Q4 20/21

Jun 18, 2021

Quarterly report

Ladies and gentlemen, good day and welcome to Jade Investments' Q4 FY 'twenty one Conference Call hosted by IIFL Capital Limited. As a reminder, all participant lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation Please note and this conference is being recorded. I now hand the conference over to Mr. Anupam Gupta from IIFL Capital Limited. Thank you, and over to you, sir. Thanks, Aisha. Good morning, everyone, and welcome to the post results conference call for Cube Investments. It's my pleasure to have the leadership 15 from Tube Investments joining us for the call, including Mr. William Subhyam, the Managing Director Mr. Mirazakthan, the Chairman Mr. Mahesh Aujya, who heads the Tube Business Mr. Srinivasan, who heads the Metal Forming Business Mr. K. K. Paul, heading the Cycles Business So I'll hand it over to Mr. Vellyan for the opening comments and the Q and A thereafter. Over to you, sir. Thanks, Anupam. Thanks a lot, and good morning, everybody. Overall, basically, the Board met yesterday And approved the financial results for the quarter year end, 31st March, 2021. This year, it took us a bit Longer, we usually kind of closed the quarter earlier, but it still took us a bit longer because we had to wait for CG to complete Jay, results and so we had CD last week and we're just finishing TI now. The Board also declared an interim dividend INR 2 per share and the same was paid to shareholders in March 2021. Now we've recommended a final dividend of INR 1.50 per share for the financial year 2020, 2021. Revenue in the Q4 was at INR 1480 crores compared with INR 935 crores in the same period last Yes. The revenue for the year was at INR 4,256 crores, which is almost at the same level to the previous year despite the pandemic during Q1, pandemic impact during Q1. PBT for Q4 was at INR 175 crores, a growth of 62% over the Q4 last year. And PGT before exceptional items for the year was INR381 crores, which is lower than lower by 9.5% versus the previous year. The ROIC before tax was at 31.5% compared with 29% in the same And free cash flow was at INR533 crores, which is 195% of that. Now that's not obviously A normal and sustainable number, but our net debt was reduced from INR149 crores in the previous year to a surplus of INR10 crores In cash for the current year. Obviously, there are 2 significant transactions around the free cash flow And net debt number also has the impact of both our capital raise and the expenses around the CG acquisition, Which was INR687.5 crores is what our outscore was. In terms of land loan results, We talk about kind of most of the numbers. So we've covered that. In terms of the individual businesses, revenue for engineering was at 8 4 in the quarter versus 545 in the corresponding quarter previous year. The PBIT was 92 as again 75, that was a growth of 22%. Revenue for the full year was INR 23.17 crores versus INR 258 in the previous year and PVIC was at INR 251 versus INR264 in the previous year. For the year, For the year ended March 2021, ROCE for the business was at 43% As again, 40% in the previous year. Cycles and Accessories, the division registered revenue of INR 301 crores During the quarter compared to 129 in the corresponding quarter of the previous year, PPIT was at 17 compared to 6 grows in the corresponding quarter of the previous year. Revenue for the full year was at 847,000,000 versus 781,000,000 in the previous year And PDP, PDIP was at INR44 crores as against INR26 crores in the previous year. For the year ended March 2021, The ROCE of the division improved to 62% compared to 15% in the previous year. The revenue for the quarter And Metform products was at 401 compared to 301 in the corresponding quarter. PBT was at 40 compared to 16 in the corresponding quarter of the previous year. Full year for metal form was $1274 compared to $1399 and BBIP was at $87 versus 123. So for the year ended March 2021, ROCE was at 22 versus 27 in the previous year. Obviously, our consolidated numbers will include the 4 months period from CG. So for the quarter, our and for the quarter, call it consolidated, we have a full quarter of consolidation with CG as well. So for the quarter numbers, CI's console revenue was at $2,733,000 as against $1031,000,000 in the corresponding quarter And PBT was at $237,000,000 as against $89,000,000 in the previous quarter in the corresponding quarter previous year. And for the whole year, revenues were 6,08 3 as against $4,750 and the PBT was at $454,000,000 versus $425,000,000 As we discussed All the companies acquired are controlling stake in Sealy Power and Industrial. We currently hold 53% and with the option To subscribe, we'll kind of subscribe to we've got warrants which will basically will subscribe to this in the next couple of months. So, Shanthi here has basically registered a revenue of INR 75 crores As against INR 43 crores in the corresponding quarter of the previous year, PBT for the quarter was at 12, as against INR 0.5 in the corresponding quarter. Revenue for the full year was at 2 For the 2.49, PBT for the year was at INR 26 crores as against INR 36 crores in the previous year. Commenting on the financial results, Mr. M. A. M. Arnaud Salam, also known as Mr. Arun Murugappan, who is the Chairman of EII, Said, the IIIF closed the year with a healthy performance post revival of the economy from the first wave of the COVID-nineteen pandemic. The results are encouraging considering the company had lost almost one full quarter of operations. We are hopeful that with the government's constant endeavor In controlling the spread of the COVID-nineteen pandemic and efforts towards maintaining the momentum and economic activity, the impetus in our operations is likely to