Q3 22/23

Feb 9, 2023

Ladies and gentlemen, good day and welcome to Sandhar Technologies Limited Q3 FY23 earnings conference call hosted by Dolat Capital. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Jain from Dolat Capital. Thank you and over to you, Mr. Jain. Thanks, Neil. Good morning, everyone. On behalf of Dolat Capital, we welcome you all in the third quarter FY23 conference call of Sandhar Technologies. From the management side, we have with us Mr. Jayant Davar, Co-chairman and Managing Director, and Mr. Yashpal Jain, CFO of the company. We thank the management for providing us the opportunity to host the call. Now, I hand over the call to the management for their opening remarks, followed by the question and answer session. Over to you, Jayant sir. Sir, we cannot hear you. Sir, may I request you to unmute your line from your end, please. Pardon. Hello? Yes, sir. I think Hello, can you hear me now? Yes, sir. That is better. Okay. Can you hear me? Yes, sir. Now we can hear you. Okay. Superb. Well, good morning, everyone. Thank you, Abhishek, for putting this together. Thank you to you and to all at Dolat Capital. Good morning to all the investors and well-wishers who are here with us this morning. I will begin the conversation by first of all sharing some of the good stuff that is happening. For one, I think something that has been on the radar for a long time are our new investments. I am very happy to share that these investments, whether in joint ventures or in subsidiaries, have started to build revenue. In fact, to the point of JV, all of them are EBITDA positive except for two, where there is a little bit of a foreign exchange fluctuation that is showing them negative. Going forward, I think this is a trigger from when we should all be in good hands of profitability. Also, in terms of subsidiaries, I think a large part of that investment has already been balance sheeted and revenues have begun. We hope to get the full aspect of these revenues in this coming year. Where the market is concerned, yes, the three-wheeler market seems to be a little subdued because of model changes and so on and so forth. I think the other elements of the market, whether it be passenger vehicles, whether it be commercial vehicles, whether it be construction equipment, are all now rearing and are roaring, so we should be able to get benefit. The last thing I want to say on the numbers, of course, is you know that the quarter that has gone by has been a jitters year for the entire industry. Therefore, you will see that most of the industry, or in fact, all of the industry has gone down in revenues. It has been a stabilizing factor, and the good news for us is that we on a standalone basis are back to our double-digit performance in terms of our margins. That is something I thought I would begin with. I also want to mention here that there are some new customers with whom we have tied up some new orders going forward. That work is now taking off, especially in the area of smart locks that we have been talking about for a while. We have also got some new Japanese customers who are extending and have assured us or in fact, given purchase orders for large sets of orders going forward. I am going to leave it there, and then I am very happy to take your questions. Where questions are regarding numbers and so on and so forth, I have with me my learned colleague, Mr. Yashpal Jain, who will be able to answer all of your queries to your satisfaction. In case there is anything that I can supplement to it, I will be very happy to do. Okay. Thank you. Sir, shall we open the floor for questions? Yes, go ahead. Thank you very much. We now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from line of Udit Gupta, Individual Investor. Please go ahead. Good morning, sir. Sir, my question is that, we are looking at so many plants and factories, and sir, the average revenue comes to about INR 60 crores per factory. So what is the logic behind this, sir, if I could know that? Can I know your name, sir? Sir, Udit Gupta. Udit. Okay. Udit, thank you for that question. That is how it probably shows up if you do a simple math. However, our aim and target is that every plant that we set up needs to have a minimum revenue of INR 100 crores. There are now units that are at almost reaching INR 300 crore level. Of course, what you see is work in progress. While each unit is being built to that minimum capacity, you would realize and understand that every time it's a new product line or a new engineering product, it takes time for it to reach that particular level of an output. So anything that you see under INR 100 crores is a unit that is wanting to be a INR 100 crores ASAP. So that's the logic of most of these plants. The reason why we put up these plants and why many of them is because of customer orientation. Customers want us to be right next to them. That is how this business runs for JIT supplies, which is Just in Time supplies, as you may be aware. The other aspect of this is that we keep the numbers of people in each plant to a level where it is manageable. So you would