Q2 20/21

Oct 23, 2020

Quarterly report

Ladies and gentlemen, good day, and welcome to the Q2 FY21 earnings conference call of Cube Investments hosted by Access Capital Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kasha Pajara from Scapital Limited. Thank you. And over to you, sir. Good morning, everyone, and thank you so much for standing by. It's a great pleasure to have with us the senior management of tube investments to discuss the q 2 F521 earnings. From the management side, we are represented by Mr. Whelan, who's the Managing Director, Mr. Mahindra Kumar is the CFO. And we also have the business head, Mr. Mukesh, on the call. Without much I do, I hand over a floor to Mr. Milan. Mr. Milan, many congrats for a fantastic set of numbers. I think we've matched up on Q2 top line last year, you've shown cost cuts and taken margin higher. And I think I've not seen this kind of working capital levels that we are at over so many years of me covering to you. So what do you do and leave the floor to you, sir? Thank you, Sascha, and good morning, everybody. You know, the, you know, welcome to the CII earnings call. I'll just go through commentary as usual and then be happy to turn it over to you for questions. Our stand alone due to PBT was at 129 crores, which is a growth of 17% over period last year. Revenues were at 1033 crores in the quarter compared to 1056 crores in Q2 last year. PBT was at 129, like I said, and that's before exceptional items. Our ROC is now 26% for the quarter. Compared to 24%. And we generated free cash flow of 246 crores for the quarter, which is 266 percent of that. The, the past for the quarter was at 96 crores as against 90 crores in the corresponding quarter in the previous year. In terms of individual businesses, revenue for engineering was at 5.65 crores compared to 5.54 in the same quarter last year. And PBIT for that business was at 84 crores as against $6.63 in the same quarter last year. Cycles and accessories did revenue of $212 compared 2017 in the same quarter last year. And, PBIC was at $18,000,000 compared to $6,000,000 in the corresponding quarter of the previous year. Cycle team has done a great job of basically improving efficiencies and bringing down the overall cost from the cost structure and therefore kind of making ourselves much more competitive. For MetLife products, revenue was at 350 3, again, 3.79. The difference in the delta is predominantly driven by lower railways revenues, because railways business has been slower in starting up. We do believe though that the rest of the year, we should be okay. And PBIT for this business was 38 against 40 for the same quarter last year. On a consolidated basis, we were 10,146 crores versus 101,191. And that was at 101 versus 93. And Shanti has revenues of 54, again, 71, so they have quite a bit of a drop, but that was a 7 versus 8. I would just like to say that the team has done a phenomenal job in coming back from COVID as the entire company. You know, that really kind of, I would say kind of it's been a acute effort. Given the the toughness of bringing back our supply chains to normal. And everybody on the team, during kind of the leadership was here with us, has really gone above and beyond the call of duty to get back to normal. And not really that kind of most of the senior management team has basically been double having as kind of also try and get an impending acquisitions to closure as well. So I would really say that this whole quarter is dedicated to the people who just put in such an incredible effort, from the from, on all fronts to kind of make what's happened happen over this quarter. And let me talk to that commentary and turn it over to all of you for any questions that you might have. Thank you. Thank you very much. And Participants are requested to use handsets while asking a question. Ladies and gentlemen, We will The first question is from the line of Abishay Ghosh from DSP Mutual Fund. Please go ahead. So just a couple of questions. If you look at the individual segmental margin of your Engineering division has moved up to something like a 15% margin profile. But if I look at your quarterly revenues, you're still down about good 20% to 25% from peak revenues we had done in 3, 4 quarters of FY19. So I'm seeing whenever and so because of the operating leverage factor, do you believe you can be that 17, 18% margin business whenever you reach those peak utilization, just wanted to get some understanding around. No. Actually, kind of, obviously, there have been there are several things that happen kind of, you know, because of this this COVID, like, swings, right, when you go to shut downs, kind of, you know, there are some things in terms of like, you know, price realization on steel that got adjusted. There's kind of basically there are several things I would say that are there in a particular quarter. If you're asking me in the long term, can we get to those kinds of margins? Our belief is that, yes, but it requires much more work on me. And we're still doing a lot of things basically on the like we said on the quality front, productivity front, kind of the shift to lean. All of those initiatives continue. But you know, I would say that definitely if volumes were to go back, see, in different businesses, we're positioned, but if volumes and all of our businesses were to go to kind of peak 'eighteen, 'nineteen levels, yeah, definitely our margins would be kind of a bit healthier than where we are today. Okay. And just coming to the cycle division as well, for the same revenues, you've moved up to that 8.5%, 9% kind of a margin profile now. So obviously cost efficiencies you've mentioned in remarks, but is there a pricing improvement because of competition you know, one of the, key players shutting down their operations and exiting the market. Has that helped? And is the overall demand scenario kind of helping on the pricing front? Yes. So pricing has been driven a bit by overall demand, right? Overall demand definitely is up. And there seems to be at least from what we can tell, a structural shift where we're seeing a lot