Ladies and gentlemen, good day and welcome to Automotive Axles Q4 and FY 2024 Earnings Conference Call, hosted by Batlivala & Karani Securities India Private Limited. As a reminder, all participant lines will be in the listen-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 the star then zero on a touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shailesh Raja from Batlivala & Karani Securities. Thank you, and over to you, sir.
Yeah, thanks, Steve. Good morning, and thanks to everyone who have logged in to Automotive Axles for Q4 and 12 Months FY 2024 Earnings Conference Call. Let me introduce you to the management participating with us today’s call. We have with us Mr. Muthukumar N, India Leader, Cummins- Meritor, Mr. Nagaraja, President and Whole-time Director, Automotive Axles, and Mr. Rangarajan, CFO, Automotive Axles Limited. Now, I’d like to turn the call to Mr. Muthu, sir, for the opening remarks followed with Q&A. Sir, you may begin now.
Thank you, Shailesh, and good morning, ladies and gentlemen. Thanks for taking time, and really appreciate you all for joining this investor call for Automotive Axles Limited. As you all know that Automotive Axles Limited is a joint venture with Kalyani and Meritor earlier, and now Cummins has acquired this company, and it has become a joint venture between Kalyani and Cummins- Meritor. As we said, I think, we have my team members, Nagaraja, who handle the entire operations space, and Mr. Rangarajan, who is our CFO.
I'm sure that yesterday we had a very good meeting, and you all know that even though the market is looking little down at this point of time, the indications is market is going to be quite good next year, at least flat for this year, and going forward, it is going to be good. We are going to talk to you about, and clarify all your questions that you have. I will give this to Mr. Rangarajan to explain the financials, followed by we will take Q&A session, and we, me and Nagaraja and Rangarajan, like to answer all your queries. Over to you, Rangarajan.
Thank you, Muthu. A very good morning to all of you. Welcome again for the quarterly and also the annual year-ended 2024, you know, earnings call. Overall, for the year, if you look at it, you know, market, you know, this year was close to about 420,000 vehicle level. There's a marginal recovery overall, compared to last year to the tune of 3%-4%, and, but, the larger growth is by and large is in the bus segment, mainly with our main customer, Ashok Leyland. Your company has continued to focus on, you know, all the revenue, you know, optimization with all our customers.
This year, we ended with a revenue of, you know, INR 2,244 or 2,245 crores, with an EBIT of 11.7% and with a PAT of, you know, 223, which is close to 10%. All of you know, in the earlier calls also, we have emphasized our focus is basically improving the revenue with the customers, cost optimization through our strategic initiatives and preserve cash. It's the main focus of our organization that is pursued this year. Though, as I said, the market has grown about close to 4% and we are marginally lower than the market growth, by and large, there are two reasons.
One is about the growth largely coming in the bus segment, one of our major customers, and more probably we can take it up during the Q&A. But also we have to accommodate the price commodity price adjustment with the customers, which is also pointing to close to about 0.5% for the financial year. In spite of that, our approach on the cost optimization and which has improved the overall margin, though by about 0.4%, though the revenue was lower by 0.3%-0.4%. So, during the year, the company has generated about close to INR 196 crores of cash, and we have no borrowings at this moment of time, and all the balance sheet parameters are quite strong. With this introduction, probably, you know, I may lead to the question and answer session.
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 one on the touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking their question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Hiranandani from SMIFS Limited. Please go ahead.
Yeah. Hi, good morning, team. My first question is basically, wanted to understand what is the exports growth in this quarter, on a QoQ basis, and how the brakes business performed in Q4 on a QoQ, and any gains in the market share in the brakes division?
Ranga, you can go ahead and see then, please. Hello, if you really see the export business overall for the year has you know grown on value terms close to about I don't know 4%-5%. And of course there's a little bit of dip in the brakes brakes business for Q4. So overall business you know it's purely based on the OE's requirements, so.
The exports on a, in Q4, is it grown on a QoQ basis?
Yes.
Okay. So, sir, my next question: basically, the MHCV production on a QoQ basis has increased by about 8%, and our key customer's volume has grown by 15% on a QoQ. And, but Automotive Axles revenue was just increased by 5.6%. So what is the reason for this?
