Ladies and gentlemen, good day and welcome to Sona Comstar's Q1 FY 2026 Earnings Group Conference call. Please note all participant lines are in the listen only mode. As of now, there will be an opportunity for you to ask questions after the presentation concludes. Please note that this call is being recorded. We request that you place your line on mute except when asked a question. Some of the statements by the management team in today's conference call may be forward looking in nature and we request you to refer to the disclaimer in the earnings presentation for further details. The management will also not be taking any specific customer related questions or confirm or deny any customer names or relationship due to confidentiality reason. Please refrain from naming any customer in your question. Now I'll hand over the floor to Mr. Kapil Singh, Head of Consumer and Digital Commerce Research India and Lead Auto Analyst. Kapil, please go ahead. Thank you.
Thanks, Deanna. Good day, everyone. To take us to 1Q FY 2026 Result and to answer your questions, we have the management team of Sona BLW Precision Forgings Limited led by Mr. Vivek Vikram Singh, MD and Group CEO, Mr. Vikram Verma, Full-Time Director and CEO, Driveline Business, Mr. Sat Mohan Gupta, CEO, Motor Business, Mr. Rohit Nanda, Group CFO, Mr. Amit Mishra, Head, Railway Business and Investor Relations, and Mr. Pratik Sachan, GM, Corporate Strategy and Investor Relations. I'll pass it on to you, Vivek, for the opening remarks on the presentation.
Thank you, Kapil. Welcome everyone to the earnings call for Q1. Before we discuss the business performance, as most of you would be aware, we've suffered a great loss last quarter. I request all of us to observe a minute of silence in the memory of our late Chairman Emeritus, Sanjay Kapoor. Please join me in honoring his warmth, his friendship, his vision, and his memory. While Q1 was personally one of the worst quarters of my life. Even from a business performance perspective, Q1 was undoubtedly our worst quarter since our IPO. This is mainly due to the convergence of, I'd say, four adverse but, in our view, at least temporary factors. First was the change in the supply terms with the EV customer in Europe, which affected our revenues.
Last quarter, the supply terms changed from ex-works to delivered to the customer, which added 60 days of extra time in the recognition of revenue, because of which revenue recognition has shifted from Q1 - Q2. This delayed revenue recognition is neither a loss of revenue nor does it have any impact on cash flow. Second, one of our large global customers has seen a sharp decline in sales due to a slowdown in their demand. This EV customer has planned specific initiatives, which hopefully will lead to an increase in sales volumes in the quarters to come. Third, as all of you would be aware, since the 8th of April, China has stopped the supply of heavy rare earth magnets to India. This shortage of magnets has affected the production of EV traction motors in India.
However, we started working with alternative motor architectures that do not use heavy rare earth magnets, and we are also expecting a resolution soon on the heavy rare earth front. Hopefully, this should improve the availability of these magnets, but notwithstanding, we will have production using light rare earth magnets. The uncertainties surrounding U.S. tariffs, particularly the frequent changes in both the rates and the implementation dates during the last quarter, have led OEMs and Tier 1 customers to slow down their procurement processes somewhat and maintain low inventory levels. This situation, according to us, is not sustainable and should reverse fairly quickly in the coming quarters. As far as we see, it has remained what it was. Auto and auto components has been 25% since early April, and that's where it is even today.
What has happened is the combination of the simultaneous convergence of all of these four factors in one go has significantly impacted our performance in the last quarter. In our view, all, maybe most, but hopefully all of them appear temporary in nature and some of these issues have already started to reverse. At the risk of sounding philosophical, I must observe that no matter how dark the skies, there are always a few silver linings at any time. We've ended Q1 with our highest ever order book, including the highest ever net order book for the automotive business. Last quarter we received our single largest order in the past two and a half years and despite all the discussions around U.S. tariffs and electric vehicles in North America, we have successfully secured a significant order from a legacy OEM for the upcoming EV platform.
We believe that this new EV platform is likely to be one of the most significant and successful EV launches in many years. We also completed the acquisition of the railway business and successfully integrated it on June 1. We've had, I would say, around three weeks of revenue from the railway business in the current quarter. Also, as you would have seen in the news and our release, we have recently signed a term sheet to form a joint venture with JNT in China to establish a local manufacturing facility for driveline systems in China. I will explain our strategic rationale for this JV in the next slide.
