Managing Director from TVS Motor Company. Please go ahead.
Thank you. So good afternoon, everybody, this is Manoj Kolhatkar, and along with me, I have Rishi Luharuka, our CFO, and Nilesh Jain, our company secretary, as well as our advisors, SGA, joining on this call. So I hope you're all doing well, and you have had a chance to go through the results that we published on our board meeting on April 17, August. And I'll just give a brief overview of the company's operations and take you along the slides of the presentation. So starting with, you know, slide number 5, which is the financial highlights slide. I'll just read the title so that, you know, we are all on the same page. This is financial highlights for the Q1 , so April to June, 2023.
We had a revenue of INR 805 crore, which is the highest ever in a quarter that we recorded. This was, of course, on the back of some good overall automotive industry volumes. Also, glad to share that we did an EBITDA of 8.6%. We'll come to that later, but this again, you know, we have driven the EBITDA upwards as we have been discussing on several calls in the past. Obviously, the pre-details has the same impact of, I think, 2 EBITDA. So the quarter-on-year, if you see, the revenue grew by 11%, and the EBITDA grew by over 50%.
So that, that is the kind of, you know, cost control that we have been able to do, mainly through, as we have discussed on several calls a year, our 490 program, which is a cost plus 90 days, program. So in this, just to talk on the different segments, the passenger car segment, which has, 9% year-on-year increase in wholesale during the Q1 . Quarters continues to see strong order book and inquiries, improvements due to, you know, obviously, the scene in the semiconductor side as well, though not entirely gone away, but, there's a clear improvement. So that's why, you know, the volumes are more predictable as well, in the passenger car segment. And of course, the introduction of, many new models that we are seeing.
Further, due to a favorable monsoon conditions, still so far, I understand that, you know, this last week has been a little low in terms of monsoons, but there's still time to go. But overall, this has increased the farm income and rural demand for PE sales has also increased noticeably. So in the commercial vehicle segment, sales in commercial vehicle actually fell 2 to 3% in the quarter. This could be attributed to, you know, many people doing a pre-buy because, in the month of April, we all know that, you know, we had to implement the BS6 Phase 2 regulations and the OBD2. So both the two-wheelers and the passenger cars were smaller extent because they were already kind of geared up for OBD2, On-Board Diagnostics 2.
But commercially, it did have an impact, so there was a kind of pre-buy that happened in the previous quarter. That's why we are seeing a little bit dip in this quarter. But behind this, the commercial vehicle remains optimistic, with growth expected to continue. This is bolstered by the ongoing infrastructure development in the country and robust economic activity. Further advances in last mile connectivity and improved e-commerce are expected to strengthen the commercial vehicle supporting future demand. This, we are clearly seeing, you know, more demand in the higher tonnage vehicles, and on the other side, the smaller commercial vehicles due to, you know, mainly last mile connectivity or e-commerce, as you know. Our two-wheeler sales increased by 11% in Q1, compared to the same quarter last year. That is some good news, of course.
Although the sales are nowhere near what we did, you know, in 2018, 2019, or, or let's say the first year. Oh, yeah, before the best year, 2018, 2019. But there are indications of a resurgence in rural demand, created by the availability of more accessible financing options, introduction of new vehicles, and also all the tried and tested high engines to some extent being digested by the market. And we are also seeing a very good growth, particularly in the premium category, and also a robust replacement demand. A key catalyst driving recent momentum in EV was the FAME subsidy. We all know how this resulted in a huge surge, particularly up to the month of May. And in June, we saw the subsidy being taken away, obviously, in terms of e-two-wheelers, or electric two-wheelers. This definitely did impact the industry.
You know, the volumes came down by around just 50%. Of course, May again, here again, you know, May was a pre-buy slide, so people did buy over a lack of two-wheelers. But in June and July, the volumes have dropped to, you know, almost 50,000. We have to see how this pans out. But yes, the OEMs are definitely taking you know this this challenge and introducing newer models which are more cost efficient. We have seen some of those launches already. Three-wheeler has increased tremendously due to opening up of the entire economy, opening of the country, if you're asking openings of up in our own minds to share public transport. So we are seeing 89% increase in three-wheelers.
In Q1, this segment had its third highest rates, because again, mainly the short distance industry, which you all know. And the electric mobility in this space, again, has seen a great traction, and that continues to grow as was seen even last year. So with the new launches plan, we are seeing strong growth in five segments. Especially while, you know, there's lot, lot on EV, rightly so, but even there are some good, high products being introduced, we are really well positioned to meet the rising demand for all these products. Our R&D investment prioritizes new products and portfolio expansion. We are committed to increase market share to gain new customers, I'll definitely be sharing in the couple of slides.
Our customer satisfaction and adapting, adaptability continue to drive our outperformance in the auto industry. Having said, given this brief backdrop of, you know, the industry, I'll get to the presentation to slide number 6. Title: Financial Highlights. The revenue, as already mentioned, grew by 11%, year-on-year, and even on the quarter-to-quarter, it grew by almost 10%. EBITDA grew by 35.7%, so almost 36%, on a year-on-year basis. And, if you see on a quarter-to-quarter, it grew by 32%. So balance sheet position also, you can see we have net cash of INR 323 crores. And CapEx, which we included, was almost INR 14 crores, mainly towards R&D investments and some capacity increases.
I mean, this is, this is the main factors that we include. Also, for some technology improvements that we did in our office, like, you know, installing or increasing our robotization in, in one of our plants. Coming to slide number 7, which is again, the track record, it's pretty much the same figures in a different format, so I'll not spend time on that. Slide number 8 is the quarterly performance trend. So you can see the margin uptick in the last, you know, two-one data point. And ROC also on an, on an annualized basis, then the, is, you know, it's as high as 40% currently. Coming to slide 9, again, it's the P&L statement. So we have already discussed that. I will move your trend charts on slide number 10, which are key ratios.
