Q1 20/21

Jul 24, 2020

Quarterly report

Ladies and gentlemen, good day, and welcome to the Tube Investments Q1 FY21 earnings conference call hosted by Access Capital. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star and then 0 on your touch tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kasha Pajara from Access Capital. Thank you, and over to you, sir. Thanks, Inba. Good morning, everyone, and thank you so much for standing by. I hope all of you all are doing safe. And, our and families are indoors. It's a great pleasure to have with us the top management of tube investments of India. To discuss the q one f I twenty one earnings. From the management side, we are represented by mister, who's a managing director Mister Mahindra Kumar, who's the CFO. And we also have the key business heads with us today on this call, Mister Mukesh Shahujya, Mister Capal, and mister Srinivasan. So the entire team, top management team of tube investments is present on the call today. Mister Weline, I would now like to hand over the floor to you, sir. Thank you, Dasha. And, good morning, everybody. The I'll just go through, you know, a quick, press release and then be happy to turn it over to you for questions. You're obviously kind of due to COVID. We've had a pretty crazy quarter, you know, this last quarter. The, you know, pretty much from March 23rd onwards with your operations have been you know, shut down in a lot of locations. We resumed some operations in a very small level at the end of April. And May also capacity utilization is extremely low across the system. In June, we've been able to get to about 50% capacity utilization. We obviously will have to see what, and we can talk a bit about, you know, what we kind of going forward. But, obviously, this has had a significant impact on both operational and financial parameters. Revenue at a stand alone level was 330 bank crores for the quarter compared to 10,252 in the same quarter last year. And, we reported a lot before exceptional items were 69 crores compared to a profit of 107 crores in Q1 last year. The quarter, during the quarter, basically, we also had put in a a VRS. This was not put in, you know, during or after COVID. We already planned for it and what, in in February. So we're just getting implemented now, and that cost our paid calls. And that's, considered an exceptional item the net profit before, I mean, loss before tax, 77 crores. Not used to paying loss before tax. I think it's also the first quarter in my professional experience and everything. I've done it a lot. So it's quite a a dramatic situation for us. The net debt of the company, was actually reduced to 101 crores as compared to 149 crores as of March 31st. 2020. He, and some of the individual businesses have done a great job in mathematics working capital. Engineering business, with a revenue of a 164 crores compared to 657. So about 20 percent, the 20 to 23% of their corresponding quarter. And their last was 27 crores as against a profit of 67 crores in in quarter last year. Cycles was a 100 I've had a 100 compared to 290. And they had a loss of 6 of us to a profit of 12. Metall formed had a revenue of 127 compared to 350, and they had a loss of 38 versus a profit of 34. At the consolidated level, revenue was 457 as against 13.85 and loss of 77 as against 120. So Chantee gears also had a revenue 25 as against 71. And a loss of 5 crores against the profit of 13. So that was the net result, obviously kind of not a great quarter for us during the environment. The only positive things I would say is that Actually, uh-uh, usually, we don't share the data, but June was a a breakeven to slightly positive month for us. So I think that's the only silver lining here. Obviously, my belief is that, it will get better than it has been So that's a that's a silver lining and that's a good news. So let me stop with that and I'll be happy to turn it over to all of you and take questions, and we will respond accordingly. Thank you. Thank you very much, sir. Ladies and gentlemen, we'll now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question Our first question is from the line of Ashutosh Sabari from Equities. Please go ahead. Yeah. Hello, sir. So so we are now seeing some pickup in terms of commentary from the same, the auto OEMs and poolers side in June July. Actually, sir, you're not very clear. Yeah. Sir, sorry. Just a minute. Is it is it okay now? Better now? Yeah. Better. Yeah. So so my question is that, if we look at commenting on different OEMs, in recent, like, like, last 1 month, there's something happening in 2 wheeler, four wheeler side, both, more so in 2 wheelers. So, how do you think that trend, basically, in July? And also, I want to understand more on industrial side, how are you seeing the trend in June and July? So, I think, Mukesh, do you wanna take the 2 wheeler question and then I'll come back? Yeah, boss. I'll take it. Regarding tools