Operator
Ladies and gentlemen, on behalf of Captify Consulting Investor Relations team, I welcome you all to the Q2 and H1 FY27 post earnings conference call of Menon Bearings Limited. Today on the call from the management team, we have with us Mr. Arun Aradhyay, Managing Director, and Mr. Aditya Menon, part of the promoter group. As a disclaimer, I would like to inform all of you that this call may contain forward looking statements which may involve risk and uncertainties. Also a reminder that this call is being recorded. I would now request the management to brief us about the business and performance highlights for the period ended September 2026, the growth plans and vision for the coming year, post which we will open the floor for Q&A. Over to you, sir.
Yeah, good morning, everybody. So, I am glad with your best wishes. We could perform better and better every quarter. We are moving ahead. And if you see the results, particularly on a consolidated basis, the total income of the company for this quarter has a growth of 57% over last year, same quarter. EBITDA has increased by 91 to 92%, then PBT by 122%, PAD by 117%, and similarly, EPS also has, there is a growth of 117% over last year with cash and bank balance, including mutual funds, is 25 crores plus. Similarly, for the total half year, we have clocked the total volumes of 191.56 crores, that is 43% growth over last year. You see, whatever projection that we have given in the past also, we have definitely not only achieved, but we have exceeded the target that we have already given to you. So, the EBITDA for the six months, it has increased by 63%, PBT by 79%, PAD by 74%, and cash and bank balance including mutual funds, 25 crore 69 lakh of rupees. With this, what I feel that, we are definitely looking forward to continue the same pace in future as well. With growth expected, of course, depends upon the circumstances from time to time. There will be more than 30% growth for this year, for 27, and similarly in 27-28 also, we expect if all the things are in place, it will be more than 30% again, with the growth hours are basically domestic and whatever exports that USA exports are growing rapidly. Along with that, our recently Europe tour is yielding a significant increase in the business and potential of more than 35 crores that will be converted into the actual sale in the year 27-28 and 28-29. And what I feel that considering the current business pipeline and the commercial discussions and RFQs that we have received, for 26-27, additional business expected is around 30 crores on consolidated basis. And for 27-28, we expect that estimated additional business will be up 151 so that the growth rate will be obviously more than 30%. With 28-29, the growth rate, we are having the list of all customers also from whom we are estimated to get the business. Yes, Erectives are there. Then discussions are going on. Commercials have been finalized. Many of the samples have been already approved. And with this, for 2029, we expect additional business of 157 crores, excluding potential business of 35 crores of euro. That we estimate. It will take little more time, but 100 percent we are going to convert that. These are all forward looking statements. Our fingers crossed, but we will definitely try to see that we achieve whatever targets and whatever commitment that those we are assuring you, we will try our best to achieve the same. There will be some queries from investor calls, investors also. So, for other income is concerned, whatever other income and some revenues, sales is concerned, inter-company transactions have been taken into the stand-alone grossing. At the same time, that has been detected from the consolidated statements. Thank you, sir.
Operator
We will now begin the question and answer section. All those who wish to ask a question, please use the option of raise hand. And I would request the participants to limit their questions to two participants initially. We will take the first question from Arnav Safuja. Please go ahead.
Hi, thanks for the opportunity. So, my first question is that, you know, if we look at the commodity prices, the aluminum prices kind of peaked in May and June, and, you know, they've fallen quite considerably since then, let's say by around 15% or so. So, has this benefited our Alcorp segment performance in the second quarter?
Yes, obviously, the rates of aluminum, basically, that is the raw material and various aluminum alloys we are applying as the raw material. The prices are down to some extent and the benefit of which will accrue to the alcohol. However, not only that, we are getting the prices or pricing of vendors also reduced in this quarter so that there will be additional Got it.
And my second question was that if we look at the other expenses in FY26, our sales promotion expenses within the other expenses segment increased from around 4.7 crores to 8.15 crores. So if you could just explain, you know, what would be some reasons for that increase?
You see, you can see our business so far as market is concerned, replacement market that has gone up substantially, maybe in breaks as well as in men and bearing. So considering that, apart from that, we have to incur substantial expenses. So far sales and distribution expenses are concerned in esports. The freight, so for a shipment of exports to USA and maybe other European countries as well, that has substantially gone up. And because of that, the sales and distribution expenses have gone up substantially.
Okay. Thank you for answering my questions and congrats again on a great set of numbers.
Operator
Thank you. Thank you. We'll take the next question from Bhargav Bhuttate. Please go ahead.