Thank you for this, the question. I think if you look at the quarter growth, like what you have indicated, the commercial vehicle market has definitely grown up, and our key customer has grown. Unfortunately, the growth is more on the ICE segment and bus segment, where our presence is little less because of the competition. I think the team is developing a new product. And because of that segment where we are not present, which has substantially gone up in last quarter because of the government orders that has come from them, mainly from the STUs, we have lost little on that segment.
The teams have done a good job in terms of penetrating more in exports, defense and other businesses and aftermarket to compensate this the drop. Actually, I think that's the main reason. But if you look at the company revenue, it is 15% growth in volume, and I think it's more on value. Just want to say, so our key customers is on value, not on volume. We have also realized more in terms of revenue because of higher value-added products that the team has launched it. And by this year, the team is launching two new products. I think Nagaraj can touch about this, where the additional revenue is going to substantially go up, which is going to be used for above 49-ton vehicles for haulage or the new tippers that is going to get launched.
If that answers your basic question, I will leave it to Mr. Nagaraj to talk about the new product that is going to be launched to increase our revenue. Yes. Thank you, Muthu. So we are planning for, you know, two new axles, which will be allocated for 49-ton and above. Like what Muthu mentioned, this not only increases the value for us, but also it helps us in consolidating our share of business in the growing segment. Apart from that, we did talk about, you know, our strong presence in the bus axle. We are at this point of time mainly present in the 12 m buses.
So we have a new product coming in, which is optimized specifically for a nine-meter bus, which we'll be launching this year. Also, we are getting into launching a dia 325 mm and 360 mm brakes with one of our key OEM. All these product launches should help us to not only improve our product line, but also help us in growing the revenue. In future, whenever there is a bus segment growth is there, we should be able to actively participate in it and make the, you know, best advantage of it.
Yeah, so great to know about the new products lined up for you. So my next question basically is on, if you can, you know-
Hello? Hello, we can't hear you. Hello? Nagaraj, are you there? No.
Yes, sir, he's connected. I think there's a network issue from his end.
No worry. We'll wait.
Should we move on to the next question, sir?
Yeah, it'll be better.
Okay, sir. Ladies and gentlemen, if you wish to ask a question, you may press star and one at this time. The next question is from the line of Radha. Please go ahead.
Hi, sir. Good morning. Thank you for the opportunity. My first question was, in your current revenue, what is the contribution of bus segment and what is the contribution of LCV, ICV segment?
While we normally don't use the split up of segment-wide sales, but I can tell you one general thing. In terms of commercial vehicle, maybe in terms of, our presence is 100%. But if you look at bus, I'm talking in the terms of the models, our presence will be around 50%-58%. Nagaraj, please correct me if I'm wrong. But in terms of values and 9 m bus, our presence is less. Is that right, Nagaraj, or you want to add anything?
Yeah. Yeah. The segment we are introducing a new product, right, Nagaraj? Yes. It's a 9 m segment, which is a high-volume segment. High volume, low margin kind of a segment, and also it is little bit cyclical. It, like you mentioned in your opening remarks, it's based on the government orders. So that's where, you know, we are going to have, you know, introduce a new product so that we can take the best advantage of it.
So sorry, your voice was breaking. If I heard it correctly, you mentioned that you are present in 50%-55% of the models in the LCV, ICE segment of the industry. And in the bus, currently it is in 12 m, and you are entering into 9 m, which is more cyclical?
Yeah.
Okay, understood, sir. So secondly, you mentioned some two new products, product launches, the dia 325 and 360. So, how do you see your revenue mix change, product mix change because of these two launches in the next two to three years? And what could be the margin scenario because of changing product mix?
You know, sometimes it is probably difficult to answer it better. But what we are focusing on is, you know, our presence in all the segment, so that, you know, during the quarter or during the year, one particular segment grows, or another segment, you know, stagnates or degrows. We should be able to still protect our, you know, revenue and share of business. Just to give you in a kind of a rough numbers, with the addition of these new products, potentially we will be able to, you know, address another 5%-10% of the market, which currently we are not presenting, or those markets which are going to grow.