continue. So thank you. I will stop with that, Anupam, and happy to kind of turn it over for questions. Thank you very much. We will now begin the question and answer session. The first question is from the line of Vimal Goel from Union Asset Management. Please go ahead. Yes. Thank you for the opportunity And congratulations, sir, on a very good set of numbers despite challenging conditions. Sir, my question is, firstly, I just Based on your comments on the working capital in the standalone business, we've seen receivables sort of increase quite sharply. So just wanted to check if this is at the 10 level level? That's question number 1. And the second one would be, Will we be able to sort of pass on the commodity impact that we've seen this quarter in the next couple of quarters? So wanted to get an update there. And thirdly, I have some questions on the TD Power, if you wish to take during this call. Yes. So first, I think obviously kind of our preference is we don't want to make this into a CG call. At the right time, when some institutional coverage and other things start, we will start separate calls for Fiji. So that's a quick take on kind of CG with other laws because otherwise, what tends to happen is all the questions become CG questions in the CI call and that can make things a bit So first on your question in terms of The working capital number, I think we've like I've mentioned briefly, this is not a sustainable level. We will kind of go back into positive working capital overall for the company. The and so what happened At the end of last quarter was a convergence of kind of several different phenomenon that basically led to this kind of to a negative working capital number. To your second question on passing on the steel price increases, Yes, I believe our belief is that for a majority of clients we should be able to pass on. I would say kind of a majority of the steel price increases. Though we continue to stay concerned that it is inflating at 2 higher levels and will definitely have other effects. The also kind of So that's kind of we continue to kind of be quite concerned about the levels at which commodity prices are today. So will it be fair to say that maybe a couple of quarters down the line, if at all Commodities sort of stop rallying here. In a hypothetical situation, you will be able to sort of recoup your gross margins, This is for the standalone business? Yes, that is, Abhijit. Okay. And so can you just comment on some of your newer initiatives Like the lenses business for maybe your 2 wheeler 3 wheeler electric vehicle initiative that you took last quarter. Any sort of a wave there would be welcome. That's all from my side. Thank you. Yes. And like we've said, progress continues in those fronts, right? And we have said, obviously, things have been slightly delayed due to COVID. Our initial plan was to try and launch it in the Q4 of this financial year. We're still working towards those targets, but it might get pushed out because we've had double delays due to COVID in this last quarter. Fair enough, sir. Thank you so much and all the very best. Thank you. Thank you so much. Thank you. The next question is from the line of Ashraf from Telimabasna. Please go ahead. Thanks, Toshiya. Thank you. Yes. Just a couple of questions. Firstly, we've seen very good growth In the cycle division, historically, we seem to be a division where the growth aspirations On the management side itself, we're like 5% to 7%, which would include maybe 2% price growth and 5%, 6% Volume growth. And obviously, we've seen quite a number this time. So just and I remember you citing in earlier calls that The division head of title had an aspiration to be the best performing division, and we are already seeing some of those things coming out. I just wanted to check with you whether this the growth expectations here going forward should be kind of look at it differently versus the way This region has spanned out in the past. So, Karthik, obviously, like you said, I mean, It is kind of we do see a lot of potential in it. But like you said, I'm going to ask I'm going to let the division editor, Sykes, kind of answer this. KK Paul is on the line. So let him answer it. I think I have nothing like getting it from him directly. So Paul, can you just answer that question? Yes. I think we worked on a set of strategies that help us to get some Sustainable competitive advantage, and that is what we are trying to build through our efforts. Some of those efforts We've executed and some are under execution. That is one part. The other part also is the opportunities That are opening up with exports in the bicycle arena is also quite large. And therefore, we are looking at that in a far more concerted and aggressive fashion than what we've done in the past. We believe that Traditionally, it gives us good growth opportunities and balance the domestic growth, the vagaries of the domestic growth. So all in all, in a nutshell, I think you will see sustainable kind of performances In terms of trying to see how we can get up the volume, yes, there's a lot of work in process that we're at it. Thank you. So Paul, just to extend that question was that what If you can share qualitatively what exactly are we doing in terms of is there product mix change, is it exports, What exactly kind of growth? There is lots of those initiatives. I think the first thing we did is We aligned our cost structure to the activity level. That's first. So therefore, that brought down the breakeven substantially. So that gave us the leverage that improved our competitive ability in the marketplace. So that's point number 1. Point number 2 is we also now embarking on looking at how to Get the manufacturing piece on make to order phenomena, just as what you see in Toyota Production Systems and other places. And that's the work that we are currently doing so that we are able to respond much faster to the marketplace. 