see that in the last 35 years, we never had one day of struggle or one day of a breakdown in our supplies to our customers. Keeping all of that in mind, we make these as modular units with the initial plan for each business to be or each plant to be for at least INR 100 crores. I hope that answers your question. I get your point, sir. Sir, but do we have duplicacy of the products in the plants, like the same product being made in multiple plants? Yes. In many cases, we do have to have that, and the reason for that is you would appreciate and understand that in many cases, we started off with that OEM as being a second or a third supplier. They already had one or two. When we came in, we started off as a third supplier, and because the customers were happy, while they wanted to give us more business, we obviously wanted to mitigate any risk that may arise out of one plant. So we assured them that there would be more than one plant that would be a feeder line for them, and therefore you will see whether it's a Hero or whether it's a TVS or whether it's the other, we do have parallel capacities running at different plants to feed them if required. For example, if Hero has plants in Gujarat or in Dharuhera at one level, they would want us to put up facilities close to their plants also for JIT, also for risk mitigation. I get your point, sir. And sir, my second question is that, in the four-wheeler space, sir, are we looking at new customers or, sir, are we making any inroads there? Oh, yes. Absolutely. That's an area which is wide open for us. The good thing was that we were supplying to Honda, which was a premium product, and based on that and with a now very deep relationship with Honda Lock, where we have an engineering center here as well now, we are very close to cracking some major expansion deals with some of the OEMs. I'm sorry, I'm not at liberty to give you names of those, but you should be hearing from them soon. And sir, the new products in the four-wheeler like the- We supply to Mahindra and Mahindra mainly. Yes. Sir, the new products, sir, like the cameras and the sensors, sir, are they making good progress, sir? Yes, all of them. I started off this morning by saying that all the joint ventures are now at turnaround scenarios. We lost our three years on account of COVID, where some of the product launches were delayed and the OEMs continued their current sources of supply, which were largely imports. All that is changing now, and our business there has started to show not just sparks, but now good growth. Thank you so much, sir. Yeah. Okay. Thank you. Operator, do you have placed star 1 to ask the question? The next question is from line of Shelly Jain from Dolat Capital. Please go ahead. Hi, sir. Sir, in two-wheeler space, the volume in premium segment is picking up well, while the entry-level segment is still stagnant. A little louder, please. A little louder. Yes. Better, sir? Who did you say this was? Sorry. Can I have your name, ma'am? Sir, Shailly Jain. Shelly? Yes, sir. Yeah, Shelly. Please go on. Yeah. Sir, I was asking that in two-wheeler space, the volume in premium segment is picking up well, while the entry segment is still stagnant. What is your outlook for two-wheeler for next quarter and FY 2024? Can you please throw some light on that? Well, Shelly, the good news is that there is a lot of talk in the industry on the new launches in the entry segment basis, especially from Honda. Honda, as you may be aware, is now cracking Hero towards the master at some stage. They built up a huge capacity in Bangalore, and the entire market is abuzz with the entry-level segment. You are aware that in the last four years, prices of motorcycles from an average of, let us say, INR 60,000 have gone up to INR 80,000. Yeah. Therefore, the entry level has changed dramatically. With this new launch, and the entire market being scared of this new Honda launch, everybody started working dramatically on entry-level launches. So we see a lot of that, and we are very hopeful. You would be very happy to know that your company here, Sandhar, has broken into that foray of Honda. I remember our investors used to ask us whether Honda was going to be a major player for us. I am very happy to say that it is, not only for our regular locks for the entry segment and premium segments, but now also the smart locks segment. Yes, sir. Also, sir, in this quarter, the margin has also improved. Yes. Which has due to the sharp jump in gross margin. Going ahead, will this be sustainable? Oh, absolutely. I think this is the beginning of what you will see. You will not see just regular, but perhaps on a growth mode going forward into the next year. But on margins and numbers, let me request Mr. Yashpal Jain to come in and take those questions. Sure. Yes, please, Yashpal. Hello? Shelly? Yes. Yashpal speaking. Yes, go ahead. Yeah, sure. Sir, what is our margin outlook for next quarter and FY 2024 going ahead? For next quarter of the current financial, you mean to say quarter four? Yes, sir. Sir, we are very hopeful of attaining our quarter margins of near about to