As you would have observed and I have also written in our annual report, over the past 10 years we've been primarily focusing on expanding our presence as well as our market share in the Western markets, particularly focused on North America. Today we are the largest supplier of EV differential assemblies in North America and ranked among the top suppliers in Europe as well. While we continue to grow our market share in the West, we are also seeking to enter and expand our presence in Asian markets. Asian markets account for nearly 60% of global automotive production and the fact that we have minimal market share there right now means there is a large area in which we could possibly expand our driveline manufacturing. The JV in China is aligned with this new look east and look west strategy.
China, as you all know, is the world's largest automotive market, especially for electric vehicles. In 2024, annual EV sales in China reached 11 million. This is two thirds of the global EV sales. Two out of every three electric vehicles that's sold in the world is actually sold in the China market. It is essential for any company aspiring to be a global EV supplier to participate in the Chinese market as well as its robust supply chain. Our joint venture partner JNT operates a world-class foundry that utilizes patented technology to manufacture complex castings and molds. JNT has a strong customer base that includes leading Chinese automotive OEMs as well as other global OEMs and Tier 1 customers. Sona Comstar will hold a controlling stake of 60% in the JV.
Operations are set to commence in the second half of the current financial year to start fulfilling orders from both EV and non-EV automotive customers. Coming to the numbers, on a year-on-year basis, our revenue was lower by 5% while EBITDA and net profit were lower by 19% and 12% respectively. Our margins contracted quite a bit due to the adverse impact of operating leverage as well as significantly adverse product mix. As I said, we've also added railway business where margins are lower. We also had acquisition-related expenses which have impacted net profit by INR 69 million. If you were to take out that impact for said extra INR 7 crore almost, the decline in fact would have largely mirrored the drop in revenue and not been so out of line. BEV revenue declined by 25% and the BEV revenue share was at 28%.
This is mostly because of the factors already enumerated. We move on to the update on our first strategic priority, which is electrification as always. BEV revenue share has decreased from 33% in Q1 of last year to 28% and BEV revenue in rupee terms has declined by 25% to INR 2.1 billion. This decline, again, to repeat for those of you who may have joined late, was mainly due to the three reasons mentioned before out of the four, which is the change in supply term with the EV customer in Europe, a shortage of rare earth magnets which is also, as you know, all for EV traction motors, and lower sales from one of our major EV customers. These issues seem to be temporary in nature and we anticipate that most will be resolved in the coming quarters.
We continue to build on our EV order book and at the end of Q1 we have 31 EV programs in production, 15 of which have fully matured and are completely ramped up and 16 are in the ramp-up phase. The remaining 29 programs out of the 60 you see on your screen are not yet in production and will start during this or the following years. We'll elaborate on our two new wins in the next slide, please. The first one, and this is fairly exciting for us, is a driveline program for electric passenger vehicles, of an existing North American customer. This customer is a legacy OEM of passenger vehicles and electric vehicles. We will be supplying the differential assembly with the final drive gear for the customer's upcoming platform from Q3 FY 2028.
This is our largest single order in two and a half years and adds over INR 15 billion to our order book. We believe this new EV platform is likely to be one of the most significant and successful EV launches in many years. The second one is the EV motor program. This is for electric three wheelers of an existing Indian customer. The customer is the legacy OEM of ICE as well as electric two and three wheelers. This program has added INR 2.6 billion to the order book and is expected to start quite soon, actually in Q4 of the current financial year. This neatly brings me to our net order book with the addition of INR 28 billion worth of new orders last quarter.
At the end of Q1 FY 2026, our net order book has expanded to INR 262 billion and the EV portion remains high at 75% of the order book. As I mentioned in my opening statement, this is our highest ever net order book even after excluding the orders from the railway business. The order book, just for full transparency, now includes customer orders from our railway business which are obviously of much shorter duration and are expected to be executed mainly within the next 12 months. Moving on to our fourth KRA diversification, on forward diversification, we've taken a slightly backward step on BEV revenue assurance, decreased to 28%. The reasons have been discussed earlier. The ICE revenue share remains low at 9% and we expect the BEV share to improve in the next few quarters in terms of revenue segment.
