEMs there on the top line, I would say, as far as we are concerned. So, top line may be…

Got it. That's helpful. And my second question is just around, there's been recent news flow around one of the large domestic passenger vehicle manufacturers and then their partnership now expanding with all the global passenger vehicle manufacturers. I just want to understand there are some news reports that there might be a local engine of the local passenger vehicle maker becoming an expanded scope in the global platform in this partnership. So I just want to understand your thoughts on how that situation is evolving and what the opportunity size could be for a company like Craftsman.

Not only the customer, I mean, the OEM we are talking about, but I can guess, it is across all the OEMs that are present in India, our multinational, and also Indian OEMs. Whatever product is suitable in India for the Indian passenger vehicle consumer, those products are very competitive and these are the same products which are required in some of the underdeveloped markets or even South American, African markets and some of the parts of Asia. So logically, India will become a manufacturing hub if not for the vehicles themselves but at least for the powertrain which is logical. The second thing is, there is a proof here on tractor, on the small tractors up to, say, 120 horsepower, India has become a global power for tractor manufacturing. Across the world, I have invested into India for capacities for export out of India also. So, the same trend we have also seen on the two-wheeler side, that exports of two-wheeler from India is increasing. Also, on the construction equipment, not on the high-end construction equipment, but on the construction equipment where we have bulk requirement in India, we see exports also happening. So, exports out of India as a product or an aggregate will continue to grow. So, there is opportunity for all tier 1, tier 2 suppliers like craftsmen on the growth strategy.

That's very helpful. Thank you very much and all the best.

Thank you. The next question is from the line of Senthil Kumar from Joindra Capital Services. Please go ahead.

Good evening. Am I audible, sir? Yes, please.

I just want to know about the gross debt. The gross debt increased from 3,340 crores in March 2026 to

3,618 crores in September 2026.

This is despite, you know, debt repayment using 280 proceeds. Could you elaborate what is the reason for this increase?

Net debt is only around 3,000 crore because we have got a lot of cash capital advances which we have paid. So we have done, yes, the working capital has, our top line growth is quite significant. So, working capital has ballooned, and also the other, say, GST credit has ballooned, and some of the pipeline, we have added more lines. So, that pipeline inventory is yet to materialize into revenue on the matter. So, yes, and we are also carrying some safety stock of material, which now will get diluted in the coming quarter. So, overall, the capex, we have done significant capex in the first half. So, overall, I think we will be at 1.7, 1.8 net debt to EBITDA on a consolidated basis, 1,850 crore sort of an EBITDA which we will reach next year. After that, we will be able to be self-sufficient for funding our capex as well as the maintenance capex. So we have done a big surge of CAPACs. We want to keep the growth path more than that. We have committed a 15% CAGR. Of course, some years we will grow much more than that. In the real terms, not adjusted for inflation is what we say that we will be growing at 15%. Our base is quite strong, I mean, large. So, considering all that, I think this is putting new plants, the land is partially utilized, but that land will serve for the next 3, 4, 5 years for our expansion. And infrastructure also has been, basic infrastructure has been put, so additional equipment will not take too much capacity. So, this is like building a new airport, I think we have taken this.

What would be the gross rate level by end of FY27 given this challenging environment?

I would rather say it will be 1.7, 1.8 times net debt to EBITDA. Overall, on a consolidated level, I don't want to give a forward-looking statement on EBITDA, but you know the EBITDA, you can reverse calculate it for H1, and definitely H2 revenue will be more, and H2, normally the EBITDA also is better, so I would leave it at that.

Thank you. The next question is from the line of Vignesh from Sima Weld. Please go ahead.

Hi, sir. I'm good set of numbers. Just want to understand on the medium-term outlook, are we looking for any other new segments entering into it, apart from heavy HP engines?

The powdering capacity, the aluminum casting capacity and machining capacity, and we have done bulk of it. So we expect that to yield results in the coming quarters in a better way. Otherwise, we are also broad-basing on the new product on the adhesive parts, but I think there are more opportunities. But in general, the product offerings of the OEMs have become more wider. So we are seeing opportunities there.

