Rane Holdings Limited (RANEHOLDIN) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Rani Group Q1 FY27 earnings conference call. As a reminder, all participants will be in the lesson only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Divakar Pinglin from E&Y. Thank you and over to you, sir.

Thank you. Good afternoon. Thank you. So, good afternoon, everyone. Welcome to the Q1A527. Our name is called the RANI Groups. We'll discuss an announcement and answer your questions today. Here's the management team from RANI Groups, represented by Mr. P. A. Pagdanavan, President, Finance and Group CFO. Mr. Jay Anand, Executive Vice President, Finance and CFO RANI Holdings, and Mr. Yves Prasad, Vice President, Corporate RANI Holdings. Please note that the results and the presentation have already been made to you, and you can You can also view it on the template's website. In case anyone does not have a copy of the presentation or is not marked in the mail, please do write those and we'll have to send the same to you. Before we start, I'd like to say that everything that I said in this call that reflects any outlook for the future or which can be construed as a forward-looking statement must be ruled in conjunction with risk and uncertainties that we face. These uncertainties and risks are included but not limited to what we mentioned in the prospectus and subsequently in another post, which you can find on the website. With that said, I will now hand over the call to Mr. Pia Pranavan. Over to you, Pat.

Thank you, Devaka. Good afternoon, ladies and gentlemen. Thank you for dialing in. I would like to welcome you all for this teleconference. I would like to start with a few comments on the industry. The Indian automobile industry began financially at 2027 on a positive note with several vehicle segments recording their highest ever first quarter sales. Exports across major vehicle segments also reached record levels, despite the geopolitical uncertainties in West Asia. The strong performance during the quarter was supported by resilient domestic demand, lower GST rates, relatively softer financing costs, a favorable base effect, and continued new model launches. The passenger vehicle segment recorded strong growth led by sustained demand for SUVs, which continued to be the primary growth driver. New model launches, lower financing costs, and a favorable base further supported the segment. The commercial vehicle segment recorded healthy growth driven by growth in goods carriers, supported by continued replacement demand, and sustained demand from the mining and cement sectors. Infrastructure-led activities and improving logistics demand also continued to support the segment. The farm tractor segment recorded healthy growth supported by continued government infrastructure, infrastructure spending, and sustained rural demand. The two-wheeler segment also performed well driven by robust domestic demand, improving export volumes, and healthy entry-level sales. The continued increase in electric true-wheeler adoption also contributed to the segment's growth. Overall, Q1 financial year 2027 reflects the contrasting dynamics shaping the automotive sector, healthy volume and revenue growth alongside continued supply chain challenges and elevated input costs driven by the West Asian crisis. Now for the key highlights, RML's total revenue for Q1 financial year 2027 stood at Rs. 1050.6 crores compared with Rs. 884.4 crores in Q1 2026, representing a growth of 18.8%. During the quarter, the company secured new business with lifetime value of about Rs. 2040 crores, reflecting continued customer confidence across the company's product portfolio. I would also like to update you on the acquisition of the friction business of Hindustan Composites Limited. As communicated earlier, Rana Madras Limited entered into a business transfer agreement with Hindustan Composites Limited to acquire its friction business on a slum-cell basis. The transaction agreement was signed on June 30, 2026 and was subject to customary regulatory approval and other closing conditions. We are happy to inform you that all conditions have now been fulfilled and the transaction has been successfully completed. The acquisition strengthens RML's position in the friction business and provides an opportunity to build further scale and capabilities in this segment. The integration of the business will proceed in a phased manner to maximize value for our customers and stakeholders, driving operational synergies while leveraging the complementary strengths of both businesses. The near-term outlook for the automotive industry remains positive, supported by the onset Thank you.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Nirma from Unique PMS. Please go ahead.

Thank you for the opportunity. I have two questions on Rane Madras. So, one is we had stated a target net debt to equity of less than 0.5. But, you know, with our CAPEX plans and the recent acquisition, is this target delayed? Are we doing anything? Are we accelerating plans to divest other land passes too?