Q3 FY23 itself. As the new projects are picking up, price agreement largely has been done with the customer. We hope to maintain the same margins. Yes, sir. Shelly, do you have any follow-up questions? No, sir. Thank you. That answers my question. Thank you. Ladies and gentlemen, you may press star and one to ask the question. The next question is from the line of Sailesh Raja from B&K Securities. Please go ahead. Thanks for the opportunity, sir. Can you please give us the total startup cost provided in last nine months and expected numbers for the full year? In FY 2024, how much it is expected, sir? You mean to say about CapEx? Startup cost. Startup cost. P&L. We have charged off, right? Yeah. You ask me at a console level, INR 21 crores we have charged as a startup cost. In nine months? Yeah. How much it is expected in Q4, sir, and also full year in FY 2024? In Q4, we are expecting something around ₹4 crore to ₹5 crore in between. The annual may be around ₹25 crore to ₹26 crore in between. Okay. Next year, sir? Next year, largely the projects will be operational. I foresee is a total year basis on the current projects. Again, we expect something around ₹4 crore-₹5 crore in between, not beyond that. Okay. Good, sir. Sir, other than maintenance- Just to add this, we are trying to make all the plants operational in the current financial itself, so that from the next year, they start their running at their full capacity. That's all. Okay. Good, sir. Sir, other than maintenance CapEx of INR 50 crores, is there any incremental capital will be deployed in the business? Well, as a policy, we keep our CapEx limited to the annual depreciation. We are expecting annual depreciation charge of around INR 130 crores-INR 135 crores, depending on what the actual figure comes up in FY 2023, 2024. But as of now, we are working very prudently and conservative in terms of CapEx. As of now, just we will be requiring CapEx to finish up our spillover CapEx of the earlier projects that are in the pipeline. Beyond that, we are not having any plans as of now, except to keep running our lines. That's all. Okay. Sir, with previous debtor days reducing from 45 to 15 days, is there any discount we are offering for getting payment in two weeks? Can you please throw some color on this? In terms of shortening of the receiver period, you mean to say DSO? Yeah, correct. Yes, sir. In new projects, we have renegotiated the terms with the customer. That is the reason. The payment terms has been reduced from 45 days to some 15 and 7 days in some of the projects. That is the reason. No discount is offered to any of the customer. Only we have renegotiated terms so that it's helpful for us to boost our profitability for the new projects. That's the renegotiation we have done with the customer without compromising on the quality. Oh, sorry, on the rates. Okay. Good, sir. Sir, my final last question. Currently, the two-wheeler mix is 58% and four-wheeler is 22%, and CV and others is 20% of total revenue. How the mix will change over next two years? The last Yeah. Next two years. Well, predominantly, we will be continuing to focus on the two-wheelers because we have done a lot of investments in two-wheeler. As Mr. Davar has told in the previous question that we are keeping an eye on the four-wheelers also and trying to expand the four-wheeler. What I presume is that at least 45%-50% we will continue to have a revenue share of two-wheeler, and remaining we can see from the commercial vehicles in the four-wheeler. With this, I would like to add that in two years of time, we are expecting a good jump in the revenues also. Accordingly, you can estimate that four-wheelers and commercial revenues will be boosting up. Okay. Sir, with the existing gross block, how much we can do, sir, revenue? I mean, we have a capacity because it depends on the number of shifts we are running, the number of orders. We are not running out of the capacity. At the same time, we are not idle. Even if another INR 400 crore-INR 500 crore of revenue is required to get it, we can easily add it. In the extended capacity, we can add another INR 400 crores, INR 500 crores? Yeah. Easily we can add without going for any major CapEx on assembly lines. They don't require much CapEx also. That's all. It's a very small investment. Even if we have to expand or some specific requirement comes from the customer side or a new order comes up. That's all. Okay. Last seven years, our average gross margin was 41%, so that has come down to 39%. With the expected increase in four-wheeler mix, can we expect some 200, 300 bps improvement in gross margin in FY 2024? Yes. We are vigorously working on going back to our earlier figures. If you see, last year has witnessed very dramatic changes, very ups and downs in terms of commodity pricing, also market, sluggish environment in the auto industry. We are overcoming all those drawbacks and those hurdles, and we are expecting that in the coming year of time, we go back to our earlier profitability figures. Okay. So what will be our depreciation numbers for next year? In FY 2024 with the expanded