Yeah, good morning, team, and congratulations on a good set of numbers.
Sir, my first question is on margins. So, if you look at your gross margins on a YOY basis, obviously, there has been a significant decline, almost more than 7 percentage points. But despite that, your EBITDA margins have actually expanded. So, can you elaborate this savings in other expenses, which is visible as a percentage of revenue? Obviously, other expenses has declined a lot. So, is this sustainable in nature? If you can sort of spend some time on that?
Yes, very good question. In spite of volatility in the raw material prices and basically in copper, tin, lead, and steel, the prices have gone up substantially. In spite of that, whatever the exercises that we have made improvement in the processes, so we are reduced substantially so far as the consumption of all these raw material and input material is concerned. That has really helped us to sustain the margins that we have been making in the past also. Apart from that, you can see there is a virgin growth and productivity has substantially increased, that is by 25% over last period. That has really helped us in reducing the overheads overall. So overhead cost has been absorbed to the greater extent, which has really helped us apart from increasing the yield by reducing the raw material. Then productivity increased. That has really helped us to absorb overhead to the greater extent. And ultimately, we could sustain those margins and will definitely sustain in future as well. And whatever the price increases there during this quarter, which is almost 50% taken together on an average as compared to the last year, and the process of passing on that burden to the customer, that is a routine process. And for this quarter, we will get prices revised from all the customers so that we can definitely sustain that in future, actually.
So my second question is that if you look at your presentation, this time there is a new slide in terms of robotic automation, which the company is implementing. So is it fair to say that if the business is growing at 30%, the employee headcount will not grow at that pace? And if you look at your employee cost as a percentage of revenue, it is in the range of 13 to 14%. So, that's a sizable employee cost expense which the company is incurring. So, if you can spend some time on this in terms of what could be the savings in employee cost through this program, how much CAPEX are you incurring on this program, and what could be the payback? If you can spend some time, that would be very helpful.
Sure, I would like to, like, both the questions I interlinked, this quarter, like you said, input costs have increased significantly. Just to put in numbers, tin has increased by 72%, copper by 50%, steel by 12%. So, here we are taking a lot of continuous effort for productivity, how to absorb these costs. So, from last year, even from now, we are doing different projects, how to increase productivity. So, automation is one part of it. So, we are getting a lot of robotic cells where volumes are higher. So, we are not dependent on manpower because manpower is going to be issue in the future. So, we are taking proactive measures for the last two years, what capex we are doing, even capex going further. So, for even in the bearing segment and men and alcohol segment, we are going for projects for automation where imagine for a machining cell, we require four people for one shift. So that's around 12 people for three shifts. So even average salary goes maybe two lakhs a month. So we are trying to get these projects automated. So we save time. So we even save time. Even if you say return on investment ROI is around three, three and a half years. So it increases productivity, quality and time. So we are focusing on towards automation where it will help us in the future also. So that's one way we are doing. We are trying to reduce costs. And because raw material is increasing, we are trying different ways how we can save our costs. So you can see even raw materials increase, the EBITDA margins have increased. So a lot of proactive measures are going through our engineering team, through R&D, and management taking proactive measures. So that is reflecting in our numbers. So capex-wise, new machinery and automation size, new AI, what we are trying to introduce. For quality also, quality is one of our major things because a lot of new export-driven business is coming. Today, we have visual inspection. All our parts are 100% visually checked. So we are getting automated AI visual camera checking where these number of parts are getting checked by manual labor, maybe 1 million parts, like 10 lakh parts in engine bearing every month. So, these systems are automated where if we are not dependent on manpower, the process are getting faster and quality also is 100% checked because how much of a visual man does, there is chance of inefficiencies or quality getting missed out. So, we are trying to get all these visual inspection systems in place. So, some of them are already implemented, some are under development. So, in the next 9 to 12 months, lot of automation and visual Systems are getting in place where we save on manpower, we save on time that leads in productivity and quality is more focused. So as we're going to exports, it gives a confidence to our American and European customers that quality is good. So that also leads to new business development and confidence in men and bearings and men and alcohol. So that's like a brief. And if you, I will not say only for automation and R&D, how much we are investing, but next two years in men and Menin Barings and Alcorp, 12 months, around 5 crores in Menin Alcorp and around 4.5 crores in Menin Barings. These are rough figures. It can go up and down depending on projects and what business is coming. But these are the next 2 years, next 12 months to 15 months plan, investment plan. So 5 crores in Alcorp and around 4 crores in Bering. What figures we have told you, what we are going to achieve. So this is the investment we are doing to increase productivity and to get these numbers. So, this is the investment we are getting. And roughly ROI will be in the next two and a half, three years should be the return on investment on this investment what we are doing. Thank you.