Do you want us to answer this question or wait for the second one also? Yeah, if you could answer this. Yeah, okay. See, we maintain our path to reach that 0.5-day equity, as we have mentioned. But as we have been mentioning earlier, the time frame we are expecting for it to happen is March of 28. We expect that in 18 months we will reach this position. As you know, we have already embarked on the Velachari property sale, and that is in process, and we are receiving the amounts in a phased manner. We will take up the sale of other land parcels as and when we get the right value for that land parcel. As you know, we have taken the approval from the shareholders for these land parcels, but we are just exploring the market, and as and when we get the right value, we will dispose them. We remain committed to bring down our debt levels in the next 12 to 18 months and reach the desired level by March 28.

Okay, sir. And second is, so our exports have been doing well. The mix of exports is increasing. Even in the new business, Windsor export programs account for now about 54% of LTV. Again, our LNG business has also picked up operationally. That was a drag. So with these two doing well, why are the margins still not picking up? So, currency has also depreciated, if you look at, in the past one, one and a half years. So, what is wrong with our margins?

Yeah, so, particularly, there is a good momentum in terms of the export orders that we have received, right? So, the LTV that we have actually indicated is for the future business that would kick in probably 18 to 24 months from now. If you look at the current quarter, so we, as indicated in the opening remarks, We as an industry have faced significant cost increases across various elements, material cost, logistics, and other elements. And that is what is actually the main reason for us to have this kind of a margin. However, we continue to work on various initiatives to improve our profitability. And of course, the mix is one element of that. And of course, increasing our cost reduction initiatives, which will mature over a period of time. And we also have some commodity pass through lead lag, right? So, though there are back-to-back arrangements with most of the customers, we are also having a lead lag in terms of recovering from the customers. So, that would also happen over the next couple of quarters. So, these are broadly the reason for the margin, not necessarily the mix alone. Mix is improving in a better manner. Both exports is also improving. And also, the aftermarket is also improving. With that, we hope to have a better margin in the upcoming quarters.

So, with this cost pass-through and, you know, with the improved makes and other initiatives, do you expect double-digit margins this year?

Yeah. So, given the current dynamics, we are definitely aspiring to go to a double-digit number.

Okay. Thank you. That's for my turn.

Thank you. Next question is from the line of Rajkumar Verdenathan from RK Invest. Please go ahead.

Yeah, good afternoon. Thanks for the opportunity. So, yeah, first of all, congrats for this new acquisition. Good to see that Rani is, you know, taking a lot of initiative to grow. You know, that's all I want to congratulate for that. Sir, the first question is, on the RANI steering, I just want to know what happened this quarter because the margins have come down and even your pad has also become negative. So, just wanted to know what is causing this.

One second, wait a minute. See, as far as RANI steering systems is concerned, as we have already mentioned earlier, for the next 12 months or so, it's going to be muted EBITDA margins only. Because of the legacy reasons, what the earlier orders which were taken at a low price, in the corresponding period of last year, there were some price increases, one-time price increases, with retrospective effect we got, which sort of helped in the same quarter of last year. So this is the normal steady-state basis, and so that advantage was not there in this quarter. Our all efforts are on to bring down the cost as much as possible, and we are hopeful that from the coming financial year, the margins will improve much better than what it is right now.

So, for the current financial year, the numbers are going to remain as what we have seen in Q1. Is that what you are seeing?

Yes, for the current financial year, it is going to be a bit muted, but from the coming financial year, we will see some improvement. Okay. Got it, sir.

And the second thing, sir, this second question is on your tax rate for the RANI holdings. This quarter you have shown almost 28% effective tax rate. So what is happening here? Because if I compare any quarters, generally the tax rate used to be very low. But why this time it was almost 28%?

You are referring to RANI holdings?

So, basically, I want to know what is your steady state tax rate number, because that is kind of affecting your tax this quarter, you know, significantly.

Just one second.

On this point, on the tax point, last year, corresponding period, there was some deferred tax that was utilized, which is not the case in the current one. That's why there is a difference. But the rate is for 25%, which is normal, as per the new regime, whatever rate is applicable is the normal rate of tax that is applicable for RML.

So, no, not for RSL anymore, please. RSL also.

Sir, you can speak for RML.

Yeah, RSL also, it is 25% only.

So, going forward, we'll see a tax rate of 25%. That's what you're saying, right?

Yeah, yeah, yeah. It'll be 25%. If there are any lost recoveries in those quarters or periods, there will be a lower tax. Otherwise, the standard rate applicable is 25%. Okay, got it.