Okay, sir. And regarding the second phase of this high engine, sir, how is it coming out? What are the revenue targets we are planning? What is it commissioning?

So, as we speak, we are getting inquiries for the next level of capacities. Most of it is on the same products, what we are already developing. Welcome, that means gestation period to market will be improved. We are discussing to add some capacities there. Second thing is, we are always seeing the value-added subject that hereafter we are trying to build up facilities which are little more looking at the trajectory for the customer to reach out to us to get their product quickly developed or quickly ramped up. How much inquiries we have received, but I think it is still going strong. I think it is here to stay. Power generators or the mainstream generators required for that over the next 5-7 years.

So tentatively, as the first phase reaches the peak revenue in FI-30, once that is done, we will start the second phase. We can assume like that, sir?

Yes, you can assume like that, and second phase will not be capital intensive because our infrastructure is already in place for the foundry as well as the fundamental machine shop. So, there, after that, it becomes interesting that incremental capex and incremental revenue growth will be more attractive.

Thank you.

Thank you. The next question is from the line of Joseph George from IISL. Please go ahead.

Thank you. I had a couple of topics to discuss. One was on cash flows. So, you know, this year, you have raised 2,000 crores of QIP. And if I look at the run rate of KPEX in the first half of the year, which is about 1,100 crores, plus there's a lot of cash drain on working capital. Considering all of that, how do you see the net debt position at the end of FY27 compared to FY26 end?

I said today's terms has been, say, 50%, but I would discount that with the commodity side. But on an overall base, if you look at it as a standalone, in the real terms itself, we have grown 35-35% on a larger base. That means our capacities are much more than that in total. So, this means the CAPEX and the working capital cycle is yet to play on the number of days, which we will see more. In the Q4, the exit rate will give a very clear indication of what are the things to come in next year. So, we are in the build-up stage now. So, I don't think we need to give the right picture about what is happening at our end.

And in terms of CAPEX for the full year, should we expect a similar kind of run rate in 2H as we have seen in 1H?

No, I think we are quite clear about Q3 to a decent extent, but Q4, we might not do much CAPEX for the simple reasons that other CAPEX are a little more long term and that will be pushed into subsequent years in a phased manner. It will not be coming as big as this, because we have broken the one level where we have put up greenfield facilities across India, I would say, on both the powertrain and the aluminum segments. Yes, we look at the… Okay, to answer your question, Q3 on a console level will be between 500-600 crore on the capex.

Okay, sir, understood. The second question or topic I wanted to chat on was the Sunbeam business. So I remember about a couple of quarters back you had mentioned that you will give up on low-margin business, low-margin revenue, and improve the mix and get to early teens or mid-teens kind of a margin, maybe in a year or two. I want to understand where we stand on that journey. Have you started giving up low-margin businesses, or what's the path from here?

Yes, our customers requested us to support until the festive season, which we have done for this festive season. So those products will go away in the next couple of months. Handing over is happening, whether they're developing alternate or whatever may be. So, overall, the exit of certain smaller customers is mostly complete, but the bigger customers we are hand-holding.

So, our top line

may reduce, but our absolute margins will improve because some of them are negative on the EBITDA itself in general. There is no point in trying to reset those prices. So, with that, thank you.

Thank you. The next question is from the line of Sagar Shetty from Veldivaya. Please go ahead.

A good set of numbers. So, my question was regarding, first of all, that we have recorded a good top line growth, and at the same time, we have seen that the margins were a bit declining. So, is it right to assume that we have seen some sort of aluminium pass-through during this quarter? So, if we could just open light on that, and why was the margins, you know, a bit lagging here?