3rd was that we reject the organization, gave enlarged responsibilities, We worked on building capabilities of people. The 4th was that We built an export structure and started focusing on different markets that we will do, build a long term plan for exports And giving shape to that. So there were these set of initiatives and now we are working around with vendors to realign the supply chain towards this make to order principle because they have to get aligned at the backward end. And the 5th portion here that we're looking aggressively into the weaknesses that we historically had In our distribution system and correcting that and seeing that we are adequately represented both in-depth, That means the number of dealers we have and their participation with us is defined as theirs. And breadth is obviously very simple. The kind of coverage that we have geographically versus the universe of dealers available, So on and so forth. The other piece which you are working on is our track and trend, that is our retail outlet franchisees that we have. In terms of revising them from a service point of view, from an activity point of view and from an ROI point of view, I think these are Basically, the things that we've done along the way, we also looked at what our brand stands for. We did some brand rationalization, Bringing out a new brand purpose, engaging in the social menu a lot now and building conversations around our brand, Looking at ecom in a far larger way and succeeding in that effort in terms of Taking up e com sales and not conflicting it with the trade sales by having different product lines. So briefly, I think We know the work that we've done qualitatively and some part of that is what you are seeing as the result. Of course, With COVID coming in, we had a Q1 washout, but the other quarters, we were held because the demand was Much better. And so that also helped us to propelled us to do better. That's helpful. Probably just last question from Sylvia, while steel prices are definitely I don't know, a bit of our concern. But at the same time, wouldn't that be an opportunity from an export standpoint because even Rising is still at a discount to global pricing as far as team is concerned. So when it comes to engineering exports, So would it kind of open up the competitiveness further towards that favor? And Will we be able to scale up export much more than what we were thinking about earlier? Yes. So, Kashyap, that's a good question and I will let Mukesh answer that. And to summarize, touch up on your last question, right, like now just to summarize what Paul said, see basically the first step that Paul has really done is kind of make the place Extremely competitive, right. So we laid ourselves a lot more competitive by improving on the QCD dimensions like you talked about. And we're still going to continue to invest a lot more to kind of make ourselves even much more competitive there, like we told you with the Japanese and kind of So a lot more investment to be done there. So given that, in cycles, you've talked about 4 growth vessels. 1 is increasing domestic market share. The second is, you're looking at mix, right? The third is Export Markets. And the 4th is new products and categories, right. So those are the 4 growth records that they're looking And that's why I think kind of Paul is beginning to look at a business in a lot in a significantly different way that offers us kind of more avenues for growth, right? So that's structured to Syfu. To summarize the question on Syfu. The second question on engineering and exports, I'm going to ask Mukesh to answer that. Mukesh, can you take over? Yes. Kashyap, your observation is right. Being the commodity price is still lower than the global Commodity prices, India has a edge over it and which will definitely lead to the more export revenues going forward than what we have planned. But we need to also check it out whether it is sustainable. So it is more important that we do not only depend on this, our earlier work on product specific category development is continuing. So that's our participation level in the different the overall business in the different product segments globally, an increase, leveraging our domestic experience. The next question is from the line of Aditi Vakul from Axis Capital. Please go ahead. And team, congratulations on a really great set of numbers. Sir, my first question is in terms of our manufacturing our engineering business and metal foam. Just can you help us understand what are the interactions that you're having with OEMs and other suppliers to OEMs, Tier 1 suppliers, with regards to FY 2022, how do they see volume growth in that segment? And as a consequence, There are above effect on us. If you can just give us some high level view or understanding of that. Yes. Abhijit, so thanks for the question. So I honestly say that things are slightly kind of mixed right now. Like we said, kind of The outlook that they have is a bit unclear. People are kind of at one level very bullish, But second level kind of there seems to be quite a bit of apprehension in terms of what's going to happen. So honestly, I'd say It's like it's a very it's difficult right now to kind of predict what is actually going to happen domestically, Because both schools seem to be prevalent at the same point in time. So which is why, like Mukesh said, on the engineering side, we've been a bit more focused on the export front. But there is enough domestic demand also to drive the business right now. And what we're also seeing in this environment is that The smaller players are having