Okay, the last question is on the warranty provision for the Livetec

JVM.

So, I just wonder, what is the closing provision that we are carrying as a decade soon, and did we utilize any provision since December 25 when we made the provision?

The provision, by and large, remains the same. What we provided in December 25, except for only due to Forex changes, that alone has increased it. Otherwise, the provision in terms of dollars remains the same. And we are still in discussions, and as of now, we don't have any updates. As and when there are updates, we will inform you. And what is the dollar value?

Do you have the dollar value of the provision?

The dollar value is around 23 million dollars. Okay, sir.

And, sir, any update on the recoverability of this with respect to the vendor and the insurance that we are working on?

It's a bit very early to come and we are taking all necessary steps to mitigate the cost. As and when there is any development, we will keep you posted.

Thank you so much, sir.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star N1. Next question is from the line of Sunil Kotari from Unique PMS. Please go ahead.

Thank you for our opportunity. Thanks, team.

Just one second. On the previous one, 23 million euro, not dollars. On the previous question, 23 million euro provision, not 23 million dollars. Yeah, please come on. Thank you.

Since last three, four quarters, if you look at the domestic industry, which is growing more than 15 percent, almost 20 is nearby. And we are part of every segment, mainly passenger vehicle. But if you look at our growth rate, which is below interest level, so I would like to understand we are losing market share or we are foregoing some low-margin business. What is happening? If you qualitatively elaborate, that will be really helpful.

Yeah. So there are, I would say, two, three different things, right? So, when we look at the addressable market, right, so from a technology standpoint, when you look at steering, there are migration of technology within the steering happening, and if you look at it from a LCV or a M&HCV kind of a segment, there are some minor changes that happen. So, largely, we are actually saying that we are in line with the market growth, both in terms of the served from a technology perspective as well as from the served customer perspective. However, there are few customers and few vehicle models which actually increase little higher than the industry growth as well, right? What we have seen with some customers like Mahindra and a few other customers, there has been a slightly higher growth at OEM as well as the vehicle model level. So that could also play an impact when you look at it overall level, whether we are present in that model, not present in that model. There is no loss of share in all the segments that we have actually supplied. There could be some changes here and there in terms of the technology. As well as, if you look at it from some of the models within heavy and medium-heavy commercial vehicles, the pack values will also change. So, if you actually look at a tractor trailer, the pack value will be slightly higher. If you look at it as a tipper, the pack value will be different. So, from a value perspective, those kind of differences will always be there in terms of which part of that segment actually grows faster or grows slower. So, these are the only changes which is actually reflected in our overall value number. Otherwise, the market share and the new business that we are continuing to win remains the same.

Right. Basically, what you are saying, there is some different technology or maybe some models where we are not present and those are growing higher. So, are we trying to follow up those new technology, new vehicles, new customers, new products, or we are in the segment where we were?

We are in the segment where we were, right? The technology migration is a very small one. That is particularly in the LCB segment, where the mechanical systems are moving to electric and hydraulic. So, otherwise, there is no big change in that technology. Even in the tractor, the hydraulic technology penetration, the steering is also at a reasonable level, where we are also in a steady market share position. So, the change is not mainly because of that. Change is because of change within the vehicle segments. Within the vehicle segments, there could be some changes in terms of which portion of that grows faster. Based on that, our pack value to that segment will also be different. And the second reason is from a passenger vehicle segment, where model and OEM combination will grow much better than the normal other vehicle and models. These are the two broad reasons. Great.

And one more present is about last year's professional fees. We paid roughly $49.50 compared to $45.50. And what I understand is we are taking the help of some consultants also to reduce costs and all these things. So, if you can elaborate what type of these charges we paid these one time, up to which year we are going to pay those, and what are the benefits by when, a little bit will be really helpful.

Yes, this is the general professional services that we take from an external agency, and they have actually helped us in, one is related to the merger of three companies, the other one is related to helping us in reimagining the structure for the aftermarket products team, and there are also some areas where we are taking help in terms of cost reduction and cost transformation related initiatives. So, there are multiple initiatives where we are actually taking support of the external agencies.

And what type of benefits we are seeing with the short to medium term?

