Batteries to the storage of data in the cloud for networks, for energy to the distribution of information through the Internet of Things from products prepared for the soil to products prepared for the action of time We go deep in everything we do, bringing ideas which are increasingly more innovative, the fields and cities and of people. This is the willingness to go ahead that the world needs to carry on evolving today, tomorrow and always. Good morning, everyone, and welcome to Fact 22. For those of you who do not meet, I am Andre Sogerro, the Financial Director of VEGI. And on behalf of the company, I'd like to thank your attendance of the pandemic.
And I'd also like to thank the presence of Desso de Silva, the President of our Board of Directors, Harry Smelzer Jr, our CEO and all our executive directors that are here today. I'd also like to thank for to the people that for those of you who are not able to be here presently today but are following us online from your offices, from your houses. This is the first time that we are transmitting streamlining this event in an online way. The event today was thought in a way to bring to you two details of the most important business units, the industrial motors and also the GEDT area and the agenda today will follow will be as follow. We are starting the presentations with Alberto Cuba, who is going to give us all the information on WAG and Duster Motors, followed by Menfred, who is going to present WAG Automation and recently created VEG system motivation and followed by that we're going to have John Paulo's presentation, who is going to bring to us the comments on the VEG Energy business unit and lastly Carlos, Digital Prince, who is going to present the Vague Transmission and Distributions.
After this whole presentation, we are to have a first Q and A session in which we are going to address the business areas of the company followed by an interval, a little coffee break. And Right after that, we're going to have Andrea Luis Rodriguez, our CFO, who is going to dwell on the financial performance. And finally, we are going to have Harry Schmelz, our CEO, who is going to bring our perspectives for the following years to come. And after Harry and Andreas presentation, we're going some important information. The presentations which are going to be made here today, they are available on our site on the investors' relator, which net.
And as I said, this event has been streamlined on the Internet and is going to be available after should you miss a part or something, especially for those who are attending online. So it's going to be available on our site for quite a few time. To start our presentation, I'd like to Alberto Cuba to make the first presentation. And only to give you a context, everything that Cuba is going to and in our vision and the vision of the market is within the Industrial Motors business unit. Good morning, everyone.
It's a pleasure for me to welcome you here presentially and welcome for those of you who are online. For those of you who do not know me, I'm Alberto Cuba. I am responsible for the Industrial Motors division. I work in VAC for over 20 years and since 2020, I'm working ahead of this unit, this business unit. And to start, I'd like to make a quick Update on our numbers.
We are present in 8 countries. We have 13 plants around the world. We manufacture over 3,000,000 industrial motors per year. And today, we have about a little bit over 13,000 employees around the world. And out of this 13,000 employees, about 4,000 outside of Brazil.
So it's a very internationalized operation. And when we look at our revenues, Basically, 80% of our revenue from the Industrial Motors division comes from abroad and the trend is for this number to grow in given our international expansion. We have a distributors line with over 3,000 distributors around the world, that gives us a lot of capillarity, especially in places where VEG does not operate. And it also gives us an advantage in places VEG is already strong with our dealerships. And I think something important is to talk about the strategy of products.
So VEG is working very strongly to have general application products, niche products and I'd like to talk about the general purpose. This is a line that we have generated in the last 2 years and when we started thinking about attacking more the global world, we're talking about the Southeast Asia, India and Southeast Europe. So when we launched this product, we've made a benchmark, which was very intensive at this market to guarantee that we were have could have a competitive product to be successful in opening these new markets. We've made this launched in March this year. And here, we have something very important to mention that this aluminum line of with these 2 motors here is manufactured in China and the cast iron motors that we have up there is manufactured in Brazil.
So in the general way, we have brought together what's more competitive in the world, what's more competitive in Brazil and we are taking to our assembly lines in India and Turkey to accelerate the gain in the markets. Here is also a very important view of the markets that in which we want to which is the medium voltage market. We even had a very intense work to have a medium voltage in iron motors that allows us to have competitiveness to work in key markets in the OEM market and also this line here that we call the W60. For you to have an idea, about 10 years ago when we were making motors for compressor, we put it in like, car cast, 550. And all the technology that was developed, we made a same power with a much smaller car cast.
So we have a line of products that is very complete in general applications to work in markets, to operate in markets in which we need more competitive products or in initial markets such as medium voltage manufacturing companies in which we didn't have so serial and competitive products as we have today. We have a complete line of special products. We are increasingly have electronic embedded products and what Harry mentioned in motion drives last year, he commented we're going to have this in the strategy, also as well as in products. And in this product here, we have an incorporated drive, which is already part of the product. We have other lines of products that so have an incorporated and embedded drive and our motion drive manufacturer companies are our main target.
Other important aspects in our strategy that addresses the investments that we're making in the motors, electric traction we are for buses and delivery trucks and for that we saw that launch in Charagua plant and our idea is to be able to have higher volumes in as well when the market is ready. And we have a very big market now that we are investing drives, gearboxes. This product here specifically with that line of general purpose motors are totally aligned because of this product here, specifically for factory for machinery manufacturers. And the W50 line was launched last year, which is industrial gearbox application. So as the motors, the gearboxes in unit have more complex products for from small to big, for mining, sugar and alcohol, ethanol applications.
So our line of products is very much aligned with our view of target markets that we are So what worked in the last what happened in the last few years? We have advanced in our market share during the pandemic in 2020. It was a hard year in which the volume of sales of motors went down. 2021 was also very hard year when we saw the produced markets. That was a drop in the sale.
But in these two last years, VEG was able to capture a very interesting number of and we advance in markets. If we evaluate the DHS media research with the interact share. And many of the actions that were made just for you to have an idea in several different markets we have still a lot to grow in Europe, Eastern Europe. And here where there are certain actions that made in opening new branch offices. Actually, we restructured the Italian branch office focusing on low voltage motors.
We restructure our business in Malaysia and looking for the Southeast Asia, so that's to have a stronger action in motion drives and we recently opened the Poland branch light in our assembly line in to meet this market in Eastern Europe. We had changed the reference now. We are making a interacting analysis study because we want to focus on the Pacific Rim countries in which we have more detailed data in countries such as Indonesia, Thailand, Malaysia, in which we understand that we need to reinforce our presence because there are a lot of opportunities to be tapped there. And in a general way, that we are marching in a very structured way in order to increase our market share, because we are now going to markets in which VAG has a limited participation, especially when I talk about Eastern Europe. Let me talk a little bit about what happened.
Many questions I answered yesterday were associated with the pandemic. And the pandemic brought to the surface a big questioning about the resilience and and flexibility of the supply chain of the companies. So we have received a lot of potential clients or clients that already buy from that discussing how we can scale our partnership given the footprint of the company. So when we analyze the way that we are organized, The view, the vision that for us to buy from global companies, not considering where it was produced, only analyzing the cost of the products is being left behind. And companies are increasingly now looking for a leisure location in order to buy things that are closer to where they are producing.
And our global strategy for production has brought a great competitive advantage. I'm going to give you a few examples. We have an operation that is very strong in Mexico that is becoming more strategic because of the presence in the American market and because of the growth we had in the American market. Both the American, the Mexican and the Brazilian market manufacturing plants have increasingly sold and as The Mexican plant has the name of products ready made they could have supplied the American market as Brazil, we're able to supply to Europe. When we manufactured to China, when Europe has scaled the volume, we had a lot of clients with supply risks and what could we do?
We transfer the production from China to Brazil in order because we could transfer the production from Brazil to Mexico. So back today when we analyze the footprint, we have a best footprint for industrial motors in the world. These are products that you're able to interchangeability of plants because they are components, they have the similar components. When our competitors look at production, they always look locally and So China, the main focus is China to China and the rest of the Asian countries. We have an operation very strong in Mexico and increasingly stronger for the American market.
And there is another interesting point. A that we had from between Mexico and Brazil that was not affected by that. On the contrary, we were benefited because Chinese were not competitive anymore. And our view now is to prepare both Turkey as well as India for a future scenario that is increasingly more complex. We do not what is going to happen in the future, but we understand that our great manufacturing plant for the future is going to be in India, but India, we are going to inaugurate in the at the end of this week on Friday, we are making cast iron products and we understand that the engine plant is also going to be an alternative for manufacturing, especially for this region here or for China Pacific Rim when China does not meet the demand.
Another factory is entering the circuit, there is another in Turkey because we understand that increasingly we are growing in this Eastern European region and it is very to have a local manufacturing plant to supply the whole market. Turkey and We are talking about $500,000,000 potential market which is very big market, much bigger than the Brazilian market and we are talking about India, we're talking about a potential market of over $350,000,000 and we are talking about in a structure that we had initially for low tension, we are talking about $400,000,000 market in which we are capturing a very little value. So we are very well prepared for footprint in terms of footprint to be closer to our clients with global products. A point of attention here is, we have WGP, here we have GP, here we GP, all these manufacturing and assembling plants are prepared to scale the general purpose products, and this is what we are launching, looking for new opportunities in serial products. Now we're talking a little bit about our strategy.
I think this is very interesting that it goes back to the very James of VECT is, which is the verticalization. Verticalization represented a very important aspect in the strategy in the difference of the results that we had in 2020 and 2021. The verticalization when we look manufacturing plants in Brazil, in which we have 100% verticalization and when we analyze a plant in Mexico in which we have basically 100% verticalized as well, that brings us a lot of flexibility because with all the production of verticalized components we're able to meet all the assembly lines around the world. We had situations for instance in Brazil, We wanted to scale the volumes, so we do not have cast iron, so we brought a cast iron from Mexico. We have situations in which Portugal were not able to scale up the production because lack of production.
So we were able to shift China to Portugal. We also had a situation in which the manufacturing the reductors, the gearboxes manufacturing We're needing carcasses and we brought them from China. So our model of verticalization makes that VAG has less interactions level 2 clients, with level 2 suppliers, which are parts suppliers. So that brought us more domain of what our productions. So that is a different distinguishing point.
Now I'd like to talk about product strategy. If you take a look at the very beginning of motor manufacturing up to the state of the art production, we have always increased our Energy Efficiency. WEG has been working ahead in terms of efficiency standards, which makes that As the efficiency law change and increase, we gained competitiveness. So we took a major leap when we launched this line, which was very successful, very early days in China. How is the world today, E3 to E4.
This is what we're moving. These are solutions we've had for 3, 4 years. What are we doing now? We have numerous products For those who participated of yesterday's technical meeting, we're working with hybrid where we have variation of products in function of the size of the carcass. We have just magnet or non magnet always trying to get higher power density.
We are no longer seeking power density, but also the reduction of the amount of material used. This is aligned in turn of sustainability, reduction of material, the more efficient the motor, the less Carbon emission there is and the less material we use, the more sustainable the product is because we need less natural resources to produce it. Just for the sake of comparison, these are product lines that already exist from This is in the SCORCAS355. This product weighs more than 1400 kilos. Today, we have In the catalog, this option weighs 900 kilos, 2 carcasses less, which is we are able to produce twice as much relative to the active material we have in the 355.
When we use new technology that we have already learned in with e mobility, now we are able to decrease in 4 carcasses. So the hairpin is an advancement coming from electric traction products. So we are able to produce 4 fold motors with the same material that we would be doing with iron die casting and now actual flow power motors With the power equivalent to the first one, we're able to reduce 28 to 29 that is to produce 28, 29 motors with the same amount of material. This is the niche market that we are going to be using evermore in high-tech solutions and WEG has been studying a lot this product for us to use it in the industrial segment. We want to increase the bar in that respect.
Take a look at this actual picture of our sample at the laboratory compared to the traditional or conventional induction motors. You can easily see a difference from one product to the other. Obviously, this product here is a niche product because it's high priced, and our challenge now is to scale it up in production setting. Now We're going to refer to some of our plants overseas and the major investment we had, the Indy plant is almost ready. We are already producing some Motors, we are going to inaugurate it officially now on Friday.