people want to kind of consume in that area, which I think is good for the market, not just in the short term and the medium term. And just to give you a sense, that trend is not just domestic, that trend is a very global trend. And so what the cycle team now is getting itself up to do, no pun intended is basically that we're also looking they're beginning to look at exports in a big way. And I think that that will also be something that encouraging in terms, right? So honestly, you know, the challenge we've given, which is we wanted kind of all of our businesses, you know, to be 10% Cbd And, there were some businesses that if you'd asked me kind of 2 years ago, you know, I said, you know, maybe they won't make it, right? But I think that kind of the teams are just showing us how resilient they are. And some of what we're seeing from a performance perspective is just demonstrating that. I'm extremely bullish as a result of that. Sure. Can you mention? Yeah. We we can't hear you. Hello. Can you hear me now? Yes. Yeah. So, uh-uh, in the metal form division, you mentioned in an opening remark that the railways has pulled down the overall revenues and what we see about a 7% kind of a decline. So is railway slowing down on their CapEx, or is it more of a temporary phenomena you can just help us understand that? The, yeah, so, no, I tell you, Keyuris is on the call or Yes, I'm here, sir. We're finding it difficult to ramp up operations in their client. That is the reason the top line has not grown in, in division. And as we speak, you know, they are ramping up the operation. And, Q3 and Q4 are likely to be, you know, better than, much better than Q2. That's how we see the quarters. Okay. Okay. Okay. That's extremely helpful. And congrats the entire team and wish you all. Thank you. The next question, so sorry, ladies and gentlemen, The next question is from the line of Manoj Pate from Carnelian Asset Management. Please go ahead. Hi. Good morning, everyone. Sir, I have a couple of questions. First one is, like, recently the kind of shift which is happening, from China to China plus 1. And across our various division, mainly engineering and metal forming. And also, I think, you have aspiration to grow export proportion of your sales. So in this scenario, how are you seeing this opportunity? And, are you also planning to have accumulated buildup of capacity, CapEx going forward on this. So this is my first question, Yeah. So I think that, definitely, we see opportunities from the China plus one strategy, right? And If you ask, yes, everybody is beginning to kind of see that. Right? That there is opportunity, and we have to kind of go off there. So the broad answer to your question is, yes, we are seeing that opportunity and yes, we will start ramping up capacity. Where we ramp up capacity will change because obviously in certain businesses, we are seeing that opportunity to be more rampant than others. And therefore, our focus will be on businesses where we see more opportunities. Specific examples include the bicycle business, industrial change, And like, for example, in engineering, we are getting developing a new product for which we're getting new capacity, investing in that capacity as well, right, in the tubeless business. So let's say across, we do see that opportunity and yes, we are focused on it. Thanks, sir. If I look at your business verticals, across like It, ranges from cycle chains to, like, engineering where you are also pioneering into some of the products, which will contribute to your margins. So on this, if you can give us some broad level transformation which is happening from, let's say, to low margin product to a high margin product, where the entry barriers are, I think, you will be better placed in terms of competitive landscape. Yes, I think we've articulated this in our prior calls as well, right? I mean, that's the reason for some of the shifts to optics and kind of going further after what value chain in the businesses we're in. Broadly, that is the approach we're taking, right, which is each of the businesses understands that they need to be in. Therefore starts altering both their product mixes and their business strategy to support that. And I think each of the business teams has articulated their approach towards this, as we have on prior calls as well, right? So I think kind of this is in line with how we're approaching it overall. I don't know if we're looking for specific commentary on a particular business, but that's in line with how we're approaching it overall. Is that particularly your, this metal from business where I think you are targeting some, new products, especially the door frames of cards where, like, It will make some kind of headrooms into a few of the OEMs on that. And also you have spoken about, like, truck building, capabilities which you are building across where you are targeting large and organized market. So on those 2 parameters, if you can comment? Yeah. So, Kiara, do you want to comment on the Metricone part of it? So we had a very positive player in the player that will be faced through those frames. To almost all the formulas in the country. Continue to, enjoy everything. You know, we need your share, in the shipment and we will, like, basically, but are you actually comfortable? Yes. We are. Mr. Shadi Vasani, your audio is not clear. It's breaking in between. Okay. Now is it better? Yes. Yes. Yes. Yes. Yes. Yes. So in PII space, we are, you know, a dominant player, and we continue to enjoy, large market share, major market share in that segment. And we'll continue to grow that. We are a major player, you know, with Sundal and, we are trying to expand our, you know, offerings to customers so that, for the same level of investments and fixed overheads, if we get, you know, more business from the same the customer naturally, your profitability will increase. That is the approach we are taking as far as, those frames are concerned. Does that answer, your question? Yeah. Yeah. That's right. And on, it's a track building, opportunities you can comment on that also. Sorry to