Yeah, so, of course, the aftermarket project or growth rate you would have seen, it is slightly better, And we have a good aspiration to increase sales in the aftermarket. So that is one benefit and synergies by integrating the multiple aftermarket businesses. The second is the cost reduction. So, cost reduction, we have a lot of new ideas which we are actually pursuing in terms of identifying both direct, indirect, in terms of logistics cost, packing cost, every other cost element is being looked at more closely, more granularly to get us benefits. And these are some of those pathways which will actually take us to the double-digit profitability in the coming year.

And this cost will continue in the current year also? This is my last question and concluding the same point. Hello? Yeah, Prasad. So just this cost will continue in this current year also?

Yes, this year it will continue. The expenses will continue. And the benefits of this on a full year basis will happen in the year next year, which would be FY28.

All right. All right. Okay. Thank you. Thank you very much.

Thank you. Next question is from the line of Pragyam Lata from Omni Management LLP. Please go ahead.

Good evening, sir. Congratulations for the merger. Sir, I would like you to throw a bit more light on the merger, how it would be like margin accretive, what is the EBITDA margin of the current business, and what kind of revenue growth do you see in this business?

Yeah, so this acquisition of the friction business of Hindustan Composites It is very, very complimentary to the existing brake component division. Brake component division has a very good healthy share in both passenger vehicle as well as two-wheeler, whereas friction business of Hindustan Composites is having a strong share in commercial vehicle as well as railway. And this will definitely help us to scale up our business much faster. That is one benefit. The second benefit is there are a lot of synergies that we can actually see. We have a new footprint that we are getting in two new plant locations in Maharashtra. And as railway as a segment, we see good opportunities to grow and which will further help us to expand and penetrate into railways. From a margin perspective, the acquired business margin is accretive. They have a higher EBITDA margin than our business, and that will actually help us once we actually start planning for the integration. And there are other avenues in terms of looking at how we will bring in their brand in terms of the aftermarket and what could be the synergies in terms of new formulations that we can actually take from there. So, there are multiple things that we can potentially do in terms of evaluating the synergy. The direct benefit is the immediate growth that comes in, and over a period of time, we will actually plan to absorb these synergies as part of the integration plan, which will be run over a 12 to 18 months kind of a window.

Okay. And so, for this business, for the business like we are acquiring, What is the share of railways in the current revenue?

Share of railways? Okay.

Hello. Yeah, sure, sure.

40% of the friction business of Hindustan Composites is into railways.

Even after such a huge railway business, the company is having like a bit of margins of around, say, 11-12%. If I back-calculate it somehow, so do you think that these margins would be sustainable for the company?

I didn't get your comment on the EBITDA margin. The EBITDA margin is healthy in terms of the Hindustan Composites Friction business.

No, I mean, like, what would be the approximate margins for this business? Around 11-12%?

Yeah, it will be in the range of 11-12%. And we intend to run it as an independent activity, so independent division. So, we are hopeful of sustaining the same margins going forward as well.

Okay, sir. Thank you. Thank you, sir. Thank you for my questions.

Thank you. Next question is from the line of Manish Goyal from Thinkwise Wealth Managers LLP. Please go ahead.

Yeah, thank you so much. I have a few questions. First, on coming back on the margin, sir. So, you said there was a material cost increase and energy cost and various cost increases. So, if you have a pass-through clause, by when do you think that we will be able to recover or may get the price high? Will it start reflecting from Q2, and will you be able to pass on the full cost increase? That was my first question, sir. And probably, has it happened across the three companies? Yeah, thank you.

Yeah, so we have already started passing on the price increases. So, some amount of that is already in Q1 itself. So, there is some which will actually get recognized in Q2, but it is an ongoing activity as and when there is an increase in terms of raw materials which are indexed and then it is very clearly agreed with the customer. So, we will actually lodge a claim and then they will actually give that price corrected into our thing and then that will flow in. So, this is an ongoing exercise. So, the lag portion comes only on wherever we are actually doing it towards the end of the quarter, which actually moves to the next quarter. That kind of element is where there is a lag.

If it managed to the extent of commodity prices, we will be able to recover it with a lag, but when it comes to certain operating expenses, where there have been increased things like premium price and over time, they are saying how we can reduce it. So, hopefully these expenses should come down as we move on. Partly the increase in expenses is also because of these kinds of operating expenses.

So, like, if there is an energy cost increase, then is it possible to pass on?

