Q1 21/22

Aug 16, 2021

Quarterly report

Welcome to Tube Investments Q1 FY 'twenty two Earnings Conference Call hosted by IIFL Securities Limited. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Anupam Gupta. Thank you and over to you, sir. Yes. Hello? Yes. Yes. So welcome everyone for the Cube Investments 1st quarter conference call, we have the entire management team for key investments with us for the call, including Mr. Velan Sibhaya, Mr. Arun Muradaktham, The CFO, Mr. Mahendu Kumar and all the senior ministers, including Mr. Mahesh Oja, Mr. K. K. Paul and Mr. K. R. Srinivasan. For the opening remarks, I'll hand it over to Mr. William Subbeya, a host which we can take the Q and A. Over to you, sir. Thank you, Anupam, and good morning, everybody. We just to go through, we basically, the Board met on June 30, 2021. I'll just quickly take you through the standalone results for the quarter and then we can talk about individual key messages. The revenue for the Q1 was INR1257 crores. There's no point in actually comparing with the same quarter last year because of that COVID quarter. Even this time, we got hit by COVID, and it did affect us Significantly in April May, so which is why the numbers are obviously kind of a bit lower than what we would have expected them to be. PBC before exceptional items was at INR130 crores. ROIC was at the annualized ROIC was at 41% And free cash flow actually for the quarter was negative at 134 crores, basically because inventory levels went up Significantly due to unexpected lockdown conditions in May and the creditors that will be paid for the agreed terms. And that we said should improve this quarter. So the in terms of reportable segments, And now we're following with India's 108 here. Engineering, this segment comprises of cold rolled, Steel strips and Precision Steel Tubes, CDW and ERW both. The revenue was at 815 For the quarter, and PBIC was at $83,000,000 Metal Form startup, it Comprises automotive frames, fine blanking, stamped products, roll formed carto frame And Gold Roll formed the sections for railways and passenger courses. Revenue here was INR245 crores And PBIT was $26,000,000 Mobility, which is standard bicycles, special bicycles including Allied Boy bikes, Cygnus equipment and the 3 wheeler electric vehicles when we start making them. The debt division had a revenue of INR 172 crores and PBIC was at INR 7 crores. The other segment comprised of industrial chain and new businesses where the revenue was at INR 88 crores and the PBIC was at INR 10 crores. In terms of CONSOL results, which obviously includes both Chantikir and CCI and CCI and CCI and CCI now, revenue was INR 2,437 crores And BBT was 185 crores. CG, where we have a 53% stake, Has a consolidated revenue of $10.50 and PPP for the quarter was at $75. Shyam Tighe, we had revenue of $67,000,000 and PPP for the quarter was at $12,000,000 Commenting on the financial results and say, M. A. M. Arunachalom, Chairman, TII said, TII has delivered a healthy performance for the quarter despite partial disruption The operations in some of the businesses of the company due to the impact of second wave of the COVID pandemic. The company witnessed good demand in the engineering and metal formed products business. The times of exports are encouraging with the opening of overseas markets. With the revival of the operations, we expect momentum to pick up in coming months. That's a quick take on numbers for the quarter and results. So we'd be happy to turn it over, Anupam, to the audience for questions and we've got the whole team here like you said. Thank you. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. First question is from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead. Yes. Hi, sir. Thank you so much for the opportunity. So just wanted to understand in terms of this quarter, how many days we had the impact shutdown because of the lockdown because of the sudden units? I'd say we lost I mean, in terms of seems actually this time a lot of the companies are much better prepared for lockdown than last year. But if you see what is think I would say kind of in some cases like anywhere between like 20 to 40 days is what the total loss was. Okay. So there is coming from, sir, is that despite that if I look at the engineering revision kind of revenues, right, On a 2 year CAGR basis and not on a YY because it's not comparable, you've still done a very good job. You've still grown at about 10%, 11% On a 3 year basis also there is a strong growth. While predominantly your key sector, which is auto, is still not back to those levels. So is it because of inflation? Is it because of market share gains, exports, new products? If you can just help us understand that aspect. Yes. I'll let Mukesh talk more. Definitely, kind of exports has been the biggest focus area and biggest growth area in the Q1. A lot of the loss in demand from auto has been pushed towards exports. Though there was also good demand from auto. But that is the quick take, but I'd let kind of Mukesh talk more as well. Yes. Thank you, sir. If I can rightly explain, sir, that it's a growth in the engineering division. It's coming with a mixture of exports, We are participating and working it almost now from last 3 to 5 years' time, which has started giving the results. XPOS is a key growth driver and which will remain the driver going forward for the growth. And in the domestic market also, we have gained the shares In this COVID, sir. And third is little bit part what you rightly mentioned is coming out of the inflation. Even the inflation is yet get