interrupt, sir. Maybe request you to return to the question queue for the follow-up question. The next question is from the line of Shyam Sindar Shiram from Sundarra Mutual Fund. Please go ahead. Yeah. Hi, sir. Good morning. Thanks for the opportunity and, a very strong delivery, despite a very tough situation that we have been seeing throughout months, sir, many congratulations on that. But my first question is on the, the size goods, we have seen a very strong margin, EBIT margin and ROC improvement from Varon for the first time in separate quarters, we were both of these metrics have have gone through, are they really targeted that day? So, is this, are these metrics sustainable going forward from an ROC perspective as well as the margin perspective. If you can give some perspective, some color on that. So you're talking about cycles and which are the business? Cycles, sir. Cycles. Cycles. So cycles, our belief is that we are going to get more more competitive. So, in general, the relief here is, yes, the team will be able to kind of sustained better numbers than we have in the past. Now obviously, this is dependent a bit on the demand side. The demand side is strong now. To hedge on domestic demand. We're also developing capabilities for export. But as long as the demand side goes up, Sam, their answer would be yes. But it's not KKP is not on the line. No? That's why the call is not available today. Otherwise, this recording was disconnected. We are connected, ma'am. But to your point, Shyam, I believe is the demand fixed at the current levels. Yes, we will be able to hold Understood. Understood. We'll hedge on that. Understood. Understood. Sir, the second question is on the sustainability of the cost levels. On the specifically on the commodity prices, we are seeing a very sharp increase in the base metal prices per se. So I believe these price negotiations would have happened for this second half. So, going forward, as we look into the second half, how are we looking at the, you know, commodity costs trending for our business across various businesses there. And, so if you can give some perspective, are we tech and we maintain on these levels of the, the R and M cost as possibly the sales given the, you know, after we have passed on the cost to the customers, is that something that we are looking at Understood, Sam. So I think actually Mokesh is on the call and he's the largest business that is affected by that. So I mean, though TRS also is to an extent, but I'll let Mukesh answer that question. Yes, Sam. Thank you. For the question. You are right, maybe let's say the commodity prices are really going up. The fee prices, particularly, maybe we see from last 2, 3 months is going substantially up. But, ma'am, let's say we have our arrangement with all the customers with the OEMs as well as, customers, and we are fairly confident we'll be able to recover that going forward. Okay. But that could be a 1 quarter or lag in that sense. Whatever. That's what we told. We have a prevailing arrangement without the customers. Maybe whether it is a direction or whether it is increased there'll be some lag will be there, but maybe let's say the disaster of the usual practice, and we are confident that maybe the change is difficult environment also. We'll be able to, recover it fully. Sure. Sure. One last question, sir, on the non auto business, both from engineering and metal forming, metal forming, we did value to the railway business being weaker. Now we pick up later. But, from engineering side, on the non auto side and from the industrial chains, etcetera, what is the outlook that we are looking at as as we look forward now. And secondly, on the export side, other than, the new products that we talked about, because of moving away from China, what is the existing business exports looking like? Thank you. Actually, that both are our actually focus area in the engineering business, particularly. Maybe going forward, the margin improvement and maybe even the market growth is going to come from the exposed market, which we are putting even CapEx for the new product development also because we always want to invest in area which is the newer, maybe let's say, not existing in the country and participating in the sports market. And coming to the non auto hydraulic cylinders part of the business, which is taking, I think, some time to catch up, because of the commercial vehicle and the offer vehicle industry, we are hopeful that Q4 onwards, that business will also start moving forward. Okay. Okay. Understood. Understood. So then aftermarket has been holding up pretty well, sir. Is that a fair understanding? Then the media Yes. From engineering business, we generally give it to OEMs and they do that for market business, but after markets right now is very strong and we are we provide for aftermarket? Maybe we see the good quantum of growth is happening on those areas. Even, I mean, I was more referring to the mechanism, business, etcetera. Is that also holding up very strongly, sir? I mean, has that come back to the Yes. I would like that, Ms. V. Yes. I will answer that. Yeah. You are right. Aftermarket is very strong today. Last 3, 4 months have been very good. And it continues to be promising going forward. Okay. Understood, sir. Understood. Thank you. I'll call back in the queue. Thank you very much and all the very best. Thank The next question is from the line of Ms. Krishna Pujara from Access Capital. Please go ahead. Yeah. Helen, just a couple of questions. If I look at the working capital of you, this time around, at least in the mid year, we are seeing you know, close to 30 or 40 or 40 odd crores of working capital, net if I was to just look at the, cash conversion purely. And this is lowest because normally we were having 200 or 300 crores of working capital, networking capital on say for high 1000 crores of sales. And this time around, you know, the working capital has really, gone down because of payables kind of moving up. Also, I can see net, you know, capital employed of cycle, which is at less than 50 crores, which was similar to 2010,011 