We spend some time on this slide because there are quite a few changes which are also integral to our strategy for the next decade. By geography now, India has already become our largest end market, accounting for 37% of our total revenue. North America follows as the second largest market, contributing 34%, and it's a small number but if you look at how much it's jumped, the share of Asia, primarily driven by China, has increased to 8% from 6% last year. This quarter, our fastest growing product segment was suspension motors and second, it was hybrid startup. The railway business, which was consolidated just for one month, and actually three weeks to be more precise from the terms of when we actually started registering sales because the first week was a transition period, has contributed 8% to our overall revenue.
When we look in market settings, the revenue share for non-automotive sectors has increased from 10% to 20% compared to the previous quarter. The off-highway market has been a bit of a bright spot, which is another silver lining if I could say. It has grown strongly in both North America and India, and we are expecting this to continue. We are expecting further diversification in our revenue mix starting from next quarter. It says the share from Asia, including India obviously, will likely exceed 50% in the coming quarters and we expect non-automotive revenue shares to also increase to over 25%. Usually, our Group CTO Praveen takes this slide, but because he is traveling to the U.S., I will provide the technology update. In his absence, I hope I will do a good enough job.
I won't do it as well as Praveen, but I'll try to do a good job. You know that in each call we present our technology roadmap, and many of you are now familiar with our approach to technology development. For those of you joining for the first time, the light blue part in the center is an apex of a pyramid, while the outlined parts are more the base of the pyramid. We try to work from components to systems. That's the way we have structured this. The black circles, the products in the black circles are our legacy products that we have inherited or the company already had when we took over. The blue ones are the ones that have been subsequently added, while the white ones are those that we want to add in the future. This quarter, we've included our railway business products in this roadmap.
We are the market leader in railway braking systems in India and supply complete systems for various rolling stock. This is shown in the black circle in the middle there to the lower left. Additionally, we also are one of the leading Indian suppliers of couplers, dampers, and friction products. Friction products are again related to braking, which are shown in blue circles. We are also in the process of developing new products including automatic plug door systems for Metro and semi high- speed trains, HVAC systems, and electric control panels also for Metro train sets. This is part of a deliberate strategy for our product diversification to add more revenue streams and target the upcoming semi high speed, high speed, and Metro trains. In that sense, we move away only from having Indian railways as the customer.
From a product perspective, our strategy is not very different from what we have always done. It will be the same as what we have historically achieved in the driveline business since 2015, in the motor business since 2019, and in our sensor business since 2023, which is transforming the business from being primarily a single product business to a multi-product business. As those of you who read our annual report will realize, our analysis has shown us that is the single biggest growth lever that has enabled us to grow our revenue by 10 times and profit by over 20 times in the last 10 years. We are and will always remain a product engineering business at our core. Hence, developing new products is the only way that we can continue to grow and continue on our exceptional journey that we've had so far.
Now I'll hand it over to Rohit to cover the financial update.
Thank you. Very good day to you all. It's my pleasure to share our first quarter results with you. First, we start with the financial summary. We clocked a revenue of INR 851 crore during the first quarter, which is lower by 5% than the comparable quarter last year. Lower revenue was largely attributable to a 25% decline in BEV sales for the reasons which Vivek has already spoken about. Our EBITDA for the quarter was INR 203 crore, which is lower by 19% compared to the same quarter last year. EBITDA margin declined by 4.3%. That's a combination of adverse effect of operating leverage and adverse product mix. Our adjusted profit after tax was INR 132 crore, which was lower by 7% compared to the first quarter of last year.
There is a positive impact from net finance income in this quarter, which partially offset the lower EBITDA and higher depreciation and amortization cost during the quarter. The adjustment to PAT is close to INR 7 crore. That's basically the forex exceptional expenses that we have debited in the P&L. Next one please. This brings us to the final slide on our key ratios. There is quite a bit of change here. All the ratios have the impact of acquisition of railway business. Due to the different business dynamics compared to existing businesses, there are certain changes. These are on the expected lines. I'll just explain a few cases here. Working capital turnover has come down because the working capital cycle for railway business is higher compared to the existing businesses.