Slide 10 is again, 10 and 11 are the key ratios, so I'll skip that as well. But coming to slide number 12, which shows the revenue mix. So clearly, you know, we have seen improvement in the passenger car portfolio, so it is 1.4%, 361% and aftermarket is 13%. Which is good news, is this balances the portfolio a bit better. This is mainly due to, you know, many of our passenger car launches now seeing production. So like we have seen the Maruti Jimny, we've seen the... of course, the earlier Alto, the new Alto of Maruti, then we have seen also, you know, the Mahindra models doing very well and with a good waiting list even now as we speak.
So this has really helped us improve our passenger car share in the portfolio mix. In terms of channel mix, it's, I mean, of course, OE is 83%. Aftermarket did improve. I think we are pushing simultaneously both the core products, as well as, we have tried to put some energy into, pushing our tire and wheel space, which are mainly two-wheel and three-wheel segment. So that overall, have reasonably well, and exports continue at 2%. Coming to slides 13 and 14 is mainly update on cash flows. We already discussed that. Now, I'll skip the earlier slides. I'll come to slide number 20. Our mission and the vision remains the same of being the global top five.
Now, coming to slide 20, which talks about the performance segment, right? So the fourth segment, I'll brief you about is the two-wheeler and three-wheeler segment. So here we are seeing a 16%, which is 16% of total sale, and 32% market share is what we command now. So again, you know, many new launches and, we are, we continue to get into the city business pipeline going forward. EV, I'll come to that later, but, you know, you saw the latest launch yesterday made by Ola, so all I'm happy to share that all the models shown, including the motorcycle, is with YT. So coming to slide 21, which is the story on EV. We are seeing 73% share of business in EV two-wheelers and three-wheelers, of course.
We will also be continuing to supply to the top leaders in the segment, Mahindra, Bajaj and Kinetic Green. And in two-wheelers, we are there on Ola, Ather, Ampere, TVS, Okinawa, and Simple Energy as well. This, this while we have seen several months, which are low, however, Ola business is strong, and we continue to see good, good pull by the customers. And the new models which are still one model being launched at designated power. So we are seeing a, you know, a lot of, lot of push and lot, and a lot of pull coming from the customer on this front. Slide 22 is on the new product that we introduced. This is, I had said last time that this is the, you know, current scope, the e-bicycles, which are, you know, a huge trend in, particularly Europe.
This is a highly environmentally conscious, and this also actually offers a very good way of transport from it, especially if your infrastructure is safe and good, which is what we see in Europe. So there's a tremendous demand of this segment. We had exported our first, which was done along with Hero Cycles, so under the name of Lectro. So they had exported the first 1,000 pieces, and the feedback has been good. So far, the feedback has been good. There is a feedback on, you know, some weight reduction that we have to do, which we're working on, and we will probably look at, you know, again, taking this and trying to get more customers in, at least get some orders in the next quarter.
We're also talking to some Indian key bicycle manufacturers, while this is mainly export focused. But we are also looking at, you know, building our business within India, or at least have Indian customers also buy these products from us, now that we make this product. Coming to slide 23, it's been partner with us. I already shared that 24% market share is what we have gained now. So Maruti Suzuki, Jimny, which again has had a good response. And now we are happy to share that we are also on an E... We already were on the XUV of Mahindra, which did not do very well, but we are now on the Stellantis eC3. This is the second electric, you know, partner car that we have got in our portfolio now.
In terms of future developments, we have the new platform of Volkswagen. Currently, what we are seeing is the Volkswagen Virtus, Kushaq, Virtus Taigun and the Škoda Kushaq and Slavia. So these first volumes are now doing very well and the entire business is with Gabriel. And we also already got the business from a new platform, which is MQB A0 IN. Now coming to the slide 24, you can see the pictures of all the SUVs that, you know, Gabriel is supplying to. And SUV is the growth story, as you all know, over 50% sales in the car manufacturing segment is actually SUVs, and we are well entrenched there.
So you can see the Volkswagen, Škoda, the Toyota Hyryder and the Suzuki Grand Vitara, the Suzuki Brezza, the Mahindra XUV300, Jimny, and of course, you know, the, the, what you call the workhorse, Mahindra Bolero. So all these continue to be the portfolio from, from serviced by Gabriel. So it is certainly a strong story. Coming to slide 25, commercial vehicles. This market continues to be almost 90%. Our business pattern also is good. Our story with DAF on exports is extremely well. As I shared last time, I'm not sure I shared actually, but we got the quality award second year in a row. They have a 10-year award, the Qatar world, and we have been recognized for that. So that is opening up new doors for us, I think, for sure, in the Qatar world.
But, you know, it's been a very good success story as far as DAF is concerned. And now we are working on some, you know, as the Indian CV makers also move or evolve towards higher tonnage vehicles with better comfort, we are also seeing a new requirement for high damping shock dampers, which we are already supplying to that from Shara Motorcycle, and we are currently in advanced discussions to close this business order as well. Slide 26 is on railways. We are, this is a very small portion, but again, we are proud that we are the only Indian supplier which has been approved for Vande Bharat. We have also added electric locomotive to our portfolio.