And your employee headcount will reduce from year on over the next two years? Is that a full understanding?
I'd like to answer it. Like last year, we did 300 crore turnover. You all have the numbers. This year, two quarters, we have done 190. So, what numbers we have given you for this financial year, if it goes at this rate, we will definitely cross it. And compared to last year, headcount has increased hardly 5%. So, we are growing at 30%, but headcount, the man, what do you say, the manpower is not growing that, what do you say, linearly.
Yes, whatever, you see, in main and bearing also, in bearing, biometal, particularly bearing production is there. There are almost 16 such lines on which we are getting production of various bearings. So, these were all semi-automatic machines, which are to the tune of almost 90 in numbers, and all those lines, we are making it on a single-piece flow, so that for every line, we will be saving almost 3 people, 3 employees. So, consider that, considering 16 lines and average reduction of 3 man per hour, will be the total quantum of employees reduction will be 50 alone in bearings, apart from Bush and Alcorp and everybody, everything.
Great, sir. Thank you, thank you so much. Thank you, thank you. I'm all the best. Thank you.
Operator
Thank you. All those who wish to ask a question, please use the option of raise hand and we'll invite you to ask a question. We'll take the next question from Vignesh Ayer. Please go ahead.
Hello, sir. Yeah, my question is on the L-Corp side of the business. Just wanted to understand, are we in line with the guidance of 8 to 10% Yes, yes.
Yes. Even it will be even more than that. But what has happened actually, our other business of domestic as well as export is also on the increase. So that in spite of increasing the EV business, the percentage to the total will remain more or less constant.
Just to make like more clarity, last two years, if you see our order book, most of our growth was driven by export. But how we are seeing in reality, export has remained at 34-35%. We had predicted it will grow around 38-40%. But at the same time, the domestic market also has picked up. So the number of value has increased, but percentage will remain almost the same. So percentage-wise, it won't increase because the domestic, other businesses also are growing at a similar rate. But the volumes will increase. Volumes and values have increased, but percentage is remaining almost similar.
Okay. Is it basically because, I mean, have we, you know, migrated to a larger or in technical products that will, you know, contribute to the revenue in the next two quarters? Or is it the same set of products that we are currently sending that will see
For Men and Alcop, we have developed around 54 parts in the last two years and they all SOB has begun. So that's why you can see the growth. So a lot of new high value addition products have been added to the portfolio. They're going to different parts of the world now.
So that would be the answer to your question. As usual, these are all the critical components we are accepting and where value addition is always high.
Okay, can you specify one or two main products that goes into the export part on the EV segment of Elcom?
EV segment, we are tier 2 supplier that goes to concentric, we do electric pump covers for them, then that goes for export. For domestic, we do for tachoprestolite, that is Tata punch and Tata cover, Tata Jupiter, so we do parts for them for domestic. For Eaton transmission for export Poland. We are tier 2 supplier, but that also goes to Poland, Eaton Poland. So, these are the three in the EV segment. But for export for Alcorp, we are doing a lot of work for house and automation that goes to the US for Honeywell. We are doing for a lot of John Deere, not even tractors. We are doing for John Deere different aspects like the harvester or tractor. Then we are doing for the seeding, fertilizer, tractor. So, a lot of different applications there. Right. So those are driving factors.
These are the major key drivers. Yes.
Plus, if you see in our export, just not your question, diversifying into that. Majority of exports we are doing around 35% of our whole pie is export. Out of the 35%, we do 80% to USA. But as management, we are looking at a different policy also. We have had our senior management, our marketing head been to Europe in the last couple of months. So, we're looking at Europe. Our Europe visits are quite positive. Some companies invited us, some we took appointments and went. So, a lot of RFQs coming from that side. So, we are very excited to look at Europe also as a new market because we didn't have a big presence there. But looking at the economic and politics, we have a better relation there. So, we're exploring there and a lot of European companies are looking at India, Indian suppliers in a very positive way. So, a lot of RFQs coming from there, a lot of interest from European companies. So, in the next one, two years, you will see a lot of positive or new business starting from that continent also.
Thank you. Thank you for the detailed answer.
Operator
Thank you. We'll take the next question from CA Garvit. Please go ahead.