factored fully in the Revenues, but small portion, it was 51,000,000 also. It's a mixture of all 3, but around 3, it is coming from exports and the gaming market share. And what would be export as a part of the revenue studio of Engineering division? This quarter, it is high. It's close to 18%. Okay, okay. And just one more question from my side. If we see gross margins in last two quarters, obviously, have seen some moderation Because of the inflation and you would have to kind of negotiate with the customers and pass it on. So where do you see that path Of that gross margins kind of coming back, and how should we kind of look at it, if you can just help us understand with that? Yes. So like how I mentioned in the earlier calls, it may not be appropriate to see gross margins quarter by quarter Because there will be some timing difference between the steel price increases and timing of increases. So we should rather see it on a long term basis, maybe on annual basis? So the one way to look at it is if commodity prices stick with where they are now, Right. Then the current levels will be more indicative, right? Obviously, we will work on improvements to kind of basically push that number further. But that would be kind of the broadest thing, right? So current levels plus I mean, if steel prices stick Because otherwise, the denominator effect on that was huge, the fact that the prices went up so much. So I just think it's driven by that. But obviously, we are working more to kind of work on the efficiency side and all that a lot more. But that aside, I think that kind of The current levels are indicative, but they might go up a bit. Okay. Very helpful. Thank you so much. And just one last question from the annual report. The flavor of the report was that there's a lot of focus in which you've been mentioning, lot of focus on export. Russia, U. S, Europe, you seem to add a lot of customers, plus the IRIS certification for railway opportunity. So is will you also have to incur a lot of CapEx now kind of seed those markets And certification that you have got to be able to grow those markets, if you can just help us with that and how big are those opportunities? Yes. So I don't think that there's significant CapEx. So for example, if you see What the engineering folks did on their stabilized of ours at mill, hopefully, we will commission in this quarter. And so that is a CapEx that has been incurred and will allow us to kind of significantly improve our export capability on that price. Even mobility, for example, is beginning to look at X Force in a pretty big way. And that doesn't It doesn't require huge CapExes, but there are some smaller CapExes there. So I don't think it's CapEx intensive because a lot of the capacity is there. It's more kind of enhancing the capacity for certain kinds of products. So at this stage, It's not requiring kind of totally new greenfield production facilities to drive that. But definitely that focus is there for us and will continue over the next couple of Okay. Thank you so much and wish all the best. Thanks. Thank you. Thanks, Ramesh. Thank you. The next question is from the line of Suraj Navanar from Sampata Investments. Please go ahead. Hello. Good morning, sir. So my question was more of related to the CG power. So how are you seeing demand on the ground after the second wave of the COVID? Yes. Again, broadly, like we've indicated before, we don't want too many 3rd power questions here. We've already said that after that October timeframe, CG Power will start having its own investor goals. But to your question, there has been a tremendous demand on kind of in all of the businesses. So they have seen good demand growth, whether it's a motors business, switchgear and transformers. I think the switchgear and transformers, The demand for PG is driven both by supply and demand issues, right, because other supply has gotten reduced And the railway business as well. So all the businesses are seeing good tomorrow. Okay. Thank you very much. Thank you. Thank you. Thank you. Our next question is from the line of Niket Shah from Motilad Oswal A and C. Please go ahead. Yes, thanks for the opportunity and congratulations on a good set of numbers. The first question was, if you can just give us some sense of when do you think your Glenn, the business will go live. I think the annual report has already highlighted the plant is up and ready. So when can we see the plant going live? And what kind of Revenue should while we're looking at in the next 2 years? Yes. So basically, all of the I mean so the Lens facility It is live now. There's only one production process that's still kind of being piloted. All the other processes are live. But like we told you, this was kind of more of a like a pilot project, right? So the revenue from this is very Because we have the capacity of nearly 500,000 Lenses a month, which will only get us to 6,000,000 Lenses a year, so that's very small. Now what we're doing is readying kind of the plan for expansion, which is what will give us kind of more capacity. That plan is what is kind of is getting worked on now. So I'd say at the current levels, it will not have a significant impact on revenue or numbers. This is more to prove out that we can, in fact, make these lenses in the air, which we're getting more confidence on at this moment. Understood, sir. Understood. The second question was, again, if I look at your annual report, you've highlighted that a lot of niche applications with the management business On the driveline, drive control, suspension applications, also within medical