Yes, some of it they are agreeing, some of it, for example, because of the wastage increases, we had a situation of LPP, so which many of the customers have actually agreed, right? So, these are all changes based on the customer to customer, element to element. So, our intent is to actually try and get as much recovered from the customer. Right.

No, so where I am coming from is that when in Q4 at EBITDA level, we were at 9.5% margin, or maybe if I remove other income, it is 9.3, and this quarter it is 8.4, so 90 pips decline. So, is it possible to recover entirely in the coming quarters? It varies from customer to customer.

Some of them on a quarterly. The operational expenses, some of it we will not be able to recover, right? So, for example, if there is a minimum wages, we will not be able to recover. So, that we will have to actually internally work on various initiatives to mitigate that cost.

Okay, okay, okay. So, when you said at RML, we aspire for double-digit margin. So, are we looking at quarter 3 or quarter 4 as possibly putting those kind of numbers?

Yeah, so the aspiration is, on a full year basis, this should be a double digit number, right? So, based on the volume and the demand that we are seeing currently for the Q2, right, I think we should be able to actually try and achieve it in Q3.

Okay, okay. And this is factoring the merger of hindus and composites, right?

Yeah, I heard you put together, Manishreeb. This is a slum sale, so from now onwards, this sale will start featuring in Rani Madras, from now onwards till the end of the year, and since that is a slightly better margin, we are hopeful that that will also help us to reach this targeted number.

And can you please tell us about the KPEX plan for each company for the current year, and what is the roughly capacity utilization, and also for Hindustan Composites, what is the capacity utilization?

I am entering here. The KPEX plan for Rani Madras for this year will be around 270 to 300 crores.

And for RSS, it will be 270 crores.

Sorry, your value was breaking.

For RSSL subsidiary company, it will be around 70 crores.

Okay, and for ZF group, sir?

ZF group, this will be around close to 250-280 crores.

Okay, and at Indusan Composite, what would be the utilization, sir? Capacity utilization?

For which entity?

Hindustan Composite, the business what we are acquiring, probably acquiring the assets. So what is the capacity utilization we have at the tree plants in Maharashtra? And also on railways, is it a tender driven business or how is the railway business? Yeah, these are the two questions.

Railways is a tender driven business with a visibility of about 12 to 14 months.

Okay, okay.

And last question on ZF Rane, sir, the margin decline sequentially is quite sharp. So, just wondering what could have, is it again the similar cost increase or how is it, sir, if you can clear it down here?

Yeah, this is mainly driven by the adverse mix in terms of the product mix.

Sorry, can you specify that? Like, in what terms?

Yeah, so, so, so, this is a, as you know, we manufacture two products in the joint venture. One is steering, the other one is also this thing. In occupant safety, we have steering wheel, we have seatbelts, and then we have airbags. So, in that mix, there is a challenge, so that is why we have this drop.

Okay, okay, okay. I'll come back in the future, sir. I have a couple of more. I'll come back in the future. Thank you so much.

Thank you. Thank you. Next question is from the line of Munzal, from NSFO. Please go ahead.

Good evening, gentlemen. Just one clarification. One is in regards to CAPEX of RML, eventually it's 270 to 300 crores. For financial year, 27.

Correct, correct.

And, sir, earlier, if I remember well, it was close to some 200 crores. Okay. So, now we have increased RML CapEx also, and we are going to pay 370 crores for Hindustan Composites acquisition also, in this year.

Yes.

So, it will be close to 600 crores of outflow from the company's balance sheet, and roughly we have yet to receive close to 150-170 crores from land. And the balance would be funded by debt. Is it paid to us?

Yeah. It will be funded partially by debt and partially by our own internal accruals. So our internal accruals for the current financial also will be used for this and also the amount received towards the velachery land. Balance will be met out of our debt.

And what is the peak date that you are assuming, sir, after this, you know, all this outflow, in rupees cross?

One second. It should be around 1,100 crore for a brief period of time, but by year end we should come below 1,000 crore.

And this, you are expecting, will be 0.5 debt equity by the end of financial year 28?

Yes. Yes.

Correct? It's fair to assume.

Yes. Correct.

I have a couple of questions, if I may squeeze. Why is this increase in CAPEX in RML by almost 70, 100 crores in financial year 27 and CAPEX for financial year 28?