Hi. Thanks for the opportunity and congrats for a good set of numbers. Thank you. I have two questions. One is only if I look at the earlier phone calls and the phone call that today we are speaking about 30% plus kind of growth for this year, maybe if the things are good for next year as well. I wanted to understand what are the underlying drivers you people are seeing for this kind of demand and what are all the geographies you people are I would say our business, we have not started yet.
It's not contributed anything yet. So now we are taking effort for us. When we start a new production, like a development or RFQ stage, it takes 9 to 12 months from getting a RFQ to like set an example and start a business. So what when we're saying Europe, that business will reflect in next financial year or year after that. Last 2-3 years, what product development we are doing and we have explored new customers, diversity portfolio. That is our current driving growth, currently coming from domestic market and Europe. If you see our numbers, we have increased our domestic OEMs production, export have risen, and also aftermarket. So currently, what avenue and merchant export? So whatever four or five areas we are operating in, we have crossed, what do you say? From last quarter, we have overtaken domestic performance, export performance, aftermarket performance, and merchant export performance. So, these are the four driving factors, I would say. And we are looking at different, we have gone to different customers. And because of China, I won't say yuan price or it says China plus one policy and Europe plus one policy, like I've been saying in our con calls. Now, new customers also, like new customers, which we are not supplying to, they are also coming to India, like exploring India as their supply base for the next four years, 10 years. So, as men and bearings, men and alcoops have become a household name in the market, what markets we are operating in. So, we are getting new opportunities from new clients also. So, these are the factors driving growth. So, that would be one. Another one, like Mr. Aradhyay said, last six months, aggressively, our marketing costs also have increased. Last two weeks back, I was also in the US. I was in Detroit, Iowa, meeting new customers, looking at opportunity. So, a lot of new opportunities there. Our marketing guys were in Europe last month. Mr. RRD and our marketing guys six months back were in the US, Canada, looking at new customers. So, a lot of new RFQs coming, a lot of new opportunities coming, and it's looking very positive for us. So, that are the growth drivers. I would not comment on Europe and policies which we have done, but it's more, Europe is looking attractive because it's more stable because, like, you know, Mr., I don't want to take, like, comment on different presidents of Prime Ministers, but US has been a little bit volatile because of Mr. Trump's comments and, you know, what he is saying, tariffs, exit policies. But that's why we are looking at Europe also as a long-term part, like, you know, long-term area for growth. But what current growth and next financial year growth are coming from our order book and strong order book and what parts we have developed for our A-class customers.
You can see there is a growth as compared to the same quarter last year. There is a growth in OEM's business by almost 50% and similarly there is a growth in export more than 75%. So considering that and the business in pipeline for domestic as well as for export and European market, we are not considering in 30% growth what we expect. That will be apart from that. So, there can be even better than that. Provided all the things are constant and geographical situation, geopolitical situation remains not much volatile. So, we expect that we can definitely achieve whatever the target that we have set for us.
And being this quarter, raw material prices have been all-time high, shipment times have been all-time high, so a lot of volatility. Still, we have achieved best numbers, better than last quarter, better than last year, this same quarter. So, we are taking a lot of efforts at our side to achieve these numbers, growth and maintaining EBITDA margins, high EBITDA margins.
Understood, sir. Thanks for the detailed explanation. And secondly, when you say we are seeing robust demand, is it within the auto sector only what we are speaking about, right? We are not looking to diversify to any other sector apart from auto maybe next one or two years. Is that understanding correct?
So, it is not only the automobile, but home automation, then airport applications and all these things are also in pipeline. Not only auto.
If you see, 10 years back, we were heavily into auto, but we are also trying to diversify our company portfolio. So, we are doing oil and gas automation, EV sector, not only engine related. Auto means before we are only engine related, we are doing different application. So, a lot of diversification from our end. We are going for generators, a lot of development happening. So, a lot of demand is coming from comments and generator sectors. We are looking at AC, a lot of bushing goes in refrigerators and air conditioning systems. We are looking at compressors. So, a lot of different diversification from our marketing side also. So, we are not only related to like a tractor engine or HCV, HCV engine. So, we are diversifying our pie chart in that segment also.
But as you said, that is basically the end of the company in Accommodia.
Understood, sir. I think my questions are answered. Thank you very much.
Operator
Thank you. Thank you. We'll take the next question from Bipin Bor. Please go ahead.
Yes, sir. Congratulations for the good set of number. Yes, sir. I would like to understand the next five-year aspiration in terms of revenue and the margins which you are looking for. And then, how sustainable are current margins down the line?