levels and this is despite new capacity having come on board. So the question is that peak levels be sustainable or do you think that they will normalize and these are one offs? Yes, so I do believe the working capital that you're seeing here is like an old time, though. So it will go up a bit. It's undoubtedly, I think it will go up from its current level. So and we should kind of plan for that. What level we kind of can fix that See, honestly, what the cycles guys have done is kind of create a massive structural correction. And, they are currently operating a negative work capital, which I think is fantastic. And my belief is that they will continue to kind of operate like that. Engineering and metal forms have also improved the working capital significantly. But they are running lower than at lower levels than what I think they'll have to be, you know, to take over the cycle. Because what happens with COVID also is that everybody inventory is basically kind of got drawn down a fair bit. So what I think will happen is that we will get back to a level that's above where we're at, but obviously not kind of close to where we were at before. Okay. Yeah. So, the shift is not entirely driven by increase in payables alone. Even, inventory and debt also are lower. Some of that will get corrected in Q3. Yes. Generally, you know, the channel check that I'm doing across many industries and specialties, you know, smaller companies, I'm seeing a trend of, data tightening incrementally. So while the earlier cycle might be having, higher day to day, but incrementally, most of the B2B business is also a kind of tightening the requirements of receivable days. And the incremental business that is being done across many P2B businesses is on lower receivable days compared to what was historically seen earlier. Would that be a fair assessment, you know, that would have also come across? Yes. I mean, definitely, we see that happening, Kashev. And I think that, yes, your assessment is correct. Yeah. And lastly, and I will not hold back the Q any longer is a cycle business. I remember earlier managing director, and we've always kind of said that this is like a 5% margin business and, 7%, 8% growth, 5% sustainable margins broadly as a trend line trajectory. And we have seen very healthy margin improvements in Cycles business now at close to 8 9%. And also, incrementally, the trend that I'm seeing at least maybe post COVID is that people are taking more to health and fitness. And since gyms are shut, most of them are kind of, you know, taking cycles. And in fact, in Mumbai, I must put it on record that there is a shortage of quality, bicycles like mantra. There is no no inventory available across most of the stores. So do you see that you might be in for a growth spot here compared to what was historically seen for us earlier. So maybe the growth and margins, both have room for scale up from here. Well, so let me put it this way, right? The segment that you're talking about is kind of a definitely we see that there is opportunity and I agree that so when you take the high performance statement, which is mantra and all, that it's a fairly small percentage of overall sales. But in general, everybody across our segments, especially in kind of the you know, in both kind of the recreation, the NTP and in our performance side, we are seeing a shortage, right? Because demand has picked up continues to be at a quite an elevated level. So I do think that that's encouraging. And honestly, that's why I said, I mean, I think it's too early to say whether kind of it's a structural change and whether we continue. But I definitely do think that it's a good position right now. You know, and so it is very encouraging, it's a kind of similar perspective. Okay. I'll move on further to the queue. Thank you. The next question is from the line of Pankaj Dipas from Kotak Mutual Fund. Please go ahead. Hi, Glenn. Hi, good morning, William. How are you? Very good. Yeah. So just couple of questions. You and the team have done phenomenal job in the last couple of years in improving the profitability the metrics you guys talked about. If you go to Crystal Mortgage for the next couple of years, what are the Things probably we would like to improve from here on. A fair bit of profitability across divisions have been done with. For the first time, we saw, the general model which you have always spoken about in US. With CG power coming in. So if you were to crystal ball days for the next couple of years, what shape and form will the company look like? 1, And in this journey, what are the challenges you are facing now, which probably could be a headwind from a company perspective? For the next couple of years. So that will be my two questions. Thanks. Thanks, Pankaj. So I would say that first off, right? The good thing, like you said, is that the different elements are kind of beginning to play out, right? The like we said, the, like, the first part is kind of what earns us the right to do. Anything I think is improving our profitability. And honestly, like I said, there's still a lot of way to go there. And I'll come back to, like, so you'd ask, what do we need to do? I would still say that we're only like we're less than we've not even got to 50% of TQM. And in terms of lean, I'd say, we're about 20%. Lean and TPS, I'd say, we're at like 20%, 25% and EQM, maybe we're at 50 side. The significant part on that part of the journey that needs to kind of do that we need to continue. The so that's one element of it, right? The second is, it is said where will PID? I think kind of First, like, it's just a it's a continuous kind of engine that we're trying to build, right? And I've always, I think from the first meeting, we've talked about this concept of engine as right, what are you trying designing the engine to do? And from TI's perspective, we have to have an engine that the free cash flow generator that then the free cash is generated can be deployed to TI2 and PI3. And then each of those entities then has to become free cash flow generators. Over time, right? So we feel like to prove that DI2 