capacity. I won't be able to give you the exact figure, but on an estimated basis, it will be ranging something around INR 134 crores to INR 140 crores at a consolidated level. Okay. Okay, sir. That was helpful. Thanks. Thank you very much. Thank you. Participants, you may press star and one to ask the question. Next question is from Abhishek Jain from Dolat Capital. Please go ahead. Good morning, sir, and congratulations for the strong set of numbers in a tough time. You are targeting double-digit margin in FY 2024. What would be the levers for the margin expansion from here on? From? From here on, what would be the levers for the margin expansion in FY 2024? If you ask me, as I told in the earlier questions, that we are working in improving the margins at the cost side also. At the same time, we have done some negotiations with the customers also in terms of price hikes also. It will be both ways, internal as well as external from the customer support. That is all. And also the product mix is also quickly changing. The revenues are boosting up, so the fixed cost always remains fixed even if the revenue goes up. All these factors will contribute to the increase in the margins for the company. What sort of the growth you are looking from the locking and vision system in FY 2024, and how much increase in content per vehicle? Well, presently we have a good content per vehicle in terms of two-wheelers with the higher content ranging up to INR 12,000 to some of the customers. And we see a good growth in the locking, and I would say the proprietary business, normally we call it. We will continue the double-digit growth in the locking and mirrors in the coming year also. Because Mr. Davar just told that we are moving into the smart locks and working closely with Honda as well as Suzuki. So in the coming year of time, you can see a good boost in the two-wheeler business also, especially in locking and mirrors. Okay. And in the cabins and fabrication business, we have seen a terrific growth in last couple of years. So can you throw some more light what you order scheme is there and what is the current capacity utilization and what kind of the margin you are making in that business? Well, like cabins and fabrication as a commercial market is, the construction industry is again boosting with the government pushing lot of expenditure on infra. The business is also gearing up. We continue to maintain the same momentum in the current year of time, and we are above 8% of EBITDA margin in cabins and fabrication, and we expect to continue beyond that. Do you have any CapEx plans for the cabin and fabrication? No major CapEx as of now for the present capacities. Yes, if some new good business comes up, then the call can be taken at that time. But as of now, we don't have any major CapEx except the marginal small routine CapEx. But if some new project comes up, some new customer comes up with an idle size that we expect a revenue of INR 100 crores or INR 85 or INR 100 odd crores plus to set up a unit, that time that can be marked down. But as of now, nothing in pipeline. Sir, there's a lot of the traction is coming in the aluminum die casting business. What is your And your performance is also very good in this business, especially on the domestic side. What is your current capacity utilizations and what kind of the growth you are looking from domestic and overseas business in the aluminum die casting? Sir, you would like to answer this? Come again, please. Sir, the question was regarding growth in die casting business, aluminum die casting, India, and overseas. Yes. Do you want an expansion on that? Okay. Well, thank you for that question. You are aware that this business was basically initiated when we acquired this company out of Spain, and post that we have done some greenfield projects in Mexico. We put a finishing center in Poland, and now our new facility in Romania is up. When we bought over the business, at that point of time, the revenue was much smaller. But with all of this, we have not just doubled it, but the margin growth has been dramatic. When we bought over the business, the margins were at the level of 3%-3.5%. Now we are very comfortably in the double digits. With us having established that business overseas, we then grew that business in India. That business in India, from what I understand now, is close to about INR 400 crore or INR 500 crore, and it is on a major expansion route from there. And you are aware that we have been given the entire business of TVS for their machining. Now, that will increase the margins dramatically because margins in the machining business themselves are much, much higher. We are very bullish on this business going forward. To do the kind of precision castings that we do, and now the machining business to take over, which not only has potential for our existing customers in India, but also has a huge export potential. Going forward, I think it will be one of the main pillars of our business division for Sandhar. In this quarter, overseas operations was impacted, especially on the margin side. EBITDA margin