See, thank you, Nagaraj, for the clarification. Your question, specifically, we have a couple-
Sorry to interrupt, sir. Your voices are not clear. Could you please repeat?
Can you hear me now?
Yes, sir. Perfect.
Okay. Radha, thanks, Nagaraj, for the clarification. Radha, you asked the question, how do we share the, how much we are presenting in different segments. You know, what happens is, in the market, there is an annual situation of changing, depending on the government order, government bid, international export orders, and it keeps changing. Currently, if you look at overall, our presence in the commercial vehicle segment of 7.5 tons and above will be around 65%-70% of the last year's customer. What Nagaraj is trying to say is, in fact, in the smaller commercial vehicles, like, with those, By introducing this new product, what Nagaraj was saying, that on the 9 m buses, our coverage will go up by 8%-10%, which means we'll be going up to a range of about 75%-80%.
However, still there'll be some segments which we cannot be present. But we need to understand that we have, their percent is also going to be very less because we supply 100% in most of every commercial vehicle, three tons and above, and our presence is very, very strong there. So, just to make sure that when the market changes, we can model for the end customer, depending on the different situation, like government order or the construction equipment or infrastructure, we are trying to gear up to present a product in, across 100%. That's our wish. But in reality, what happens is we are not able to present 100% because of competitiveness, because of various things, and the team is working to launch a product. Every product that we launch should be competitive.
I think the team has identified a 9 in, 9 m bus product now, which is going to be competitive and going to become, bring the value for what we are looking at in this conference, at the same time, meet the customer's aspiration of reliability. So at this point in time, like what we said, we'll be touching up to 75%-80% now, and then further, we may have to go further to 100% at some point in time.
Sorry to interrupt, sir, but the current participant has been disconnected. We will move-
Oh.
-to the next question. It's on the line of Amit Hiranandani from SMIFS Limited. Please go ahead.
Yeah, sorry, my line earlier got dropped. Sir, my question is basically, can you just give me broad revenue breakup for axle, brakes, exports, and others? Ranga, I leave it to you to answer, Ranga. Yeah. Yeah. I mean, generally, we don't have the revenue breakdown, and, as we have mentioned in the previous calls also, and, yeah, but, definitely, the axles plays a significant portion of the total revenue size. Understood, sir. Sir, current capacity utilization for axles and brakes, and what would be your annual CapEx plan for the next two years?
Yeah, see, as we have mentioned in the earlier calls also, the investment basically, apart from the system CapEx, what we do, we're consciously working on improving our productivity as well as capacity as we introduce new products, as well as, you know, in terms of automating the plant towards efficiency and all the stuff. So, probably, these areas we are currently positioning towards the investment, the next two years, kind of about INR 50-60 crores level, but apart from system CapEx. Specific automation projects, new product development, and all that stuff. Understood.
Just to add to what Ranga has mentioned, we are really focusing on, you know, a lot of automation, digitization, so that we can not only meet the new product quality requirement, but also help us in optimizing our capacity utilization. Next two years, the investment will be coming in our housing line and gear manufacturing, and then overall assembly areas. Yeah. This, we are basically doing this to make sure that, you know, we are ready when the market, you know, demand goes up, and this investment- Thanks.
Great, sir. So also, we were supposed to come out with a midterm growth strategy, so any update on this front?
Yeah. Some of these new products, what we are already talking about, in fact, you know, last time, last call, Muthu did mention, 16% of our last year's revenue has come from the new products. And as we mentioned, during this call, we are introducing four more new products. So, this is a plan what we are having to, you know, not only probably try to be present in, you know, all 7.5 and above, in all the segments, but again, you know, we are also kind of looking at how we can bring in the value for our end customers.
So there are a lot of new products that is being developed, in terms of, you know, noise-sensitive gearing, say, you know, Quiet Ride Gearing for bus and coaches, and, the largest axle, which is called, MS185, with a 500, crown wheel diameter, for a 49-ton and above. So those should, really help us, not only in the domestic market, but also make us competitive for the potential export opportunities as and when, both, North America and the European markets, you know, come back.