India is a major strategic step for VEG Motors. WEG Energic has already broke ground there in the medium voltage field, and we believe that the green field is the most intelligent way that we get our best ROIC. We are taking 100% verticalized plant to India. The India plant is an assembly plant? No.
It's a very verticalized plant where we have all processes except stamping. Why not stamping yet? Because CapEx would be rather high. But we have also identified that it makes more sense to produce all the stamping in China and then produce it locally in India. India has steel prices much more competitive I mean, China more competitive than in India.
Now we continue to invest in more automated products, verticalized processes for us to be able to capture all this increase in demand that the country has been having over the these years and will generate even more in the future. This is another major step that we took in Turkey, and We're already exporting into Turkey, in fact. But in Turkey, there's an interesting example, because market leaders are not the 2 largest VAG competitors, they are local manufacturers. And for us to understand what happens in that country, we have to take advantage of assembly plans because we are not able to export it because of the lead time. So this is an assembly plant, low CapEx facility where we have all the facility ready.
We are already assembling motors there and now we're starting the localization process, bearings, axles, coatings and paints, locally manufactured axles and also aluminum die casting. We are going to learn a lot of this process. Now we are moving fast. We are opening many dealers or distributors in Turkey, In GP Products, our strategy is very well designed. Once this plan grows, we are going to get ready to be a local alternative to larger motors.
What's our strategy? Today, in Europe, we have a plant in Portugal, which manufactures special motors and supplies to OEMs, generals for 200 plus carcasses. This plant here is going to meet OEMs' needs for 200 lower carcasses. By using the Turkey operation, the Portugal operation with a larger volume is still in Brazil. In the future, if we understand that Turkey is really competitive, this is a very nice opportunity to build a plant, a fully fledged plant and reduce the China risk because China has been losing competitiveness year after year because it's becoming more expensive.
So we will be able to share the Chinese volumes in case the European Union imposes a barrier trade barrier to China. So we are going to be able to supply it from Turkey. I was asked, why Turkey and not Poland? The Turkish market is a $220,000,000 market. So this operation here makes a lot of sense for us to win the Turkish share.
Poland is a $90,000,000 market, much smaller. The other extremely important investment was made in the Portuguese plant. We are transferring our operations to Portugal. Those of you who had the opportunity to visited the low voltage one is a huge plant, and we are building thousands of square meters now in this plant in Portugal. This site here has HVS, which is VEG Energy Services.
This is our new strategy. This is where we're going to repair motors sold in Europe. This is a major step for us to consolidate medium voltage motors. This plant here will take explosion proof motors being produced there. Our major competitor was German and is having issues as far as cost and competitiveness and shut down its operation in Germany.
So we're trying to start this new phase by beefing up our competitiveness and investment there, CapEx, considerable CapEx. This plant will be ready by February next year, and we're going to start transferring stuff there. This is the very last slide that we have extremely important and strategic investment in Brazil. For many years, we took a very interesting step by beefing up our capacity overseas, which allowed us to diversify the location plants being nearer the markets. With the strategic step we took with more assembly plants, we will be able to supply components as well.
The Brazil plant is going to have considerable investment in the next 3 years to produce components and expand in better motors. In this pandemic period, WACC developed more value added products, 200 plus, 400 carcasses, a lot of projects are going on, and our capabilities and capacities are been exhausted. So our strategy is to build a new plant called plant number 8, where we're going to be ready to meet the e mobility market as it grows, we're going to have this plant nearby, and we will be ready to meet the demands for 225, 250, 280 Carcass Motors, reorganizing our production footprint in our manufacturing plants. This is the vision, considerable investment. Since we are using many facilities existing facilities, this is an enabler for us and costs are diluted here.
So our risk and ROIC is much higher. This is it. Just to conclude
and
wrap it up. I understand that the verticalization model has shown to be really resilient in volatile scenarios. VEG has a competitive edge there through its verticalization model. The strategic location of plants are also a major advantage for our customers. We always invest regardless of a crisis or not because we have a long term vision and our portfolio diversification is a major competitive advantage for our customer during this period that we have more opportunity.
This is it. Time is up. Thank you so Thank you, Cuba. Now I call Manfred for his presentation. As I said in the beginning, WEG Automation recently in September has split.
We have WEG Automation and WEG digital system managed by Carlos Grillo. To provide some context, everything that Manfred will present here is within the Electro, electronic, industrial except for the solar equipment, which is part of the GTD line of business. Okay. Let's start the automation presentation here. These are some highlights.
The Automation business today has 6 more than 6,000 employees worldwide, 15 plants in 9 countries, the largest manufacturers and market leaders and voltage inverters and protective protection equipment in Brazil and leader also in major product lines more than 100 patent holders. We export to more than 55 countries, more than 560 technical technicians worldwide, more than 2,600 dealerships and distribution operations worldwide, more than 400 integrators for distributor generation in Brazil, and we are the largest manufacturers of panels and e houses in Brazil. Our portfolio is very extensive and could be subdivided into different categories, such as low and medium voltage drives, controls, and I will refer in more detail to each one of them, a specific line develop for infrastructure, solar energy, e houses, e mobility and bringing it all together, we have digital business up there. Now talking Briefly about the drives. Our line is comprised by frequency inverters, both low and medium voltage soft starter.
These are the 2 product lines we operate in different geographies In Brazil, complementing those product lines, logic programmable controllers, PLCs, servo drives, UPSs and others. Control lines is very extensive. It could be subdivided into command switchgear, server drives, no brakes on rectifiers, electric circuit protection devoted to machine safety, complemented by devices for electric connections. In addition to our operations in jointly to the industry, which is our most important market. We developed a line for infrastructure, starting with cubicles for medium voltage panels, totally tested, used a lot in hospitals, busbars, shielded busbars for energy distribution, mini circuit breakers and DRs and surge protection equipment.
We also finished with power outlets and circuit breakers and switches. And to complement our offerings, we are developing a specific line for comfort and safety, Wi Fi and monitoring cameras devices. As far as solar energy is concerned, We are operating in distributed and centralized generation. In distributed generation, we have inverters for single phase and 3 phase facilities, hybrid with batteries. Someone asked me during dinner yesterday.
This is just for off grid operations. We are not able to plug it onto the grid yet and this regulation is also going to be elaborated fixation structures, cables and accessories. That is, we have all products to put together a photovoltaic full photovoltaic facility, centralized generation. We have full EPCs projects, and we also provide equipment of grids. We have central solar inverters, solar skids.
We manufactured both the skid and the inverter, solar inverter. It could be also assembled on a solar skid where we have the panels and the transformer assembled on the skid. And to complement this offering, we have the energy storage battery energy storage system that could be part of a solar or wind generation plant. Talking about the solar market. Now install power in Brazil, this is the source, anel, solar, compared to the power system that we supply by adding up distributed and centralized generation gives us a market share of 19.3% in Brazil.
Analyzing the distributed generation figures this year, we are going to supply 33 solar kits through our integrators
with over 400 integrates all over Brazil and analyzing here once again the power for the generation with the value that we are going to supply in terms of power gives us a 20 2% market share. Here is a question. I from the moment on that the law 14,300 comes into force. This law was discussed for a few years and finally was approved in all instances and it will be effective in January 2023. So what changes in the actual rule from the moment that this law comes into force is that there will be a taxation fee from the YRB distribution, really remembering the fee on the energy distribution is composed by several parts.
One part is the wire B distribution of low voltage and this part represents 28% of the total cost of the distributed energy. So from next year onwards, this share is becoming is going to be taxed. And Trying to simplify, today every unit of energy that you generate in the system and puts into the grid, You have as a credit the same energy, the same quantity of energy. The relation is 1 to From the moment that this law comes into effect, for instance, for a system of about 5 100 kilowatts, you're going to have a fee of 100%, a tax of 100% of YRB. That is for every unit that you input in the grid, your compensation is going to be 0.72 percent units of energy.
What is that's 1 less 1.21 percent less. That's for the systems about 5 kilowatts. For systems which are under 500 kilowatts, there is going to be a transition rule. So the 1st year is going to be 50% from this 28%, 2nd year 30% of the 28% and so successfully up to 100% in 2029. When you're going to finally have the compensation of 0 point 72% for every energy you input.
So, it's worth mentioning the projects that are at existence or whose access required is filed by the 7th January of 2023 is maintained the conditions of compensations at the actual up to December 2045. And then I was also asked about what I think about the market is going to go down. 1st, the next year, basically, we are not going to feel the effect of this impact, because all the projects that have already a request access request filed, they have at least 1 year deadline to be built. So these projects are going to be built next year, generating a very considerable revenue. And from 2024 onwards, I would say that perhaps the impact that we're going to fill is that The solar area comes back to normality because we lived in this year what we lived this year was an acceleration, a of this change that is going to take effect from next years onwards.
So I think that the first impact is that we become we go back to normality in which we're going to a growth that is not so accentuated as we had in this request of access for the distributed generation. Now here I have a few simulations and that changes according to the region where you are, according to the solar irradiation or the power but running a few simulations of the impact that is going to generate in a residential unit, for instance, in which the payback of this discounted payback 4.8 years. In 2023, with the new rule is going to be 4 point system, it would go from 3.8 to 4.7 and a remote power plant is which instance, on the evolution of the photovoltaic module, nowadays the photovoltaic models are with a lower in price. It also depends on the tariff on energy, whether it's going to go up or down. It depends on the exchange rate.
It depends on a series of variables in order to actually see how this is going to evolve. Another important information is for the centralized generation from 2023 onwards. It's the barrier the entry barrier is going to be lowered for to 500 kilobatt, so that companies may be acquire energy from the free market. So that opens up a very interesting and big market for the centralized generation power plants. Today, the barrier is 1 megawatt and it's going to be halved.
So more companies will be able from January 2023 onwards acquire energy directly from the free market. The auto lighter products, electro motor control center, so we manufacture a very big portfolio of products for industrial plants. We do all the stamping, all internal components, most majority is also made by ourselves. So motor control center for lower voltage with medium voltage cubicles, e houses and load centers. Speaking a little bit about electric powertrains or electric mobility, we have 2 variations to focus of attention.
First is the electric powertrain. Here we manufacture motors and inversers. And to complement the offer, we also became a the offer, we also became assemblers of batteries. We acquire the cells and from the cells we assemble the modules and from there we assemble the whole park aggregating, adding the refrigeration system, which was developed by ourselves, higher extinguishing systems and ending up with the housing. And we already supply a very battery packs for buses.
This is a picture of an electric bus, if I recall well from the Espirito Santo Estate, which is running on our battery pack, motor and inverses also supplied by ourselves. And as a complement, we also auxiliary electric controls for buses and trucks, for instance, for the compress air for the Braking system. Here is an actual picture is the complementary, the e delivery truck for folks. So it has our motor, our inversor and it has our electric auxiliary control. Is another application which is a Mark Apollo bus which also is running with our powertrain and also within this Mobility electrification, we have a strong participation in the naval propulsion in the marine segment.
Another variant of the electric mobility is the recharging stations for electrical vehicles. Here we develop all kind of EV charging stations, slow, semi rapid and ultra rapid We are the sole manufacturer that does makes everything in Brazil. There are other starts up that are basically working on the slow charging stations, but everything else is important in Brazil. Apart from the hardware, which is the charging stations, which are manufactured by ourselves here in Brazil, we develop all the software that are that equip this equipment and management system here. We have also developed a smart charging system, both for both software and hardware.
And this is for instance, when you have several charging stations installed in the or in a shopping mall and you have a demand that cannot be overpassed, you have installed capacity that cannot be over So it does the intelligent management of all these charging stations, limiting, Therefore, the power to be supplied to vehicles according to the capacity installed capacity, it's an intelligent demand control system. And to our products are connected or prepared for connectivity, we have created and developed a 9 are of hardware, the monitoring and connectivity layer here on the above layer of PLCs and automation and control machinery, the Factoring Management System and above everything else intelligent or artificial intelligence called VEG technology. All hardware and software also dedicated VEG smart machine, for for instance, the software that has been developed by ourselves, specifically for machinery manufacturers and so on. Our industrial footprint, we manufacture all our line of products in Brazil. In Brazil, we have 6 manufacturing plants, panel and product in Mexico and the United States, Portugal and South Africa.