You see, as I already told you that whatever raw material prices, those are volatile, but we are always having a pre-studded formula. So far, as increasing the raw material is concerned, we can pass on that burden to the customers or if the prices are reduced, then those prices will get reduced. So, there is a mechanism that is already in place. So, so far as labor cost is concerned, that we have already explained as Mr. Aditya told you that we are more and more into automation so that our productivity is increased, then we are going for automation so far as quality is concerned, considering that at timely delivery because of expansion in the productivity, expansion and capex in place for more and more demand that will be catered to the expansion. So far as infrastructure is concerned, it is already there. We just have to add, go on adding the machines, whatever required. So that is always possible and not to worry at all.
And like your question, for five years, I don't want to comment on five years. Last year, just a brief explanation. Last, like if you're following us for the last two, three years, we were supposed to do 270 crore last year, which we did 300. This year, if you are following us for the last six months, eight months, it's supposed to be 360 or 370. But if you see what numbers you achieved in the first two quarters, normally for our industry, first two quarters are relatively slower. Third and fourth are more better for us. We've been from last December, every month we've been outperforming ourselves and the next two quarters look promising. So, this financial year also, we should touch wood, bypass the number, what we have told the investors in a positive way. And we have done all the investments, what we require. Before, last few years back, 500 crore looked at 2029, 2029, 2030. So, we are taking a lot of efforts so we can reach 500 crore next year, most likely next year or maybe a year after that. So, a lot of, we are growing at 15-20%, but now we are growing at around 30%. So, 500 crore, I would say, next year should be possible.
That is possible. So, I mean, maybe you can calculate thereafter also at the rate of 30%, plus because of European market that we are tapping and that is already in place, you know, we have issued so many RQs from them which are to the tune of more than 35 to 40 crores. And apart, there are so many other businesses and break business will take a substantial lead into the market so far as replacement market is concerned and then major OEM that will be into our fold apart from railways. So, considering that, we hope that why we should not grow at a rate of 30% year on year for next four years. Okay.
And we are doing all the capex required to get these numbers, to achieve these numbers.
Operator
Thank you. We'll take the next question from Atul Jhobi. Please go ahead.
Yeah. Congrats, sir, for a great set of numbers. Thank you. Sir, when compared to last part, as I said, decline in EBITDA margin. So when can we expect the margin to go back to 22% kind of levels?
It is already there. I think you will have to go back again and see exact numbers. We are already there.
Excluding other income, Masumi. Excluding other income, EBITDA margin to be 22% kind of level.
Whatever more than 20% is always better. I hope you will agree to that. Okay? Yeah. Apart from that, there is volatility in the raw material prices that you also know. So, considering that whatever raw material prices are there, that we will have to absorb for a particular period, that is for one quarter, and those will be substantially part on to the customer. So, that again, that is restored. So, this is a process. It will range between 20 to 22 percent always there, and considering the business in pipeline and growth rate, what we have achieved and will be achieving in the future also. So, considering that, we hope that it should exceed 22% also and what we are targeting for next year, the EBITDA margins will be about 23%. That is our target. And we will try to achieve that.
And if you see our competitors in this industry, above 18% EBITDA is excellent. So, what we are achieving also is a great number. So, if you check our competitors in our field, then you see their numbers and then you see 15%, 10%, 7%. So, you see, our numbers are excellent, and we strive to keep these numbers going ahead. So, we always focus on sustainable growth. So, we are not looking at top line to increase significantly. We want our EBITDA margins, our PAT margins to grow at what numbers we have now. So, we look at sustainable growth. So, we are, what do you say, growth focused on our bottom line. So, we make sure what bottom line stays constant.
So several measures that we have taken to sustain that in future as well and to try to increase the margins. We are going for automation. One thing, saving in electricity by rooftop solar, that is another. Then thirdly, reducing the manpower, increasing the productivity, improvement in the processes. That is ongoing process and we will have to follow and we will have to continue our measures that we have taken in the past and now we will have to take future measures to see that we sustain those margins in future as well. We will definitely take all out efforts to see that we maintain that.
Okay, sir. That's great to hear. So, also I have another question like what is a margin split in bimethal, alcove and brake segment? Can you just give the data? Segment-wise margin in bimethal, alcove and brake segment.
Okay. So, for a brake is concerned, the margins are 30 to 35 percent. It depends upon the mix of the product. But it is between 30 to 35 percent. Okay. That is one thing. In Alcop, it is 18% to 19%, whereas in Bering, it is 23%. Okay?
Thank you. And if you see, this quarter, we have had the highest profit of the company.