Due to which we had to pull some capex, advance what was otherwise to be spent in the next financial year, we have advanced it to current financial year, and that's why this year it has slightly gone up compared to the previous estimates.

Sure. And, sir, on this EBITDA margin, you mentioned this friction business of industrial composites, the EBITDA margins are 11-12%.

Yes.

Sir, but if I see the number, so you have reported it 315 crores of Turner and 40 crores of PBT. So that's itself, PBIT margin is 13%.

See, this number is from the annual report of the company for the last financial year, 25-26. When they do the segment reporting, there are some unallocated costs also. There is some direct cost of the respective businesses, segments, and then there is some element of unallocated cost. So, that also needs to be allocated to this business to arrive at this business EBITDA and profit margin. We believe the current EBITDA of this business is around 13 to 14 percent.

And, sir, one of the competitors of Hindustan Composites, they are reporting EBITDA margin of almost, if I remember, 20 percent plus. Do we have such aspirations for this business?

As you know, we will constantly be endeavouring to keep improving the margins.

That is also a listed entity.

Yes, to some extent, these margins will depend on the product profile also. Here, there is a mix of railways and commercial vehicle friction products as well as aftermarket. So, we will keep maintaining our pressure to keep improving the margins. But company to company, it could vary depending on their product profile as well.

One classification, the EBITDA margins for this year, you're expecting to be close to double-digit, financially 27, right? For the year as a whole?

For the year as a whole, yeah.

Yeah, okay. Thanks a lot, sir. Thank you very much.

Thank you. Next follow-up question is from the line of Raja Kumar Veddinathan from RK Invest. Please go ahead.

Yeah, thanks for the follow-up. I just have two more questions. The first question is on this merging at Rani Holdings level. I just want to know where are we looking at merging all the entities up to Rani Holdings?

See, as of now, we don't have any such plans. This restructuring we'll be doing in the interest of all the stakeholders at the appropriate time, if at all it is required. As of now, we don't have any such plans. Okay.

And second question is, in the recent ZF conference, they mentioned that they have shelved the plans to hive off the Lifestyle Division, which is, you know, it's a bit capital intensive. So, given this new decision of ZF, I just want to know whether there will be any change in the CAPEX plan of the ZF.

See, as you know, even when both the steering gear division and the occupant safety division were housed under a single entity, ZF Rane, they were acting as independent businesses and then meeting their CAPEX requirement on a need basis. Now, those two independent businesses within an entity have become two separate entities. So, from a CapEx investment standpoint, I believe there is no change. It is just that instead of being a part of a larger entity, they are individual companies. So, as and when there is a need for CapEx, these individual companies will reach out for any debt requirement as may be required. Thank you so much.

Thank you. Next question is from the line of Sunil Kothari from Unique PMS. Please go ahead.

Thanks for the opportunity. Two questions. You said that there is one order, some order requirement to the currency from the next. Hello?

Yeah. Yeah.

So that is related to exports What are domestic, and what type of, because exports is growing really well, so how you see this sustainability of steering division, and this new orders features, that's the first question. And that is on our Rane brake lining segment, removing, keeping aside Hindustan composite. We are, I mean, almost, last three-fourth quarter, almost static between 135 crore plus minus 345 crore. So, what is stopping us from growing because the two-wheeler and the other industry is also growing.

So, you can explain why this is not growing.

I am not very clear on the second question. Which division are you actually talking about? Rane Brick.

Rane Brick. Rane Brick division. Brick. Bricking division.

Okay. Okay. Got it. Yeah. So, see, Rane Brick division, we see a lot of opportunities in terms of growth, right? So, one is, of course, it will be a growth, and then with Hindustan Composites friction business, we see progressing well on both railways as well as commercial vehicles, and on top of it are aftermarket. Aftermarket is a sizable portion within that. So, that is the manufacturing entity. So, there again, the friction-related products we see growth. So, we are definitely positive on that particular division in terms of the overall growth over the next two to three years. And in terms of the first question, which is related to the steering products, where we have some advancement in terms of the timeline, so that is why we have actually increased the capex. And particularly when it actually comes to exports, and we have a good aspiration in growing our steering products, particularly the rack and pinion as well as the ball joints, and many of the programs of what we are actually saying as exports, there is also an element of deemed exports, where the billing is in Indian rupees, so we don't actually get the benefit of any forex movements.