In Spain, we have a company that is dedicated to the assembly of panels here. The focus is the machinery manufacturer that comes a past acquisition. In China, we manufacture also inverse low and medium voltage drives and miniature circuit breakers, which are building division equipment. In Italy, we made recently an acquisition of an embosser for medium voltage apologize for for the motion drive area, inverters, frequency inverters for lower voltage applications, these line of products, our revenue is very well divided, 50% made in Brazil and 50% of the revenue of this line of product comes from foreign operations. In Brazil, we have a 40% above 40% market share.
In South America, we have 10% market share. In Africa, 16 17 actually. And in other regions, our participation, our market share is small, which gives us a great opportunity to increment our revenues. Within this strategy of motion drives to accelerate the process of internationalization of inversor productions and one of the strategy was exactly to acquire the GFRAN company Drive Motion GDM in which the headquarters is it is based in Italy, it's not an assembly plant, it's a manufacturing plant. It has all the stages of the manufacturing process.
So you assemble as well the electric cars, you do all the steps of the manufacturing in this factory that is based in Italy. Besides it has operations in Germany, Chile and India 142 180 employees and it brings us an increase in our portfolio. Our actual portfolio is more dedicated to general purpose inversors and it brings lifts, for conveyor belts, plastic industry, metallurgy among other applications. Here is worth mentioning that we have made investments, strong investments, very heavy investments in the last year, we invested with over BRL100 1,000,000. In 2023, we're going to invest even more in order to increase our productive capacity.
So much so in our in China plant, the enlargement of our plant here in Brazil as well and also investment, a very strong very heavy investment in machinery, fully automated in our manufacturing process in order to increase our production capacity. And to wrap up my presentation, I am nearly out of time. The main strategy for of the JetBrains drive and motion, the acceleration of the internationalization process through the synergy action of motion drives to use our installed plans to join forces for selling the motor and inversers to continue to advance in industrial market with all the line of products, but increasingly to increase our portfolio in the electrification area, in the building and structure area, the advance in electric mobility in the electric powertrain as well was in the EV charging station and a constant expansion of our portfolio, be it hardware or software for digital solutions. That was all. Thank you very much.
Thank you, Manfred. I'd like to now call Jean Paul to present VEG Energy. And the same as I mentioned and the auto presentation, FEG Energy in the market division, all the motors high and medium voltage is within the electric electronic, industrial electronics and the rest of the energy in the GTD area. Please, Jean Paulo, the floor Good morning everyone. Can you hear me?
I think you have to reset the timer here. Thanks. 1 minute is not enough for me. It's a pleasure for me to be here. But in the physical presence, I'd like to thank your presence here as well your attendance.
I will make a quick presentation on VEG Energy. Our product portfolio and some generic numbers, I'm not going to dwell on all of them. But perhaps the strongest point here is 400 and above, which is a bigger machine and we go up to the 2,000 car cast with 145 Megawatts Motors, which is the biggest that we have already produced. But also we have another portfolio of products, which is a hydroelectric power generation, the electric power generation, water, hydroelectric power turbines, we do not do the civil the project. We do part of the construction.
We concentrate only on the turbine and the generator and some valves. Also we have about 1 gigawatt of wind turbines, installed wind turbines, the biomass generation, steam turbines with presence in the American the American countries, and something that has been very interesting for Energy in the last few years, the growth of the service area in which I'm going to dwell a little deeper. Products that we supply. As I mentioned, hydro power generators with something very important for us in India. We do not make the Turbines.
We do not participate in this market, but is the main participator of hydro generators for the Indian market. The line of turbines, the 3 models, a product that has represented an important part of our revenues, the Synchronoss condensers specifically in the U. S. We have already taken 2 orders there. We have now 2 more good perspectives.
For Canada, we already have some in Brazil and later on I'm going to delve into this because this line of products may be may represent Much more businesses for FAG in the future.
Our industrial footprint. Evidently, Our largest plant is here in Brazil, in Zaragoa do Sul. We have another plant in Minneapolis, which was an acquisition that took place 11 years ago from GE. We have a small area in Portugal, but good possibility for growth. We don't have manufacturer of those items in Europe because we recently started that.
And now in Portugal, we are spending this plant in Portugal for us to be able to capture more market share in the services area, both Weg motors and generators and competitors as well, a small assembly of turbine steam turbines and generation kits in Nuremberg, Germany, an acquisition with TGN Cadmis
that
designs urban solid waste facilities for England, Turkey and also for generation from Industrial Waste Biomass, our plant in India was built 10 years ago, almost 11 years ago, greenfield, you've seen a picture of it, it's been growing a lot in terms of market share. It's full plant. We have to do a lot of maintenance there and our opportunity for growth. China accounts for 35% of these items worldwide. So if we are outside China, is not an option.
Being outside China is not an option. We've been growing a lot, but was a small rather small market share yet, and our objective is to grow there. Medium voltage motors. In the Americas, we have a good market share as well as Europe, but in the Asia Pacific region, where we have the largest market, China, requires a lot of focus and attention there. For larger motors, Carcass 550 and upwards, our market share is 10% because our more specific motors, They are not sold to OEMs.
So we the specs are more demanding. So probably this is one of the slides I'm going to dwell a little bit more. The blue bar are the product lines that we are offering up to August this year, 2, 3 months ago. These are our European competitors, And this is our new line in terms of power per carcass. So for example, This carcass over here, our offer was not competitive.
But thanks to this new product line that we Launched in August, it practically doubles power density, which will allow us to achieve much better margins or more market share or a combination of both. We have already launched Carcass 450,000,000 $550,000,000 is ready for sale by March next year. We will release 610, and then next year, we're going to work with larger carcasses. This is crucial for us to be able to enhance our competitiveness and increase market share in numerous markets. In the case of medium voltage motors medium and high voltage motors.
Where do we apply these markets? Some of the most traditional markets such as in mining, oil and gas, but we've seen a lot of growth. And here we talk about motors and generations. A motor and a large scale motor generations are practically the same in terms of technology. There are some specific things, of course, but this is a market that's been growing a lot.
We've been designing lots of projects with Ormak Israel, also projects, many projects with them, new opportunities are coming up. This is a very strong market for us, for offshore oil and gas, Europe, U. S. Carbon Capture is a project we have in Sweden, concrete plant that captures CO2 mixes it up on the concrete for us to do carbon sequestration forever. Capturing carbon, there is technology for that, but sequestration is something different.
It's for good. It's just like catching a fly. If you open your hand, it will fly again. You have to kill the fly somehow. Another project in South Korea for export of green hydrogen to Europe.
We are supplying all the motors there, compression motors there. Notably, in China, we enhance our product lines being offered there, Still limited to Carcass 900. We don't have the whole line there in terms of size. We are starting to dedicate this plant for medium and high voltage motors to enhance our productivity and offer and to win market share in China. This is an interesting line.
Maybe we haven't paid much attention to it, but it's becoming ever more important. But It's kind of an old line, a 20 year old line, which in fact made us wonder how we're going to acquire a company in Europe especially, But in our assessment, this is a market that is going to face a lot of competition from battery storage segment. So we are going to, through this line, going to face a strong competition, especially for those applications that are not critical versus grocery store is not critical, hotel is not critical, But hospitals, telecommunications, major plants, reefer plants cannot rely on battery storage. Can you imagine an ICU at a hospital? It has to continue to operate.
It cannot rely on battery power. So instead of investing through inorganic growth by acquisition, for instance, in a market that tends not to grow so much, Since we have a small share worldwide, we're going to create a new, more compact line with smaller alternator powers without carcass, this is going to be an altogether new line, extremely competitive without acquiring external companies and 2 came up over the last month, we want to grow organically instead. This is our plan for this line. And there's a lot of market share out there. Power SIM Power Generation, These are complete solutions that provide not only the turbine, but also the the generator or the excuse me, the gearbox and so on and so forth.
This acquisition took place in 2018 in Serpte Unzinho, which has a branch office In Germany, as I told you, these are the applications, I won't dwell on it, but this is a business that has grown considerably, especially the services side. This machine need constant maintenance, extremely specialized maintenance. Therefore, we have been generating a lot of revenue with excellent bottom lines, and we want to take this type of services that are extremely successful already in the U. S. That also provide repair services, maintenance service of steam turbines jointly with the gearbox generator and generator.
We have already struck interesting deals there. Hydropower plants. This is the picture of the largest hydropower plant we supplied equipment for, 500 Megawatt equipment, Sound Rocky power plant, hydro power plant that had a major delay in the construction, but it was concluded Earlier this year, we have already delivered a 50 megawatt generator. We didn't supply the turbine, just the generator for hydropower, low rotation. And despite the power is not so big, the machine the piece of machinery is big.
And it's a relatively small piece of machinery. And this is just to mention what we've been doing as far as hydropower plants. This is we are going to enhance our services and products through consultants from Austria, Germany to increase our competitiveness. There are smaller competitors in Brazil that make very aggressive offerings. Therefore, we need cutting edge technology here, wind power, turbines.
This is our product. This is the number of equipment we installed from 2014 to 2018, 2019, Well, there was a hiatus between this product and this product here launched, but we have a full plant, full of orders by mid-twenty 24 is all taken to provide the service and more recently we've heard that WEG announced in August the largest offshore Wind turbine, well, that's 7 Megawatt. And a European manufacturer announced a 7.2 Megawatt wind turbine. This is going to be a change in technology. The generator is a very heavy piece of machinery, expensive one.
We are here making a technology shift from direct drive to middle speed, which is the technology of the future For wind turbines this big, there are 2 medium speed and high speed technology ones. The high speed ones have smaller reliability because of Mechanical issues, this development has been done jointly with engineering teams in the U. S, our engineering team here in Brazil and the numerous VEG divisions, our engineering team in Germany, We signed an agreement with Bio Wind, a small wind power engineering firm, very fully fledged and highly skilled engineers in wind turbines and our India team as well. This is just a rendering of how this machine look like looks like. This is the speed multiplier, an extremely compact generator, permanent magnets and the rest is similar to the current technology ones.
In India, and this is the expansion that Cuba has shown us, this is the new VET Motors planned to be inaugurated in on Friday and this is the VEG Energia inaugurated in February 2011, that is 11 years old, therefore, now we are expanding. This plant is 300 meters long. This is going to be the boilers for the new wind turbines. The 4.2 that we are launching in India, in fact, There's a prototype running there, an operation under test. 2 weeks ago, we started that this is the boilers part and this is the assembly part of the generators.
We are not going to launch a 7 generator in India. This is the largest wind 3rd brine ever installed in India. This is an $18,000,000 investment This is a new business that WEG helped develop, which is energy storage gravitational energy storage. These are train tracks, 3 30 tons each. At dawn, we take energy upwards, uphill and during peak hours, we bring them down again.
This is the discharge area, This is the charging area and each one of these cards or lines are 5 megawatts each. We supply we provided the first system in July. It's been installed near Las Vegas by a company called ARRIS, which is our partner in this project. We are making the proof of concept. The difference from this system to a battery storage system is that that is GTD with a relatively low cost compared to battery storage system, 50% of storage costs relative to battery storage.