Highest profit, all-time high sales, then all-time high EBITDA margins, totality, in totality, in company history, as well as start margins was also high.
And I have to thank our MD and our whole team because getting set of numbers for one month high is good, but maintaining it for eight months and every month breaking the previous month also is a challenge. So that's a big achievement from our team here at Men in Berries.
Operator
Thank you. Sir, we'll take one question from the Q&A box. It's from Ashish Parikh. He's asking, Sir, ours is a cyclical business and there is some slowdown anticipated in auto sector. So, how do you see our business from the cyclical perspective? Where do we stand in the cycle? Thank you.
You see, there can be, these are the cycles, automobile industry or auto industry is going through these cycles for several decades. Actually, this may happen this year, next year or next to next year. But at the same time, you can see there is a dot like situation in Maharashtra. So that the tractor industry is going to suffer to some extent. But at the same time, we are compensating that business and what we have forecast, we have received from other customers which are not related to the tractors. Those schedules have been increased substantially and we don't see any, there will be any adverse effect so far our industry is concerned. We will continue to like that in future as well in spite of downturn in automobile industry, if at all any is there. At the same time, you can see HCV, LCV and passenger vehicles, there is, for the last six months, there is increase, our growth rate is almost 14 to 15 percent, whereas in EV, it has gone up to 20 percent, and we are more and more getting into the EV business. So far, Alcop is concerned. So, we don't see any cyclical situation there. So, there will be a downturn in the automobile industry as of now.
And normally cyclical, when you say cyclical, second quarter, if you check our history also, it's supposed to, you know, take the biggest hit. And we've outperformed the highest in second quarter. So, normally quarter, three quarter, four are positive for us. So, this year, we should cross what numbers we are seeing. And if you see cyclical only for engine bearings or automotive, 10 years back, 54% of our market share was tractor business. Now, it's become 34%. Even the volumes are increasing. So, we are diversifying to different applications. Like I told you, generator application, heavy earth moving application, there's braking system, steering system, transmission. So, we are also not focused only on tractor. Even though it's our biggest growth from engine bearings, from 50% has come down 34, but we are growing. So that 16-17%, we have got different customers, different applications. So we also know the risk of our company. So we are taking majority efforts to de-risk. So that's also one thing you should know.
But in spite of that drought-like situation so far as Maharashtra is concerned, and maybe other states as well in throughout India, Yeah. But at the same time, it is surprising that our schedules from tractor companies are increasing this quarter as well. Well, yeah.
So, maybe Indian tractor manufacturers are maybe exporting also higher. So, even they are growing. So, what projections we have for the next quarter and the quarter after that look very positive. So, that should not be a problem for us. Thank you.
Operator
Thank you, sir. All those who wish to ask a question, please use the option of raise hand. Sir, we'll take another question from the Q&A box. It's from Anil Parikh. He's asking, how is India EU FTA supposed to benefit us? I'm not sure if this question has been answered. Also, are we seeing interest on account of China plus one?
You see, China Plus 101 policy has really taken place now. That is more and more effective since European countries are exploring India as a preferred supplier and quality supplier. Our industrialists and manufacturers here in India have improved so far as the cost is concerned by increasing the productivity and quality as well. So, they are well prepared and ready to fight China. So, their China plus one policy is really taking place now. All the European companies are looking at India as a preferred and reliable source considering this present situation of improvement by all manufacturers in India. So, it will definitely benefit us.
Plus, we are not looking at Europe and India's whatever agreement is going to happen. We are looking in a long-term way because U.S. has been a little unstable and our visit to Europe has been very fruitful. The European companies have shown a lot of interest. It's not like we have not tried marketing before to Europe. Maybe back then there was sourcing from China or Eastern Europe, but Ukraine, Russia, also prices have increased, energy prices have increased. So, European customers also have a lot of pain points from the current suppliers. So, they are also looking towards India in a very positive way and what visits, what communications we are having, RFQ. So, it's looking very positive. So, I won't say we are basing a decision on agreements. The agreement happens that well and good and very positive for us. But Europe is looking as a more stable option for exports also. So, and it's a, what do you say, so, or even supplies also are very positive and what communications we are having, RFQ has been very positive from the last four, five years, what we are trying to, you know, enter that market. So, now it's been very positive and easier, I would say. Easier means it's requirement from them. So, when they are in need, they are making that process of new development RFQs faster. So, that's what we mean. Thank you.
Operator
Thank you, sir. We'll take another question from Mr. Gulam Soni from the Q&A box. Sir, we have talked about diversifying in non-auto segment. So what is our current share of auto to non-auto? How do you see this mix changing in the next three years?