Yes, the aluminum, some of it, we are still in discussion with the customer for the corrections on the matter. Until we come to a conclusion, we cannot book the differences, number one. Number two is the steep rise, and there is a panic in the market of the availability of material itself. Added to that is the Middle East crisis. See, we wanted to protect our customer product lines, so we had to take an extreme step of ordering more, Not knowing which material will be supplied or which material will not be supplied. So we have gone a little overboard, but I think that will stand us in the long run. Even to be frank with you, some of the customers asked us to give the aluminium to them, for them to give to other suppliers. That was the situation. So for that, we have taken some brunt that when the prices dropped, yes, we have some impact. That's a one-time impact, but it doesn't going to impact on the longer term. Yes. On Q2 especially, yes. And in Q3, there will be very marginal and Q4, there will be nothing there.

Okay, okay. And my next question was around when I viewed your Q2, there was a new German subsidiary. So, if you just throw some light on it, like what is the purpose and investment planned in it, and at the same time, if you would also, you know, What is the growth rate in German subsidiaries as of now? What is the quarter-run rate which we should expect going forward?

So I will just explain the German subsidiary. Even though it looks a number of companies, fundamentally, there is one holding company, which is holding a real estate company, and then the holding company is holding a foundry. That is it. The foundry is the only manufacturing company as of now, and that company is quite, I think it has reported a healthy growth in the revenue and also the profitability is very decent and this is also supplying to large engine family products and which is sustainable going forward. And all the expenses are indexed with the customer. The case of power, all the raw materials and also the labor cost. So we don't see any risk on the business and it's a steady business and it's profitable. Coming to what is the new company which we have done, only the formation has been done there. The machining portion is now outsourced to all our companies in Germany. Since our growth is big, we thought, craftsmen, yes, we have capability in machining. So we want to take a small, put a small machine shop there, which will help our customers to give more orders to us there. So, in this case, we have not decided the quantum of investment. It will be very small. You know that we have invested around 100 to 130 crores, something like this, in the German subsidiary. But Mission Shop will be a very small percentage when compared to that.

Would we be focusing on how many KX comes going forward and have a policy release?

Sorry, I think line is not clear, please. Can you repeat the question?

If you could tell me, if you know... I'm sorry to interrupt this, sir.

No, the line is not clear, yes.

Is this better? Yes, please. Yeah, so I just wanted to know, like, are we planning any future CPEX, like, you know, any foreign subsidiaries going forward? Like, apart from the 1,500 crores outlay which we had, anything extra for the foreign subsidiaries going forward?

No, foreign subsidiaries, no. As I mentioned, it will be nothing. The subsidiary is a small machine shop. So, what we are thinking through is only very small, maybe 20-30 crore on some few couple of missions there, so that we will support the foundry and reduce the working capital intent, because now we are sourcing the missioning outside, and there's a delay. We'll continue to outsource the missioning with other mission shops there, but the incremental requirement, we may do it inside. This is only an optional subject. It's not any CapEx intensive business what we are doing.

Thank you.

I want to make one very clear statement is we are not a fan of investing outside India in a big way because we understand the risks which are associated. This is a very strategic investment and we will keep it in that way.

So just adding one question, so does this also rule out our possibility of foreign acquisition?

Yes, if you look at our history, we are always very averse for many, many decades, instead of checking a number of times, we see what is the life cycle left in this sort of businesses, which is coming for acquisition. So we believe that any company coming up for sale, the good companies will get merged with the bigger brothers there in Europe itself. There are other companies So we feel that we stand more exposed or it is more risky for us. Unless there is a technological advantage or it is very small when compared to the parent. Look at our size of revenue outside India. It is almost 1%. 4% of our revenue is coming from our subsidiary. And if you look at the net block of the investment also, it may be hardly 2-3%.

Okay, okay, okay. Thank you so much, sir, and all the rest.

Thank you. The next question is from the line of Akshay Karwa from Aviva, India. Please go ahead.

Hi, sir. Good evening, and thank you for the opportunity. Firstly, congratulations on a good set of numbers. My answer, my first question pertains to the stationary engine segment for data centers. In the opening remarks, we argued that the current order book is around $100 million. So, on that, when do we expect to book revenues within this, and what would be your target by, let's say, F29, and approximately your monthly run rate for this on the stationary incident segment?

F530, we will reach the run rate at least by Q3 or Q4 for that 100 million.