So we are there on every product that Indian Railways has, from LHB coaches to Shatabdi, Duronto, Vande Bharat, Train 18, and the locomotives. We are there on the entire aspect, and we are also exploring now, as we speak, some opportunities for exports. Well, we have to see how this pans out, but we definitely have to maintain focused efforts towards exploring markets overseas, for railways. Slide 27 is aftermarket, which has been inching up in terms of the overall size. So we are at 13% of the total sales, for this quarter. So, you know, we have been pushing this in B2C platform. We're adding new products as electric vehicles, you know, put on the tires, tires and tubes, which, I mean, is doing well.
We are also looking at opening up some more new geographies in, particularly in the LATAM region, Latin America, region, and let's see how that goes. But, aftermarket continues to be a strong pillar of our overall sales. Slide 29 is on our new company, a new JV, which we started with TA, as we did mention last time, after our, you know, call for the sun roofs. So in Inalfa Sunroof, the, I'll come to the picture, but plant is almost ready. The demand is very strong from the customers. We have already met, I had already shared that we have got the order for Hyundai and Kia, but we already met, you know, Mahindra, Tata, Maruti Suzuki, Renault, and MG. We've had all the customers, and there's a very, very high level of interest.
We had tech shows in Mahindra as well as Maruti recently at the group level, where we had demonstrated this product as well. So a lot of interest that we are seeing from customers on the sunroof, because obviously, the demand for sunroofs, panoramic sunroofs in every SUV is almost nearing, you know, 70 to 80%. In some models, in fact, I mean, they have been saying that customers are wanting 100% sunroofs. So really a very, very good product to me. And now we are focusing on getting the plant started. The machines will start arriving in this in the month of September. They've already been dispatched. So we'll see the plant actually setting up in the next month, and starting of the trial also should happen...
from the end of September lines, and some production we see, and surely trial production, of course, in the month of October itself. Just the pictures of the plant, you should see, you know, 170,000 sq ft facility in the Oragadam area of Chennai, which is close to Mumbai. So you can see it's practically ready, and I'm ready to receive the machine, the machinery line and the machine that will be coming at the end of, at the beginning of end of this month and beginning of next month. Also, you know, one more important milestone that we had was opening up of the Ghent European Engineering Center. This we have been working for some time now.
As you know, we have already inducted the CPO, Mr. Henri Group, who's from Belgium, an expert in suspension, especially in active suspension, over 30 years, actually the CPO, and we have been working with him to open up a European tech center. Tremendous confidence exists in this region and also in Europe overall, because the customers, you know, are demanding these kind of products more and more in that region. So we have opened this up near Brussels in the city of Ghent, where there was a very close to the earlier port plant. In fact, it is very close to the proving grounds, so that also helps us in doing our trials very quickly. You can see the pictures of the...
This is the office that you see on the left, is the picture of the actual office that we have currently entered, and we'll be moving to a workshop in the same building. This is the actual picture of the building. This is not a rendering, this is the actual picture. With the blue circle you can see, that is where we'll have the factory. Not factory, it's a workshop. It's called factory, in you know, in something to do with the communication, but it's not a factory, it's going to be a workshop. So it will house our office, our engineers, and also our tech equipment that, you know, the heavy force to lift the car and fit our suspension system.
So from here, we intend to clearly go for the best product in suspension. So not only in active, but also, I mean, in active suspension, but also in passive suspension. We are working on next generation evolving technology in close collaboration with global experts in this area. It will be a kind of a, you know, cooperation of this, you know, new generation valving technology that helps us be the best in the field. This is a picture of our tech center in Chakan. This is fully functional. You can see absolutely state-of-the-art tech center. And happy to share that this has been rated platinum as far as the green building is concerned.
So we have a complete solar, solar panels on top, which, you know, everything about this building, we have ensured that this meets the platinum requirements of, you know, a green building company. And this is the way going forward, we had already mentioned about Anand plants. All our new plants or offices that we come up, we have, you know, decided that we will go for a green building certification. Our Anand plant is already at a silver. There's a brownfield plant, which we got a silver rating, and here we got a platinum rating. So this is our focus on ESG. As you all know, this is a very, very important part of Gabriel and as well as Anand Group. We have a common mission to be carbon and water neutral by 2025, with zero waste to landfill.
I'm happy to share again that five of our locations out of seven are already zero waste to landfill, and we are doing well on carbon and water neutrality as well. With renewable energy being almost 20% of our total energy consumption. In this annual report, we of course have the BRSR report, which will be, which we already addressed. I'm sure you must have had a chance to go through our annual report, as well as, you know, the BRSR report. So that's, that's very quickly, what I have to share as far as our, you know, presentation is concerned. And now I would definitely be keen to hear from all of you on the questions and relations training. So over to you. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to lift your handset just by pressing the star key. Ladies and gentlemen, you will be put on hold while we hold for questions. The first question comes from the line of Jay Kale with Elara Securities . Go ahead.
Yeah, thanks for taking my question, and, congratulations, team, for very good margin performance. My first question is regarding the, on the margin side itself. If we see, both YOY and QOQ, a large part of the margin delta has come in from gross-margin expansion. If you just throw some light on what has led to how much of this comes from commodities, how much from mix change? Because if I see a mix change on a YOY basis, you know, you have your passenger vehicle contribution going up, but on a QOQ basis, you are seeing a contribution. So just try to get some flavor, how much of it is because of mix change versus commodities? That would be my first question.
... you get the rest of that question. The growth now being mentioned is on two folds. One is on the raw material side and another is on the side. You have a separate question about the commodity, the net impact, as compared to Q4 on the commodity side, including the denominator effect, which by the way, is now playing positive in our case of the reducing commodity cycle is roughly 1.5%. On the mix side, it's in the range of 0.5 to 0.7%. And the remaining part of that is either through a better realization or through some of these agreements with the customer or price changes.