You see, at present, the segment-wise revenue, if you break up, so from auto, we are having almost 60 to 65 percent, and others is engineering and other applications. So, in future, we would see that it will continue the same pattern. As we told you that, though the exports are increasing, the percentage to total revenue has remained more or less constant. Similarly, with the increase in the automobile sector as well as non-auto, though the business will increase, the percentage will remain more or less constant again in future as well.
And just to make it clear, engine bearing business is more auto-focused. So, in 2008 as management, like how you are asking the question, we also know the risk of our business. So, we started Manan Alcorp. So, Manan Alcorp having the same vendors and all, even there our auto is only around 18 to 20%. There we have de-risked into other applications, industry application, house and automation, oil and gas, EV. And when we say tractor, we are not only doing engine auto application, we are doing harvester application, seeding application. So we are trying to de-risk as much as we can. We are going to, in the engine bearing business, like I said, auto HCV, LCV and tractors were around 70-75%. That has come down to 58%. But the sales are increasing. So, we are going into other applications, not only engine application, maybe braking systems. Wherever there's rotation, we are trying to enter that, refrigerated compressors, transmission. So, we are trying to diversify applications more. And in the future, also, we're looking at the same mindset. So, we're not going to let go of our core business. We are looking at core business increase also. There are new tractor companies which are approaching us. So, if you get bad business, that will be significantly increased. So, it's not like de-risking. That's our core business.
So, we appreciate that. Our basic DNA is automobile industry and we will be concentrating on that and to improve upon that our share into the market.
But at the same time, we are trying to de-risk it. So, we are not cyclically dependent or if there is a down, if that industry goes down, like, you know, the total sales doesn't come down.
It will not have adverse effect on the total revenue of the company.
Operator
Thank you, sir. We'll take the next question from Kunal Tokas. Please go ahead. Yes, Kunal.
Okay. So, first question is, what kind of shipping policy do you follow? Do you follow free on board or does the customer pay for changes in freight type?
You see, it depends upon customer to customer. The commercial terms are different with each of the customer. With some, we are having duty delivery paid, that is DDP. Okay. Some are X-Works, some are FOB, and some are free on board. So, there are different terms and conditions with each of the customers.
Depending on what their requirement is.
It's not specific or as a policy. We don't have any particular terms that we are forcing on the customer. It depends.
Depends on the product, their complexity, what their needs are. So, some customers we maintain warehouse near their factory even in the US or Europe. Some we do Xbox Mumbai port. Some we do derelict shipping to the factory. So, there are different expectations of the customer and then we negotiate what will be feasible.
It differs from customer to customer.
Some we do repackaging that it goes to the warehouses, then they repack it according to how they want it in their factory. So, we work with third parties also. Third party warehouses, logistic systems, which are the customer's partners. So, there are different combinations what we do for our exports.
Okay, and these any increases in freight rates are passed on as well to customers the next time you negotiate the pricing.
You see, like I told you that so far as the recommended prices, if they go up, we are transferring that burden to the customer. When they are reduced for a particular period of a quarter, then we get a benefit out of that. That depends upon situation to situation and time to time.
So, it works with logistics also. It's similar with logistics also. Okay. Okay. That was my question. And the second was, are you seeing greater demand from clients in the USA to stock more finished products in your USA warehouse because of geopolitical conditions, freight rates, whatever, and that is affecting your working capital?
It is affecting, but how it is from before we, before the, when we do all the negotiation We already have a min-max level. So, we manage stock at their warehouse, how much shipment time is going to require. But like you said, because state of hummus and war, it's taking longer. So, sometimes air freight is required. So, it affects working capital a little bit. But as a precaution, already most US companies, they prefer to have three months of stock at their warehouse. So, that is already pre-planned and the cost, inventing carry cost and already So, it's not a big problem or a big challenge.
So, we have considered that into our pricing. Apart from that, we are availing packing credit limit from bankers, which is now available at a rate of 4.75% only. So, the debtor ceiling because at the same time, our working capital requirements are being fulfilled through this, so that we get a working capital loan at a very lower rate, So, considering the subvention given by the government as well of 2.75%. So, that is always beneficial for us.
Our customers also are all marquee A-list customers and we are supplying critical products. So, if our products don't reach the line, their line is shut down. So, it's a big cost for them also. So, they are very cooperative and, you know, we work together on all this. So, it's not like, if our products don't reach them, it's a bigger loss for them because they are overheads and they are So, if
you go through the financials of the company, last year, whatever the interest cost or borrowing cost was there, in spite of increase by 100% turnover of 55% for quarter to quarter, more or less, it has remained the constant.