form business, you launched engine oil. So If you can just help us understand that obviously these might be very, very smaller in terms of revenues, but what is the contribution today coming from these new product launches and are the thoughts that you are within each of these segments? Yes. See, like we've said before, right, What you're seeing and what you have to see at an aggregate level is that there are again, if we take it back to TI1, TI2, TI3, What you're talking about is the new areas that are getting introduced by TI-one itself, right? So for example, in TI-one, If engineering decides to get into stabilizer bar or if kind of the auto change distribution guys, let's decide again to engine oil, That's the call that the individual business unit is taking, right? Why are the business units taking that call? Because they're basically What can they do to basically improve their revenue growth rate to get to their target. So actually, if you see, the encouraging sign there is if you take a business like auto change because of the shift to aftermarket case and through some of these new products, That business has seen significant growth, right? And it's been seen both revenue growth and margin growth. And it's gone from, I would say, almost 0% to close to 10% in terms of both revenue and margin growth. And the so I think that, that is where it's encouraging. Those numbers don't show up in any kind of aggregated fashion. I mean, in a sense, like, those numbers show up in the individual BU count. So now why do we count separately what happened with that new initiative, right? So that's how we view those. And it's absolutely fair that each of them think of those as their own individual organic growth Those aren't things that we've kind of either monitored at an aggregated level, okay, how much should they add for the overall cost. Got it. Got it. And one final question on the EV 3 wheelers venture that we have planned. So where are we in terms of our capacity and when do we see the plant going live? Why don't I let Paul Grosso on the call answer that? Sure, sir. Good morning, all of you, all of you. I think we're working around that. In the Q1 of next year, we should see the launch of the product in terms of this. COVID has picked 1 or 2 months It has been a month of growth, but we are working around that and hopefully by the Q1 of next year, It should be in a position to launch the project. And so would it be possible for you to quantify the capacity or something? So capacity, we are looking at short and long. So we are building up that capacity. But to answer your question, really the plans that we have made, capacity Not the issue. That's the way that we planned the capacity on the factory. Got it. And so just one more clarification on the engineering part of the business. There was this antidumping duty in U. S. Which you had represented. So Is that clarity that now it's completely off and we can do export to U. S. Without any CBD or ADD? Yes, it is almost clarified and we have got a favorable verdict on that. So that's why we are going to see some kind of So, if you know the news, that's what's going forward. Okay. That's very helpful. Thank you so much and best of luck, sir. Thank you. Thank you. The next question is from the line of Vimal Govil from Union AMC. Please go ahead. Yes. Thank you for the opportunity, sir, and congratulations on very good set of numbers. Sir, my question was on the Octoglens business. Just wanted one clarity. So basically, when you say the Intel, which industry have we sort of taken to? What is the end user base? What does the end user base look like Over there? This is predominantly for the automotive industry. So they go into automotive cameras. Automotive cameras. Got it. Got it. Got it. And sir, what is the market size like overall market size? Would you be able to sort of highlight that? Kiarev, do you want to do you have an answer for that? Yes. The ADAS space is quite, you know, expanding and progressing. So it is actually a huge market globally for these ventures, though it has not significantly increased in India. What we are targeting is the export market, particularly in Korea and Japan. But what will be a strategy will be a private project? Maybe in the quarters to come, we need to invest in expansion and then look at the bigger numbers. Fair enough, sir. If I may try my luck, if you can just highlight some what Give us some quantification on how much money are we sort of looking to invest in this venture. Would that be possible, sir? Not determined yet. Not determined yet. Fair enough. And so my second question was just I missed out on your clarification on gross margin. So we were a tad above 41, 42 in our peak. So I guess you gave some clarification there, but do we my question was do we sort of post assuming that module cycles will sort of normalize or reverse, do we expect Q2 sort of get back to And I'm talking standalone. Do we expect you to sort of get back to those 40, 41 plus levels Going forward? Yes, correct. Hopefully, the right improvement from where we are right now, that's what Ramin was explaining. So what I was asking is do we get back to our historical levels assuming that commodities are the specialties? Yes. Okay. Fair enough. And you also said that, if I'm not mistaken, you said that the working capital was slightly high this quarter and could dominate Great. That is great to hear. Thank you so much, sir, and all the very best. Thank you. Thank you. Our next question is from the line of Anupam Gupta. Please go ahead. Yes. Monica, a few questions on each of the segments. So Firstly, on the metal form products, have you seen any improvement on the railway side yet or it is still very, very muted? Kiara? Yes. See, railway, predominantly, we supply to the coach factories. So, growth factors because of lockdown, Q3 was affected. They did not increase the production. We were going through. 