Great, sir. Sir, my next question is basically, annually, if we look at, we have already crossed the previous peak window in FY 2024, and despite increase in the exports of heavy defense business, our annual EBITDA margin, excluding other income, is hovering around 11% level. The earlier peak margin of around 12% was achieved at a lower top line in FY19. So what is the reason for this, and what steps the team is taking to cross its previous peak level margin of 12%?
I will answer your question on the volume later. Then I think Ranga is the right person to answer on the profitability. If you look at the previous peak volume-
Sorry to interrupt, sir. Your voice is coming a little muffled, sir.
Can you, can you hear me now?
Yeah.
Hear me?
Yes, sir. It's working.
Hello. Okay. If you look at our volumes of FY 2019, which was the previous peak, the industry did about 476K, and we did about 8.7 million tons, because it's not only the number of vehicles, but also the capacity of the tonnage that we have produced. Last year, the year which is passed away, FY 2024, we ended with 423K, which is about 9.2 million tons. So in fact, in looking at the number of vehicles, we are 10% less when compared to there, but we are slightly above in terms of tonnage. So I just wanted to bring it to the fact that we have not come. So at that time, our revenue was about INR 1,700 crores or INR 1,800 crores.
Now, it is about INR 2,300 crore, which means we have grown in other segments. Even though we have taken the commodity, commodity went up, came down, and of course, it has only about 2% impact, not more than that between that time and now. So that is the reason from the market volume and the tonnage-wise. Okay, having said that, the company continues to improve the cost reduction. We have improved the reliability of product, and we have also enhanced the value of the product, whereby our per axle realization has gone up. But of course, the plan did a wonderful job in terms of cutting down the cost. I think COVID gave us a lot of insights, post 2019 peak, to find out how we can enhance our operational capability.
Those things have really helped us to grow and almost reach the same margin, even though the volumes is quite less on this particular segment. Of course, we spend a lot of money on the CapEx on the defense, but the real realization of defense has still not started. The government is giving orders little here and there, but it's just a long-term investment. With that, I leave it to Ranga to answer specifically on the profitability comparison between 2019 and now. Yeah. Thank you, Muthu. I just wanted to take a point. I mean, if you really see, 2018-2019 was a peak, peak in terms of you know the market. That year, we did about INR 1,940 crores, if my memory serves right, okay?
As of today, if you look at it, our revenue is close to about INR 2,100-2,200 crore now. So, there are between 2018, 2019 to now, which is more than about the commodities change is quite huge and in terms of... So, that is one of the significant aspect, which is value terms, which is, you know, impact, which has got an impact on the revenue perspective. And, that's one of the reasons, probably, you know, it, it is showing up or showing low. Okay? The last two years, you see, there are significant, you know, commodity reductions have happened. In 2018, 2019 to close to 2020, 2021, it's only an increase.
After the last two years, this commodity is in the declining stage. So, as Muthu said, the revenue or the overall market is down by about 10%-12% compared to 2018, 2019 peak. Still, we have not reached to that. Maybe broadly in terms of tonnage, we may be closer to that. But, so though the per axle revenue is improved, but really, realistically, to look at it, the overall revenue is still much lower than the 2018, 2019 volume. If market come closer to that, you can really see the same 1,900 level with our market presence, with all customers, with all initiatives we have taken, with all the customers in terms of improving the share our business with them.
The introduction of new product gaps what you have and whatever new products we introduced recently, we definitely will be not less than another about 400-500 crores will be added as compared to the 2018, 2019 level. So very comfortably, we'll be reaching around INR 2,500-2,600 crores with the current presence if the market reaches to 18, 19. So, that's a perspective all of you understand, because one thing we really see a value comparison, but in terms of the commodities plays a significant role.
Today we're able to show off the revenue up is only because of our active presence with our customers in terms of the share that comes through purely based on our delivery and quality performance, and also, and our new product introduction to fill the gaps on the customer requirements.
So, sir-
As for the margin perspective, you know, perspective concerned, though the market still not reached the 2018, 2019 level, you touched the point about 12%. Percentage is really one piece of it. If you really look at the absolute value, we are really created the absolute value in terms of, you know, the real measurement, we look at it with, you know, EPS, and EPS has significantly grown compared to 2018, 2019 to now.