This is the synchronous compensator. We have already supplied a hand VGA to ElectroSol. We are now providing or supplying 2 more in a deal that was struck 3 weeks ago. This is a version power solution, utility from Main, and we are providing the whole EPC, the accelerator within the compensator, which is nothing but a hugely 50 megawatts power machine, we accelerate with a small motor and it starts its nameplate rotation and it supplies transient energy to the grid. Why both the battery storage and the gravitational storage system are important because until then, energy was considered firm, that is we had major hydroelectric power plant, 500 Megawatt turbine constantly operating with high inertia or a gas turbine or steam turbine, carbon fired turbine and Energy supply was steady, but as we add wind power and solar power, we inject a lot of as the grid becomes ever more reliant or dependent upon the transient energy sources, we have to find ways to stabilize frequency and voltage.
This guy here is extremely important for small microseconds of power supply. And this is a graph that depicts what I mean here. What's the difference between each one of these systems? BES or Battery Energy Storage is charged early in the morning, 1, 2, 3 megawatts for the grid, this amount of energy is nothing. This is a medium sized company, but for power and voltage control, This is extremely important.
So we charge it from 1 to 4 a. M. And at peak time of energy consumption, we discharge it. In the meantime, it controls frequency and voltage. This is a very simplified explanation, but I just wanted to show you the difference between those two systems.
This is the loading time or charging time, frequency on time, and during peak time, it discharges or unloads. The gravitational compensators takes a long time to charge, but also are much more resilient and The synchronous condenser provides a lot of energy. This is a graph where I'm going to compare The features most important features of the 3 of them that are totally different, but extremely important for the grid. So battery storage is for short periods of time, 3, 4 hours. GES are for long periods of time.
And synchronous condenser, very short periods of time, microseconds, but every single time, why? Because when the generator or the condenser decelerates, starts losing frequency, so it doesn't have much time and it creates a different frequency from 50 or 60 Hertz. So it loses speed and continues to consume energy from the grid to speed it up. So these are the 3 technologies that that provides solutions to that are going to be extremely important for the grid. And to conclude, right on time.
Black Energy capacity and global manufacturing capability and flexibility minimizing uncertainty, some important segments such as mining and wastewater driving demand for high voltage motors. SEP MEGA is a wind turbine platform that we intend to launch in Brazil, but move elsewhere to other markets, important markets such as the U. S. And occasionally India, hydro power generation, we have done some business overseas, especially in generators, our renewable energy solutions that today has a generation portfolio based on renewables solely, some new business lines, green hydrogen, and we've been studying some solutions, but are yet to define what to do precisely. Pump storage, solid waste and geothermal, we are doing now the proof of concept of pump storage and services and Opta, we invested recently in TGN Kanes to expand the building to provide turbine services, especially non veg turbines, maintenance and services and repair, same thing in the U.
S. And this has been generating a lot of revenues, considerable revenues for VEGA, and we will continue to invest on this business. Thank you so much. Thank you, Juan Paulo.
Now, transmission this is Carlos. Here Carlos is within Let's start this presentation, our transmission and distribution unit. I'd like to start my presentation, supplying you with an overview of our business unit for the generation and transmission in a world concept. We have 13 plants, 5 of them located in Brazil and 8 broad. Today we are the largest transformer actually not in America.
We are a manufacturer that produces about 75 MVA a year and for you to have an idea that is to produce transformers for about in terms of with the main utilities in the Americas. And I can tell you that we have advanced a lot in the U. S. Utility. So nowadays we are certified in all of them.
We are accredited by all of them. Also Now in the United States, we have about 4,600 employees abroad and we have a very wide service network. And when I speak about the service network, when we besides our dealers, our commercial representatives, our commercial structure, I always repeat that we are the only manufacturer, the only Brazilian and Latin American manufacturer that has a technical service network that is trained by the company under its technology for both emergency and transformer, but also in the assembly, supervision or bring into operation within good operations our own products. Our strategy and our line of products. Again, WACC has a complete transformer lines from very small one from the pole transformers for this distribution going through all the industrial applications.
We have the dry type transformer. This is a technology today we're going to see that we are not only present in Brazil, but it's a technology that is growing with its participation in the market. And for you to have an idea, VEG is the leader in this segment in Brazil, is also a leader in Colombia, has a very important participation in the Mexican market and without also has a very strong environmental appeal. And for you to have an idea in Brazil about 50% of industrial performance and special purpose applications are dry type transformers and VAG doubtless is a leader in this market. We also have The submersible underground and submersible transformers are very important line of for the big cities because we want to see a clean environment without all the wires going around in the skies and back is very strong in this segment.
And we also have the Handistal transformer line. This is a line products that is used in residential condominiums, in urban centers, in public squares is an equipment that is normally supplied with vegetable plant oil, which is also very environmentally friendly. We also have 2 very important applications and in the grid he always say transformer for solar application and wind application is more or less like having a car, an automated car, which requires every minute for you to start and brakes, start and brakes. If it is not very well designed, it's not going to work well. So this is a technology that we have recently improved.
We brought from the U. S. From our acquisition from Vectron Farmers USA, it's a distinguished product, very reliable and I would say unheard of in terms of the Brazilian market. A great part of the manufacturers of this kind of equipment that has their mean power higher as not making with the technology and the required reliability. And to complement our line of products, we have the medium voltage transforms up to 145 kilowatts.
Here has a very important market share, very significant in Brazil is the leader of the market and also the gray transformer up to 5 1,000 kilowatts, 550 kilowatts. We can see that we make all the line of transformers and we are the manufacturer in Brazil that has this complete line of products. All others have segmented in different segments, different areas, but WAG offers a whole and complete line of products, which is very important in terms of technology, in terms of product portfolio, but is much more important for our clients because power transformer. So we have a very complex line of products in terms of transformer to supply our clients wherever in whatever market they are. And now addressing Some more specific purpose equipments, we have the derivation reactors, these our products to equilibrate the reactive energy in the line of distribution.
This shunt reactors was developed specifically for the energy options that was launched about 4 years ago and we have all the special transformers for occasions especially for foundries. We have the disconnectors, steel mills. We have the complete line for the renovation and repowering of grade capacity transformers and this is growing in our portfolio. Everyone knows the shell life of equipment in Brazil. So it's a line of product that we dedicate a lot of attention.
And afterwards we have all the solutions in turnkey solution regimen. We offer conventional substation, mobile substation. Now moving on On an update of our industrial footprint, and I am going to take advantage of this a slide here to show you a little bit of our strategy. And in the U. S, I'd like to tell you how we are structured.
We have 3 manufacturing plants and there we manufacture transformers up to 60 MVA, 161 kilobolts. But here the strategy is distinguished. We have in the U. S. Market these 3 plants and one of which, the most recent one is dedicated to supply the big utilities in the United States in the powers that we call the distribution power.
So that is a extremely automated manufacturing plant and it makes transformers up to 3,000 for you to have an idea, we manufacture in this plant about 150 transformers per week. And Talking about a 1,000 kVA, it's about one possibly one of the manufacturing plants with the highest capacity of production United States. And as I mentioned, it supplies the utilities in this with this line of products. Then we have the second plant, which we call the specialty transformers, in which we produce all the transformers for renewable energy. So it's a dedicated plant for transformers to be used in solar and Wind Energy Generation.
This line of transformer is helped by one of the Mexico plants. We have a line of production dedicated to wind and solar energy generation, all with the technology of WTEU, VAG Transformer USA, to meet the demands of dedicated to the renewable energy production. And then the 3rd plant in the United States. It makes mid power transformers up to 60 MVA, 161 kilovolts, meaning basically the utilities and municipal distributors in the United States. And in Mexico, we have 2 plants.
One of them, as I mentioned, it meets partially the demands of the U. S, market on the renewable energy generation, and this park also supplies the power market in Mexico. And the second plant in Mexico, which is the transformer, the high load transformer, it supplies the U. S. Market, especially for the big utilities.
And if the question has not come up yet, it will, Because with all you speak about the U. S. And the future greed that is going to be built in order to distribute all this solar generation from the East West Coast to the great urban centers. The VAG in the U. S.
Today, as you can see, example of that in Brazil. In Brazil, we participate in all energy auctions. We are present in all the distribution business and in the U. S, we still participate in what's called a sub transmission of energy, which is the transformers, the lines or transmission of 138 kilowatts and 230 kilowatts. We are now supplying In 450 kilowatts, that is vague within its strategy.
It's getting ready for an effective business in the transmission sector also in the U. S. And For that perhaps, and I'm going to show you next, for that perhaps VAG is the best prepared maker or manufacturer because we have plans in the U. S, that is we are an American company with all the technical support, with the competitiveness of Mexico. Moving on in our industrial footprint, we have a plant in Colombia as well, which makes transformers up to 30 MVA in 72 kilowatts and here basically to supply Colombia and the Andean region.
And in Brazil, we have 5 plants with transformers, making transformers up to 500 MVA with 5 50 kilowatts. And in South Africa, we have 2 plants. And one for smaller transformers for the distribution area and the other one for transformers up to 45 MVA, 145 kilovolts an hour. Main client is WESK, which is one of the greatest generators in the world that has recently launched a plan, which is very important to develop the electric sector in South Africa.
Now moving on, Our market share that today is number 1 in the Brazilian market, and it has a leadership role that also plays in Latin America as a whole. I divided the Americas into 2 regions. In South America, today, we have we hold 23% of the market share. We hold approximately 6% of the market share. I'd like to underscore something here, and I wrote it in the upper side of the market.
When we assess the market, we are considering all the manufacturing plant and sites of for transformers, not always where VEG plays an active role. When we talk about 23%, 6%, we refer to the all the transformer manufacturer in a given market. So we have a huge opportunity there in North America for growth, Well, we already have an expressive market share in renewables. As I told you, For us, the time has come for Energy transmission, power transmission for 345, 440, and 550 kV, which are the voltages where the new grid is going to develop. WEG has the technology for that.
Up next, I'm going to show you the investment we've been making in that area. So this is the time for us to do that. In Mexico, up to 145 kV, we're leaders. We have an expressive share also in that market, as I said. I'd like to show you now some investment we've been making in Blumenau here in Santa Catania State.
We are about to finish a transformer production line dedicated fully dedicated to renewables. They grew their medium power a lot, so we have this dedicated line. We're investing currently on the verticalization method within Brazil with boilers expansion, with the radiators plant in Betim, Minejeraj's estate, we are investing heavily as well. We are doubling the assembly line capacity in our laboratory for high voltage applications. We are also implementing our e mobile solutions.
We're going to have both in Bloom and now Embiidim to provide more competitive services in Southeastern and Northern Brazil. We're also in between renovate overhauling transformers. If Bloomer now strategically takes care of Southern Brazil, in Betim, takes care of overhauling and repowering of Southeastern and Midcenter Brazil. Itajai, which is a port nearby, we are doubling the capacity For dry type transformer, investing heavily on dry type transformers in Brazil. Overseas, Well, in the U.
S, to start with, as I told you, we've just finished the distribution transformer line there with the 3rd plant. And now we are doing capacity building for people in our renewables, energy transformer line there. We are the U. S. Plant is getting the last investment.
It's going to be ready for the U. S. Market by March, April 2023. In Mexico, I detail here in this picture. Our planning is quite aggressive.
This is our manufacturing site for 550 kV transformers. We are expanding the side, and we are building a new boiler facility here and a silicon cutting part there, we're going to expand this manufacturing site with 2 major goal: number 1, to manufacture transmission transformer, 550 kV transformers and secondly, to feed the manufacturing sites with radiators, transformer cores and tanks to make them ever more competitive. That's why I told you that we have a very privileged situation there to provide products and services in the U. S. Market, thanks to the synergy we are building between Mexico and the U.
S. Here, also very briefly, I'm going to show you Baital, which is an acquisition we made early 2022. It manufactures current and power transformers up to 5.50 kV. Balto is a brand that is owned by VEG. It's known worldwide, and our strategy is clear.
We are making considerable investment on this plan to internationalize Bautel and WEG in power transformer or instrument transformer, if you will. Very briefly, this is the development of new products. We're working on all digital production lines in asset management for industrial transformers, monitoring of transformers, large size transformers and also working on pole, light pole transformers for monitoring and reduction of non technical energy losses. Do we develop another dry type transformer that is boosted by VEG automation, and we piggybacked on the solar solutions with this dry type transformer that is vacuum impregnated. These are the Balto measuring instruments of Balto.