F530. Lastly, on the margin guidance, if you said, in this quarter, aluminum segment has seen a margin decline of almost 6.5% effect margins, you mentioned that you talked with customers, so when do you say, what do you say for the closing margin for F27 and F28, if you can check us out on that?

I think I lost you. Clarity of the call was not there in the last few sentences.

My apologies, sir. Just only, margin guidance for the imaging segment for S&P 7 and S&P 8.

Now, we will go back to the normal after our discussions with customers happens. Yes, we are still in discussion with the customers. Some are for the past impacts that you have taken, and some are for the future corrections. Both will be discussed finally. Let's say it will not be only for craftsmen, it will be for the entire aluminum supplier community, and also the OEMs, OEMs are also aware of this, a lot of dialogues are happening. Beyond that, because of the sensitivity of the information, I cannot share.

Sir, can you tell me, when we do, we are not doing the time for aluminum, or what is it?

Again, the commodity price has gone up, so you have to equate the same commodity price, then the margins should come back to normal after the discussions with the customer. But commodity price is a subject where we cannot get the increased aluminium price, we cannot get a margin for that aluminium also. So we have to look at it that way. Some moderation will be.

Thank you.

The next question is from the line of Shiraz Jain from MK Global. Please go ahead.

Yeah, good afternoon, sir. Suppose GST cut, we have seen very strong growth for the entire auto industry. And this year also growth seems to be surprising. What are your thoughts on industry growth for probably the next one or two years, and particularly the 15% growth guidance that you gave, how much that is dependent on the underlying automotive industry, and how much would be more driven by bottom-up auto-wings that we have done across various customers and platforms?

We have not factored too much auto growth, but I feel that auto growth will continue in quite a strong way, especially on the passenger vehicles as well as two-wheelers, because of the infliction point of per capita GDP. And also the value per product is also increasing, because of the two-wheelers, I think the 150cc and above also is going to grow in the near future, which will give more option fees for us. Similarly, also on the passenger vehicle, newer models with newer prices, and there will be realignment on the supplier base. We will get more opportunities. So we will have a combination of new products, replacing old products, and we will be maybe a supplier for the new products. That is one advantage. Second thing is exports out of India is also continuously increased. The third thing is value. For example, if an hybrid vehicle comes in, there will be more transmission parts which are available. If Euro 7 comes in also, then BS7, then the new engines also will come in. All this gives an opportunity for us. The last but not least will be the in-house manufacturing to outsourcing. The trend for in the future will increase. You know, many of the OEMs are still, we see the trend slightly starting to shift.

At this point of time, any sense, I mean, how much would be in-house and how much would be outsourced from an OEM perspective on the aluminium side?

The major market player, I think, almost most of it is in-source, the key parts, totally. The second largest player, also, quite a big percentage is in names here, yes. And for two-wheelers also, it's the same trend. There are somebody who's totally outsourcing, almost totally outsourcing. Some are still almost totally in-house, at least on the missioning side, on the two-wheeler side.

Are you driving the shift towards more outsourcing?

It's available for the same quality at a reasonable price or even a better price.

And just on the export side, since you touched upon, Ryan, obviously on the powertrain side, we are doing reasonable exports. On the aluminum side, when do you see, let's say, a major inflection point from an export opportunity standpoint?

We have got orders from companies, multinational companies, who are going to do aggregate exports from India. And already some aggregate exports, maybe engine and gearboxes are happening for some of the multinational OEMs who are set up base in India. So we see this trend continuing to increase going forward. First it was for products which are suitable for India, manufactured in India, sold in India, those powertrains are getting exported. But we also see now that the infrastructure in India is getting shifted to India and India is being used as an export hub for the aggregates also. So 1.5 litre and below for the passenger vehicle, especially on the gasoline side, it means to get the powertrain out of India, been exported out of India, whether it's Europe or anywhere in the world. Also, on the two-wheeler side, India has become a very big manufacturing country overall, and the capacity in India is higher than the biggest Asian country has moved towards more to passenger vehicle. That may be one reason, but I think we are still growing some advantage for the next three, four years on the growth cycle. We also see that the consumers are preferring more.