Okay, understood. My second question is on the railway side, you know, what is your outlook there in terms of railways? Given that, you know, recently there has been also news flow of some bit of DLI also being talked about for railway component. What is the import content in your type of product currently in railways? Any scope of... And you mentioned that you are also looking at exports currently, but wouldn't the domestic opportunity be big enough for you to, you know, kind of utilize the capacities or are things like competition also coming in on the railways side in the coming years?
Yeah. So on railways, you know, like we already mentioned, you know, it's an end of business. So even if you have if you get some entry, there's always somebody who develops the product. You know, it's a cat. The only thing is we have, we have moved fast. We have been the first supplier to be onboarded for the Vande Bharat. And railways, again, you know, the, the pace is very slow. So the numbers are, are very small. So it, it. You know, it's not going to make a change in a big way, even though it's even though the DLI is announced or whatever it, at the time, it sees the light of the day in terms of the actual business, it takes a lot of time.
But the good part is now we are there on everything that railway has to offer. So, so we definitely see some improvement. But again, repeating that the bottom line, the top line is a very small fraction of our... And as we keep on growing, the rest of the industry is growing at, as you know, in the last year, you know, were 22%, growth was at 40%. So these numbers are, railways are different, totally different, sorry.
Understood, understood. My next question on the sunroof side, I mean, you did have, you know, you've mentioned about the sunroof presentation of panoramic sunroof versus the normal sunroof systems. What are the headwinds of imported sunroofs in India, and what is the kind of price value proposition you all get by localizing the entire sunroof in India? We just 10%, 20% cheaper than the imported sunroof. That is one. And between the normal sunroof and panoramic sunroof, what is the kind of price difference? Is it, again, panoramic sunroofs are having the price of normal sunroofs, or how does that equation go?
Yeah. So panoramic sunroof, actually, the normal sunroof, what is just to clarify, it's one of the previous, the small sunroof, right? That's what you mean, right?
Correct. Correct.
This is went in slide, and the bigger is the panoramic sunroof. So yeah, typically what you get, right, is, you know, almost a figure of double. The size of it double, and the price also is almost actually double. That's with regard to, you know, the last part of the question. And the first part you said about, in terms of, localization, the localization benefits and how many of it is right now imported. So right now, many of the sunroofs are still imported, so, as you know, Webasto already set up facility. So still many of the sunroofs continue to get imported. So, in fact, Hyundai Creta is almost, other than a few previous, the smaller sunroof models, it's all imported. This is where we are doing the localizing.
The localization benefits right now is still small because the supplier base or the supplier ecosystem for it is yet to mature. You know, this is the first time, like, Webasto has set up, CA is setting up a setup, and we are setting up. So now, obviously, the supplier ecosystem will also start getting more mature and evolved and set up. So the localization percentage for all the localization content of the sunroof is going up, will go on continue to increase. Right now, glass has been localized largely, plus some other components, but I would say still, still a long way to go in terms of more localization to happen in the sunroof category. But yeah, right now it's the import would be to the tune of, I would say almost 50 to 60%. Yeah.
Understood. Thank you. Last, the last question, you know, it's happening to see our share of business being higher, and the price at around 3% versus 24% on blending market share. But, you know, in terms of your new products, you know, you mentioned, we've seen a lot of EV launches coming in from your competitors. How are we positioned in terms of, you know, say, Maruti, Mahindra, Tata EV products coming in? You know, how are our orders based on that? Because probably in the next three years, there will be a whole host of EV products. You mentioned in a slide, I imagine you have one product over there. So is it a ICE product or an EV platform of yours?
Yes, the random product is a eKUV, which actually is a eKUV, a very small product, and it was the e-Verito as well earlier, and that too, but that is not a big runner. The key thing would be to get on board for the new EV, HGV products mainly. So what we are looking at is, you know, this center that we have put up both in Chakan as well as in Europe exactly is to develop, you know, the latest technologies in terms of the semi-active suspension. So our first model working prototype, fully functional prototype model, we, you know, we test drove in our customers' vehicles, and the feedback has been very good.
So we intend to start, you know, getting into manufacturing stage, somewhere in the end of 2024. That will position us well as far as any active requirement is concerned. But having said that, there's a lot of passive suspension requirement as well. So we are there on E... The eC3, which is a Citroën EV. And we are in advanced discussions for, the one of the Tata models coming up, which will be actually the E-- the Harrier EV. And in addition, also you saw the new car yesterday launched, the EV... Not launched, what do you call it? The picture was, the model was showcased in Cape Town. So we'll be also discussing on that with Mahindra.
Understood, understood. Great. Thanks and all the best, and wish you a sustained margin performance.
Thank you. Thank you.
Thank you. Our next question comes from the line of Umesh, Raut from Anand Rathi. Please go ahead.
Congratulations on the results, sir, and markets in the previous quarter, and also the interest from the new customers for the same person. Can you indicate overall at a group level, what are the product areas, where you're seeing opportunities, with the global entities looking after partners like ANAND Group, to look like in India?
Well, Mukeesh, yes, there are definitely a lot of discussions with, you know, many OEMs, with, of course, with Gabriel and ANAND Group for new products. So as you know, in terms of sunroof, we already got some, and then there are several other product portfolio which our partners do have as far as ANAND Group is concerned. It's not given, but our partners do have a wide product portfolio. We're increasing them to, as I said, these tech shows that happened recently. We just display them in, even in Auto Expo. So we are continuously looking and scouting for new opportunities through the product portfolio offered by our customers globally. So that continues, you know, I mean, I don't know if I answered your question, but...
My first question was like, Gabriel also looking at the technological areas.
Yeah.
Just want to understand where they are seeing the opportunities, broader areas of where, some of the, and global entities looking into partners.