was dented, and that has come down. What is the reason? Margin has come down where? In the overseas operations. In overseas operations. Yashverdi will answer. Abhishek, the reason, if you see the footnote in the investor presentation, we have put up a one-time commissioning and charging cost of Romania plant amounting to INR 7.65 crores in nine months. We have to normalize this expense, I mean, to normalize this startup cost. If you eliminate this, our results seems to be wonderful in overseas Barcelona consolidated operations. The only reason which is drawing down the margins in the quarter is just because we have put up this as one-time cost because Romania was commissioned in December last week. That's the reason. Will it continue for the next quarter? No. It is already commissioned now. Large expenses already been booked. Hardly around a crore rupees might come in this current quarter. Otherwise, everything is booked up in Romania. They have started emerging also from December 25 of last year. When will you start to receive the incentives from the Romanian government for setting up the plant? One installment we already got close to around INR 5 crore. Second installment is in pipeline of INR 23 crores. In converted rupee terms, we are expecting something around March or in between March, April. That will be shown in the other income side? No, it's a capital investment, so we'll give net off on the capital investment. You won't show it as a profit and loss account. No, because actually all these grants, they are governed by the IFRS requirements. Based on the IFRS, the treatment will be given. We are against the capital expenditure, so we need to go through the capital expenditure route. Thanks, sir. That's all from my side. Thank you. Participants, you may press star and one to ask the question. Next question is from Lanodipa Poddar from Safari Capital. Please go ahead. Hello. Yes, please. Sir, what would be the current debt levels? Currently, at the end of December, we had a gross debt of INR 573.53 crores. In terms of net debt, it was INR 553. Just not much of a gap. Okay. I just want to understand why our interest cost is only INR 9-10 crores a quarter. Annually, we are expecting INR 36 crores of interest. Because in terms of working capital, we are not having much utilization of working capital. That's the one reason. If I take an entire product of term loans and working capital, it's something around 5.5%, not beyond that. Okay. We have, Yashverdi, do you also want to give a breakup of our costs in India and overseas? Yeah. The debt levels and so on. Yeah. I'm coming to that answer also. So what I think, if I give a breakdown of the debt, it is of INR 573 crores. INR 260 crores is in India. INR 333 crores in overseas, while the cost of overseas debt is ranging from 1.65%-3.5%. Okay. That is all. That is the reason our interest charge is lesser. If you straight away multiply by 7% or 6%, that will not be accurate. That is the reason. Okay. I understood. A couple of clarifications I wanted. In the previous call as well, we were looking at INR 2,800 crores-INR 2,900 crores revenue this year and about 30% growth next year. Is that the same? Is there any change in that? No, if you see our nine months figure, we have closed at INR 2,150 of total income. Correct. Quarterly, we are above INR 700 crores of margin. In Q3 FY23, we closed at INR 725 crores, and quarter 2 was INR 749 crores, and quarter 1 was INR 677 crores. Even if you take a moderate average of all these three, INR 700 crores we can easily add up in quarter 4. That will be something around INR 2,850 and plus in the current year. With the new projects started and maturing and giving us the revenue, next year, yes, we are very much on the same growth that we have given an expectation in the earlier calls of 30%. Okay, understood. Fair enough. Next year also 30% growth is what we are looking at, right? Yeah, we are looking at because new projects will also start giving us revenue. Correct. That was fair enough estimate that we are sure of achieving it. Correct. You mentioned about 200-300 basis point improvement in gross margin, right? Right. That's what we are targeting FY 2024? Well, improvement of margins is a continuous process. I may not be able to give you any assurance. But yes, we are targeting to improve our margins in terms of cutting down the costs also and in terms of our pricing to customers. And we are looking forward to another increase by at least 100 basis points in the coming financial year. 100 to 150 basis. So 100 to 150. So currently 9%, maybe what, 10%-10.5% what you might be. We are targeting double-digit margins in the coming financial year. That's it. Double-digit margin. And this 200 to 300 basis point, whatever improvement, maybe it might come in two to three years, right? Driven by both the. It will take time. It will take time. Okay. Understood. That is it from my side, sir. Thank you very much. All the best. Thank you very much. Thank you. Thank you. Participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. Next question is from the line of Udit