On the profitability front, do we, I mean, would you like to share in terms of any particular

I have to be candid here, but I think wherever the fairness is there, yes, we will get it done. If fairness is not there, I think it is very difficult to accommodate any customer who is not allowing a pass-through, especially in the commodity. I think it is very risky for any supplier to continue to serve in the past. We have to be very careful there. Second point is also for the literacy products that has to be reset. So our margins are in spite of, our operating leverage has improved the margin and whatever some of the margins that we need by all these issues. This will be corrected. But what we believe is new products will come at new prices. This is allowing us that we can pick and choose or be selective. I will not say pick and choose. Be selective on new developments. This is very important for the profitability. At the same time, how the negotiations go on the existing products with the existing customers, we have to wait and watch on this matter, and we will take some logical decisions because some of the capacities are fungible.

As you said, 15% growth, generally, you should be targeting. Your profit growth should be much higher because, obviously, the basic infra that you have put up, I mean, the capex that you have done over the past, that's a few years. I mean, apart from the price hike that you will get from the OEFs with respect to this compensation.

See, in the powertrain also, there is a lot of problem about all the consumables have gone up. The cutting tool consumables, the oil consumables, power, labor, everything has gone up. But our operating leverage was able to, and the newer prices, was able to offset some of these challenges. And these plants are also not suboptimum, the powertrain plants, because they are quite, we have entrusted ourselves over a period of time. Aluminium, the opposite is true. Not all plants are at the optimum level. Still, there is a lot of capacity to be added to the optimum level. And we are on the ramp-up pace, which is also pre-operative cost, which is eating into our margins. Second, third thing is, it is a commodity price and the fuel cost, which was quite, it is more energy consuming there for us, for the gas and things like that. So that has also hit us. If not, for these two things, our minds would have been at least equal, if not better, and it should get better over a period of time when operating leverage improves in each of the plants in the last two years. So, that sort of accelerated growth has taken some toll on the property.

Thank you so much. All the best.

Thank you. The next question is from the line of Vinay Nathkarni from Hardware Investments Private Limited. Please go ahead.

Thanks for the opportunity. Most of my questions are answered.

Just one question on the aluminum mark-to-market loss that you have said that you have to book in Q2 because of the drop in aluminum prices. Can you quantify what would be the impact in this quarter?

No, we will not be able to exactly quantify because the material is, and some of the materials is still sailing to come here, and some are, we have to secure some contracts. So, I don't want to get into that detail, but what I can say that the effect on Q3 will be almost, will not be having any impact. Q4, then nothing will be there.

Yeah, but then this drop in price, I mean, market to market in this quarter, will it help better margins in Q3? Because we have already booked that loss in Q2.

No, no, it's not a loss. It is the, see, we are continuously buying material and continuously selling the products. So, when the price, we have booked more raw material. It's not a market to market loss. It's a consumption cost which is increasing for us. Our cost is improved. It's not a market to market loss.

Okay. Okay.

Okay.

That's it then. Thank you. Thank you.

Thank you. The next question is from the line of Shubham Bhattra from Ambit AMC. Please go ahead.

Hi, sir. Thanks for taking my question. Sir, in the aluminum business, we have roughly grown 45 odd percent in H1. Just wanted to understand of this, how much growth would be driven by the commodity, inflation and pass-throughs which we have got from the customers and how much is the underlying volume or real growth for us?

Between Q1 and Q2, there is nothing significant on the commodity. It will be very marginal. Actually, all of the things between Q1 and Q2, we have to take it as real growth, mostly.

Got it, got it, sir. Secondly, in terms of the alloy wheel business that we were ramping up, could you give any update on how is it ramping up?

Sir, we are at around 70% sort of on current utilization level in the past couple of months, I would say.

Okay, sir, thank you.

Thank you. The next question is from the line of Momoksh Mandilesha from Anandrathi. Please go ahead.