And with that, we conclude this cycle in the transformer lines with complete solutions. To conclude then, Our most important growth strategies in the foreign market is to keep focus on the Americas and sub Saharan Africa taking advantage of opportunities that I told you about, intensified synergy between North America, plants focusing on verticalization as a strategy and to become ever more competitive, to expand our share both in the renewable energy markets and power transmission market. In the domestic market, We continue to develop our portfolio of products, a diversified product to pay attention to the auctions of renewables, paying attention on the renewables energy market and increase our market share there and to consolidate the Betin plan to expand our footprint In the transformer power transformer market, reactors, shunt reactors and other mobile solutions, this Thank you, Carlos. You can stay here because We're going to start the Q and A session right now. I'm going to invite Cuba, Manfred, Rampaolo for us to start the Q and A session.
I would kindly ask those who are going to ask questions, please raise your arms. We have the roving mics here. We're going to take the microphones there for you. And during the question, please identify yourself, give me your name and the company or organization you work for, that would be fine. So let's get ready and mics are ready.
Therefore, we're going to start. Hello. Good morning. This is Lucas Machiaoli. Thank you for your presentation.
I'm going to ask about the circuit breakers, and Cuba mentioned that we have a doubt. But trying to understand what is permanent and what is provisional in this competitiveness where competitors have suffered logistic bottlenecks, and we see a lot of loss of competitiveness, having verticalized production like yours. Now In a conference call, they started mentioning that are getting more components and the logistic bottleneck is fading away. I understand that you are at a different level, totally different competitiveness level, but the world gets back to business as usual. How far is production flexibility.
Now you can have the same competitive levels like the ones in Europe, okay? Thank you for your question. I think that in general terms, what we have to understand is the following. The speed in which the commercial area is moving, especially in Europe, and we have markets in Europe like Germany, where it is extremely different for for a new entrant to knock at the doors and open up this market. Our engineering and engineering teams are reluctant to admit new entrants, new incumbents.
New opportunities came up during the pandemic because our competitors were unable to provide the products. So this help us open up new markets. Now we are working for this to consolidate. So all the customers, the new customers that we had the opportunity to capture during the pandemic have tested our product. Now they're applying our products.
Now we're going to be able to transform an opportunity into solid market in the future. As you said, the supply chain is getting back to normal. Deliveries will be normalized, regular. But one thing that is going to happen and is happening as we speak as we have more business with OEMs. And we are talking with major global players where VEG had a relatively small market share.
Many of them are looking for us, and they're not asking if we have an operation In China or India, they want operation nearer the U. S. Or Europe. Even if our competitors are able to meet this demand In under normal situation, our footprint is more flexible and resilient for future logistic issues. So with the capacity building that we are having worldwide, we'll be able to capture more business opportunities as we've been doing over the last years.
But as the pandemic is overcome, we are going to reduce the pace in which we were capturing new customers. Good morning, everyone. Pedro Fontenin from BDI. I'd like to explore e mobility and what's the strategy that WACC has Concerning that, will you continue to operate in a specific niche? Is this a natural pathway for this business line that you have?
EMobility, we have 2 variants, so to speak. 1 is the electric powertrain and the other one are the recharge stations. In the electric powertrain, We have the inverter, the motor and the battery packs. On this segment, the electric powertrain specifically, Our focus right now is on buses and trucks, especially this is the demand we have in Brazil, and the focus is the Brazilian market right now. There are other applications in marine applications or naval applications, which are new line or revenue line.
Can we do it for other vehicles? Yes. But the demand we have right now is for buses and trucks. Therefore, we are focusing on them. Other geographies might come up, yes, But this is our focus right now.
We are testing this here in Brazil and then check other opportunities out there. As far as recharge stations are concerned, we have already sold in other countries small numbers of those recharge stations in South America in addition to Brazil. And this is a product line that we are preparing our service to be able to sell worldwide except Asia. They have a different connector standard, but the product is getting ready. We are certified for European Union.
And up next, we're going
to have
the certification for selling it in the U. S, My question has to do with verticalization. It's nice to see how you are verticalized in Mexico and India. For instance, pre COVID, nobody followed this strategy or so lean manufacturing the companies were following that, but you were doing things differently. And now during the pandemic, You've proven to be right.
You had less supply chain issues. Do you think that competitors will converge to this more verticalized model, like you did here in and in other geographies? And if they do it, how are you going to keep your competitive edge? What we've seen is a trend in major plays that move towards markets where market growth is higher. The motors market has very small organic growth possibilities.
So we understand that our major competitors don't allot or allocate a lot of CapEx, but on those that have much higher growth rates. We don't understand these movements is going to impact us. We do understand, however, that VEG is very well positioned, both in Asia and in Mexico to meet the demands of China, Southeast Asia and other markets. And now with the expansion of our operations in Brazil, in Turkey and Portugal will be even stronger to supply and provide products and services in Europe, what we see is regional competitive. Our concern is not verticalization and lower cost, but to have optimized product to have low cost enough and competitive to sell in Turkey, to sell in Poland with good bottle blinds.
So when we understand that, Even though you want to verticalize, this is something that takes years. See what happened in China. We had a high CapEx invested in China. When I moved to China in 2010, a lot of outsourcing of components was out there, which is the Chinese model that was in 2014, the UGao was built. So verticalize To verticalize has to be long term strategy that takes years years.
We are very well positioned both with an interesting manufacturing strategy worldwide and competitive levels that allow us to pay fairly with any competitors worldwide. Hello. Good morning. Lucas Vak from XP. Thank you so much and congratulations for VEG for this VAC Day being held face to face, I'd like to explore the distributor generation business.
In 2022, 2021, big part of the growth came from domestic distributed generation. By your presentation, we've seen market share of 22%. I'd like to understand how that is positioned in projects below 500 kV and above 500 kV that are more impacted by the new regulation? And how do you see a potential strategy shift migrating towards smaller projects that would be less impacted by the new legislation To think on the maintenance or keeping of this the growth of this segment that allowed you to grow your revenues. What's the current positioning?
I mean, larger projects versus smaller projects? And what's the way to go between both subsegments of distributor generations? Thank you. Excellent question. In distributor generation, Our most important market has always been the sales of solar kits, not the distributed generation power plants up to 5 mega.
For us, that accounted for 10% of our business. In the last years, this changed because of changes in legislation, and therefore, Now we are in 30%.
There is an increase, significant one in this GD our plans because of the alteration in the law that is going to come in effect and generate the strategy to maintain our revenue from 2024 when we believe that we are going to start feeling in the effects over the last 2, participate more in the mono phase, single phase market. Actually, our integrators, the most participation of them is in the 3 phase market of solar kits. So for that, We are developing a line of products that are more dedicated to the single phase modules and for besides the solar integrators, we are developing some in distributors specific to operate in the single phase market. So these people are going to be a great distributors to sell to small installers. That is the strategy.
I think we have 2 questions from the front here. Good morning. Lucas Derits from Santander. I'd like to exploit a little bit more the strategy of India that you commented that you see as the main manufacturing part in the future. And I'd like to understand whether you already have a CapEx strategy as Cuba commented that the verticalization there takes a longer time.
What would be the time schedule for the CapEx so that we can have more numbers on that. Well, in regards to VAC Motors, we've made in operation there with a capacity for us to reach 2,500 motors. That's an estimate volume that we can put in that factory. We have structured a whole base of technical support, distribution. We restructured our commercial area to supply the short cycle product, which is different than the VEG Energies, yet it's long cycle.
And we understand that we're going to and we're going to take about 3 years to understand the market to scale the Zwala. And after that, we're going to have to see a new manufacturing property, VEG Energy is also increasing and we do not have more room in that plant. So when VEG Motors designed the India project, we understood at a time that we should go there and start an operation in the same plant in which VAG Energy operates and we have everything ready there. And from the moment that we are going to scale, we have to move on to a new park to have a higher verticalization with the stamping, for instance. And why not in the future, perhaps a foundry having a foundry there.
So I think in the 4 years, 5 years, this is not going to happen because we have a good in store capacity for the committed demands of the Indian market. Good morning, everyone. Daniel Gasparre from Itau BBA. I'd just like to explore a little bit of strategy on the transmission area. The word demonstrated that market share in the international market is relatively low.
And I'd like to understand what are the advantage the competitive advantages, who are the players, how do you compete with your competitors, what is the strategy to gaining market share in this sector? Well, first of all, thank you for your question. Well, we have First to understand how the transformer business works. Transformers are is a business, is a product that because of the sheer size of They have a very complex logistics. The microphone's problems, some mic issues.
Well, so it's very difficult for you to have a strategy for exporting this product, specifically for the target market, you have to have local plans. And then we have a strategy that is very well assembled for the Americas, in which we have the located the plants located in Brazil and Colombia, and I'm speaking about South America here. And then later in North America, we complement that as I shown with the Mexican and the U. S. Plants.
And here, the different movement that in the market is to have the Mexico as the base for a production center. In terms of components for the U. S. Market, as I've shown you, all boilers, the core components we are going to produce and we are already producing part of this in to supply the Mexican and the U. S.
Plants. You also asked about the movements in terms competition. And we've had a few recent developments that were quite significant in terms of world market with several change in the playing field. And I'm not going to dwell into this because these are public information that you are all aware of, But these are developments that can bring a lot of opportunities to WAG in its focus, which is, as I before Americas, the Americas for all the opportunities that we foresee for the growth in the market as well as in the African market. These are 2 markets that we see as a short term very good perspectives for the short term, especially in the renewables.
In the U. S, you can as well as in Africa. So today, our focus in the international civilization strategy in this specific markets. We have a question from the back of Etor from Lyra Investment. Thank you very much for the invitation.
There are 3 points I'd to comment on. First, how is the opportunity for us to do a battery? We already export some to France, but from the ventilation with the wind generation, we have all the oscillation and the difficulties of maintenance in the distribution line? And why not transformers in India, where you have everything in place for making. You already have a fruit there.
It wouldn't would be interesting to produce transformers there as well. So the intermittency of the renewables, solar and wind generation, actually there is a great opportunity for Brazil to become a supplier of green steel, especially in the Northeast part of the country in which we have better wind conditions in the world, and the solar radiation that is stupendous. Eventually, we will be able to attract and we were talking about this in the Board of Abe we are going to be able to attract investments, but that has to go through industrial policies, not only the wind that is going to solve this problem, to attract this kind of investment in the Northeast region of the country so that we can have power plants to produce green hydrogen with meant to be exported to the Europe that's happening in the South in South Korea with U. S. Investment.
And I think that here our generation capacity to make green hydrogen is better than in any other country in the world because of our natural resources. But I think that this is still a bit far off. There are some embryo projects. And you also mentioned battery. Battery comes to firm the rates.
This green renewable energy or green, still they can be isolated plants. They do not need to be connected to the national grid. But for the interconnected national grid, battery and long term storage is necessary in order to solve or mitigate this intermittency of this non for renewable supply. And besides the very important electric power plant, is able to generate months on end. So there is a whole, many things to be studied in order for us to implement something these green projects and to be able to export green hydrogen.
And as I comment today, our focus is on the Americas and on Africa, where we can see a lot of short term opportunities. We are following a verticalization project as well in our plants in Mexico, in order to achieve higher competitiveness and become a very important player in this process, and this coming the development of the agreed. And now India is not part of that short term strategy. We still have time for one more question. I am going to pass the floor to the back part of the Thank you.
Here is Morello from Valea. And I think the question is for Cuba. But In the beginning of the presentation, you mentioned about a $660,000,000 investment for the expansion of capacity here in My question would be, what is the timeframe for that project? When should that be executed? And a more generic question.