Similarly, fixed asset turnover ratio also had an impact, which is because of revaluation of railway business land as a part of purchase price allocation, which is part of the acquisition accounting. That has caused a pull down in the fixed asset turnover ratio. Our VA over employee cost, though still healthy at close to 5 times, had an adverse impact mainly from change in sales mix and operating leverage. This also had a small degree of impact coming from the railway business integration because that's an assembly business with a higher material cost and therefore lower value. Additions have largely been in a similar range as previously, whereas negative net debt has reduced largely due to discharge of purchase consideration for the railway business. This brings me to the end of the first quarter's earning presentation. I'll now hand the proceedings back to Nomura.
For your presentation. We are now at the Q&A portion of the session. Okay, we will go to the first question, raise hand from Aditya. Hi Aditya.
Yes, hi, good evening. Thank you for the opportunity.
My first question is on the tariff. There has been a few months, what has been the discussion with the customer in terms of, you know, our ability to pass orders or absorb, and how are we placed versus our peers, global as well as domestic? Related to this, post announcement, are we considering scaling up of our facility in Mexico, and attached to that, any differential in costing you can indicate on India versus Mexico, two questions I understand on tariffs, but that would be my first question.
Thank you. Tariffs for automotive and auto components have been 25% from, I think, April 5th or 6th itself. We've had a full quarter of it. We understand the impact better, but our assessment is the same. I think there's some in the background. Maybe you're watching television while asking questions. We have nothing actually further to add from what we said last quarter that we see 3% - 4% of revenue impact could be there possibly, but as you know, you've covered our sector for long enough to know that it happens in 12 - 18 months, even if it does happen. It hasn't yet happened. The plans for Mexico have been the same as they were before because they were for specific parts. If you know, the entire PPAP process and the process to go from planning to SOP is one that takes a lot of time.
There are no other changes. This new tariff that was announced a few days ago is relevant, but relevant to only the categories of auto components that are not already covered in the sectoral drivers because this is the reciprocal tariffs. In fact, we will know when those customers reach out. As you know, and we really said that the importers pay tariffs, not the exporters. If you are exporting, it is not on you. We haven't seen much change so far. How it is being absorbed is an answer better given by our customers. I believe they have been. There is a scheme for the next two years for automotive OEMs in the U.S. that the government will support them in absorbing these extra costs. Same situation as when you asked me this question a quarter ago. Not much has changed actually.
Yeah, thank you for that. The second question on the China JV. Congratulations on the JV. Initially, will it be a situation where we would be exporting differential gears from India to China, and then over a period of time, as volumes scale up, we will shift the manufacturing of differential gears in China?
Is that the thought process?
No, we will not manufacture differential gears in China. What we will start off by is supplying differential housings and other parts. We will, at the next phase, which is not yet part of the financial planning right now, but we will in the next phase export gears from here and assemble the final assembly there. If it does come with a final gear, we can do the final year there. Differential gears will not be produced for at least the next few years that we can see anywhere outside India.
Okay, thanks for the final question, i f I can squeeze in, any sense you can give us on the NOVELIC business development in terms of any order wins, geographic color, OEM, EV versus ICE? Any sense on NOVELIC?
Sure. I think we updated a few quarters back. Next year the sensor production will start, actually, so the hardware parts will start rolling out and there'll be the first product supply starting. We are well on track. The product line will be in Chennai. We have a new SMT line setup where I will actually invite you guys to come visit. It is genuinely, genuinely world class. You should come visit the program. Actually, this is an in-cabin sensory, so as it's agnostic for powertrain because this is an interior system product for sensing. The first customer indeed is an electric vehicle customer, but that is not to do with the nature of the product. It happens to be an EV cluster.
Thank you. As a reminder to all participants, please keep your question to a maximum of two questions. If you have any further question, you can return to the queue later. I'll now go to the second raised hand from Gunjan.