a tougher time to manage their supply chain. See, basically because you're seeing Commodity prices go up, people aren't sure how much inventory to hold, because they're not sure what's going to happen to pricing. Getting supply from the field guys is still kind of a challenge. So there are all bunch of factors that is actually making it more difficult for the smaller guys to compete. And as I said, working capital cycles are also getting locked up. And I think that that's also helping us both in terms of Engineering and in terms of metal product. But honestly, I don't think that the OEMs have kind of a crystal ball or the capability to do that at this stage in time. Fair enough. Thank you. Thank you so much for your comments. Sir, my second question is With regards to our Q4 numbers, I mean, we've been more than positively surprised with the growth that we've seen, obviously, in cycles that Ashraf highlighted, But in engineering and metal formed as well. So just can you help us understand if you were to decompose this, how much of this would be purely on account of Commodity cost and how much would be the inherent volume growth throughout the Q1? Yes. So, Ajithya, the commodity costs passing down to the customers, as you know, it will take some time. There's always a lag of about 3 business months. So not entirely but almost part of it. So Aditya, I mean back to your question, a larger portion is driven by volume because part of what happened in Q4 is that Everybody was running flat out, right? Correct. And so now kind of obviously again then we had kind of the same impact of a slowdown in Especially in April May. But in Q4 last year, everybody was running flat out. So that basically helped us significantly on the volume front as well. Okay. And as Sir highlighted, I think what we're going to see is the impact of commodity costs coming In Q1 and Q2? Correct. Fair enough. Sir, I understand I don't want to discuss too much in terms of CG, but I had one data point to ask. With regards to our exceptional number, Right. In terms of exceptional items, there is a divergence. We've got INR 22 crores odd in our consolidated numbers per cube. But when I look at PG's numbers, that number is quite high. I think it's closer to INR 280 crores. Can you just help me understand what is the diversions in that? Sorry, comment in? So our exceptional items is INR 22 crores. So our exceptional items in CI's numbers, the standalone exceptional item is driven by the voluntary retirement scheme. That is correct. Okay. So even in this consolidated number I'm looking for the exceptional items in CG's numbers, Which are at INR 280 crores, which has a whole variety of items in it. So I think Aditya's question is why hasn't that INR 280 shown up in TI's console number? So one thing, Ramanathan is going to answer the question. So the next thing is when we consolidate PG just for 4 months starting December to March, So the entire exceptional item of PC will not flow in here because the 8 month gets excluded. So for the 4 months, the expression item is up here on if you say take Q3, we are up here on H2O80 or growth. That's the reason that Because that shows up in the exceptional on the overall income, yes. Yes. Avishti, I don't know if that answers your question. Maybe I can take it up with Mr. Ramanujan offline after the call. Sure, sure. You can meet us. Okay, great. Thank you so much for answering the questions, Mr. Velayin and team, and best of luck for the quarters to come. Thank you. Thanks so much, Elika. Thank you. The next question is from the line of Amrit Mohsen from First Investment. Please go ahead. Yes. Good morning and thank you for the opportunity. My question is related to TIDC India. Can you shed some light on the TRDC India? How is the transmission chain business doing for us? As well as if you could help us bifurcate Kate, on the 2 wheeler and the industrial chain division? Yes. So obviously, we don't give we don't report kind of Performance data at the business unit level, but a broad indication, I'd let Mr. Kya Srinivasan, who Let that division give you some broad guidance on how the businesses are doing. In short, both those businesses have been doing well, but I'll let the IRS kind of talk a Yes. Good morning. Jastrini Lawson here. As far as change are concerned, automotive transmission change, We saw different kinds of demand fluctuations right through the year 2021. The Q1 last year was affected by pandemic and then we had some good traction in the aftermarket demand in the Remaining quarters are basically driven by the consumption of the vehicle maintenance to the market. So that really helped us to improve our market in the aftermarket. And the OEMs were actually Following the demand curve, the lockdown and then market opens up and then lockdown, so they were actually managing the Pipeline inventory right through the year. That is how the productions are going up and down. So we need to update our operational level for OEMs And coming to the industrial chain, industrial chains have done pretty well. Of course, they were affected in the domestic demand initially because of pandemic. And then this visual came back very strongly post pandemic. And then we did some impressive sales in the domestic demand. Even exports have done pretty well, though the export markets were affected because of logistics and also other demand fluctuation issues. Overall, the division came back very And we see the traction continuing this year as well. Sure. That's helpful. Just a follow-up on the automotive chain segment. Would it be possible to share that how much of the revenues come from 2 wheeler or From the passenger vehicles or the other segment? Mahindra? Yes. We don't usually share data that granularly. I think