When we look backwards, VAG had a CapEx on net revenue because that is a measure that we used to do. That was bigger than it is in the last few years. So the impression that we get that you gained a lot of market share and expanded your operations and the investments have not grown in the same rhythm. So my have you gain on productivity because of this investment that's why I didn't have to invest that much? This is what I mean is in terms of capacity or production capacity because there's a lot of opportunities and you're still performing well in the growth area.
Well, that is a very question. I think that in the last few years, they were perfect years in which to do the plant management because when you have a full order, you have better opportunities to identify bottlenecks and when you identify this, you have a better notion of your production. In 2020, you had a drop and then we started from 2021. And from 'twenty two onwards, we have all production taken. I mentioned that we have a lot of the transition of components between plants going on and we're following 2022 with oil production taken all over the world.
So the first question that you asked in regards to the timeline for the investment schedule. And Brazil's investment is $660,000,000 the construction of new buildings and the acquisition of new machinery. So in 'twenty two and 'twenty three, we are taking a big step towards constructing new physical structures. And with this building done, we are going to buy the machinery, so we're talking about 20 to 23, 2024 beginning of 2025 in which we're going to buy the machinery as we have an increase in the demand both for industrial motors as well as for electric mobility, as was mentioned here. And what is happening in regards to CapEx?
PAC Motors is still investing a great share. The percentage of the investment on raw is the same. And when we look backwards, 10 years backwards, we see that we had an increase of revenues that were very significant. So that somehow is marching together in lockstep. And as we have this increase in revenues in the last few years, obviously, we were able to we have a better utilization of our plans, use as well with this, we have several programs that were implemented worldwide, WMS, in which we gain a lot of productivity in all our operations.
Today, China operation, Mexican operation, Portugal and in Brazil operations are all monitored in in a remote way and we can run benchmarks in the Brazilian plant with any other plant anywhere in the world. And I think that is something that distinguishes FRAG with a vertical production that is able to do that very few other manufacturers are able to do. So it is better intelligent allocation of resources over the CapEx using just what makes sense in every country. I think that's it. So we are running out of time.
Yes. For us, in order to keep on time, we are going to finish this Q and A session. I would like to thank again the executives here for their presentation. We are going to have a quick interval and back we're going to come back at 11:45. Thank you very much.
Okay. Let's resume our session. The second part now. I would like to invite Andre Rodriguez, who is going to talk our CFO is going to talk about our financial performance. Hello.
Good morning, everyone. It's a pleasure to be here to update you on our financial performance, convey some more information about our business units. Let's start then. Okay. Talking to you about our growth record over the last 2 years, we had a growth rate in average of 16%.
I think it's important to convey the information that this growth rate in adverse in adversity like the ones we faced with the downturn in Brazil, like deceleration of global economy, the pandemic in early 2020 and now the Russia Ukraine war. This growth rate, if we consider the last two years, we're growing a little above 30% in the 1st 9 months of the year. Our growth rate is quite attractive at 28.8%. Now talking in further detail about our business unit. The first point in the 4th business lines that we the default result is growth rate in 3 of them.
And the other thing to be mentioned is the profile between this breakdown between the external and domestic market. Growth in GTD Brazil generation solar generation, wind turbines and Good performance of transmission and distribution has changed the profile of revenues relative to the past 2 years. The other point our product diversification, market diversification, solution diversification has helped MEG try to find new opportunities in different market cycles. For example, the continuity of a good portfolio of short cycle products, both in Brazil and overseas, has helped us in this growth process. And also, a good long cycle product portfolio, both in Brazil and overseas.
Now getting into the business lines, starting with Industrial Electroelectronic Motors, which is the most important part accounting for almost 50% of our revenues, industrial, electro, electronic equipment, 33% foreign market. Here, we're talking about Industrial Motors and Industrial Automation Equipment. This excellent performance results from favorable conditions, economic conditions that is of our most important market, coupled with important segments that have been showing excellent performance, oil and gas, pulp and paper, Water and Wastewater and also Agribusiness. Now moving to green part, GTD, generation, transmission and distribution, which has been standing out because of our strong position in providing renewable Energy Solutions in addition to research and development with full solution for wind, solar, thermal and hydropower. When we examine the growth of 70% of the domestic market, It's really robust, thanks to the excellent performance of research and development, as Manfred showed, the solar and distributor generation business and also the new wind turbines in The external market, despite the good performance we're having in North America, particularly in some other countries, In 2011, we had very important growth in Colombia and South Africa that has raised the bar.
Even a little below last year. This year, we are performing very well in the U. S. And now having our permit portfolio being beefed up. Now in the Motors for the appliance industries, we had a performance a little below the expected one during the pandemic.
On the second semester of 2020 early 2021, we had huge demand for appliances. So thus sharp drop was expected. And now we are picking up again and creating the conditions to improve the situation next year. In the external market, in countries like the U. S.
And Mexico, where the improvement of economic conditions and our market share has allowed growth in those markets. When we talk about coatings and vanishes and we're talking about liquid and power industrial coatings and varnishes for industrial purposes as well, the domestic market, a good performance of the markets where we operate and the excellent sales in Latin America has allowed us to have a 30% growth rate. Now next slide, I'll show you our EBITDA performance, EBITDA margin. In the 1st 9 months of this year, we have a margin of 18.5%, a little below what we had in the last 2 years. But definitely, comment that we are delivering the solid bitmap margin in an unstable scenario in issues in the global supply chain and also issues in the European economy and also this is also the result of our productivity enhancement and cost reduction programs.
Cuba mentioned the VECT Day 2018, there was a presentation of this program that has been widely publicized and also the enhancement of our operational capacities and long cycle product improvements and operations overseas. Now I will talk to you about our working capital, where we had been following this historical series. But in 2020, we had an increase of the ratio of operational working capital relative to the revenues, and this happened to our stocks. This was due to a strategic decision made by the company to improve enhance increase, excuse me, the stock of raw materials and stocks in this period of uncertainty in the supply chain, punishing our performance indicator. And what we showed you this morning proves that this decision brought positive results in for the development of our business and such as market share gains.
In this slide, I'm going to talk to you about our In the 1st 9 months of this year, we invested BRL672 1,000,000 of investment, an amount that is much higher than the amount we invested in this The same period, if we consider the historical Sirius, we invest from 3% to 5% of our revenue And the focus of our investment, as you've seen, our focus is capacity expansion, internationalization of VEG business and also investment in modernization in Brazil and automation in Brazil and also overseas. Now moving on and showing you our most important performance indicator, which is ROIC. The 1st 9 months of this year, we finished the 1st 9 months with 27 0.9%, a very expressive ROIC, which is the result of business development with excellent returns on investment, discipline in capital allocation and CapEx programs optimization. Our message here is that we're going to work to deliver ROICs above expectations consistently. Getting to the end of my presentation, I'd like to share with you our dividend distributions, which has been increasing year on year, that is to our more than 400,000 shareholders.
And the payout mean is incredible, keeping what we practice over the last years, the earning per stocks. The take home message that I want to share with you, first off, we keep our long term focus of continuous and sustainable growth. We're going to be able to achieve that, thanks to the favorable scenarios we have and the markets where we operate through verticalization and financial viability has helped us deliver that consistently over the last years as shown. The other point to be mentioned are margin of EBITDA that are very attractive. Our competitive advantages here such as verticalization, scaling of production as shown today and the solid and clear industrial strategy, coupled with our productivity gains program, cost and expense reduction program has helped us do that.
And to conclude, the moment we go through is to normalize the normalization of supply chain, we want to improve our KPIs. Thank you so much. Now I pass the floor back to Harry. Thank you, Andrea. I'd like to call Harry now to continue.
Good morning, everyone. I would also like to start by manifesting my gratitude, my Pleasure to be here back to VAC Day in a presential form. And VAC Day is a Nice opportunity to show the VAGS plans what it's doing, but you know that we end up transmitting much more in our more conversation and informal questioning because people ask more. That's why our being here presentially is very important because we have these opportunities as we had last night. So welcome everyone.
Good morning again. In my brief presentation here, It is not going to focus on the results of the next quarters, because maybe you are expecting this, but I'm not going to dwell on that. But I am going to make a brief presentation. Summary of our last review of our strategic plan to see what were the business that we decided to place a special focus on how is the scenario for our businesses and the macroeconomic scenario, the perspectives that see and then afterwards a few drives, a few directions to show you how we are moving them about. So to maintain this decision that is apparently simple but it's a very important decision.
Vague, once and this is a plan that we have from 2021 to 26. Information. So we put focus on motion drive, electrification, automation, energy generation and the grid, which is the transmission and distribution parts of the business. And you can see that here we are bringing a new name here within our market action, our product operation, which is the motion drive, which is a bit different from the strategy that we've been doing up to this moment and I'm going to dwell on that later on. And with that, we are able to advance in the for a new world of mobility, you can see VAG going marching towards that direction, the world of mobility is set within 2 of these business units, which is the powertrain and motion drive and electrification compasses, the systems, station, charging stations, focus of our investment and also developing solutions as a complementary and integrated solution to all WAGEN Businesses.
And So these were the topics that we were rediscussing, reassessing and decided to be our focus. And from them I'm going to speak about the scenarios, but before that I'd like to make a comment on the macro scenario. Without to shadow without if we start analyzing the economical aspects, which is too much macro, the signals are tend to be not very positive. Talking about inflation, we're talking about interest rate. So this is a simple theory.
We can see that there is a war going on in Europe. And I was asked many times how is that impacting Faggot, the war by itself impacts businesses in a general way. But on the other hand, we have lots of things happening, not attention to what may come out of all these politicals and geopolitical changes and we have to be very to that. And what we do is redirecting along the way. We have this capacity to redirect our was not on the businesses, but where we are investing, how we are investing, what sector we are investing in.
I'm going to give you examples about the war again that everyone here is supporting that this will end up soon. I think it's already gone too far, but at the time that they are suffering with the lack of energy, higher price of energy, the world is also marching towards how to supply this demands in Europe because it is marching toward changes. So it is a difficult balance to strike whether we have positive perspectives, especially because of the scenario of the businesses that VAG is involved in. And what is this scenario? Every demand that stem from society And it's a very strong demand to decarbonize the world and this decarbonization movement is going to bring more electrification.
Is the most efficient way of using energy and the way to have clean energy for all applications. So the world is going to be more electrified. You can perceive this all over the world in all movements because this takes which leads to more investments in GTD. We were talking about the renewables in the U. S.
A, the distribution, several things going on there as well as in the world and in Brazil. So throughout the world, these investments are going to be at higher levels than were the historical records. In levels of energy electricity generation, generation is going to be predominantly renewables. And WEG since a few years ago has invested in this, wind, solar, and so this is something renewable, Jean Paulo has commented upon. There is a complementary need, which is the way to store this energy.
So this demand is going to demand storage system, WAG is also very attentive to this. We already decided to invest in the storing in batteries, but I'm going to give you just as an example about hydrogen. In my view, hydrogen is again a way to store energy because what is happening different than the gray hydrogen. We are talking about the green hydrogen here is wind turbines and solar generation. You're going transform that in hydrogen to reuse that as a source of energy is not to produce hydrogen to use as was commented, The green still uses a lot of energy to be produced, but this is something as the fact is also attend to this, but much more as a supplier of electrical electronic equipment as something involved in the production of hydrogen in the spiral plants.
There is the wind turbine and electrification of the transportation system. So all this movement of of transport in the infrastructure of recharging batteries and mining of minerals of transformation. That is something very There is no way to make this transformation without mining. You know that we will have to mine for lithium, copper, silver, there is a lot of investment going on in mining and there will be more than normal in order to make this all viable and reality. More companies are adhering to their commitment to reduce the emission of CO2 as a growing movement industry is increasingly When they take this commitment within the global pact, they start actions within their companies to outsource renewables to substitute types of polluting energies.