Hi, can you hear me? Okay, thank you. Thank you for taking my questions and deeply sorry for your loss and lots of strength to the Sona family from my side. I just wanted to hear from you on two things. I think both railways as well as the traction motor business. I think railway is now under your fold. It didn't really see much revenue growth last year, which is fiscal 2025. If you can just sort of share a roadmap on how should we think about the growth of this business both from Indian Railways as well as some of the new products that you briefly touched upon. What sort of growth should we be thinking from this business? Secondly, again traction motor, while you touched upon the shortages on the rare earth side, you also have won a new program there, right?
Which is a little perplexing to me because we've seen a lot of delays in new launches coming through on the scooter side. Is it that we are seeing the resolution to rare earth, that the new launches finally will start coming through in the second half of this fiscal? Some color on how should we think about the business ramp up both on railways as well as traction motor.
Thank you, Gunjan, and thank you for condolences. I think we take your question literally every quarter, so you don't need to thank me for that. I will answer the traction motor question first. The rare earth magnet shortage is real. It is an issue because the existing motor architectures that we have or were supplying were all using heavy rare earth magnets. Now, heavy rare earth magnets are NdFeB magnets but with a decent amount of dysprosium and terbium that makes them heavy. Rather, neodymium is a light rare earth. Can you substitute a heavy rare earth magnet with a light rare earth magnet and develop a new kind of motor? It is possible. There are some efficiency, slight cost tradeoffs, but with increasing copper content, increasing the size of the light rare earth magnets, it is achievable, especially if it's, I would say, less than 15 kW.
It is achievable. Technically, the problem or the disruption was because it was so sudden to have a new motor developed. You have to test it, validate it, homologate it, and only then can you launch it in a vehicle, which is why there has been time taking. You'll be happy to know that in July we will be, we are back to our run rate of where we were in April post previous crisis. There are still some motors that have been, that are troublesome to meet. Like I said, anything above 10-15 kW. As the power increases, the physics problem becomes more fundamental in nature and hence impossible to solve. It is being resolved because a new launch which is coming in 2-3 quarters will be actually done with those kind of motors.
There are alternative suppliers of light rare earth magnets in other countries who have developed magnets which are not very far in strength from HRE magnets. We have explored those too, and we are starting to get those from other countries. Both of those tracks are on, so engineering solutions to a trade problem. I will compliment Sat and his team on his agility on being able to solve it. Sat, if you want to add some more color, please change it.
No, Vivek, I think you covered very well. We are addressing all the possible solutions, working on design, HRE-free magnets, and different, different sources. These are the only options available, and we are exploring all those options.
We are working on all those O ptions.
For the railway q uestion, l et me invite our new Railway Business CEO, Mr. Amit Mishra, and throw it to him rather than trying to answer it on his behalf. Amit, over to you.
Yeah. Hi.
In railway business, as we have discussed earlier, we are market leaders in brake systems in India. Another product areas that we have are couplers and suspension systems. All of them are complex and technology intensive product with strong entry barriers. While we are starting with this position, we have identified opportunities to add products within these three core segments as well. We can go further deep into these segments and add more products at the same time. As Vivek explained in Technology Roadmap, we are working on several new products as well which are at different stages of development. These products will come in production over the next few years. We have a roadmap for next five years where new brake systems as well as the new products that we are working on should come into the revenue.
In terms of end market, if you have tracked rolling stock production projections by the government, I think there is growth projected for next few years which should be a tailwind for the business. At the same time, we are actively working on increasing our presence in metro segment and also in select export markets. We do expect the business to grow well over next few years. As you know, we don't give any further guidance in terms of revenue etc. We do expect growth given what we are doing on the products as well as tailwinds in the industry.
Thank you, Amit. First question that Amit has answered. Congratulations.
Raise hand. Amyn Pirani , please go ahead with your two questions. I think the audio connection. Amyn, can you hear us? Can you raise? Can you speak?
Sorry, am I audible?
Yes, go ahead.
Yeah, I mean, we can hear you now.
Yes, thank you.
Thanks.
Thanks for that. Just a clarification on the rare earth comment that you made. You mentioned that in July, we are already back to the April levels. Are you saying that this is because of the light rare earth magnet? Because of that, we have been able to do that, or we have been able to figure out some solutions to the availability of the heavy rare earth magnets?