30% growth last quarter, our inventory carrying cost or total inventory, working capital has
And just a last question on growth that you have projected 30% this year and possibly next year and the year after GARC as well. What could the volume growth be here as opposed from growth from price realizations or inflation past?
No, no. That is, we are just talking about, you see, that is the increased business. That is additional business from which we will be getting the growth of 30% plus. Maybe some part of it will be, maybe some part of it will be due to revision in the race also, but whatever growth that we are expecting out of 30%, you can say amount, almost a 20 plus percent will come through virgin growth.
Virgin growth. Wonderful, sir.
Yes, sir. Thank you very much for answering my questions and have a good day. Thank you.
Operator
Thank you. Sir, we'll take the last question from Mr. Bhargav Gudhadev. Please go ahead.
Yes, sir. So, my question is on the working capital. So, if you look at your operating cash flow last year, I think in the first half, you have done what you did last year in terms of operating cash flow. So, that's a phenomenal achievement given the circumstances. So, is this improvement in working capital sustainable? Because I see that your inventory on the balance sheet date hasn't increased in line with revenues. So, if you can guide in terms of how sustainable this improvement in working capital is.
You see, basically, what we have done in the past, for more than six months, we have not availed any term loan. Whatever CAPEX that we are doing, that is out of internal accruals, which are definitely having the impact on the cash accruals, okay? So, in spite of increasing the profits as well, the cash margins have not increased to that extent, just because we are financing our capex through our internal accounts.
No, sir, I was referring to the working capital. So, if you look at your operating cash flow, operating cash flow is closer to about 20 crores versus 23 crores for the full year last year. So, in the first half, you've done almost what you did last year. And this is primarily led by a reduction in inventory days. So, is this sustainable? Because your export is actually rising at one end and your inventory days are actually falling. So, it's basically just wanted to understand that kind of, it's a very unique combination.
See, what has happened actually, you can see that basically to start with, we have built up our inventories with the customers in USA, so which was to the extent of three months. Once we had built up and then the rotation of working capital, that is the release, payments released by then, that has now settled. So, now henceforth, year after, it will be Similar,
so when you start new business, the customer has requirement of having this stock at our end, also at the warehouse in US. So last six months, one year, we were trying to get this everything built up. So new development was happening, new plants. So during shifting, we wanted to have spare inventory like our end. So our partners or suppliers are not, customers are not affected. So now how the business is getting realized, sales is increasing. This cycle is getting more, you know, a better cycle is getting fixed depending on the requirement.
So there will not be much increase in the inventory, maybe a little more in relation to the total volume.
It will be next, maybe next quarter, depending how the seal increases, it might increase to what it is now, but it won't be significant increase. That will have direct relation with the volume. And with few customers, we have some commitments, you know, because their lines or the part is more critical, where there's no chance from us to fail. Sometimes, you know, it can happen. Technical side, you all look at the financial side. So, we also promise because it's a new business, new plant in US. So, we don't want to have a bad image because, you know, in the first six months of supply, if there's some issue, they might like, you know, have a bad opinion about men and bearings or men and alcohol. So, where to build up the inventory? We are trying to keep little bit extra inventory so customers don't get a bad image or, you know.
But since we already built that inventory what is required and now there is no possibility. And we can maintain that and sustain that in future as well.
That was the step we have taken. So there is no issue at delivery point of view or a quality point of view. Otherwise, what happens for US if there is an issue like this, we have to air freight it. So air freight costs you more than the actual product price. Sometimes the customer bears it for their requirement. But if it's our issue that we have failed at delivery, then we have to bear it. So that cost is significantly higher and we don't We don't want to bear that. So, sometimes for some customers, some specific parts, we follow this practice also.
Since we have already built that inventory, it will be sustained in the future.
Great, sir. Thank you very much and all the very best, sir.
Operator
Thank you. Thank you, sir. Thank you, sir. Sir, since that was the last question, would you like to give any closing comments?
So, thank you very much for the support that you have been extending to our company and we hope that you will have a word with all your inventory. We are very sure that we will take up with all investor community to see that what performance we are giving and what is the estimated production that we have given and we will try and see that we are sure that at any cost unless there is any Thank you very much for
Operator
Thank you, sir. Thank you to the management team and thank you to all the participants for joining on this call. This brings us to the end of this conference call. Thank you.