And one that is very important is to consume less energy, Because when we talk about energy, that is one of the problems of the world today. We have not only to transform the way we produce the energy there is and all the associated pollutants that but we also have to bear in mind that, That also implies in a lot of investment and the things run out and the whole world will have to look for more efficiency, all of us, all the processes have to pursue more efficiency to use less energy and less resources. That is a great movement as when we are talking about decarbonizing our economy is not only substituting fossil fuels for non fossil to be more efficient in all we do and make is to use less resources. The less resources you use, the more you are contributing to save energy and make it available for essential things and to keep on growing. So this is going to Demand is a business that you already are aware of.
Those of you who follow VAG, VAG invest permanently in the search for better efficiency in all products that we manufacture. It's a very important approach in the market. CUBA hasn't shown how we are investing this, how our technological advancement is going on in the electric motors. So we saw differences in the uses of the resources, the uses of the raw materials, that is enormous with other technology, but a different way of cooling, refrigerating, also the use of is growing, still a significant number of electric motors don't use drives, the gearboxes that gain you gain a lot of efficiency, you will save on energy using with drives and automation and digitalization also and the motor markets as I'd like make a comment, Cubra made a comment here, the drives in automation and motors is the market is going to still grow more than the industrial I just recall this because Sean made a comment on what happened to the motor engine, but historically this is not So historically this market grows more than the GDP industrial GDP grows, world GDP. The market for this kind of motors drives for drives and automation is a market of the macroeconomic signal that many people wonder what is going to happen with the war.
And in fact, VAG is attempt to this certain sectors always will have feel more or less and certain sectors in this transformation market that we have is going to migrate, is going to invest, we're going to have investments in other areas. So our vision is of positive scenario. These are our perspectives and that is why Vegas is still going on investing in these areas that has or perhaps even a bit more because of the new businesses opportunities. Here, actions that I would like to highlight for 20 for the coming years that it somehow has been commented here in the meeting. So first is to accelerate to advance to with the transmission and distribution business in the Americas, it has been shown that we have with 3 transformer factories in United States, we're still investing a lot in Mexico and Brazil, but the United States, we participate in the market, which is a big Our participation is very small and we are doing well in that market with all the support that we have from Mexico, from Brazil, in terms of fabrication and doing a work in conjunction and we have a lot of potential to go on growing.
That is a highlight I'd like to make to continue to advance in the renewable energy business and to invest in the battery energy storage. That is a decision of VAC today. We are there are several other systems to store energy, but we chose and that is going to be analyzing all these other alternatives because it's part of our business. But today, it has It makes more sense to store in batteries, because it has inversors, it has battery packs, automation, it has everything in the system. So that is our expertise.
We have to have a special inverser and to become a specialist in battery applications. Electric power, train, it was better already commented upon and if you charge an structure solution, which has already been commented. And to invest and master the most efficient motor and drives technologies, as has been shown, VEG has had globally the offer of digital solutions for asset management and this in the digital area, we have 2 strategies. Our focus in this moment is the industrial area for energy for digitalization energy distribution and Brazil has a lot to evolve in this and we have several products. But besides this action in Brazil, VAG has already in the international market is incorporating the asset in all the product offer that it makes when you're going to do a management of motor substations, it's already incorporated to it in the package that GRA AVEGI offers internationally to strengthen the motion drive strategy and to accelerate internationally the business of automation and I am going to comment this with this slide here.
I'd like to make clear why the bag is using this motion drive and the international We are 2nd in Latin America because of the United States, but Brazil is an absolute leader in the United we have a relevant participation. We are the 2nd player with a relevant participation. In Europe, we also have a relevant participation. We are the in Asia. You can see our investments in China.
You can see our investment in Asia as a whole in India, in Southeast Asia, we are investing a lot in order to grow more rapidly in this region, which is our important focus of our strategy. And this position in has conquered this. You've always Here, Vegas speaking about oil and gas and mining, salmon, which is very strong areas. Countries that produce this, the market share of VAG is very important in this producing countries and especially of more general applications of of rotary machinery, ventilators, pumps, and this is where VAG stands out in the international market. But in Brazil is different.
In Brazil, for you to have an idea, that is agricultural market is the 2nd market for consumption of motors after oil and gas and pumps is machinery for agriculture. In fact, needs now to establish the strategy to work in processes food and beverages, food as a whole, management of materials and why does the motors and drives and gearboxes. And we have started a plant in Austria and here a gearboxes and we have a very factory and it's a more aggressive strategy with more synergy that we classify here as the manufacturer of machines, which is the manufacturer of machinery and machinery for processing food products, for We have rotatory, motion, oil, gas, mining, and we are starting to address this in a very different in a little bit different way, using all of the technologies that the bank has to increase the participation with machinery manufacturing. There's a lot of potential for us to do so. So this and I was that was how Manfred and Cuba presented this, because we need a lot of synergy.
We need a work in conjunction in approach in the market several different applications. And then we have a for 2 actions that we have here, these two points, these directions here that were first, the separation of automation. I think has mentioned upon automation. We have created a new business unit called that digital and systems and the system area itself that is going to be responsible for this new division. Digital and Systems, then you can here that is highlighted in bold, digital solution system for Industry Infrastructure and construction for the industry.
It's a leader in the market and this is what we call systems, because apart from electromechanical construction, you have automation, We have several softwares and VEG is an applicator of this. So Along with the new systems that we have specific names for, which is the battery storage system and the electric mobility systems that for us here is a motion drive, but each application is going to be a system, is going to be a specific development for each type of OEM for the automotive industry, so we need a lot of engineering, a lot of applications, so we are there as well. So also to have To say that it didn't have a focus is not correct, but we need to apply more focus on this in order to accelerate actions and this is the moment. So our new COO, Carlos Grillo is here today. He is leading this digital solution within automation.
So it's still with digital solutions now. The system area was transferred and was the battery storage energy in order to give more focus and we grow faster in that way. And on this side, on the automation, you can see drives and control and then we have products for company business, Navveg Automation. Here drives and controls is what we have within the strategy of drive along with gearboxes and motors, we want to strengthen our structure out there in order to work in synergy in conquering segments that did not have the participation as it has in pumps, oil, gas and mining. We have to grow there and as a start.
And for this new restructuring, I think actually front for this restructuring, for example, our Head Office our Chief Office, the COO of the VAG Motors and Automation. The center is based here at HQ is here in and they are transferring this office Manfred is transferring his office to Europe along in Italy, along with Jefra and Cuba is transferring his office to the United States from January onwards. So you can see there is Europe and the United States in order for us to implement and to start in conjunction to have more participation in the day to day of this contract to see to a possible restructuring in order to make this strategy more successful and to be more aggressive and to look machinery manufacturers to offer something in construction industry, motors, gearboxes. So they're transferring their offices there. It's the office itself that has been transferred so that we can strengthen this.
This is a temporary solution. Also because of from Manfred is one more executive that is going there to work in conjunction with all the offices in Europe to increase the synergy as well as in the United States.
Well, now I brought robotization and digitization of operations. Once I was asked about CapEx and investment, Vic has something really clear. We have to invest to grow. Do we have a continued sustainable growth rate? This is our flag.
We have to grow. We invest in new business businesses. We invest heavily and we are investing evermore on robot and digitization system for productivity gains and enhancement of our competitiveness. A lot of was said about competitiveness and production of costs of our high voltage motors, etcetera. But this is not for us to make more machines.
The key word here is competitiveness. If you are competitive, you're going to gain it. If you're not, you have to become competitive and increasing volume and then you have this virtuous cycle turning. This is an example. Those of you who attended the last Black Day, this is an example of digitization within WEG.
We as we develop products for digitization of our customers. We are also taking this digitization journey within VEG and other actions to become ever more competitive. An example of robotization, in 2010, we had 10 years in a row growing 4 folds and 4 fold and 4 fold. In 5 years time, we will have to have 4 times more than our base. And this has been speeding up the other example of digitization, and we have this product to sell.
You can see here that in 2018, we invested BRL300000. In 2019, we invested BRL645000, which is BRL945000 And the result today in the effective use of equipment in the wire Manufacturing plant evolved as such, and we are now saving BRL21 1,000,000 It's because of that. This is digitization, the collection of information. And by doing so, we have Excellent performance. I usually say the following.
When you are responsible for managing something, you have to list what are the indicators you want to achieve, you have to select and then you follow it. And you don't over collect information Otherwise, it gets in the way. Today, as a plant, we have to collect maximum information possible because You are not only going to learn, but AA is going to do the work for you and it will tell you where you have to focus. You can have it all because the data collection and the analysis through IA is going to help you focus to prevent downtimes and so on and so forth. And as this evolves, you are improving over and the software management systems that we are offering our customers in Brazil.
And this we have 89% then and the world average of digitization is 7%, but worldwide in Brazil, excuse me, is And WEG is an example that invests heavily. It's always using cutting edge technology from 77% to 89%. So this is another piece of information of all the investments that we have. And yesterday, Cuba was asked about investment in India and CapEx and so on and so forth, it's the following. Historically, WEG has had an investment percentage, continuous and sustainable development.
This has been our strategy. Of course, once in a while, you have to invest some more and but the average considers a longer cycle. Sometimes need to invest more when but this varies the percentage, but the average is kept At that percentage. Have you shown the percentage of investment? Have you shown it?
5%, right? Now it's a little more. And that is always reinvesting either by automating or investing on a new technology or on innovation or on new business. This has been our history, a plant in India. So the faster we succeed, the better for everyone.
Exception to a foundry with the sole exception of a foundry, these are modular investment. You create lines of investment. So we are going to invest on a business that will give us good ratio between investment and revenues. So this percentage of our investment is specifically for robotization process improvement and is a significant amount considered to what others invest elsewhere. To raise productivity levels, this is a complement.
We are working strongly on this. There's not a level of this level of efficiency overseas as yet because we have the same resource levels supporting workers. That's why we are insisting to achieve the same level as the one in Brazil and to strengthen the VAC culture and ESG actions. Well, a lot has been discussed about that culture. And the best description or definition of what a company's culture is all about is the way the company does things.
Vague does it in a co management through co management with the commitment of all workers, all stakeholders. And thanks to this engagement of commitment, we are able to overcome challenges, A company that grows and affords its employees and collaborators to grow as well is the desirable thing to do. The other thing that is really strong in our culture that it Insist on training all levels of operation. You may hire lathe operator at the market, okay? You can hire a lathe operator in the market, yes, But we are going to do capacity building to our own personnel to ensure this in the digital field, Well, more so.
So we start a new business. Now we have a group. How many people are there? 25. So, Senay, which is the national apprenticeship system industrial apprenticeship system, trains people.
We also continue training them and we can give those people opportunity for them to take advantage of the opportunity that open up a bag. This is our culture and to strengthen our ESG actions. Maybe strengthening is not the right word, but I picked this word myself. Here, is listed at all ESG levels and is faring well according to the assessments that are carried out by numerous magazines and awards. We are faring very well in ESG, but the world is changing and we have to beat other demand by beefing up our ESG actions, the social component is really strong.
And decarbonization is also one of the things that since we are in the business, we have to give our contribution and move in that direction. So but we defined and established our target, And this is part of the company bonus to achieve ESG target. Very soon, we're going to have one more, which is decarbonization being the second one. Now showing you how VEG is aligning itself to sustainable values, the search for new values in this world in transformation. We defined our purpose, our goal as to develop technology and solutions to contribute towards the construction or the building of a more efficient and sustainable world, driving efficiency and sustainability.
And here, repeating to strengthen that culture and to strengthen also our ESG actions. Take home message. Our major goal is to continue to grow sustainably, and this is what we're doing to grow. In Brazil to keep market share and positions in mature business and invest in new businesses, for example, in energy storage, etcetera, etcetera. I would like to mention something about WEG Automation.