our guidance would be not to. Okay. And also if you could give the outlook on the automotive chain segment, like if the EV Transition takes in, then how do we plan to navigate through this EV scenario? Yes. That is a very good question. Actually, like always, Subalen says, we don't have a crystal ball to project this future. But however, we are preparing our chance to face the EV because EV will have some impact, But not immediately. Maybe a few years down the line, we have some impact. So we are preparing ourselves with sort of alternate strategies within the division For in our safety, not. Sure. But that we would be much more focused on the aftermarket side, right, Yes, you're right. So aftermarket would continue for 30 more years, even though the OEMs, Because of media demand in the IC engine demand comes down, the Astra market would continue for many more years. Yes. But currently, we don't have any product to for the EV as such? As such, currently, we don't have any product for the Okay, okay. Thank you so much. Yes. Yes, thanks. Thank you. The next question is from the line of Shyam Sundar Shiram from Sundaram Mutual Funds. Please go ahead. Yes. Hi, Phil. Good morning. This is Shyam from Pingaram Mutual. Thanks for taking my question. I hope you're doing well in this tough environment. So my first question is on the Metformin division. While all other divisions have done very well during the year, We see the Metal Forming division in terms of the revenue lagging little bit. Obviously, the year has been quite tough. Revenue, this is how many subsegments have sort of under or have pulled down the performance of the overall division? That is my first question. And secondly, on the engineering side, would you talk about the online segment, the safety challenges, etcetera, Both on the engineering as well as the unit for me. So Priti Kether, have you gained market share in any subsegments per se? The reason I'm asking is because engineering is doing extremely well from a revenue growth perspective on that front. So are there any share gains Any sub segment within that, if you can give some perspective on that as well? To your first question, the challenge actually has On the railway front, that's where we've kind of seen the biggest challenge from a medical firm perspective because railways kind of got And then to your second question on engineering, Mokay, why don't you answer that? Yes. Thanks for your question. Just to share with you, growth is led by almost all three verticals. One is like your observation is right. We have gained market share in the domestic market in the last year to a good margin. And also maybe focus on exports as well as our large diameter plant has also led to the growth. So growth is a function of all these three areas. In domestic market, yes, we have imposed shares. Sure, sir. And on the so when we're talking about it, on the new build that was supposed to pass In 1984, what is the status there? And overall, on the non auto hydraulic cylinder pickup, how is it happening? And if you can, one housekeeping question on the export revenue, if you can share how much of export revenue in FY 'twenty one, sir. Okay. Going by 1 by 1, this our Q bill, what was getting commissioned, we, unfortunately, because of COVID, it is running by a Let me delay. And we hope that after second wave, we are going to finish that exercise. And coming to exports, we, like Valen mentioned, we don't share the Revenue breakup of domestic and exports will be changing dividend. That's how we classify. And on the large diameter side, yes, the growth is I mean good because of the government's spend on the infrastructure and all these things are showing good momentum. Understood, sir. And one last question on the CapEx side, what are the Planning in terms of the capital expenditure, IF 'twenty one, we had around INR 129 crores of CapEx. How are you looking at Yes. Shyam, so this year, the CapEx could be in the range of INR 200,000,000 to INR 250 crores. A major part of that will be towards The EV project which we are working on, plus there are a few expansion plans which we have in change business and also in engineering business. I'm sorry, which project you're working on for IEVs yet? The EV, EV, electric vehicle project. Okay, 3 DNOs project. Okay, okay. Understood, understood, Thank you very much, sir. I'll call back in a bit. Thank you. Thank you. Thank you. The next question is from the line of Abhishek Ghosh from DSP Needham Sun. Please go ahead. Hi, sir. Thanks for the opportunity. So I had a few questions. First, per cycle division, when we are looking at the For opportunity, will it be in form of B2C or B2B format or will it be a mix of both? So it's only I mean, are you saying are we going to go direct and kind of try to sell the customers with our own brand in the foreign market? The answer is no. Okay. And Why we have seen a sharp improvement in the revenues of cycle division On a quarter on quarter basis up to that 300, the corresponding margins have not come in. But I thought since It's more of B2C business, gross margin should have been stable. So how should one look at the margin profile of the cycle business more from a medium term perspective? Is it more like a 5%, 6% margin business or is it like a double digit kind of a margin business? How should one look at it? Yes. So, Maina, do you want to take the statement of that? I mean, how far I add So you're talking about full year numbers? Or what are you comparing this, Full year or Q4? So I'm looking so I'm saying I'm not looking at full year because 1Q was an aberration. If I look at more like an exit number of INR 300 crores Revenue that you've done for the quarter with corresponding 5.5% margins, I'm just trying to see that in the