2nd quarter looks better, And we hope Barclays would streamline by the 3rd quarter. Okay. And just continuing on that question, do we have pass So for raw material for railway quote as well, the sections which you supply there for the raw materials? Sorry, your voice is breaking. Can you please repeat the question? Yes. So what I was asking is for the railway supplies also, do we have pass through for the raw materials which where we have seen price increases? Look, there are there are no raw material availability concerns, but price increase concerns are there for raw material and railways also because Predominantly, we use stream lifting for in arrangement. So there is a concern on price increases. But otherwise, most of the orders are covered by price variation classes. So there may not be big concern in recovery of raw material prices. Okay, okay. Understand, sir. The second question is related to the Engineering Products segment. In the annual report And in the call, starting, you said that you have seen some market share gains. So which product areas has this market share gains happened in? If you can just Like we shared in the earlier call, maybe let's say we generally don't discuss on the market share segmentation part, this thing, but also see Raul, we have maybe let's say, presence in the auto sector, in particular in auto sector. It is a combination of your 2 year CD and CD. Across the segments we are seeing, the retail insurance. Okay, okay. And just continuing there, sir, I think the near term outlook at least for auto domestically, specifically 2 wheelers is not very, very great given the inventory levels which are there. So how do you see in terms of like the next few quarters for the auto, the engineering product segment going to the 2 wheeler side? Let me see if I will anybody's guess, but the first given reason is nearing it out and the projections being given is, sure, we're going to be much better than as compared to Q1. Okay. Okay. And just one last question on the Cycles business. So this quarter, obviously, there was some slowdown versus Q4, and I think there was some impact from the lockdown. But as of now, what do you see there the growth should remain elevated for the next few, let's say, at least for the near term and then normalize? Or how are you kind of cycles in this way? Good morning. I think in the Q1, as you rightly pointed out, we had issues of lockdown in the closure of market And that is reflected in our review that we had in the second quarter. But maybe forward, the point that we make Q2 and Q3 should be at least better than Q1 based on the markets opening up The situation remains very stable. As we move forward, there are various kinds of users on Stage 3 of COVID and therefore we don't really know about the market opening and the trend closes. But The internal plans that we have grown up is to look at how we can gain share, where is the market remains flat and what are the various steps that we have to do Product intervention through market intervention, through distribution intervention, through digital interventions and so on and so forth. So we're quite upbeat about the next two quarters in terms of moving forward for assets. While the market may not Overall, it shows very big pickup based on the demand that we are currently seeing. Okay. Okay. And to this one question continuing there. In the annual report, you mentioned that export share within cycles is close to about 11% in FY 2021. Over the medium term, let's say, how high are you targeting this to go? And apart from the China plus one factor in terms of sorting, What else will drive that gain in export share overall? I think there are 3 factors 1 is building our internal capability to compete in different markets of export, which we are doing. That's point number 1. Point number 2 is we will drive the exports further up. Based on what we do and how the customers respond, We should be enhancing our exports in the overall pie. This is what I can tell you at the moment. Lots of plans are being made in terms of the seniorization of products that are happening. Lot more foray into we are ourselves getting into Some of these initiatives so that we can manage the supply chain portion of the business. And with that, I think we hopefully We'll give a much better account of ourselves as we move forward on exports. Sure. Sure. That sounds good. And then for the time being here. Thank you. Thank you. Thank you. Our next question is from the line of Kashyat from Trading Partners. Please go ahead. Hi, good morning to everyone at TI. Just one question, Mr. Lalande, slightly high level in terms of thought process. Now how do you see the trajectory of businesses under TI-one over 3 to 5 year timeframe? Would you kind of we've discussed this the trajectory earlier. Do you think that incrementally going forward you can see The trajectory going up first or do you think we would be at the same point where we used to ordinarily think about it at? Got it. Thanks. Thanks for the question. So I think if you ask us right now, Right now, the world seems to be in a very optimistic mood, okay, at least from as far as we can tell, right. So if you see what's happening, engineering kind of has a new kind of very promising