Gupta, individual investor. Please go ahead. Sir, my question is that, you gave a debt picture for FY 2023. How are we looking at the debt position in FY 2024, sir? Sure. I have given a debt of INR 573.53 as of December, right? Yes. We are targeting that we will not be exceeding INR 700 crores by close of March 2023. This is our target. For the coming financial year, we have kept a target from internal efforts. We target to repay around INR 150 crores by free cash flow generation. If you really ask me with the current CapEx, current cost of the project, to fund those projects and complete those projects, March 2024, if something more new project comes up, we are targeting to be around INR 550 crores or that, not beyond that. Sir, on the export side, by FY 2024, what percentage of revenue are we expecting from the overseas business, sir? Well, overseas business is generating revenue overseas. We are not much into exports because cost-wise it's not viable. Sorry, sir. My question was about overseas only, not exports. Okay, sure. Overseas, we are expecting something, the revenue might grow by another 25% with the Romania plant coming up. We are expecting INR 300 crores we have done in Q3 FY23. Another INR 80-100 crores we are expecting in Q4. You can expect fairly something around INR 480-500 crores is the expected figure in the next financial year for overseas. Thank you, sir. Thank you. Next question is from the line of Abhishek Jain from Sharekhan Limited. Please go ahead. Thank you, sir, for the opportunity. Just a few questions that, sir, we have added a few new clients in our portfolio. Despite that has not been reflected in our sheet metal revenue. Anything we are expecting in coming quarter, or is there any other reason which is not performing the sheet metal business in this quarter? Sheet metal business, Abhishek, if you remember in the last call also we told that we have set up new projects. It takes some time for them to gear up with the revenues and the margins. Out of our four sheet metal projects, two are in the full phase of commercialization. Two will be by April 2023. We are again expecting to be above 8%-8.5% of margins in sheet metal business in the coming financial year. Okay. Any reason with this high margin expectation next year? We are having good volume indications from the customer side. What happens is, after a certain volume, the fixed cost remains to be neutral. Okay. That adds up and boosts up your percent margins in terms of the revenue. That's all. Okay. But it is fair to assume that there is no price hike from the client side. Pardon. Can you come down? Is it fair to assume that there is no price hike kind of a thing, as we are expecting the new margin? That is because of the operational efficiency only. Price hike, but yes, we have negotiated the price at the current levels. Last year only we concluded the price fixation with the customers. That is all. Okay. Sir, any incremental orders which are expected from HMSI? Well, we are working closely with HMSI for all our verticals like ADC, locks, and mirror. We are in talks with them for some smart products. Okay. We are expecting to materialize it very soon. Okay. If you can give, sir, outlook for your assembly business? Assembly business is doing fairly well. I would say it is largely dependent on the customer side, the customer volumes, like other businesses are, but going stable. We are not expecting much of an investment or much of a change in the assembly business. Okay. Sir, one last question on the, if you can share your outlook on the two-wheeler sector, especially what you are hearing from the clients like Hero and TVS. Because in general, whatever we are hearing that the two-wheeler sector is the one sector which is still lagging comparing the other segments with automobile sector. Sure. Mr. Davar will be right to answer this. Sir, will you answer this question? Yeah, sure. Yes, you are absolutely right. We are still not at levels of what we were in 2018, 2019. Okay. As I mentioned in the beginning, the price of two-wheelers has gone up by an average of almost 60%-65%. Which has been a huge shock to the entire ecosystem. Okay. From what we understand now, and from the ground checks that we hear in showrooms of retail sales, exactly with good monsoon, that has happened second year in a row, there is stabilization in the understanding. These price hikes came on account of several factors. One were mandatory with the government regulations brought in. Secondly, were levels of comfort that had been brought into the system. And third was the electronification and the entertainment aspects that were added on to the race track. Okay. I think those things have kind of stabilized now. Like I said, the market is extremely bullish on this going forward. Each one of the OEMs, four-wheelers, have lined up launches. But I think the biggest thing would be the introductions of new models in the entry segment. So whether it is a Honda or whether it is a Yamaha or whether it is a TVS, all of them are working very diligently on their entry point barriers. That, I think, would