So, sir, are you indicating more juice left on the volumes and margin side for Automotive Axles?
Hello. Margin by default will come through our initiatives. There's no doubt about our percent. I told you very clearly, we are really, you know, work on the initiatives of, we have our internal Mission 25 initiatives, and we really drive, our performance on the costs, and year on year, especially on the material and conversion costs. We have taken a significant efforts in terms of bringing the value, in terms of the material cost optimization, as well as the conversion cost optimization. That effort will continue. Year on year, we stretch ourselves to find new avenues to bring the value to, you know, value to the, you know, financials. And, definitely, juice left out, our pursuit is there to improve the margins. As market grows with the current efficiency, we will be doing much better.
That's the point I'm trying to drive here. Mm-hmm. And ability, we can take it, with confidence into the market, where it has to go in, you would think. I think whatever the indication to be given in terms of our top line and bottom line will certainly happen. But the team is working hard to make sure even before there's such a volume into the market, how we can manage our profitability. I think that's the challenge the team is working on.
Great, great to hear this. So just last two book-
Amit, just, sorry to interrupt. Just to give a data for your confirmation, to see our EPS in 2018, 2019, the peak volume is at INR 80. You know, with a 10%-12% reduction, our EPS is about INR 109 per share. So this is one of the parameters internally we see, are we, are we really increasing the value per share? So just an indication to you. That's it. Hello, Amit?
Sorry, sorry. Thank you, sir, for this answer, detailed answer. Sir, are you still facing any commodity-
Sorry to interrupt, Mr. Amit. Could you please stay in the question queue-
Yes, sir.
For further questions? Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is in the line of Pratik Kothari from Unique PMS. Please go ahead.
Hi, good morning, and thank you, everyone. So just one question. It's been about two years since Cummins acquired Meritor also. And we had highlighted in the past about kind of getting some new products, new orders from this. If you can highlight anything which has happened in the past six, nine, 10 months.
So, exactly, with this August, it is going to be two years. I think 2nd of August is what we announced the actual acquisition, even though we have communicated about February 2022. On 22nd of February 2022, we announced it, which is a year plus. A good amount of work is happening. You all talked about penetrating into another OEM, where Cummins is strongly present. And at the end of the day, when company has a capacity in their own plant, recreating the traction with our-
Sorry to interrupt, sir. The voice is coming muffled now.
Oh, again? So the team is working with the customer and along with the Cummins support to see that how we can penetrate into other OEMs, where Automotive actually does not have good share today. So we are trying to work with the combination to make sure that how we can get into fuel efficiency. Good amount of activities have been done in the last one year, and we are coming into some stages, but we are not in a position to announce anything, but yes, we made a big move at this point of time.
But I think this acquisition has bringing a lot of synergy. First and foremost, we're bringing in a lot of good systems into the company in terms of the talent management, in terms of the launches, and we are improving with the synergy coming in between both the best practices, it is breaking into a good to great company. So we are working on this, but at this point in time, we are not in a position to announce that we have made this business, then we have made this. But definitely, a lot amount of progress is happening both in the off-highway business as well as in the regular business.
Sorry, so this, you highlighted it, I mean, it is helping us penetrating other OEMs. So this is largely off-highway that the focus is or even TV is globally?
No, even in on-highway, sir. Even in on-highway, where we are not present, like that amount is one of the questions everyone is used to ask. Cummins has a very, very good leverage with them, so we are working. So we as, Cummins- Meritor is working with all the customers, automotive, working with all the customers to see where we can penetrate. I think the team is working extensively, work on working with all the new vehicles that are coming up. So everywhere the team is making sure that we try to penetrate. A lot of new players are coming in the EV segment, where it is not an e-axle segment, but remote mounted segment, where also these companies continue to win the businesses to, start supplying for them.
Right. Very much. Sir, earlier we had an aspiration that, once obviously the volumes come back, once we have scaled, I mean, we should be able to see some EBIT margins. I mean, does that aspiration still stay given the current context and things that you are putting?