No, mostly it's light rare earth magnets, and okay, so we do not have any HRE magnet supply since April 8th. Zero.
Okay, okay, okay. For the light rare earth magnet availability, are there risks to that also? It's quite commendable that you're already back to April levels, which is great. Is it a steady state from here, or even on the light rare earth magnets? There could be some challenges in the foreseeable future.
I hope not, man, but these days, every day I think this is the last challenge that I'll have. Next year is a new one. I hope they don't because the ban is specifically for HRE magnets, because even the light rare earth magnets, the source is sad. I hope they don't now come after this. I hope they go the other way. I like, you know, start giving out export licenses for heavy rare earth magnets and solve a lot. There is a constraint. See, we are back also because we had new orders, also bigger motor, still a challenge.
Okay.
It is only our fortune that most of our business is a two wheeler, and even in two wheeler, less than 5 kilowatt motor, which has been helpful. As you go up, it gets harder and harder. That's basically the situation. Okay.
Okay, thank you.
And. On the China JV, first of all, congratulations on that. Is there any broad idea that you can provide as to what is the order book? Because obviously right now it's a JV, you're just starting off and you said that you'll be supplying EV and non-EV. I'm not sure if you can name the customer or customers. I guess that would be difficult, but any broad sense of what is the order book which is there?
You've started supplying,
So good question. It's a brownfield. We wanted to move with agility. Agility, as you know, is one of our core values, which is perhaps the reason that in three months we've been able to come back and bounce back in EV traction motor production. It would have taken a long time to do this greenfield. Second, China supply chain. While it is one of the, I'd say, most diverse and widespread supply chains, it is hard to navigate on your own, which is why you need a partner. It serves both purposes. That's why we went into it. We have not yet started adding order book nor will we guide on it. I'll tell you the reason, because right now it's a term sheet. We will sign all the binding documents and all the stuff in China.
We don't want to start adding to our order book. The day we do it, we will start that. Understood. Okay, great, that's helpful. I'll come back in the queue.
There are some questions in the Q & A box, so I'll just take those away. One question is from Dinesh. Can you talk about the driver of increase in revenue share from China in one case?
Yeah, suspension motors. That was our fastest growing product, as you well know there, and is literally the one product in which the customer is also publicly known. That is the Chinese EV customer Nio, and that's where the growth hits.
Vivek, on this, if I may ask, how far are we from the peak revenues that we are seeing? We are projecting, and how is this ramping up?
You want to take this?
We are still in a launch phase, Kapil. We just launched the product. It's too early. I think this quarter was literally the last. March was the first. We are still in early days. We will see.
Okay. Second question is, can you talk about the potential revenues from the China investment, the China JV investment? Would the Chinese opt to end-to-end manufacturing or would there be supplies from India? How would be the margin profile of this JV on full ramp up?
We can't. As you well know, we just signed a term sheet. Until an acquisition is complete, it's too premature to start talking about the revenue addition or order book. Right. Like if you realize, railway order books, we announced it in September or October. We closed it now, and first time we've added something to the order book because it's premature to do those things. We will once it is final and everything is done. The modality, I think I've already, when Aditya Jhawar asked me, I think I explained that first it will do mostly machined housings and some other parts. In the second phase, we will try and do full differential assemblies. I will invite Vikram if he wants to add anything non-number to this.
No, I think you answered it.
The very idea of getting a good casting supplier who has good connect with customers already is where we targeted. That's why this profile
on the margin profile, it is not going to be the margin profile of our business. That I can guarantee you. China is a very, very competitive market. It will be lower, but it is a large market. As you all know, we are not obsessed by margin as a percentage. Absolute profit growth is what we want, and that's what we will chase for the largest EV market in the world. Even if you get a small market share, it can be a significant amount.
Is either company participating in development of Humanoids by Tesla?
We never comment on customer specific questions.
Okay, then some questions are answered. I'll read just a part which is unanswered. Is the existing customer base part of the order book from the JV?
That's interesting, Jai. Guess there will be some customers that would be our customers existing, but the orders would obviously be different because the product would be different and supply location will be different. Yeah, some of us will be common, but automotive, if you take all the OEMs and all the major driveline Tier 1s, it's not that large a number. You will always have the same customers everywhere. All the large OEMs and all large Tier 1s are already there in China.