Yeah, thank you, sir, for the opportunity. Sir, I want to understand more on the, how do you see the EV penetration happening, this is happening particularly very good in two-wheeler and four-wheeler segment. Sir, I just want to understand how they are placed in the EV-related segment, what kind of products we cater to that segment, and how would be the revenue mix from the EV-related products?

Yes, for the two-wheeler, the penetration is significant in the scotas very clearly, and it will continue. On the motorbikes, I think it is, you have the public data, I think it will move more slowly in general, and what we see is the motorcycles also moving to premium, if not super premium, at least on the premium. That means the requirements for higher power, the EV will be more difficult because of the battery size, battery weight, and the packaging of the battery in the motorcycle. So we feel that scooter is the first transition, partially on the basic motorcycles, high-performance motorcycles, but they do not have a range. So, I would rather leave for the OEMs to make an estimated guess here, the market. On the passenger vehicle, there will be a steady increase of the recycle in the decision-making for a normal consumer. The second car, third car, a city car, yes, the EV penetration for passenger cars will be very high. Beyond this, again, I would leave for the commentary of the OEMs for you to decide. Which product are we offering for the two-wheeler, for the EV? It is negligible, I would say. Currently, it is only on the alloy wheel. But the aluminium structure, when it comes into the picture, in a bigger way, for light weighting of the two-wheeler, more, cost economics will drive it. If it is favourable, then more aluminium content will come in. But on the passenger car, aluminium content is said to grow on the, all passenger cars, more so on the EVs.

Putting on PVs, how we are placed, sir, on the, on the products, what are the supplies for the PV, EVs, sir?

Yes, structural parts other than alloy wheel and other than aluminium forging, we are there in the segment. Yes, we are not there in the aluminum extrusion also, but looking at the castings, low pressure, high pressure, and gravity, which is the bulk of the structural parts there, we are present there.

So, just to give a sense, sir, for the PV segment, if you compare the ice PV versus the EVPV, how the connecting would be different, sir, for us?

Engine parts will not be there in total. Yes, for a hybrid, actually a content aluminum increases. The addressable market for EV will depend on the structural parts, adoption of structural parts, which will be more common with EV as well as for ICE increase over the period of the next 2-3 years. I think there is a lot of reports on aluminum content per vehicle, which is in public domain, and India has got one of the lowest aluminum content per vehicle on the ice also. And plus on the EV also, both. So comparably, as a percentage of the vehicle weight on the ICE, we are less than half of the developed market, not even half, maybe one third. So there is a lot of scope to go on the ICE also. Similarly, on the EV also, new platforms have to be evolved. The current platforms have not been built for adopting aluminum. That is why we see more OEMs investing for new assembly lines so that they can lightweight the vehicle.

And, sir, on the EV side, how we are placed among some of the key customers, sir? Are we present now at the EV space now?

Yes, our bulk of the business is with passenger vehicles only, and we have also seen the volume growth in the last few quarters, and our commentary is that our aluminum business will continue to grow very strongly in the coming quarters. Yes, it means our order books are quite strong, and we are quite selective in taking new customers and new orders, which are more sustainable and profitable going forward. Yes, we were very reluctant to take EV parts even a few quarters back, because the EV is going through an evolution. The parts order, if we had taken, we would have seen early changes to the product design and even products getting discontinued or modified. Right. So we would have been a victim of that. So now the market is maturing or the product designs are maturing. New platforms are emerging. So we will be extending our services on high pressure, high casting, low pressure and gravity and also sand castings where our applicable and our technology is fungible, I would say. It is not for ice alone. It is for EV also. The same missions do not understand where is EV or ice. But light weighting of the passenger.

Thank you. Thank you so much for the answer, sir. Thank you.

As there are no further questions, I now hand the conference back to Mr. Srinivasan Ravi for his closing remarks.

Thank you very much for staying with us for the full meeting. What we say is now size matters to cater to the larger OEMs, including the multinational OEMs. I think the critical mass or critical size craftsmen will be reaching in this financial year. This will help us for almost next 5-10 years for being a very stable and growing company. Thank you very much.

On behalf of Craftsman Automation Ltd. that concludes this conference call, thank you for joining us and you may now disconnect your lines.