Ranga, over to you. No, I couldn't hear you clearly, sir. Can you repeat again?
So, two, three years back, we had an aspiration that, once the volume comes back and we are at scale, we should be seeing some EBIT margin, 13%-15%. Does that still hold?
Absolutely. And I we have already mentioned that, you know, you know, our continuous pursuit of every initiative what we are taking is about is to be present in the market and dominant player in the market and keep the customers happy. And apparently, you know, see how to bring the value to the organization. That is a continuous focus, it still holds good, and there is absolutely no doubt about it. That's the reason Nagaraj was explaining earlier, the automation process is more make the operations more efficient and and more quicker deliveries can be made to the customers and all that stuff. Definitely, we we are committed to grow in terms of the bottom line, and every initiative is taken is towards that only, sir.
As you said, market, it goes up, definitely margin will much go much higher than what we are having it today, but whether it's 13 or 14 depends on the product mix and various things, but definitely we will see a significant growth in the margins.
Thanks. Thank you and all the best, sir.
Thank you.
Thank you. The next question is from the line of Deep Shah from YES Securities. Please go ahead.
Yeah. Hi, thank you. So, couple of clarifications since voice was not very clear. So in the opening remarks, you had said a price hike of about 0.5% with the end customers. So can you elaborate, is this over and above the RM inflation pass-through or what it is exactly?
No, no, no, this is not over and above. I said the commodity settlement-
Okay.
Which has lowered the revenue by 0.5%, which is a commodity which you accommodated in the year 2023, 2024 actually. There is nothing impacted to the P&L. Whatever the customer settlement, the same with supplier settlement, so your pay, P&L is well protected.
Okay. Okay, okay, that's one. And the second, the new launches, especially on the axle sides that you just mentioned, are those for FY 2025 or, or it will come in FY 2026 also?
Yeah. So yeah, these are all the ones. In fact, as we speak, we are launching these products. So like, we keep on, you know, iterating that what Automotive Axles, the value what it brings in is, you know, along with our partners, Cummins- Meritor, we develop the product and then be ready well ahead of time, even before the market is ready for it. So our MS185 axle is already launched with one of the customers. It's going pretty well with a 55-ton tractor, and the product has been updated and then being launched with our key customers. So that is going to happen this year.
Both the bus axle and our largest axle, MS185, and then the brakes, all of them will be launched this year, and we'll be realizing some revenue out of these new product launches.
Perfect. Perfect. And, sir, I missed the number you had shared. So the share of revenues from the new products, was it about 16 or 60? Sorry, I couldn't get it.
You know, I again, it is a little bit of challenge, right? It's a, it's a, so we also depends on what customers are, our OEs are, realizing from the market. So our focus is, you know, from somewhere around 65% where we are present, we'll take it all the way up to 80%-80% with the launch of these products. So that coverage we are going to have, for all the 7.5-ton and above trucks, and tractors, you know, applicable in the market.
Got it. Got it. And sir, last question, on the industry outlook itself. So, when we hear the commentary of, let's say, the OEMs themselves, let's say Tata Motors and Ashok Leyland both, they both have a divergent view in terms of FY 2025 output, especially the MHCV segment. While one is saying, kind of growth, and the other is saying kind of a muted and maybe a mixed commentary, one from the other engineering. So what is, I mean, as per your view, what is the overall outlook for FY 2025 in terms of the volumes that the industry can achieve? Because in last call you had mentioned, it was something close to the flattish, volumes for FY 2025, if I'm not wrong. So what is that today?
You are right. When compared to FY 2024 to 2025, we are projecting flat or about 4%-5% less. If you see the start of this quarter, the first quarter, is not going that good, and most of the activities needs to be picked up. And we are talking about the reasons could be many. We are talking about elections, after election good start. We are also likely to get a average or above average rainfall, which means we don't see any interference on that side. The infrastructure push from the government continues to be good. That's what the government is committing, but we need to wait for the new government to come back. We, as a component supplier, tier one, if you look at it, we're going with the OEMs preparations.