Okay, the other question has come on equipment. Are we planning to start commercializing in 2025 as per plan considering rare earth magnet that kicking?
Sorry, on equipment, no. That big a magnet, that big a motor without magnet, more chance. I mean, I was talking about 10 kW. Talking about 350 kW without heavy error? No, next to impossible to solve that problem.
Okay, I think Noelic we have answered, but anything on the order inflow that you want to mention here?
No, anything? I mean, there of course have been smaller order wins, but mostly in services or small POCs. Any large product win we would obviously share in our earnings presentation.
There is a question asking what will be your new EBITDA and PAT margin guidance after incorporating the new dividend.
Good question. Let's just do the math. Our range earlier was 25%- 27%. That was the range we've reiterated many times. How much as a percentage, Amit, would we expect railway to be? Since you're the CEO, you should tell me.
If we look at last year.
Full year numbers, railway would be about 18% - 20% of consolidated revenue.
Good. 20% is at 18% EBITDA and 80% is 25%- 27% range. If we do the math, you will get your answer, which is 23.6%, and 27 into 80 is 24.6%. Yeah, 24 %-2 5% or 23.5%- 25% will be the new EBITDA range, I guess. It's just mathematical. Just do the arithmetic, you'll get the number.
One question has come that could you provide some insight into the succession planning following the unfortunate passing away of Sanjay ?
Whose succession planning? No, let the question towards because Sanjay was a Non-Executive Chairman, he has already been succeeded by Jeff Overly who is our Lead Independent Director. He is now again Non-Executive Chairman. If it's about the management or executive role, I can answer because that is my purview. I don't choose board successors. That's not a question I can answer.
Sure. I think that's all the questions we had. The question is also on who is having the ownership of the company. That question will also come.
Ownership of the company as publicly listed company . I think it should be clear that the public is the owner. 72% of the company is held by a public shareholder, whereas FIIs, large domestic mutual funds, and a small bit even with retail shareholders. I don't know the exact percentage, but 5 to 6%. 28% was held by a promoter entity called Aureus Private Limited. That is a fact since our IPO; that has also not changed. Yeah, who owns Aureus? According to the documents that have been filed with the exchanges with the Registrar of Companies, it was held by RK Family Trust, of which there is one single beneficiary, which was Sanjay Kapoor. We have not had any information after that from Aureus, but direct. There was no direct shareholding of anybody else in the company from any promoter entity.
If the person who's asking the question, these are all very well disclosed numbers, you can go to ROC, you can go on our website. Every single quarter the company is legally obliged to disclose its official shareholding. It's called the beneficial position of ownership as well as the ultimate beneficial owner. That's what it is. I think more than that is far more sensationalism around it than it affects anything. Just for actual genuine investors, this is the answer. Whoever controls the 28% really has that much. Let's say Aureus controls 28%. They can nominate, like any large shareholder can, a member to the board. The board then, in its discretion, can choose to either reject or accept that nomination. If that nomination is accepted, then it has to be further ratified by public shareholders.
Only if above 50% of the shareholders approve could that person take that board seat, which is of an additional non-executive director. How one director's appointment out of a nine-member board with six independent directors makes a difference to the running of the company is very bizarre to me. For some reason, Press of India thinks it is a very pertinent question to answer. I don't know how it affects the company's growth, the company's operations, or the management.
Thanks, Vivek. I had a couple of questions from my side as well. Firstly, on the EV industry globally and particularly the U.S. market, you know we are seeing some pullback of subsidies and some changes in regulations as well. At the same time, there are markets like China where probably there may not have been that much support, but still electrification is going quite rapidly. Do you think that kind of move will come in markets like the U.S., Europe, and India? Is there a line of sight now to that?
Good question. My opinion, as you know, I've not changed for the last 10 years. I think electrification is inevitable. The phase and things in the interim where it kind of goes slow are almost impossible to predict. There is a lot of policy play here. This is the same thing when it happened with renewable energy. Remember it used to be $1 million per MW back in the day and nobody would put up a solar farm, and it was only regulation that was pushing it. It changed. As production increases, cell costs came down. I take the same analogy. Same analogy for cell phones also, by the way. When cell phones first came, people were like, who will buy, too expensive? Batteries are too expensive. It's almost always battery cells which are the problem or the bottleneck of the whole growth area.