Right, and sir, last question is, Manish has asked about this Raleigh Holdings, this JVD, the margin falling from, our normal margin was also always between 11 and a half, 12, last quarter Q4, we reached to 13 and a half, 14, but again, Fallon, and you have explained, somewhat not able to understand, you can make a little bit more clarity on the fall in margin of first quarter of this JVD.

One second. We will just…

Please.

Sunil, we had already addressed this point in the previous question itself. It's basically to do with the product mix. Within occupant safety, we have got seatbelts, airbags, and in that seatbelts is comparatively lesser margin compared to airbags. So if there is more of, say, of seatbelts, because of that core product mix also, this margin gets impacted.

I'm sorry, if I can switch one more question. After long years, this light metal segment really growing, the exports grown almost 50 percent, domestic has grown 20 percent first. Is there any new order or new products, new customer? What is happening, if you can say something more about this aluminum casting region?

Yes, structurally, lightweighting as a team is very favorable, right? And the metal price, which is aluminum price, has also increased. So, some portion of that growth is related to the aluminum price also. So, the volume growth is also reasonably good, and the metal price is also higher. So, that is why you are seeing that kind of growth.

Thank you, Anand. Thank you.

Thank you. Before we move to the next question, I remind her to the participants to ask a question. You may press star and one. Next question is from the line of Pratik Kothari from Unique PMS. Please go ahead.

Hi, Viratun. Sir, just one clarification, we have changed the last quarter we used to give order wins, and

from this quarter we are mentioning some lifetime value. If you can explain what this is and how do we compare it to what it was earlier?

Yeah, so this is similar to what we have been giving, right? Earlier, we were actually giving it as a per annum value. However, when we actually benchmarked with other peer companies, both India as well as globally, they have actually been sent as a lifetime value, which indicates because most of the projects that we have are for more than six years, six and a half years, kind of a time frame. Just to reflect upon that, we have actually moved to this lifetime value.

So this would be about 5-6 years each?

Yeah, yeah. So if you look at it from the current revenue perspective, right, so this lifetime value will be 6.26.4x.

Great. Thank you. Thank you.

Thank you. Next follow-up question is from the line of Manish Goyal from Thinkwise Wealth Managers LLP. Please go ahead.

Thank you so much, sir. Sir, on aftermarket, sir, over there also, have we taken the price hikes in the current quarter or we are planning to take? And also, second question, yeah, sorry, go ahead.

We have taken price increase.

Yes, and so just on the, like with revenue contribution increasing for aftermarket, how much of that sales would be in-house manufacturing and something which would be outsourced? Because probably that will also have an impact on the gross margins or raw material cost content.

Yeah, something around 20-22% would be outsourced.

Okay. So, it will have some impact on the gross margin. And so, in this quarter, in Rania Holding, we don't see the revenue breakup and the group sales number and revenue breakup for quarter one. So, is there any particular reason not to share that?

Can you forward, it's only... One second.

Because you have given FY20, till now you were probably giving every quarter the group sales and the revenue breakup. This quarter it is missing, and no doubt we stopped giving revenue breakup of ZF Rane, so...

No, we have actually given this, in our Rane holdings, we have the revenue breakup.

No, but that is, presentation is saying FI 26. It is not saying quarter 1 FI 27.

Yeah, that is a static slide. So, that is updated once every year. That is just a group positioning of the sales number. But the respective quarter-wise numbers are given in the subsequent slide. Rane Madras, we have given subsequently, and then Rane Steering, as well as JVs.

No, I agree, sir. What I am saying at a group level, the revenue breakup for, say, vehicle-wise and business-wise, who?

With this format, we have actually thought this is more appropriate representation because we are not talking at a group sales in any other metric. So, group sales is indicate the group size and position, and we will update once a year.

Oh, okay, okay, okay, okay. Great, sir. Thank you so much. Thank you.

Thank you. Participants, to ask a question, you may press star and 1.

As there are no further questions, I now hand

the conference over to the management for the closing comments.

Thank you all for joining today. And we are as committed. We will do our best to keep improving our margins as we move on. And look forward to the next call after the half-yearly performance. Thank you.

Thank you, sir. On behalf of Rani Group, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.