and TIC can become their own free cash flow generated. So that's something that we have to prove over the next 2 years. And that's an imperative for us because I think we've proved and hopefully this will assist you and I'm confident given kind of my knowledge of the team and what it's done. That TI-one will continue to sustain as a free cash flow generator. So And if the teams manage to do that in this environment, I have full confidence they'll be able to do it in most environments, right? So I think that basically that's what we're trying to build, right? We're trying to build a core free cash flow engine that keeps getting enlarged over time. To build more and more capacity, to allow the company to scale at the levels that we've set out, right, which is basically we have to bring back the number was not delivered consistently is at 17 percent revenue growth number. And we are sure that we can deliver that also aided by TI2 and TI3. Hence kind of the acquisition approach. And then now the second thing to prove is that that each of those entities in TI II and Tier III can become their own free cash flow engines as well. So that part is still unproven. Like I said, the second part that's unproven is that I mean, not unproven. The second part that we're seeing early in our journey is on leandpsandtqn. And then the third part really you know, that we're starting to kind of think more and more about, Pankaj is, is balanced, you know, basically If we've got 20 views today and we want to be at 100 views in the near future, we need a team of viewers, right? And, you know, how do we start grooming that balance, right, and Honestly, here again, we've articulated the approach, right, which is broadly that I do in the 1, the team has to do in year 2. I mean, my direct reports need to do in year 2. And then one level down from them needs to do in year 3. That's something that we're constantly striving to do, right? As a matter of fact, even with kind of, whether it's, if we like I said, the transaction has been not closed yet, but a lot of the integration work, a lot of the work that has to be done post that will be driven by the team, not by me. So constantly, we're looking at how do we push that envelope and push, and so I would say the biggest question is talent and talent development. And that leadership development is where we're going to move our attention from the center hopefully in the near future. Great. Great. So thank you and all the best for that. Thank you. The next question is from the line of Raghaskimani from Carnelian Capital. Please go ahead. Hello. Hello, sir. Congratulations on a great set of, an investment performance. I have two questions from CV Power. If you could share some plans I don't remember the telephone. This is on the same. I'm sorry, Mister Kemani, but your voice is breaking. Can you please check? Hello? Check. Is it okay? Better now? Yes. Okay. So as I'm I have two questions on. One is that if you can just share some broad thoughts on how you plan to sort of turn that around over the next couple of years and secondly specifically on that, you know, how do you plan to, so for fund that, would you have some sort of capital raising TI at some point in time to to capitalize the CC power? Yes. So I'd say, essentially, we're not having any conversations on, on PG, because, you know, 1st, that transaction has been closed, and So we are unable to basically kind of have conversations on that right now it's just one entity. So we'll really pass commentary on that after we close the transaction and once we've had a chance. So what's the timeline of that for any any broad sense you have on that? It should happen, in this quarter. In this quarter. Okay. Thank you, sir. The next question is from the line of Nikkatesha from Motigal Ujjwal. Please go ahead. Hi, thanks for the opportunity and congratulations on a good set of numbers. Couple of questions, sir, first on the margin side of it, I think, you know, it's been a phenomenal journey from where the margins were earlier and where we are right now. Almost at 11.5%. How much room do we have and where are we in this journey? Because our top line has not grown in the last few quarters and yet we've seen efficiency gains coming in. So do you think that incrementally from year on, we will see a situation where top line will also start growing up and that will kind of kick in an incremental more margin expansion. So that's the first question. The second question was on the breakeven point of the plant, you know, during COVID, how much have you brought it down? And do you think some of the cost initiatives that you you have saved before the bringing down the break even point are sustainable? That's the those who got the question. So I'll say, I'll tell you, let me just have both Mukesh and Kiara answer those questions for you because they can talk about from the individual, their individual perspectives in that businesses. And then if need be, I can add some overall color, but Mukesh and Kearest, can you answer those two questions? Can I take your first, Mukesh? Yeah, Terris. Please go ahead. Yeah. I'm Terris here. I take care of metal form product division. Your your question is valid. In fact, we are looking at, a top line growth in the coming years. Which will further, you know, push up the profitability because of contributions kicking in with the disproportionately letter. So so the coming year also, we are looking at some good top line growth in, you know, various verticals. Of all the metal firm products within our business units. And about your question on breakeven, yes, we have brought down the breakeven significantly in this year in these two quarters using the disruptive situation and we would like to sustain it going forward. So that would be some small corrections when the operations came up. Yeah, Mukesh. Yeah. Thanks. Well, let's say, like, here is mentioned, this good headroom available today, say on in the top line, maybe let's say, we are already invested in our Rajpur plant and we see that maybe let's say those capacities are also catching up Given the auto