medium term, given the Competitive intensity that one has seen in the domestic market that has kind of come off because of a large player going off. The demand pool that is coming plus the export opportunities. So more from a medium term perspective, is the cycle business At Pune, is it like a double digit margin business for you all or is it more or less than 7% margin? Just wanted to get that aspect here more from a medium term perspective. It may not be a double digit margin, but there may be some opportunity for further improvement, but it won't be a double digit margin. Broadly, I would say Paul and team are looking to improve margins. Paul, do you want to comment? Paul and team are interested to improve margins more, but They've already improved margin significantly from what the numbers used to be. Compared to last year, there was already a significant improvement. Yes, correct. And sir, the other thing is now you have this portfolio, shanty gears, CG Power, Tube and there are a lot of commonalities between industrial gears. CG also does a lot of business with railways. Tube also does a lot of business with Realbase. So are the teams already kind of interacting with each other? Is there some kind of Synologies that are happening or you just want to consolidate CG and then probably get into those kind of initiatives, how should one look at it? Yes. So I'd say that this year is more of a year of consolidation to each of the individual businesses. Just to give you a sense, even in railways, kind of In Fiji, their interaction has predominantly been with the powertrain, right, with the engine side. And TI's interactions are mainly being waste kind of the COVID crisis. And so The 2 the main total is to separate kind of facilities, so on and so forth. So at the first stage, kind of our focus is just consolidating the existing business. And then on the second page, we will move to integration between the 2 businesses. Okay. And just coming to one element also, do you believe that RailGas will be weak In FY 'twenty two as well because of the similar trends continue as of FY 'twenty one, so the metal pump division could See a drag in FY22 result because the railway is not doing well? Yairaj, you want to provide your first question on railway? Yes. See, right through last year, the coach factories were having challenges in continuing the operations. Even now we see that because of the lockdowns in all the zones, wherever the coach factories are situated, both much out or not. But slowly, they are opening up. The allocation from the ministry need to improve. But our interactions with the railway authorities It's really promising. They see that maybe Q3 of this year, things would come back to normal. It's what is their guess. We need to wait and watch. Maybe next quarter, we'll throw more light on this. But definitely, government has committed We are now spending more in railways, both in coach and other areas, in the safety areas. So as far as potential in railways Concerned on a long term perspective, it is definitely me. Okay, great. And so just one last question from my side. In the cash flow statement, There was once municipal amount related to the corporate guarantee provided to CG Power. So just wanted the amount is at least, but just to understand your this thing in terms of how much Have you lent to as a corporate guarantee to CG Power? And what's the policy going forward around that? Yes. We issued these corporate guarantees to secure the loans, which we have taken to refinance the CG acquisition. So this is a notional entry. This is not actually a cash flow entry. It will get offset elsewhere. So there's a notional entry which we have to pass based on in the history. Great. Okay, sir. Thank you so much for answering my questions. Thank you. Thank you. Thank you. The next question is from the line of Anupam Rupa. Please go ahead. Sir, a couple of questions. Firstly, on the I feel, Dhanush, while the period after COVID has been very strong, but do you expect the domestic market to keep growing at this Healthy pace or should it revert back to the older pace which you are thinking before the COVID struck? I think somebody had asked this question earlier In China, what's the outlook? I think, like you said, at this point in time, it's very difficult to kind of say what is the outlook going to be, So I can give you just a wait and see because wait is specific. Okay. Understand. Obviously, there is a school that Demand is going to pick up, but we don't want to kind of make that assumption right now. Like both kind of Mukesh and Paul said, there's an increasing focus on exports as well. And so we're hoping that, that will also help us because we are seeing good export demand. Okay. And since we discussed you said about exports, so what So given the export so the suppliers in China and Taiwan who are the largest suppliers, we obviously have much better economies of scale there. So what advantage do we have versus Then in terms of cost, if you are primarily focusing on B2B? I think 2 sets of things, right? One is that like we've seen, After this pandemic, there are several buyers in the Clearly saying that they do not want 100% dependence on the Chinese supply chain anymore. And we see that as a definite advantage. And the second is that I think in terms of some products, Like you see even in cubes, right, kind of there is basically anti dumping against some of the Chinese players. There has been problems challenges with China with India also, but we do see Opportunities again to pick up for us. Okay. Understood. And just one question on the engineering segment. So you have been working on Growing the exports pie for the engineering segment as well. So how is the traction on the product which you