WEG Automation, the electrification part of the company in all the products it has, it standouts in the Brazilian market as a leader in some product lines. But By using this position, we are little by little offering products in 2 direction, a technological synergy or a market synergy foreign market to try and achieve 2 digit organic growth in all regions by winning more
shareholder
participation in the U. S, we have transformers and generators and so on and so but we're going to evolve to other products, invest in new technologies, in operational excellence, the competitiveness is part of and parcel of that culture. We always have to do things Best than what you did last time. This is part of our founding fathers' culture. This is part and parcel of our culture.
This is permanent search for competitiveness to set ourselves apart in the way we relate to our customers and to strengthen our actions in general, ESG generally. We're going to start now the second Q and A session. I will ask Andre Rodriguez to come up stage again and to stick around. We're going to keep the same dynamics as the first Q and A session. Those of you who want to shoot a question, raise your hand, identify your service We have one back there.
Hello. Good afternoon, everyone. Marcelo from Credit Suisse. Congratulations for the meeting. Excellent results this year.
You mentioned something during your presentation, e mobility and e recharging stations, okay? My question is what comes first, electric vehicle or recharging? And then question number 2 is, How e mobility or electrification is going to take place worldwide? Is California more aggressive, Brazil, India, where people have more resiliency in renewables, etcetera. This is just to see where you see the potential, how big the potential is and what's the implementation or deployment timeline, 10, 5, 10, 15 years or longer.
Time line is the most difficult answer or question to answer, right? But as you mentioned, timing will be different. In the U. S, you mentioned California. In principle, everything almost started there, a major boost in electric vehicle and this growth in electric vehicles is now incredibly growing in China and Europe.
And this is clearly the way to go in deadlines established by governments and the infrastructure to be built. And the question is what comes first, The chicken or the egg, but they're doing that simultaneously because they have a clear cut plan for those countries In Europe as well as in China. Well, concerning Brazil, this is going to happen more slowly. You mentioned alcohol or ethanol. Brazil will have to use its assets, which is ethanol, corn ethanol and the for electric vehicles, for cars, Okay.
So electric vehicles will grow more slowly in Brazil. But what about for buses and trucks? Things it's a different ballgame. Urban buses, for example, our focus or truck, this is, In our opinion, in a very short term, much, much faster because that our government, municipalities, state governments and urban buses are moving in that direction, not probably at the same pace as things are taking place in China because everything is electrical there or in Europe, but it will happen. And then comes the recharging systems.
Recharging stations will not be a business because there's not plenty of money or money enough to build infrastructure everywhere. But in urban centers, they are going to be private investment. Companies will have to provide for their own vehicle fleets. So this is how things are going to happen. But all cars that will be imported, electric cars imported in 5 years' time, they come from Europe, there will be electrical.
And what happens? If 2 electric vehicles get to a condominium at the same time, An argument starts because they have to recharge, and there's not enough infrastructure. So they have to expand, they have to build taking into account the growth in the EV fleet. And there are going to be companies investing on recharging equipment, but growth rates will be much bigger in fleet owners. Just to conclude, the powertrain strategy now.
We are starting this in Brazil for urban buses and trucks. All companies' truck builders are international. And so this is the way to go for us to sell our powertrains. There's one question here in the front. Good morning.
Thank you for your presentation. I would like to understand how is the budget planned in VEG because of the different fronts that you can invest And being 3.5% of your revenues, these are 3, 5 year cycles? Or is by the expected level of return on invested capital that has Well, we had a strategic plan, and it was a 10 year plan. Now it's a 5 year strategic plan because of the market volatility, because of pandemics and logistic issues. So and we list all initiatives we believe that are going to take off.
And after discussing and providing inputs, all initiatives that make sense or VEGS strategies are shortlisted, and we show how much it will investment it will require. Vague investment per region, okay, either in Turkey or in India or elsewhere is projected in the 5 year plan, and we make estimates of that. And as far as ROIC, we know that We have midterm or longer term ROIC, but some products take a little longer than others. It depends on when things are going to happen. For example, the e mobility market, When it is going to take off truly, so for us not to miss out the opportunity and to build our position in that market.
And this is how we discuss businesses and investment and implies in increasing our capacity, productive capacity, if it makes sense and it's growing more in a big in a certain region, we invest more in that region and so on and so forth. We discuss the risks involved, etcetera. Let's see if everything is aligned, but the return on investment is assessed on a project by project basis without knowing what is the actual things, but there are some variables, numerous variables, by the way. We invest this percentage and the investment that we've been making is linked to our strategic planning, and these are things that we at VAG continuously Do it.
We have one more question from the front here. Good morning, everyone. I am Renata Cabral from Citibank. And my question is in regards to automation. A lot of it was spoken about it and I understand that this is an area which is a bit different to VEG in the sense that it is going to involve services, it does involve service software.
So my question in regards to what is the ambition of VEG in the markets in which it's uncertain itself in a deeper way, which I understand is Europe and the U. S. Market given the transfer of the offices to these places. So what would be your ambitions in also analyzing the competitors in these markets, it seems to me that the CapEx investment is a bit bigger than this 3% to 5% that you mentioned in general terms of Ag. Is it to expected an increased CapEx for this focus in automation that is going to give automation that you referring to is the digitization or the inverters or both sensor with digitization everything.
Well, what I see is this strategy for inverters and automation in terms of what has been done so far. These investments are going to be within the natural cycle of investments in this around 5% to 6% of our revenues and this is the digitization. It's still hard to tell, but I don't believe that is going to change the profile of because our strategy as we previously mentioned for digitization, we started with mass. It was not in the software. VAC was always an applicator of software.
Now it's manufacturing. We brought mass. And our focus is now in Brazil, we have the digital platform, but it has to do with the actual business. So software is something new in the strategy, the global strategy of Ag. As a management system, and we have the focus in Brazil and this focus in Brazil is not going to demand strategical changes that are very important.
But depending on the of this strategy. They may think about other mergers or acquisitions in the software area. But there isn't an offer nowadays. And digitization has to be inserted within our growth strategy in the automation and I do not see anything that deviates from these standards. We have a question from the middle of the room.
Thank you for the space and congratulations on this event. Igor, We know that the macro scenario is contributed. It's a more difficult And new opportunities come up in such conditions. And we know that you have always had a very clear mind about acquisitions, so to enter new markets or new sectors. And I would like to understand what business unit of yours generates this opportunity to amplify the product portfolio in a scenario that we have tighter scenario that we have, because I believe still there is some space in movements of migrating the management to Europe and the U.
S. They Actually, we'll tap some opportunities. I'd like to understand whether this is actually happening. And what is your mind about this in the sense and you have said specifically said that VAG has done this or accessed new markets in technologies. Yes, VAG is permanently evaluating opportunities for businesses that may It was asked why does VEGT doesn't do more acquisition.
But strategy actually as you can observe has not been to pursue acquisitions in gigantic acquisitions. These acquisition in which you buy and incorporate into the company in which you don't have a shift in the strategy. Vegas is in the example of Giffra separating €43,000,000 in revenues. Kind of business in this M and A. It's a tool similar to what we are applying nowadays.
So that's our mind. We have another question from the back of the room now. From Citibank. Thank you for this event. And I have a question.
I think that in line of what my colleagues have already mentioned, thinking towards the end of the presentation, we're talking a lot about ESG. And at the end of the day, the company is putting commitments to that end. But at the time some of the main clients of the company are working in the sectors that are contribute a lot to generation of CO2. So how does a company deal with these two movements? In the segment that is trying to and working with sectors that are not so much and work with investments and technologies gears toward these sectors consume less but how does VAG help?
How can they help? How can you help your clients improve with that? And what levels of investment should the company do in to achieve that. Well, in terms of clients, the great thing that WACC does, one of the biggest consumers electric motors to become more efficient to consume less and less energy and put out the same capacity that is to eliminate losses and automation solution as with inverters with we can reach up 30%, 40% perhaps is a little bit exaggerated, but 30% reduction in consumption, for example, in inverter and pumps and automation as well, 6%, 7% efficiency gains is what is being offered to our clients. So our clients are able also to improve their consumption and reduce the resource This is the movement that WREG is doing and its contribution to our clients.
This is what I can answer, but all of this will happen in a gradual way. No one is able to So may I remind that there is all over the world a movement towards the renewable. So our clients at the same time that are going to gain on efficiency are going to pursue themselves renewable sources of energy and then you close the loop if they have the consumption of renewables, be it solar, wind, whatever. And all the consumption is optimized, they're going to end up there. So this is the movement that is taking place.
We have another question here. Good morning. Thank you for the opportunity. Gabriel Hansson, Centimeters Office is a company is an investment company since 19 And the question is from the configurations that we're seeing yesterday, specifically hardware and software aligned to the verticalization of the company, it seems to me that is designing a very important competitive edge along with all these opportunities for the growth opportunities out there. And within the company, how do you deal with features.
What how major is the company towards that? Well, depending on the sector. When we are talking about mining oil and gas, these people are these are companies that are very mature. So they're able to pursue more efficiency efficiency gains towards their decarbonization goals. So the dress the approach that I think is easier that is easier and the manufacturing sector is a bit harder.
There are a lot of things that still need to be done in this sector and that needs more work so that they can understand the offer of VEG and by understanding this to start calculating their returns on investment. So this is How I see. Do we have any more questions? Well, we have one more here in the front. We still have time for a couple Good morning.
Chahual Borkarika from Onyx. The comes from as a compliment actually, Vega is a rare case combining growth, very, very high. We have 30% 2 digits growth. So is there this internal vision or that you from now on is increasingly harder to maintain this number and up to what extent should you have any figures in Up to where would you be willing to open one of the sides of the equation, be it growth or to have a high revenue are lower than you have today. What is your vision towards this ratio between growth and It's a hard one to answer because you know well, let me give you the example of the electric motors division.
It's a historically well it brings good rentabilities, good revenue, has the expertise, knowledge, technology. And the margin that you are able to gain depend on the moments, for instance, if the demand has good demand, the margin increases. If there is lower demand, your margin decreases. If inputs, your raw materials increase your margins, increase your margins, increase your margins, increase, but we do not see loss in margin percentages. But always, again, it depends on the cycle that working.
If you are a bad patch, a bad cycle in terms of raw materials, you will lose a little bit of the margin, but FAG In motors, just an example, again, the way forward is have more market share is an attractive business. All businesses of ag are attractive, but we haven't analyzed yet to give you a right answer what would be the margin in 3, 5 years how this is going to be. One thing we know though, it's we know that there will be new competitors out there. There will be more demands for price reduction and you have to be ready for that all the time. We still have time for one more question.
Is it working? Yes. I think Brazil has many bottlenecks, and the most important one is We train just a few engineers. It's really hard to retain talent. And when we look at VEG, everyone is 30 years in the company with rare exceptions.
What do you do differently to be able to retain talent and to attract so much talent and to retain this talent for so long. Where does this is it Possibility for growth, earnings, compensation, how do you do it so well? There's one thing I'd like to say that VEG invests on at all levels of employee levels by delivering training, by affording opportunity to its employees. That's why people say 20, 25 years at the company because this has been the pathway, the professional pathway. This person is constantly learning, constantly applying knowledge, and the company is creating new opportunities all the time.
So the best way of retaining talent is to have a good performance, is to have a clear cut plan for investment and to open up new opportunities. In 2,008, and I was telling, The mission of WEG is not the one that is on screen. It's what the company does. And we discussed Then what are we going to do about that? Let's make the company continue growing because if the company is to continue growth, it's going to continue creating opportunities, it's going to account to the capital market that invests on WEG that continues to grow and provides a good bottom line to the investors.
So As we work for the company, new opportunities will come up. So this is a way of retaining talent at a company at all levels. It's this strategy, this movement of wanting to acquire more knowledge and market share and so on and so forth. So thank you so much. Once again, I'd like to express my appreciation to Harry and all the directors that made their presentations during today.
I'd like to express my appreciation to all the organizers who put together this meeting, our IT team, all our service providers that have also help us achieve the wonderful results we're having at this meeting and for everyone who watched