Yeah. So, you know, that, that's the lens that we are looking at in terms of, you know, agnostic areas. So there are quite a few areas where right now obviously we cannot disclose. There are a lot of agnostic areas which are in high growth and, you know, particularly in EV segment. So we are scanning. So right now, I think we've got this sunroof now in our CT, and the important thing is to see that this starts off well and its production is well. So our energies are focused towards that as of now. Having said that, we are definitely looking and scouting for more opportunities as well.
Right, sir. Sir, it's coming sunroof, sir. I mean, there are almost sunroof suppliers who are supplying India, Webasto and Gabriel capture most of the opportunities, as the systems are localized. And, can you probably indicate what other players who are importing the sunroof into market?
Okay. Okay. So right now there are many of them. Hyundai and Kia do import, Mahindra does import. There's a little bit of import by Tata Motors as well. Maruti, since they've introduced only in the new models, that is localized. These are the main players who are, you know, who are, I mean, offering a sunroof in their product. So this is the overall scenario of where the imports stands today. And as far as the market is concerned, I've already mentioned there are three players today, I mean, Webasto, CIE, and Gabriel. So AGL is another, three players in the market. And yes, I mean, definitely, definitely a good scope for everybody else.
Right, sir. Also, what has been the CapEx spend for the sunroof till now? And, in the content of the sunroof, what could be the car value addition? And, what's the state of the JV formation, and what might be the valuation for the team applying the stake in the JV?
Okay. So currently we are in the making stage, so the amount that has been invested through 30 June is fairly small. It's in the range of INR 9 crore. Large part of that is in line as cash and debt. Total commitment of CapEx, which we shared earlier also, is INR 60 crore. This will be shared by the two JV partners. The remaining part of the CapEx will be handled through the funding. So we are looking if we develop the risk itself. In total, the you know Inalfa is going to own 51%, and Gabriel is going to own 49%. The status of the application is called Press Note 3, application, TMC.
We've already, actually, Inalfa has globally already applied for that, and it's currently with the authorities, and they are reviewing the same. There has been some development on that early this month.
Thanks, sir. Just on the last question, and we continue to be because some supplier for Ola Electric, sir?
Do you do what?
Ola Electric.
All right. Yes, yes, yes, we are.
The new model that you made.
Yes, yes, we are. All the four models that we displayed yesterday and the motorcycle model, we are single source on that.
Okay. And just on the previous models launched by the Triumph and the Harley, have we got any traction for these models, sir?
No, we are not on neither, you know, Hero we are-- we don't, do not have any business so far. So Hero, obviously not, and with Triumph also, we do not have that piece of that part of the business. However, we are working on, you know, some new platform with TVS for an advanced suspension.
Okay, sir. Thank you so much for the opportunity.
Thank you.
Our next question comes from the line of Viraj, with HDFC MPL. Go ahead.
Yeah, hi, can I hear you?
Yes, sir.
Yeah, hi. Just two questions. First is, you know, on the EV part, you know, what you said for two-wheeler, that we have flagship car and then for Harrier EV variant. But just look at the perspective in two-wheeler and three-wheeler, you know, we've got a quite a head start vis-a-vis the competition in terms of, you know, getting a higher share of the EV startups and maybe some incumbent. When we look at the passenger vehicle EVs, so what is your sense in terms of the, you know, our overall play in the pipeline? So we perspective include... Give us in terms of, you know, sort of share what we would probably be looking at vis-a-vis say, three by three.
Yeah. So, Viraj, actually, you know, it like is that currently the in the industry in EV two-wheeler and EV passenger car are totally different, right? In EV passenger car, it still is a limited players. You know, so we have to go on that big shift in dynamic. In two-wheelers, it's you know all the challengers, as we call them, you know who are leading the pack. So what happens is, in passenger car now, almost 80% of market share is Nexon, the Nexon EV, right? Now, Nexon EV classically, it's an ICE platform. So that platform was not with us. So that platform is with the competition. When that got converted to EV, obviously, OEM will go to the existing current provider of suspension and not change the suspension, only retune the suspension.
Suspension largely remains the same. So that's why obviously we are not, we are not there on the EV as we speak today, you know. But going forward, as I said, with Safari, with Harrier EV, we are in advanced discussions. Similarly, with Mahindra, we are in discussions for the EV. That picture will definitely change. Having said that, again, you know, the EV penetration in India in terms of passenger car is not gonna be... Even now, it's only at 1%. The optimistic estimate, you would know better, even by 2030, the passenger car is, you know, at just 20%, which is also looks like very, very optimistic. So yes, in terms of volumes, it may not be that much.
However, it definitely we need to have a larger play in EV, and we are focusing our energies to ensure that we get more EV platforms, both in India as well as overseas. Coming to overseas, we are in discussions with, you know, I would say these two, two global players, which is a platform which is shared for EV as well as ICE engines. So how that goes we will have to see, but, we are in discussions with them.
Okay. Second question is largely in terms of the new opportunities which we have. So for the EV bike you talked about, how we are looking at new orders in the coming quarter. Can you just give more perspective in terms of the size of the business this can be in 2, 3 years? And similarly, on the railway export part, you know, how big of an opportunity is, you know?
So coming to the first question, which is on the EV two-wheeler, it's a very interesting product, you know. You know, it's a very good value proposition as well. And we are looking at it mainly from, mainly from the perspective of exports, because this market development in India will take a lot of time. So the market that—market is huge. You know, the market of EV is being selected, EV, not EV, sorry, e-bicycles in Europe is almost 30 million, in twenty, in twenty... By 2030. And the growth rate is, is almost 20%+.