lead to the volumes that are necessary. Right now, like I said, probably the cheapest motorcycles are INR 80,000 to INR 90,000, which is much over the affordability barrier. But these new entry points will be a game changer, and you will see that in this coming year. Okay. Just one extension to this thing that you said that bullish on the, I mean, your customer are sounding bullish. Is it right, or, I mean, it is your thought process that things are bullish? No. We are only going by the messages that we get from our end. Okay. Thank you, sir. That's all from my side. Thank you. Thank you very much. Ladies and gentlemen, you may press star and one to ask the questions. The next question is from the line of Kumar Gaurav from Dolat Capital. Please go ahead. Hello. Kumar, sir, you audible. Yes. Yeah. Hi, sir. As we expect to grow 22%-23% in 2023, what is our revenue guidance for 2024? How do you see FY 2024 panning out for us, sir? As I mentioned in the earlier question, at INR 2,150, we closed in Q3, and we are above INR 100 crores of turnover every quarter, so around you can say this for 20, 15, the current. Next year, we are expecting something growth of around 30% in terms of revenue. If you can share, sir, major growth drivers for this revenue in FY 2024, just basically some points, what you see. Sure. Yeah. Basically, we set up seven new plants. Out of six was largely in the forward integration type, I would say, the new business type. They will be all generating revenues in the current financial year, I mean, the current means FY 2023/2024. That will be boosting up your revenue expectations. Okay, sir. Second question, sir. What kind of ROCE we are targeting, I mean, in FY 2024 or going ahead in one or two years? Well, as of now, I may not be able to give the exact figure, but yes, we are targeting a very good ROCE that our loyal investors were expecting us when we were generating in the year 2018, 2019. We will be moving to those figures quickly in a maybe span of one or two years of time. But yes, we are targeting EBITDA margin of about that I can always tell you. Okay, sir. My other question is on JV side, as Jayant sir has already mentioned that all JVs except one has already turned EBITDA positive. Could you please throw some more light on JV performance and what is your outlook for JV going ahead? Okay. One thing is that all the JVs at operational level, they are EBITDA positive. We are in two JVs, due to because we have some payments to them in foreign currencies and the dollar has shoot up from, you see the levels of 70 to INR 81, INR 82. So that is unrealized loss of Forex that we have booked in two JVs, DSL and Kwangsung. Going forward, we see a very good business outlook. Even at EBT, we are having three JVs positive and EBITDA, we are having five JVs positive, varying to negative due to the Forex fluctuation. In the coming year of time, we expect that all JVs in the current, I mean the FY 2023, 2024, they will turn around even at the EBT level. Sir, my question on EV side. In our previous calls, you have been mentioning that we are developing some products for EVs. What is progress there, and have you started production or anything from your side? No. Like we have given a bar chart also with the timelines. We are in the stage of development. Some products are developed. They have been sent for validation with the customer also, followed by the validation from the ICAT and other authorities. We are working very fast, quickly on migration to JV on powertrain. In the coming financial year, FY 2023/2024, we expect to see some good action in JV, including starting manufacturing of some EV products. Okay, sir. My last question is on RM inflation. We have seen some correction in RM, but we are hearing that there is some uptick in RM cost from January onwards. So what is your thought on that, sir? Well, it is market-driven, so if it goes up, we get a settlement in the succeeding quarter from the customers. So quarter to quarter, it affects our profitability. That's all. But it all depends on market dynamics. So if you see the current financial year, 2022/2023, it has not been stable, sometimes up, sometimes down. So that trend is going on. I think that may continue in future also. Okay, sir. On EV side, are we adding any new products or any new projects there, sir? EV- You can also talk about our R&D capabilities in EVs. What are we doing? We have a dedicated R&D center. Apart from that, we are tying up for new powertrain technologies to manufacture EV-specific products. That is what I told you, we are working on the same. In the coming financial year, you will definitely see some action from our side, including starting of manufacturing of some of those products. Let me supplement that, Yashpalji. Yes, sir. To that question on EVs. EVs for us is divided into two portions. One is our current level of supplies that we do in terms of product lines, which you are aware, whether it is our locks or mirrors or sheet metal or this, that, and the other. They continue unabated, and we supply to several of the new OEMs that are there in the EV