product line and it's seeing very good demand from the export, which we see can be sustained due to both China plus 1 and global steel price level. But also the fact that there's new product capability. So for different markets, there are different kind of approaches that the engineering team is taking. So that in itself can lead to good growth numbers in that business. The Metal Form Products business, like we said, the individual areas are New avenues for growth. And then in Mobility, again, there appears to be a lot of export led growth Opportunity for that business, that's what Paul was just alluding to earlier to that question. If you look at those three things combined, Then actually, what you would hope for is that the TI-one growth number revenue growth number would actually be higher than what we thought What it was historically going to be, right? So that's our current take on the business. And that's our current thesis, right? So that's where we are. Yes. No, I thought about it similarly. And so I thought to ask that question. That's all from my side. Wish you guys all the best and look forward to meeting you soon. Thanks, Kashyar. Thank you. The next question is from the line of Shyam Sundar Shiram from Sundaram Mutual Fund. Please go ahead. Yes. Hi, good morning. This is Shyam from Sundaram What will be the average utilization in engineering and lithoforming in this quarter Q1 as compared to Just trying to understand how are the sales from an utilization perspective in Q1? We had lockdown affected, but Again, Mukesh and KRS can give the answers. So, Akhiras here, let me answer that. Shyam, there was an effect because of lockdown. Notwithstanding that the OEMs have really shown some promise both to be there and flow here in terms of pushing up their numbers. I would say we are sort of utilized to about 75% to 80% of our capacities. Okay. That is helpful. That is helpful. So we still have a 20% GAAP rule in terms of the to include the inflation before the Any need for such CapEx, CapEx? That is a fair assumption here? Yes, you're right. We have capacity to take care of the Increase in demand in the coming quarters. Okay. Okay. So here, what would be the 2 the engineering segment and the performance, sir, any ballpark number you can share? Can we go to 90% or Is 90% part of the fee utilization number you can comment? Shyam, regarding engineering business, We have a good advantage because over a third of time, we have created plants in all the regions like North, West I am South as well as Brittany. And prior, we have tried lately our part of strategy 3 years back what we shared in the investor call. We are trying to build a common capability across the plant. This gives us a good headroom. I believe it's just that sometimes North will not be doing well, the West will not be doing that. So interchangeability of the plant is really becoming handy for us To cater to the different market needs. And barring, let's say, whatever the 10, 20 days we lost in month of May, Apart from that, we are operating with a small part number around 85%. And we also have a fairly robust process. We look forward for next 2 years, and we take the actions, Particularly in advance how the market projections are there, we have a clear robust process on that and we did the appropriate column to get us the expense whenever we require Pretty much in advance. So at any point of time to cater to even fluctuation in the demand by 20% plus or minus, we all are geared up to handle that. Understood. Thanks for that. So just a follow-up on that. So we had indicated a CapEx of close to 2.50 of crores Any change in terms of CapEx numbers for this year? Or any discussion that you can share on Other than the EV 3 dealers division, anywhere else we are we will want to 10% more? Yes. The total LTV around that only, INR250 crores only. In addition to the EV project, we'll also be spending some amount to expand capacities in cubes and also in auto chains. Okay, understood. I think just one last question. Metal farming from a margin perspective has EBIT margins have helped us pretty well despite the drop in volumes per se, is that Due to the mix within the division, the railway is going down or is there any initiatives that we have taken that has contributed to this Margins being slightly resilient as than what one would have expected per se in the performance? Yes. One is, of course, the actions which you are taking for margin improvements have started yielding results. But the second thing is there are also certain price recoveries for inflation During Q1. Okay. Okay. Understood. Understood. Asim, this other segment of industrial industry has changed because that segment seems to have improved sequentially. So the change has contributed to this Of that length, the pilot project has started playing out until there is a sequential improvement in the other segment revenue? No, it's mainly because industrial sales is now grouped under others. We have taken it out of Metal Form Products and grouped it under others along with the new business. It's mainly about illustrative. Okay. Thank you. Thank you very much. Thank you. Next question is from the line of Sundar from Spark Capital. Please go ahead. Hello, sir. Thanks for the opportunity. My first question is with regards to a couple of resolutions that were passed yesterday in the on the week Friday on the AGM. One was to do with the investment about 2 crores into Watson in trouble. The other was at 25 crores in innovative research. So first, let's start with the 25 growth of innovative results. So what does