You know, and with more and more push coming on climate change and, you know, more environmentally consciousness, more environmental consciousness getting into people, particularly in Europe, this will only increase. So we are seeing a very good possibility, that's why we, we addressed this. We had long time back, about 8 years back, we had ventured into the normal bicycle distribution. It was more out of the innovation exercise, but that did not have a great value proposition for us. And this surely is very exciting, you know, both in terms of value and in terms of technology. And we, as I had mentioned last time, we definitely would not want to take it to at least the size of, you know, in the range, at least close to INR 100 crore.
Okay. You know, on the export piece, you know, this is what you developed and so Japan and new-
Yeah.
And same as for that.
Yeah, yes, sorry, I forgot to answer on the railways part. You talked about exports. So there again, we have done some exports in the past to Sri Lankan railways. So we are looking now, we have, you know, formally engaged a consultant to help us find new markets, particularly in Russia, in Turkey, and in some Eastern European countries, and also the African countries. The, I mean, the size will not be very big, but yes, it will certainly be exports and, hope, hope that will be at a good margin as well. Your second question which you asked, I couldn't get it. If you can repeat that.
Sir, Vinay just left another question to you.
Oh, okay.
We'll move on to our next question, which is from the line of Harshal Chipia with Home Fund Advisors. Please go ahead.
Yes, sir. So I want to understand what kind of size of businesses do you expect in the sunroof JV? And, going ahead in terms of railways also, what kind of the size of business do you expect for to ramp up in the next 3-5 years, if possible?
In terms of sunroof, we did mention, you know, with an estimate, but by 2030, purely the market potential going by, let's say, even if you take a, I would say, a modest estimate of 35% penetration, the market size of total sunroof would be almost INR 4,500 crore. That is the estimate that we have done. In fact, you know, the market share in SUV is even higher, so it can even go higher than this.
Okay. And, what kind of market share are you expecting to capture in this INR 4,500 crore market?
Definitely with the current line that we, we did this, is that we are putting up, you know, currently we are putting up two lines, and, going forward, we may add, definitely add more. So we are looking at hitting within 4-5 years, almost INR 1,000 crore. And by 2030, this figure will be, you know, in terms of market share, yeah, I mean, we look at 40%.
Okay. Sir, with the current two lines, how much CapEx has been done to set up the Chennai plant for sunroof businesses? And what is the maximum, so what kind of asset turnover do you envisage from the same?
So, roughly, the turnover would be 4.5-5 times. And, the current CapEx, including building and, and long-term lease with PowerGrid and other things, and of course, the investment for this, installation would be in the range of INR 450 million.
Will it be the same margins as it is with the existing shock absorbers business, or the margins would be higher?
No, definitely higher margins.
Okay, higher margins. Sir, and secondly, you said that there is a strong order inquiry in the railways business. So can you just quantify what kind of order inquiries are we participating in? And, what kind of business ramp up do you see in the next 2-3 years in the railways end?
Well, Harsha, we mentioned that railway revenue size is not much. So we are currently looking at a very small number, and that's... I mean, it's, it's in the region of, in terms of our total sales, it's, it's not even. It's just about 1%. You know, little more than 1%. So even if it grows, it won't make any, you know, big change in terms of, top line.
Okay. Sir, my last would be on the exports. You said it is currently 4% of sales as of today. Where do you plan to take it up to in the next 3-5 years in terms of percentage of sales or an absolute number, if you can give? And what kind of margins do we see in the export business compared to our domestic businesses?
Yeah. So, you know, our clear target has been to double digits next year. So, I mean, we have maintained that, you know, we want to get it in the first 10%. Things were shaping well, but you all know, you know, some political issues that happened, like our exports to Russia were completely nullified due to ongoing conflict. Otherwise our exports could have been much better, but our target remains 10% in, you know, let's say, in five years.
Okay, thank you.
Thank you. We move on to our next question, which is from the line of Amit Hiranandani with Kotak Limited. Please go ahead.
Thank you for the opportunity and, congrats for the good operation performance and new orders and such. Just on the GM gross margin side, basically wanted to understand, you know, how do you see input cost for balance part of the year and, sustainability of the current EBITDA margin in this fiscal?
Amit, in the previous discussion also, quarter we had mentioned that we are taking measures in terms of improving our margins, but interval would be to sort of either continue here or further on improve.
Sir, can you give us an outlook for FY 2024 and 2025, including Inalfa?
Including in Inalfa, it should be in the range of INR 160 crore, roughly.
Okay, that's for FY 2023, right?
2023, 2024, yes.
Okay. Sir, next is basically, how's the traction of SSG, any new model addition for this sector?
Yeah. Sorry, you got dropped off for some time, but coming to SSG, a very good traction of it. Luckily, our first model, 67 now, is being appreciated very well, where I clearly use different and much more comfortable. So we already have 2 other OEMs where we are demonstrating this product to them on their models. So we'll have to see how it goes from there, but yes, certainly good traction, yeah.
Also, sir, Gabriel now started derisking and diversifying from shock absorbers. So directionally, which new products the company is planning to enter, and you know, how many more new products we can expect in the next 5, 7 years now?
Oh, Amit, good question. As I did mention, you know, we are on the first one. So we continue on this agnostic theme or, or you know, any, any product which, which we see very strong demand, because it's not that ICE engine is going away, but in India, it's going to co-exist for a long, long time. And for the globe, India is very likely going to be the last transitioning when it comes to ICE engines. So we're not completely closed on that, but yes, the, the key thing will be, you know, products. We are scanning those, and you-- So we might, we. In our plan, I think our plan is to, you know, come up with one more in the coming fiscal, one more acquisition.