industry, as well as the traditional ones and the legacy ones. Then there are new products which have been developed, which are both for EVs and new series. These are new product lines for us. For example, a CBS or an electronic steering column lock or a foldable key or a tire pressure monitoring sensor, USB chargers, and so on and so forth, or vehicle location and security systems. There are several of them. But the third element, which is the element which is the specific EV products, which means they have to do with the powertrain, which is the electric mobility product line. In this, you will be happy to know that your company has already in readiness for motor controllers for 1 kilowatt, 2 kilowatt, and 4 kilowatt, DC-DC converters, which are absolutely ready. The EV chargers, which we expect to be ready in this quarter. The hub motor is already done. The mid-drive motor we put on hold for the moment. So this is where we are. We expect, like Yashpalji had said, production of these new kind of EV powertrain product lines to be in the framework and in the market in this coming financial year. I hope that answers your question. Yeah. Thank you, sir. Thank you. That's from my end. Thank you very much. Next question is from the line of Sada from VNK Securities. Please go ahead. Hi, sir. Good morning. Thank you for the opportunity. Sir, given that we have a diverse product range, in this market, who would be considered as our top critical peers? That's a very generic question. I don't know, unless you can be a little more specific. If you're looking at competition in peers, you're absolutely right. We are in diverse markets and a diverse product line. Depending on the product line that you would want to pick, we would have different competitors. Locks, for example, you're aware your company is the largest lock producer in the world. You look at mirrors, we are the largest. You look at seat belt spools, we are the largest. If you look at cabins, we are the most diverse company supplying to everyone. Now, in terms of who is our competition in aluminum, I guess in aluminum casting, almost everyone who does aluminum casting would be our competitor. But if you were to take spoons as a product line within aluminum casting, we are the world's leader. So it is very difficult to answer your question in terms of peers or competitors directly as a company. Yes, you can pick out individual things and I would be able to give you one or two names for who the others are. Sir, in the locks business, who would we consider as a peer? In locks business, we will have a company called Minda Corp as our competitor. We would have somebody like Jay Ushin would be our customer. But again, even within locks, the product lines are a little blurred. In some cases, we fight directly, because locks have a very strong entry barrier. If you see in history, there were five players. Out of those five players, we as a company acquired one, which was a deep loss. And now there is us, there is Minda Corp, and there is Jay Ushin, who are the others. And of course, there are one or two small ones, one out of Aligarh and one out of somewhere else. But in the last 50 years, we have not seen any new player come into this market. Okay, sir. And sir, other than Hero and TVS, given that we are present in CV and as well as off-highway segment, who would be the top two players that we are supplying in CV and off-highway? In off-highway, we supply to everyone. If you look at off-highway, we supply to Caterpillar, we supply to Tata, Hitachi, we supply to Scania, we supply to Volvo, we supply to Kubota. We, of course, supply our largest customer is JCB. If you were to look at the entire lineup, we supply to almost everyone there is in this industry. Everyone. Okay, sir. That's it from me, sir. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Okay. Thank you once again, Dolat Capital, and thank you to all the investors for your time this morning. I hope we've been able to do some justice to your questions. We'd be very happy to have you visit some of our plants or discuss with us face-to-face to be able to maybe understand things a little more. What I can tell you is, as I sign off today, that our company is in very comfortable position in the industry today. We have a lot to look forward to. The investments that have been made in the past couple of years are now showing fruit, and this will only grow into the next financial year. I think Yashpalji has already said that we are probably looking at almost a 30% growth in the next year as well. It should be good times, good margins, good product lines, and the way things seem today, the market goes unabated. Of course, there are some cons of higher interest rates that are dropping in. Somebody mentioned about the volatility in commodity prices. Notwithstanding, I do feel that there are happy days ahead. With that, thank you all very much, and once again, I wish you and your families a very happy new year. God bless. Thank you very much. Thank you. On behalf of Dolat Capital Markets Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you. Thank you.