mobile industry has maybe almost bottom line, maybe which can go only up. And also our focus on the exports market as well as we are doing some CapEx on the new product development, which are the growth levers we are going to apply it going forward. We're pretty confident that the growth is going to follow, which we could not do it in, last two or 3 quarters because of the environment extra. And going forward to mobile, let's say breakeven, we have done a good quantum of work in maybe last 1, 1 a half years time and by bringing the breakevens down. And that is the reason we will, let's say, our performance was visible in current quarter in respect with the difficult environment. But still, like Valin mentioned, a lot of work is still pending on the journey of Deepgram in the journey of the lean. Even the working capital front, we have done a great work, but still we feel there is a good headroom available going forward by bringing the lean approach and improving in the quality. So make sure of this quality and the lean approach is also going to give us further headroom, to be more sustainable, even grow margins going forward. Yes, just one more one, I will expect here. Just like, how Helane explained at the beginning of the call, there are also certain raw material price negotiations, which got finalized during the quarter, but it also gave some encouragement to the margins. So I haven't said that yet, Life our locations here as explained, there are also certain actions which are in place or which are in progress to improve margins for us. Sure. So, so on the margin side, just to complete the loop, is it safe to assume that we are halfway through and going to 14%, 15% PBT margin is a possibility. Obviously, we should have got that aspiration, but again, right. I mean, I think we should we should set that as you know, yeah, we would like to get that over a 3 to 4 year period. Sure. And the second question was, on CG power and is not asking specific questions on PG power. But just wanted to understand on the funding side of it. Is it safe to assume that in a future date, we might look at capital raise for PPAR balance sheet, right? See, we don't want to provide any commentary on things that we have to stay silent on. And so, Like I said, we want to discuss any of those matters. You know, and So, yeah, I guess kind of that's my short answer. Sure, sir. Perfect. Thank you so much. Thank you. The next question is from the line of Rateshwarier from Sundar Mutual Fund. Please go ahead. So just a couple of questions and down the cycle business. Understand what will be a market share in the cycle division? That is one. And second, one of the earlier participants, if there is a demand and you don't know whether it is next whether it is sustained for next 2, 3 or if that's sustained, how was our plans there in terms of, you know, investment either in the distribution segment or, do we have that distribution segment, you know, ramp it up if the demand sustains here? And one more question in terms of margins here, looking at where the steel prices have moved up. Are these margins sustainable, or can we pricing be passed on at current environment? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So your first question cycles market share, I believe we're somewhere at about 25%, 25% of storage revenue currently. 2nd question was So do we need to ramp up both on manufacturing and distribution? I think, you know, it's a distribution we have been ramping up. That's been helping kind of our growth. And we continue to ramp up on cybersecurity solutions. And manufacturing, we've got adequate capacity because we've also got the Rajpura plant there. So I would say we're not even using kind of, more than 60%, 65% of our capacity right now, at assembly capacity. The challenge with the market supply right now is because some component shortages are there, which we're also working to correct. So that we have more capacity to ramp up it in quicker there. And then You had another question. No? What was the other question? In terms of margin profitability, So still prices are moving up. So can it be passed on? Sorry. Answer the margin sustainability question. Right? So Mukesh again, I mean, you can answer it again. Like we mentioned earlier, we will be able to pass on the steel price increases to with our customers, with the prevailing agreements, whatever we have with our customers. So we are pretty confident there'll be no effect on margins because of the steel price. Okay. And just one more thing on this in the cycle business. Product mix Can this, when you're seeing 20 percent market share, so when you talk about the base cycles, premium cycles, Can this product segment anywhere, compositions or anything can change where where, you know, that can even more benefit our margins the realization footprint? Well, see, I think what you're seeing is that the team is kind of doing the right things, right? Team is focused both on supplier side and demand side and is doing the right thing. So obviously, one of the things that we have started offering is product mix. And we will continue to kind of look at that and kind of keep altering that. So is your question is, have we done everything we can? The answer is no. Thank you. The next question is from the line of Hardik Doji from WhiteWave Partners. Please go ahead. Yes. Thank you very much for taking the question. As part of your strategy, you had mentioned that one of the pillars is to see the new areas, to expand into. So can you just give an update on where we stand out there in terms of the different initiatives And also given the CG power acquisition, are we looking at capital allocation out here maybe over the next couple of years or so? Yes. So, I mean, I'd say like a couple of things, right? I mean, so for example, on on our new growth kind of, areas, there's 2, a couple of those have been a bit slow down because of the demand environment. And also like for the lens business and the optics business, the challenge we had is that all the equipment was all imported but we needed people from outside the country