5-7 years, well, we can naturally see, you know, at least one or more.
Okay. So just last question. Can you, can you, like, share the average realization, you know, of your segments, like two-wheeler, passengers, commercial?
Amit, sorry, Amit. No, no, we cannot.
Okay. Okay, sir. Thank you.
Thank you. Ladies and gentlemen, thank you very much. We request you to restrict to two questions per participant. We move on to our next question, which is from the line of Hemal Patel with Aditya Birla. Please go ahead.
Sir, our share in EV two-wheelers is down from 80% in Q4 to 73%. You said earlier, we not sustained that market share, but any reason you can describe for this drop in Q2, is it because subsidy was ended?
No, no, it's the, you know, some of the players, let's say, Okinawa, which we are supplying, you know, Okinawa volumes have been consistently, so there's a little bit of change in arithmetic, mainly. And like you said, 73%, it would in fact be a little higher if you compare the number. Sometimes it's difficult to get the exact number, but, but no, it's not that we are not sustained. We certainly are sustaining what we have got, and we continue the business with all OEMs. It's nothing that we have lost, right? It's only a, maybe a mix of the overall pie.
Okay. So secondly, in the presentation, CapEx of INR 20.6 crore is mentioned for Q1. What is the standalone CapEx, and does this include Inalfa? And, if you can just repeat those numbers again, please, earlier. What is our CapEx for Q1, and what is the CapEx in standalone?
Yeah. So the one we mentioned is standalone only. The CapEx for Inalfa is INR 10 crore. It's not CapEx, it's actually a share after reproduction. Now, coming to the overall outlook, we are looking at INR 160 crore-INR 260 crore of that outflow in Inalfa.
Already a lot of share of the CapEx is done, so there must be some CapEx already done for Inalfa in Q1.
Today we are in August, the numbers are of QHU. QHU, right. From the, it's least significant.
Thank you. Our next question comes from the line of Jayesh Sabi with Parsha Trans Security. Please go ahead.
... First of all, congratulations on a good set of numbers. My question is, again, listening to Himanshu. Can you just provide me with, since he already made comparison to Mahindra, Maruti, Tata Motors. If you have any feedback, can you just share what kind of feedback have you received from them? My other question is, since you are looking at, if I, if I heard you correct, our vision is by 2030, we get 40% of market share in sunroof, which is like closer to, according to you, it's like INR 4,500 crore. And our turnover is like 4-5 times. So, so we think, I mean, I think we should have a gross profit of closer to, like, INR 500 crore.
Currently, you are sitting on some cash, which then you think you are going to—I mean, I think you are going to deploy for some of the acquisition. So from the current fixed assets, the gross profit is INR 420 crore. Are we thinking of moving to somewhere closer to, like, INR 600 crore, INR 600 crore in the next 7 years? That's all from me, sir.
Okay. Coming to the first part, you know, you asked about Mahindra, Tata, and other customers. So I think, you know, we launched the new JV on May ninth, right? Just say 3 months back—less than 3 months back. With that, we have already, after checking, we have got 1 RFQ, which we have responded. We have got, you know, we've already done 2 RFIs with this information, and, you know, the agreements have been signed with 2 customers. You know, it is good initial moment within a short time of couple of months. I would say leave it at that. Of course, for the business translation, it will take some time. But, yeah, I think, you know, building compared to our other experience on other products, it's really fast.
So around in terms of getting the RFQ, getting the RFI, it's really fast. So obviously, it will be obviously, there'll be some version of this request for information request. Your second part, yes, we are right now, we are going to put INR 150 crores in this JV. And obviously, we are very clear that we'd have to augment lines, probably geographically, you know, the geography as well, to meet customer demands based on the, you know, inclusion that we are seeing. So, yes, surely we'll be looking at adding at least another 100 odd crores in terms of investment to augment capacity for some growth going forward. So, yes, if I got your data points correctly, in terms of photo, what you say is making is correct.
You have to remember that, it's a JV, so it's a 51% stake, which is yet to come in the country. Once the entity approval comes, the capital investment from CapEx approval perspective will be co-shared. This entity is profitable as well as a good cash generating flow its first year of operations. So our plan is not to invest too much of CapEx, but to actually leverage the entity as it stands for its operations. So broadly, INR 60-100 crores, maybe INR 150 crores, is what CapEx is envisaged. Remaining will be-
Okay. And, one last question. So since you are thinking of deploying this cash, also adding one or two more products in the next five to six years, what is generally our thinking while we choose a product? I mean, in terms of ROE, ROCE or ROE, whatever. Is it going to be on similar lines, or you don't mind evaluating on margins or so is focusing on that?
Then this, it's an important aspect of any capital investment that we are looking at. There are a few hurdle rates, so payback, IRR, these are the standard ones. In terms of ROS as well, it should be margin active. So what we agree is correct. Now, when it comes to the return on investment on a long-term basis, it should be in the range of 20%+, is what we essentially look at. But all depends upon what kind of synergies that the target can have with us, and where we can take the exit once we have acquired the seat. So, while we have our hurdle rates, we will also evaluate each use cases.
That's all from my side.
Thank you, guys.
Thank you. Our next question comes from the line of Viraj with SiMPL. Please go ahead.
Yeah. Hi, audible now?
Yes. Yes.
Yeah, I just had three questions. First is on the export theme. You know, we talked about Mitsubishi Japan, as a new customer for future adoption. So just to kind of get a perspective and sort of the size of the business, you know, so if you have to compare, say, to the PACCAR Group or that, you know, what will be the project opportunity here for us? And as regards to the PACCAR Group , what are your share now based on the orders we already have?
Just to clarify, Viraj, you said Fuso, right?