I think battery prices will keep coming down. We are already at a stage where China has overcapacity and will have no other option but to start exporting this overcapacity into other markets, making batteries smaller. The second thing that we are seeing is battery packs themselves are becoming smaller. Actually, range anxiety is fading quite fast. I was having this, and this is anecdotal, I was having this conversation with a friend of mine who just bought a battery electric car. I asked him which model did he go for. He went for the lowest range model and I asked him why. He said lowest range is 400 km. Whenever have I ever driven 400 km in a day? I don't need it. I anyway put it to charge at night. If they made one with 250 km, I would go with that.
This, if you were to take as analogous to the small engine revolution that came in the 1960s and 1970s with the Japanese cars. Suddenly the auto market grew many fold because people could buy much cheaper cars with much smaller engines w hen people realize everybody doesn't need a massive engine with 70, 80 liters in the tank at all times because you don't actually use it. Asset utilization of passenger vehicles historically has been about 8%, 9%. As this trend increases and customer awareness increases, I think EVs will become cheaper and cheaper to a point. I think we covered it last quarter. They will be cheaper to manufacture and service and support than ICE vehicles. At that point, economics will start playing its part. Subsidy, no subsidy, nothing will make any difference. China is already past that point of no return. I think it's going to go 100% even.
Europe will follow, and America will be last because of maybe four years of policy direction change. It will inevitably come. I mean, the legacy OEM who's announced this and who's given us this award, if you read what they're saying, they're saying after 2028, 2029 they will do this, and it will be a pivotal moment for their entire company's history. Timing, like I said, may be slower, but the inevitability is undeniable. It is going to happen.
What about Indian market? What are you seeing there?
India is obviously going to be slower. Our views of, I mean, we've answered this many times. You already believe three wheelers, buses, two wheelers followed by passenger cars. That's the order of electrification. There is significant challenge because of the way our country is. Urban density is a challenge. Actually, we have a first mile mobility problem rather than last mile mobility problem. The first mile is actually the hardest to electrify. I would still say it would be the slowest. I think all of us can say we are impressed by how fast two wheeler, three wheeler and buses have grown.
Vivek, the second question is we have quite a bit of order being a very large percentage of the order book coming from electric vehicles. Now in 2015 we've had this problem which seems to be resolving to a large extent. Do you see a much stronger launch pipeline happening in India and even maybe the global markets now this parity is coming, maybe excluding the U.S.? How do you see the launch pipeline?
Actually, the launch pipeline is pretty good. The magnet issue may delay it by two to three months in this calendar year. For 2026, 2027, and 2028, these three years, we had a lot of new launches in, and not small ones, actually all of them are the massive ones. There will be a lot of small ones in the interim, but the big ones over the next three years, there should be quite a few which are, you know, genuinely that size, INR 2.0 billion, INR 3.0 billion per year type of sizes of each program. There are quite a few of those coming in the next three years. Like I keep saying, the battery cost is going down every year, and the battery pack size constraints are going down.
The problem was always only solvable if you had between $20,000 - $25,000 cars were required to make electrification truly mass. China has been able to do it because of that price- point car. The same thing will happen for the U.S. and Europe. India too will follow. I mean, India again has that problem that they do not have enough inexpensive or economical battery making capacity yet in India. I think that too will change.
Sure, and some of the major order ramp-ups this year, w hen do you see that? Which quarter this year we would start to see that happening?
I would say Q4 would be the one in which it will happen because a lot of them for this year were more around motors, where there is a month or two of delay already. There may be a little bit more delay because of that.
That was the last question for today given the time constraint. Deanna, I'll hand you back to close the call, please.
Thank you very much, ladies and gentlemen, for joining today's Sona Comstar Call. If you have any further questions, do feel free to reach out to Kapil Singh for the corporate management. Thank you and have a good day. You may drop off the line.
Thanks, everyone. Thank you. Thank you. Good evening.