to come and set it up. And they've not been able to come into the country we're trying to do it on teams, not the optimal way to basically kind of set up and start a new plant. But we have been kind of working on it. Now, so I'd say it's a bit slower, but, you know, in my mind, kind of, the traction is definitely kind of going to get there. So I'm not kind of too worried about it. In terms of, I mean, I think what you've seen, in terms of capital allocation in the end, you know, as I say that, you know, my lines always been listed in the end where it's out and then, you know, till we get to a space where we feel comfortable with the debt level. So we're not going to go out and kind of do anything crazy. And so that's basically, broadly, is there enough capital required for both kind of growth plus I mean, organic growth plus, you know, something like CV, yes, there is. Okay. But, I mean, would it be fair to take it for the near term? I might have the proposal to remain on the men's business, and probably, not increment receiving any more new businesses? Those businesses don't take up a lot of capital. That's what I'm saying. But showing us any massive amounts of capital. So I mean, that's all part of in our CapEx programs, all of that's already included there. The free cash flow you look at is basically kind of after we've incurred the standard capital required for that. Okay. Got it. Great. Thanks. The next question is from the line of Sushmit Patodea from Motilal Osualaset Management. Please go ahead. Hi. Good morning, everyone. Good morning, a fantastic performance. I just wanted to state your perspective, Ryan, on, the cycle business, right? I'm sure, 2 years ago, when you came in, there would have been a different strategic perspective on the cycle business and the way it's kind of come back. And I remember you telling us once on a fall that, you know, they have taken up taken it up as a challenge to prove themselves otherwise. How are you looking at this business now? Are you going to be investing a little more at the plants changing from this business? Yeah. Like I said, I mean, I I mean, and I I think even in my earlier commentary, you know, the first thing I kind of admitted was that it's been kind of an amazing change, right? Correct. Yeah. It's absolutely fantastic. So the thing that's encouraging for us now is that we see an opportunity to they themselves, as a team, are just kind of redefining their future, right? I mean, honestly, like I said 2 years ago, we gave them a challenge. What they came back to us with, and unfortunately, KK Paulo runs our businesses, on vacation. I was just being here with But what they've done in that business is that they basically come back and talks about and develop how they're going to become the number one division in TI, right? Now I don't know whether Mukesh or Kiara will let them, but the point is that, you know, I just think that that's the level of confidence that they've come at it with and they're delivering the performance to support that. Capacity is not that much of an issue for them. Both in Sri Lanka and in India, they have adequate capacity. So, it's not a capacity constraint. They're just really showing the will and kind of the capability to kind of outperform. Which is encouraging, right? And so I would just support that kind of as long as they continue to deliver like this. Any expansion plans that you are pushing them toward now that they have crossed the hump or the first challenge I'm just trying to understand, is there a title, 2.4, that you could give us some clues into? I don't push anybody, man. No, I think, definitely they they've come up and they've kind of actually developed, you know, a whole vision for mobility and, I would basically say that, you know, it's very what they have shown is that, that they have a fairly exciting road ahead. It's part of the cycle. They're beginning to explore pet legs. I mean, basically, they're looking at both export markets and India market. And saying how are they going to basically push the envelope in terms of what exists. And I think that is a fairly exciting plan that they suggested. Okay. Yeah. Because I'm I'm just dwelling into this a little bit as this is the only B2T kind of business that you have. And if you can make a success out of this, then it opens up a completely different avenues of growth for you. Good. Thanks for the line. The next question is from the line of Shyam Sindashira from Sundaram Asset Management. Please go ahead. Yes. Hi, sir. Thanks again for the follow-up opportunity. My first question is on this CLI localization schemes that being talked about. So are there any specific large product segments that we are eyeing that can come through a 2 year timeframe from this localization cost of the government per se. Is there anything that you are seeing as an upcoming opportunity, which may maybe evolve over a 2 year period, any such opportunity that you can comment sir? We're exploring. There's nothing specific yet, but we are exploring that area. Okay. Okay. Okay. Which category, sir? Is it on the No, I didn't say, man. Yeah. Let me just say that we're looking at it in a few categories. So we don't want to talk specifically about what we're looking at. Okay. Sure. Sure. So just one other question. On the export side, we were developing new products, and even on the vision system side, we were we were about to start the operations and then ramp up over a 2 to 3 year time frame. How are those initiatives panning out because of post in FY 2020 was a was a sort of a down year compared to the prior peak in FY 2019. So from that perspective, going forward, with the next 9, 12 to 15 months, how is that, technically looking like, a new product as well as same business. You did come and take both the focus area, but some specifics will be helpful. So thank you. Yes, do you want to comment on that? Yeah. Yes, Sharma, let's say, like we shared earlier, this CapEx is progressing well, and we expect that CapEx to get over by Q4 of this financial year. And for that, we'll be starting our development process with a few