are developing? And any further products which we are in the pipeline which I think Mukesh answered that. Mukesh, you want to answer that? You mentioned some of it, but nobody can answer it again. Like we shared earlier, we don't discuss in this call which product category specifically we are focusing on. Just to give you a broader your answer is, We are going to increase our participation at the geography level. We are going to do that. And we are also participating the new product segments. Even for this CapEx is also under completion, so we'll be taking that forward to Anshulaksh. Okay, okay. Understand. Thanks a lot. Thank you. Thank you. The next question is from the line of Nikit Shah from Autonomous Bank. Please go ahead. Yes. Thank you for the opportunity and congratulations on a very good set of numbers, sir. Just two, three questions. So first, I think you've taken a INR 200 crores fundraise enabling Resolution, is it largely for working capital? Because as I'm sure or is there some for something else? That was the first question. The second question was While we've done M and A of CG Power and we did guide us that and that we will look at multiple M and As in future as well, Given the turnaround that we've seen in CG Power already, when do we I mean, is it safe for us that over the next 12 months, we will look at Another acquisition given the stress environment that we are under. Yes. I'll answer the second question first. I mean, obviously, we will start looking, But we're not going to kind of set ourselves the time limit under which we have to do a deal. It's going to be very opportunistic from that And in terms of the INR 200 crores? It's more like an enabling resolution, not for any Okay. Got it. And just one more question, if I may squeeze in, sir. While you had guided earlier During the CG Power call, you had a guidance of 10% TBT margin. And if you just look at the numbers on an adjusted basis, you already would cross about 12% If I adjust the raw material cost inflation, which at some point of time will converge. So would you like to give a higher level guidance again on that number because it also impacts, To some extent, cube valuation. So would you like to give that guidance again, revised guidance on that? So I think first let's see because there is a mix of businesses there, right? Some businesses might be higher, right? So I would say that it's still a business that we need to learn. So I don't want to give any guidance on any increased guidance on that. Give us a couple of quarters, give us 3 or 4 of the investments. And I think that after that, we can start Perfect. That's all from my side. Best of luck for the rest of the quarter. Thank you. Thank you. The Next question is from the line of Avin Joshi from Bachelors Enterprises. Please go ahead. Yes. Good morning, sir. I just had a small request to make. Sir, in the last call, you had mentioned that you'll probably be doing a separate conference call for CG Power. Now you're stating unless there is adequate coverage, we will get into it. It's becoming Like a chicken and egg story. Why don't we PM the coverage by getting some more details discussed in these kind of calls or do I start We have a separate call, sir. That's just a request. Thank you so much and all the best. Okay. All right. Yes. So it's not likely that we have to wait for coverage. We'll have a discussion. Yes, so we'll make a call ahead fairly quickly, okay? Thank you so much, sir. Thank you so much. Thank you. Next question is from the line of Bharat Sheth from Western Western. Please go ahead. Hi. Thanks for the opportunity, sir. Sir, a small question, I mean, not on CGPOWER, not financially, but business wise qualitatively. In Fiji Power, we also I understand we have a smaller motor business also. And with the GST coming in and This COVID, there is a lot of consolidation is happening. So if you can share some color? And are we working, I mean, For the small motor business for EV vehicles? So like we said, sir, we'll start doing separate DG calls. I think basically, We are looking at motors for EV, but it's still an early days. I'm not sure what you mean by small motors, But kind of obviously, the there is a The broad spectrum that kind of TV kind of plays in, we don't get into the very small models, if that is your question. But our intent is to obviously kind of broaden that spectrum over time. But we don't see getting into the very small fully automated manufactured model. Okay. Okay. So we'll discuss more when we hold the CG Power call. Thank you. Thank you. Thank you. The next question is from the line of Rohit Ali from Progressive Please go ahead. Sir, two questions related to Shanti here. Just wanted some clarity on the growth CapEx. In Q1 FY 'twenty one, the team mentioned that Shanti was going to go for about 15 odd 20 odd crore of growth CapEx. In Q3, Mahindra and his team mentioned that there will be a deferral and that in future, in Q4 and then Q3 of the next year, to be spread over the next 4 quarters. Just wanted to understand what exactly is happening on the CapEx plan for Shanthi? Yes. So Your question is what are we likely to spend this year or What we are likely to spend and what do we intend to spend in this, Yes. What we intend to spend could be in the range of around INR 20 to INR 25 crores. Okay. And that is for the growth CapEx, is it? Correct. To get into new segments of products. Sorry, I didn't get that. To get into new opportunities for new segments If you wish to elaborate a bit on the new segments or is it too early to speak about that? We don't want to reveal it exactly now, but we have to be in the same call. Okay. So apart from the new segments, any other proponents of growth which Long term shareholders or investors