this pertain to? Is it out of the normal business course? So what are we looking to So Sundar, thanks. So broadly, like we've articulated, this will be for TI2 Investments. TI2, the approach we've taken, We've said that this should be more like DC style investments. And what we've been looking at is kind of several different platforms that We think can be growth platforms for TI in the future. Amongst those kind of ways, we are studying And we are working to study, I would say, 4 platforms that we see as interesting. And one of those is this whole area of kind of environment and sustainability. So the idea with the INR 25 crores is that we will make smaller bets in companies and take a percentage of an existing company With the intent of then being involved with that company's growth, where we can bring some value to the table, but also help the entrepreneurs basically drive their business. These are, of course, riskier bets. And with more like VC like sell payoffs versus having Okay. A very fixed kind of payoff schedule. But the intent is that we use this from TI's perspective To get into some of these areas in which we don't have capability sets right now, because clearly developing Capability sets in an organic fashion will be more difficult. And then, Willam, will you be able to further elaborate on both of those two areas The core platforms are looking beyond environmental sustainability? Yes, that leads to capital. Basically, medical devices, And it's this optics and electronics. Those are the areas that we've looked at kind of initially. That doesn't mean those are the only 4 we will expect. And it's still you will be still heading this project. Sorry? You will be heading this project. No, no, no. I'm not heading anything. I don't do any work over here. Now what we do is kind of different people get involved. Like I said, in one situation, we are using our consulting firm to help us. But different people get involved and then usually the divisioners will take ownership of the projects fairly early. Arun, the second question out here was that I know I'll not be getting into CGP alone answer much out of it, but From the time we took over in last December to now, there were 3 parameters to be drawn, 1 in terms of revenue, 2 in terms of Supplier relationships, 3 in terms of the net liabilities. How have we progressed? And what do you think we should look at it going forward? Like I said, let's not get too much into this thing here. You can see where it's tracking in terms of the overall numbers. And obviously, there are a lot of disclosures. So you actually just kind of read all of the disclosures, both that was there in the annual report at the The atconsolid level, but also now even in our quarterly statements, there are a lot of disclosures. If you just read, you'll get a sense of how each of the situations is revolving along those three The revenue side, you can definitely see the traction basically in terms of the quarterly numbers itself. I think most of that data is out there. So rather than kind of get into it on this call, it's better when we start doing the quarterly calls there, post the April quarter, there will be a better time to do it. Thank you. Our next question is a follow-up question from the line of Vimal Kohl from U. N. AMC. Please go ahead. Great. Thank you so much for the follow-up. So just wanted to get your sense on how much out of our total product market Specifically for Automotive, how much of it would be sort of for engine agnostic? And how much of it will be sort of directly dependent on TCE, which will get impacted, especially in electric 2 wheelers post the proliferation of electric you, Vijay, going forward. Yes. The total level, it's not going to be a significant shift for us. There are certain businesses which will be impacted more. For instance, you see the auto chain segment. We have drive chains and cam chains. Camp change will have some kind of impact because of EVs. Drive change are expected to continue. Similarly, in engineering business also, there may be some minor impact, At the total level, it's not going to be significant. Right. And change the change that you mentioned, The can change, those are not a very big portion of your total overall change, automotive change portfolio. Would that understanding be right? Yes. Not very significant, yes. Got it. Got it. Fair enough, sir. Thank you so much. And in any case, aftermarket will continue for much longer. Thank you. Next question is a follow-up question from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead. Yes, thanks for the opportunity. Thank you. Abhishek, your voice is breaking. Abhishek, we are not able to hear you clearly. Hello. Is it better now? Slightly better, but still there's a break request you to please come in and network area. Okay. Just allow me a minute. Hello. Am I audible now? Yes. Okay. Thanks. So sir, if we Just go through the annual report again, we see a lot of newer segments like Metrorail as a new opportunity, seating solutions, new products like The safety critical products, the cranes and the hoist, all these things which are part of PI 1 itself. So you see all these newer products, new opportunities, which Yes. What added in TI, from the last cycle of FY 2019, is it fair to assume that you've added an opportunity size of another $1,000,000,000 Over this new product, sir, how should one look at the overall opportunity size that has got added into TI-one because of these new products? Yes. See, basically, we think take things like stabilizer power, for example. It's a significant opportunity