customers and we'll be getting approval and getting the customer approvals and ramping up the business. And as far as exports growth is concerned, I will let's say, because we are going to enter into a new segment, So it'll be market share gain at a global level, and that is going to give us a headroom going forward. And it's a very, very safety critical product where we going to expand our vision, which is going forward. Okay. Okay. Okay. So we can one can assume that we can cross the fire by 19 exports over, over the next 12 to 15 month period. That is a fairly positive. Is that something that Yes. Yes. Okay. Okay. Understood. Understood. Understood. Thank you very much, sir. I'll come back with you. The next question is from the line of Ashutosh Tavari from Equiras. Please go ahead. Yes, sir. Congrats on the strong set of numbers. So firstly, on the cycles part, I have a question. So, in our mix in cycle sales, what would be, say, a share of premium cycles and has it has that changed significantly over the last few months? Sorry, your question is what is our share of the ladies cycles and what? No, no premium premium cycles. So you have a basic cycles and premium cycles help cycle. So what's the, is the share of premium cycle exceeding in the overall mix, in cycle sales? The premium cycles is very small. Increasing, yes, it is. Okay. Okay. So, I mean, I want to understand that there's a low cost cycle that, like, has the digital cycles is batch here decreasing, or is that also has has not changed much over the last 3 to months as well? Initially, in coming up from the coming out of the thing, we did lose some share. But now we're basically gaining that share back month or month. And we believe that in the 3rd quarter, we'll be back to kind of our higher shares than we were before. Okay. And, sir, secondly, on the metal forming side, how is the industrial change doing right now, let's say, where we are with the peak of it now? The message team is doing very well. Both export and domestic. We are back to pre COVID levels and profitability is higher than what we were before. Okay. And lastly, any opportunity that we see in terms of replacing the things discussed on China in our business, an entire business that is happening on our side. Sorry, I didn't ask any question. So I feel like, are you seeing any possibility in terms of replacing some of the product? Yeah. Yeah. That's the question earlier. Definitely. Definitely, yes. We do see that opportunity. And so, and we are seeing we are exploring that in all of our businesses. Okay. So thanks a lot. Thank you. Thank you. The next question is from the line of David Krayal from Carnelian Capital. Please go ahead. Yeah. Hi. Good morning, sir. When will the plan of this update, the operation? Because I said, I think this earlier mentioned due to the optics is operational now. It's just not scaling up. So basically, it's not scaled up yet. Okay. And you promised new businesses, truck body and this uptake and the other one. So what kind of, revenues are stated by you? Are you, find it through type of revenue over the next day for you? What are they targeting internally? That's why, I mean, I've always told people for these, please don't put them into your models. Sometimes I kind of always feel Like, you know, the easiest thing is just not to talk to them and not to talk about them at all, right? Because you have to look at this, right? I mean, kind of, it's like these are like DC types options that we are developing for the company, right? And, I don't think any of these DC guys get asked these types of questions. Right? So some of these businesses, you just have to let them kind of grow at their own pace and, you know, and so I don't think that we're trying to and nowhere in our internal models do we basically build out these into our revenue models or our, or our numbers? Thank you. The next question is from the line of Hatin Borita from Sequent Investment. Please go ahead. Hi, sir. Good morning. So, my first question is, like, like, each and every segment is growing really well. We are seeing a good margin in the cycle segment as well. As and as you mentioned, as you have we are expecting this margin to sustainable. So what kind of revenue growth we are seeing? Like, let's say, in FY 'twenty 2, FY 'twenty 1, any internal target for our growth? You're saying revenue target? Yes. Revenue growth, yes. I think it's too early to comment. Nobody knows what this environment is is going to be light. And the, yeah, so it's too early to target because too early. Nobody knows that. I mean, like, we don't we can't don't have that kind of visibility. So I don't want to we don't want to offer commentary on that. Thank you. The next question is from the line of Shailesh Raja from BNP Securities. Please go ahead. Thanks for your opportunity, sir. So how's the response for the new product like SSID, product under large diameter there any plans to introduce the same in the overseas market as well? And what is the market potential in domestic and overseas market? And application of this product? Large diameter, Mukesh, do you want to take it? Yeah. We are in some development of this particular, specific category, what you talk about SSID dudes, and we have maybe sent the samples to global markets and we are awaiting the feedback. And based on the feedbacks, we'll be ramping up this segment going forward. What is the market potential in domestic and what is this market? Domestic is not much here, maybe let's say largely potentially comes from the global market only and it's a large market. Thank you very much. Ladies and gentlemen, Due to time constraints, that was the last question. I now hand the conference over to Mr. Kasha Pajara for closing comments. Thank you. Thank you, everyone, for being on the call today. And thanks to Nfrivelayan and all the members of Cuba Management, to patiently answer all the questions. In case if there are any unanswered questions, apologies for the same, and please feel free to write to me and, or Aditya, and we'll kind of get the questions answered through the management.