The OEMs are something, even though they are predicting in the, in the original target is less, but they're talking about a net present target that, yes, we will grow if we want to grow and expand the margin. We as a company, like what Nagaraj presented, the market could be -5%, or it can even go up to +7% or something, because even though we are losing the first quarter, so the next three quarters then ramp up. One good thing is the industry inventory has come down substantially in the last quarter. Even though the last quarter production is less, he said this, the inventory has come from pipeline inventory. I'm sure that this year, we have a possibility of, let's say, positive outlook, it will be single digits, growth would be still there.
The company internally we are preparing for whatever the number changes from the customer, whether it goes up or comes down, the organization needs to run efficiently and convert it very positively to make sure that every bit of opportunity that we get, we should convert into the top line. Every opportunity that we have to cut down the cost, we should add it to the bottom line. I think that's the team in the Automotive Axles team continues to work. Industry outlook at this point in time, looking at the industry inventory, the government spend, the push for passenger buses, everything, if you look at it, I'm positive about it.
All right. Yeah. Thanks a lot for the answers. Thank you.
Thank you. Ladies and gentlemen, due to time constraint, this will be our last question for today's call. It's on the line of Chirag Jain from Emkay Global. Please go ahead.
Good morning, sir. Thanks for the opportunity. Just couple of clarification. Do we supply to the defense space, from, let's say, this entity?
Yes, we supply to the defense entity, not directly to the defense. I think, not directly to the defense. We used to sell it to VFJ, but now VFJ has started into making axle. They are buying, they are waiting from Tata and Ashok Leyland. So our suppliers are going to assemble them or to other customers through the defense. But we are supplying defense actually from this entity. Go ahead.
Okay. In terms of future, let's say, product pipeline, let's say, e-axle, would that be part of this listed entity or could be potentially part of, let's say, the part of the group, but may not be in this company? Any thoughts on that?
Yeah, at this point in time, e-axle, at this, the segment... Hello?
Sorry to interrupt, sir, but the line for Mr. Muthukumar has been,
Yeah.
- disconnected.
Okay. Yeah. So, the thing is, you know, we still have a capacity to, you know, manufacture some of the key components required for the e-axle. So at this point of time, e-axle, you know, it is basically a part of Cummins -Meritor, but we supply then the parts wherever it is required. And the volumes at this point of time, it is still too early for us to tell, you know, how this overall e-axle business is going to develop. Having said that, we are already supplying to key customers for the EV or battery vehicles. Our, you know, special axle, which is being applied on that.
Most of the OEMs at this point of time, preferring to, you know, remote mount type design, which is, cost effective at this point of time. So, just to confirm that, you know, e-axle still requires quite a lot of, components which we are producing, which we have a capacity for that. I'm sure that we will be a part of, you know, any future e-axle production in one way or the other.
Okay, thank you so much. That's it from my side.
Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to Mr. Shailesh Raja, for closing comments.
Thank you all for attending this session. We especially thank the Automotive Axles team for their time. Muthu, sir, would you like to make any comments?
Yeah. Thank you, Shailesh. Once again, ladies and gentlemen, thank you very much for your time. Let's assume that is on top of, I think whatever we spoke, I also wanted to we congratulate your team. They have got the JIPM and TPM award last year. Nagaraj and team did a wonderful job of last three, four years on the journey of TPM, and they've been now awarded by the JIPM and TPM. I think the team went to Japan, got the award. This gives the confidence on the ability of the flexibility that we have created in the plant to increase customer varying demands.
The team is continuing to put the efforts in terms of new product launch, in terms of improving the reliability, at the same time increasing the flexibility in the plant to make sure that multiple models and deliver it at the shortest time. We'll continue to put the effort and looking forward to, my team is there in the next two days in the conference in Mumbai. I think it'll be a very good person to meet you, talk to you, and give you all their commitment for what is to come. But let's assume that the organization on will took everything to make sure that the value, value to be on the table. Once again, thank you very much for taking time to join today. Thanks Nagaraja and Rangarajan for taking the call.
Thanks, Shailesh, for coordinating this, and really appreciate everyone of you. Thank you very much.
Thank you, sir.
Thank you.
Thank you very much.
Thank you. Thank you very much.
Thank you. Bye.
On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you. Thank you.