to look at it Globally. And as we go segment by segment, right, there are definitely things that kind of are significantly delivery opportunity globally, Including the kinds of cycles now that Paul is making and kind of beginning to export. But I don't think we've ever gone through the So I guess the quick answer is I don't know, Matt. All I'm saying is kind of it does push the growth rate of those businesses From that organic level that we thought will be 5% to 7%. It can push it up from there. But the quick answer to your question is I don't know. Okay, okay. Fair enough. And so the other question is also now in the 2 wheeler space, at least the expected shift to EV is much faster there. So how are you kind of engaging with the probably the newer OEMs and the products for the same? Any thoughts around that if you can share? Yes. So it's still early days. We're exploring it kind of. There are 2 schools out there, right, that kind of setting now everything is Bhavesh and Ola said that it's going to accelerate and everybody is leading the newspapers and saying that all the IC 2 wheelers will be gone. Interesting. I don't know if you're going to make with this level of subsidies over time. And the fact that see the bigger question is this, right, which is Both Ola and Asar seem to be losing a lot of money on their 2 wheelers and will be losing. It's estimated that Ola will be losing Some very significant numbers for 2 wheelers sold. So broadly, we don't know, right. I mean, this is what we're kind of hearing in What we hear from like other guys who are suppliers and competitors. Now if that is the case, We need to see, right, which is we don't want to get into an industry that has a big revenue pool and no profit pool. So we need to figure out kind of and that's what we're exploring. Paul and his team are exploring it actively. We're basically exploring whether because for us, The revenue pool only makes sense if it comes with a good profit pool. Otherwise, we're not going to get VC funded and raise $1,000,000,000 to kind of fund something So we need to explore that. If we get to a solution where we think that there's a profit pool, then we will jump into it. Okay. And so just one last question from my side. In the earlier articulation, you obviously had a The margin target of that 10% and which you are kind of comfortably consistently doing much about that Even with the negative operating leverage. So how are you thinking about it now? Is there a change? And obviously, with this new product addition, the growth will be much better. So how should one look at it? Any thoughts there? Correct. We should increase it. I'm saying we should increase it to 14% in 3 years. Okay. Okay. That is very helpful and we should all the best for that. Thank you so much. Thank you. Thank you. The next question is from the line of Jankee Raman from Franklin Templeton. Please go ahead. Yes. Thanks. Good morning, Halem and team. One question on the cycle exports. You've been saying that the handicap versus the Chinese and the Taiwanese exporters is what is holding you back. What is the reason for this cost position? Is it the labor cost, productivity or something else? And How do you suppose to work on this? Paul, I'm taking. Yes. The only way we can explain this is that we will pass significant amount of input substitution. We do not Japan, there was no pandemic, etcetera, but we said that we have to make our supply chain much more robust I mean, we can have to get reviewed. So we've started a lot of individualization and growth activity over there. And then happy to say that we have Substantially, you know, improve that score in the income growth. So today, you know, if you are looking at Point 2, it also talks about premiumization of repurals in terms of aluminum, etcetera, Internally, in the Phase I, as we proceed in our venture for exports, third is that we also have a plant in Srivastava Actually, which we are moving much more towards ports in terms of getting 2 countries to different countries. 4th is very important on term of capability delays, which we're now doing, create the practice of winning apps, number 1. And number 2 is also we are taking on some basic product, we export line quality so that we use pre manufacturing Mr. Shankar, thanks. It's a very large fraction. As far as capacity is concerned, we believe we have 2 plants we have capacity. Yes, we have built our own capability and capacity, which we are at the current moment on sub drilling. So all this put together on a phase wise way as we have planned, this is our awareness where to be able to give the necessary trust Sure. And when do you hope to reach cost parity within Chinese and Taiwanese and ethanol? So cost parity is different depending on which markets are we looking at and which So that's very good to hear. What we are looking at is weaker could not just allow us a substantial amount of margin where we are not This is boxed between Taiwan and China, much more from China. There is also bear in mind that there are a lot of antidumping duties on So would that allow us an opportunity as a new entrant in terms of making in those markets? There are also an additional opportunity that is cropping up in the China Plus One strategy that Mr. Varane talked about earlier. That also gives opportunity to small numbers in industrial ways in India in terms of the way that they plan and the way that they You know, Bishwodhar intends to getting after the export market. There is also a lot of stuff going on between So the The other opportunity that will come through is this e bike, that