should look at for, Shanti? Like how we explained earlier, service business continues to be a growth There is significant potential there still which is remaining untapped. We're letting you to focus on that. So the service business will be like, what, 15% of the total turnover today? Yes. It will be around that, yes. And you intend to pull it up too in terms of percentage? Sort of go for potential. It We, I would say, may be a double digit growth every year. Okay, sir. Thanks a lot. Thank you. The next question is from the line of Yogesh Singhvi from Spine Investments. Please go ahead. Hi, Uresh. Yugesh, your line is in talk mode. You can go ahead, please. Due to no response, we move to the next question from the line of VP Rajesh from Banyan Capital. Please go ahead. Thanks for the opportunity. Most of my questions have been answered. Just a couple of quick ones on Shanthi's. What is the capacity utilization in that business? And secondly, what is the growth prospects you see over the next 6 years given Government's trust on manufacturing and infrastructure. Yes. So Capacity utilization obviously is kind of done at an individual product level at Because some of the products kind of go through other much larger products, some of the products are kind of So the heavy duty, the medium, the kind of so capacity utilization in general, I would say It is about 65% to 70% right now. The in terms of growth prospects, I think we talked about it Basically, the avenues we see are service revenues, new products in the existing segment itself, Exports continues to kind of be an opportunity. And we're also looking at now what to do from a technology perspective, Basically broadly beginning to see IoT, what if we can kind of stick some of that into the gears Because that's increasingly becoming a demand from the customer side as well. So all 4 tend to be kind of good growth opportunities for the business. So there's definitely significant growth opportunities. We'll have to kind of wait and see how this thing kind of plays out, but we are bullish Kind of broadly in terms of where is it on the business. Sure. Thank you for the answer. I was just trying to understand if there were There were more opportunities in the domestic market because of the spend that government is pushing in the infrastructure. That you noted in the Q3. So I just wanted to get your Yes. Definitely, there are several trends that are positive, right? I mean, sugar, for example, is going to be kind of a positive trend if people start spending more in that business. Infrastructure, infrastructure picks up definitely. Any of the big areas, right? I mean, cement basically helps us. Any infrastructure areas kind of help us. So definitely there is more of an infrastructure spend and push there, we will see growth from that. It's too early to comment on that. Yes, it will be too early, right? Like I said, we don't want to kind of say anything before the Okay. Thank you so much. Appreciate it. Yes. Thank you. Thank you. The next question is from the line of Sanush With regards to our acquisition of CGP, in the total corpus of outstanding warrants that Diab Possessed. Is there any data that we have as to how much of it has already been utilized and converted to shareholding. And what is the approximate time line as to when TI is going to utilize all of their warrants and So I think the issue we have 18 months from the date of issue. The date of issue was October or November. November 2020. So within 18 months, we'll basically fully subscribe. On a fully subscribed basis, I think our total shareholding goes up to 58. 59% on those. So 58.06 percent. Yes. Okay. Yes. Our total shareholding goes up in that range, somewhere between 58% and 59%. Thank you. Thank you. That was the last question. I would now like to hand the conference over to Mr. Anupam Gupta. Yes. Thanks, Ayesha. So, I just had one small question, if it's okay. In the Engineering Products segment, we obviously have a single exposure to 2 wheelers. And the electric 2 wheelers there are making Slightly faster inroads than in the passenger vehicles, at least in India. So have we started pitching our products there? Or have you seen any Question there or do you see that still to be some time away? Yes. It's a good question. So I think Mukesh, the question is on whether Electric will affect our DSS business. So if you can just talk to that. Actually, it is going to increase the growth Because if we go through the segments, the scooters are taking the first priority for the electrification in the tool segment And the PFS segment is going to increase by introduction of EV. So we see the opportunity, maybe let's say, we don't foresee any Impact from the business on the negative side as of now, but there is opportunity side, yes, there are opportunities which we have to participate and grow our business. So far, but have you seen any traction there? Or is it too early? It's too early. Okay. I understand. Thanks a lot, sir. That all answers my question. And thanks a lot for giving us the opportunity. If you have any closing comments, Balen, please go ahead. Thanks. I think that I mean, nothing specific from our perspective. Like we have said, our ability and our focus continues on the key areas, including kind of lean as an opportunity for Performance improvement, CQM, all of those efforts continue, and we do see more performance improvement opportunities Just on those itself, in addition to kind of some of the new areas and growth that we're looking at. So With that, Ketan will also close our commentary. Thank you and look forward to interacting with you next quarter. Thank you. Thanks a lot, sir. Thank you. Thank you. Thank you. On behalf of IIFL Capital Limited, that concludes this conference.