Yeah.
... Okay. Well, FUSO, FUSO and cab business, I mean, again, the size is not too big, but what we are seeing in our exposure is more on the one big passenger car order coming through, because those volumes are much higher. And in terms of cab, we are only on the cabin purpose, but, you know, we have now got that action plan for our RFQ as well, so that the strategy is playing out right. We have demonstrated a good quality and consistency supply to them. We're having won awards twice, twice in a row. Now they've expanded to the other damper. And, so and, and also expand RFQs, there's expand business to Brazil. They're seeing RFQs star world as well. So clearly, in terms of the share, it is increasing.
I do not have a number to share in terms of what is our exact market share in depth, but, yeah, I'll be able to work on that separately. FUSO is still early stages, and it'll FUSO or, you know, for that matter, Daimler also we are speaking to, and, you know, with this China platform getting more and more real, we see a lot of scope, but yes, we have to note that the pricing of China is very tough.
Okay. Second question is on the margin front, you know, last year, 2023, and if you see the annual report, you know, we had a negative impact of around INR 31 crore from the price change. So I understand, you know, we've seen an expansion in gross margin, but for this particular, do we see bulk of that benefit going to us in 2024, given that iron prices are now, you know, trending downwards?
You need to clarify, maybe the INR 51 crore where you have seen and how we have computed.
You know, in the annual report, if you see, you know, there's a revenue as per contract and, other than the discount part, there's a price change to us.
No, that's not no, that is not the case. These are... That 51 is what basically is the unfilled part of it. It's only a reflection on the year and what is outstanding. So the previous year, to give you a perspective, we've had almost close to 95% recovery in terms of all commodity, which impacted us was the denominator effect and the aftermarket piece, which obviously cannot be increased in line of the market. But now with the downward cycle, for example, in this quarter, we've already seen a 0.1% denominator effects, as well as the commodity effect of 0.1. So, currently, with the downward cycle, we will be facing, we see seeing benefits coming out of that.
Given that we have a structural mechanism in books, none of the benefits or the losses of previous years, if any, are expected to be recovered in this year, other than from operating-
Okay.
-market.
Just a further question on this. If you have already provided for the 100 part in 2023, or maybe 2024, if I got it this right, then in 2024, the margin expansion should be even better, right? Because the provision has already been made.
So commodity is a quarterly settlement, for example. So whatever is the movement on the count of commodity, multiply which commodity, multiply by the quantity in that particular quarter, that is only approved. The future never gets approved in this case, right?
Okay.
Whatever is going to be the movement, we are going to show with that movement, either upward or downward, as the case may be.
Okay. And just one more question. Was on the sunroof part, I think when we were starting out, we were looking at initially setting up one line, and, what we understand that we are now looking at two lines. So what is driving this change? Is it that the volume expectation from existing customers itself is more, and that is what driving an expansion? So any process to the question?
Yeah. So, I mean, we had always, always mentioned that our plan is for two lines, and we begin with one line, and the expectation from the, from different customers is to be made towards the these two lines as well.
Okay, so the capacity from 2 lines will be 2, so 200,000 units, right?
Little less than that, but yeah, around that.
Okay. The investment of INR 170 crore, which we talked about, so if I go to 2024, that bulk of that investment, so the equity part of INR 260 crore-INR 120 crore, that journey would be initially from here, and the rest will be funded.
24 is the share commitment in the time frame you mentioned. This is still to get PN3 approval. Obviously, so there is a government authority involved here. We have more certainty as to when it will happen. So assuming that it happens in Q4, the capital investment from the JV partner will come in, and our stake also will get diluted.
Okay. So capital standard loan would be INR 160 crore in this year, and in addition, we would have another INR 260 crore-INR 120 crore. That's the investment.
The loan is INR 120 crore.
Okay, so when you say 160 is already included, great.
Okay. Yes, that is what the question was.
Okay. Thank you very much, and good luck.
Thank you. Our next question comes from the line of Ravi Lohit with Securities Investor Management. Go ahead.
... Most of the questions have been answered. Just wanted to know, you know, the, you know, the challenge, should we have this 2% management fee, which gets charged every year? Has there been a change in that, in this quarter, in this year, or it continues to be remaining at 2%, in future as well?
No, there's been no change in that. You know, it continues to the same, yeah.
There is no numerical value that, that is, there is a cap to where we have to kind of go back to schedule just to get a clear, just like a formula to understand whatever the revenue is.
Yes, yes. We just tested out on, you know, on, you know, we have done all the studies we have shared, so it continues to be.
Okay. Thank you. Thank you. Thank you.
Thank you. Ladies and gentlemen, that was the last question. I will now hand the conference over to the management for their closing comments.
Thank you. Thank you. Thanks, all, for your inputs and your contributions as well. We, as I did mention, we will continue to focus on, you know, sustaining the margins, and especially on improving them. The next quarter, definitely is looking good. It's a few quarter, so the best, best quarter for the entire industry. We hope that we will be able to meet all the demands of all the customers, and while doing that, also ensure that we maintain our efficiencies. And yes, I mean, our focus clearly remains on further expansion and expand the EV two-wheeler market share and also make some inroads in EV battery pack, though it is still a small part of the whole, whole business.
And, yes, one more key focus area, this quarter will be, you know, medical machines unloaded and commissioned in our sunroof venture in Chennai. That's a very key activity that we are really focusing on this coming quarter. So, with that, I wish everybody a very, very happy new year. And, you know, because we're meeting only possibly, actually, after the session is over in November. So thank you, and all the best to everybody.
Thank you. The conference of Gabriel India Limited has now concluded. Thank you for your participation. You may now disconnect your line.