is, buy cycles that are electrified In some sense, we just launched our 1st product in the domestic market just a day back. We have seen much of that headstrong. And then you're working around different markets that could be less a big drop, BT guys. Sure. Thanks. And so I have one question to you. So I heard your Description of the electric tool and market in terms of profits. Yes, that is definitely our belief. And even on the 2 wheeler market, all I said is we're studying it. But definitely, we do think that 3 wheeler is going to be better. But even 2 weeks ago, we're still studying it at this stage. And where exactly We have seen the product development, how is it such specs design prototype of the program? That obviously we won't share too much now. We just have to wait till the market time till the product kind of gets out, which like Paul gave you the time line earlier, so we just have to wait for that. Thank you. Our next question is from the line of Rohit Oiti from Progressive Shares. Please go ahead. Hi, sir. Few questions related to shanti gains. The pending order book of shanti gains has been swelling up, which is around 42% on the upside At around 2.35 odd crores or so. So can you help us understand that what percentage of the order book is For manufacturing and what percentage is for the services business? Predominantly It will be predominantly manufacturing. We'll try and get you that split, but a large number of it will be manufacturing. Okay. And if I were to break the order book into short, medium and long cycles, short being less than 6, medium being 6 to 12 and long being more than 12, What would be the if you can help us with that, if you can share the ratios for that? Yes. We generally don't give that kind of breakup to the external world. But yes, but in terms of filling the lines, it's not been an issue at all. We are reasonably covered in terms of sales for the near term. Okay. So by end of FY22, will you be able to kind of clear this pending order book that you have? Yes. I mean, there will be ins and outs, yes, but gradually, yes, we'll come pretty close to that. Okay. And on the margin front, I know you don't need to give guidance, but will you try to reach the prepandment levels if I can be lucky over there. Yes. I mean, ideally, yes. Why not? Okay. Sir, this order book and if we try to understand that the synergies that might come And if the management thinks that you'll be able to blend in this synergy between 2, UPT-twenty and CEG Power, do you think that the pending order book can swell by another 30 On percent? That's difficult to put a number to it, but they are under the discretion. They are being explored. So we want to have some good clarity on that. We will give you those details. Okay, sir. So any new product or product Launches and pipeline, which you would like to share for Shanti, yes? I think they're doing the Segmenting view that we have talked about and kind of that continues to look at that as a thing, but some of the areas Similar to what we've talked about in the past, right, kind of in terms of the areas of growth. We'll continue to look at new industry segments, but may not be so different in terms of new products. Okay. Okay. And sir, if I were to ask one more, in terms of the raw material prices And their fluctuations, how does it happen, Nishantan, like the revision of prices, how Does it take it on a quarterly basis or half yearly or 1 yearly contract basis? Yes. See, normally, the way it happens is when the quote is submitted, Reasonable factor towards inflation is already baked in. On top of that, wherever possible, the price variation clause will also help. But maybe a certain percentage where it may not be possible to do so. So that's how it that's what we will absorb through our experiences. And in recent times, were you able to take any price hikes? I mean, it's a custom built gear business, right? It varies from order to order. There is no general norm which is applicable here. It depends upon Okay, sir. Thank you for the answers. Thank you. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. Anupam Gupta for closing comments. Thanks, Sawan. Balan, if I if allowed, I just wanted to ask one small question. On your TI-two, you have invested in quite a few already and you are willing to put up more in the new a few startups. So in the medium to long term, how big do you see this compared to TI-one and TI-three? Or would it be, let's say, small, at least for the foreseeable future and overall contribution, sort of thing. So we've always said that it's not going to have any significant effect on the short term And, Rizal, it's more building platforms for the medium and long term. So I'd say that you have to start thinking at least 5 years plus When you start thinking about CI2 and only at that point when the numbers start getting immaterial in any way. So you just think about this as seeding the next set of businesses that can be significant businesses for TI and the C plus plus. It's not a near term or short term thing. Right. That sounds reasonable. So thanks a lot. And I'll hand it back to you for any closing comments that you might have. Yes, I think that's very good. Thank you. We continue to be encouraged overall by the environment. And so thanks everybody for joining and look forward to catching up view again next quarter. Thank you. Thank you, Anshul. Thanks, William. Thank you. Thank you very much. Ladies and gentlemen, on behalf of IIFL Securities Limited, that concludes today's call. Thank you all for joining us and you may now disconnect your lines.