aside, maybe like you rightly said, there is a momentum which is, visible maybe from June onwards. And June was maybe operating at around 50 to 55% level. And, we expect that at least July should close somewhere around our 65 percent, of the pre COVID levels. And, as of now, I think in the two wheeler side, was demand is maybe really picking up because of this personal mobility push after COVID scenario. And supply chain has to cope up what has been given to understand with the various, OEM interactions. So it looks like player. The things are picking up in 2 wheeler segment very, very well. And, followed by the small car business, which is in TV. And, I think CV will take some time to catch up. Is what is a penalty. Fine for it. Yeah. Yeah. Over to you, as well. And I think in terms of industrial, general, definitely we're seeing a light increases thing on the two wheeler side. We're seeing July being better than June. So that is the, that's the kind of big kick. Honestly, we don't want to make any commentary for kind of, you know, what the future is gonna like and all that, but we the positive thing is, that I do do see, July being better and if that trend continues, it's a good thing. Okay. And then secondly, how are the how are the things shaping on the aftermarket, in King's business? Is that picking up more fast? Yeah. Would you like to respond? Yeah. Yeah. Hello, everyone. Hello, Ashutosh. See, because of this COVID situation, the aftermath is really looking better. Even before the OEM started their mother, actually, aftermarket has picked up. And, as soon as we are concerned, we could engage with our, you know, channels partners and we could really do, have some good business in the first quarter. Aftermarket, we really, look very positively right for the year. Yes. I was just like going back to the normal levels now in July. We I mean, I tell you more or less to reach the pre COVID level in the aftermarket. Yeah. And then lastly, if I may ask, on the railway side, is is there also, like, the the attending, everything is getting delayed or their things are more better than other segments physically. Railway is getting significantly delayed. Again, KRS, why don't you talk to that? Yeah. Railways, he's getting delayed. Because they are finding it difficult to run the operations within the coach factories. Because of the current, pandemic scenario, even, the allocations from the central pool, so then So the respective coach factors are getting delayed and also are not in the same level as they used to be. So there is a significant delay in this. We are expecting at least our things are postponed by about 3 months. Okay. Okay. A reminder to our participants, if you wish to ask a question, you may enter star and 1. Our next question is from the line of Shyam Sindar Srinivas. I'm sorry. Shyam Sinda Shreedham from Sindra Mutual Fund. Please go ahead. Yeah. Hi, sir. Good morning. Thanks for the opportunity. Yeah, just a couple of questions on the metal forming division. It's been easy, and we highlighted the auto aftermarket revenues doubled in 20. Did I hear it right? I mean, some 20% of the metal forming does now become 40%. You're just out keeping there. And metal forming as a division, if you see the EBIT margins, from a size 15 to 20 has not really improved much. We have even an annual report we have spoken about improving, increasing opportunities on the industrial change, auto aftermarket being good, 50% growth in So what are some, segments that are, proven challenging in terms of, being margin accretive? And, just an addendum to that, I'm I'm from a railway perspective. Our acquisitions necessary to grow in railways. We are hearing some bidding on the, for for, for an industrial, for engineering company. So just to understand, our acquisition necessary to go in. So these are the the the other questions on the other merchant office. Right? Thanks. Thanks, Sham. So let me just answer the question on acquisition. I mean, like we've told you, kind of, you know, definitely, we think that railways is an area where acquisitions are appropriate. Because it does take a long time to basically get approval. And the railway tends to be kind of it's fairly loyal to their supplier base. So we do see it as a good area kind of from an acquisition perspective. To your earlier questions on metal forming, again, I'll let TRS respond to that. Yeah. Yeah. Yeah. See, you you asked about a rate margin. See, metal forming has a set of businesses which are dependent on tour video, 4 video, and railways, and industrial chains. It's it's a combination of all these businesses. So what you see is what is aggregated EBIT. At the individual level, if you see, there have been strains on the EBIT margins on the 4 digit, actually. That's, basically, because the market went down last year and the formula, as you know, about minus 13, minus 14%. Which actually affected our overall top line to that extent the fixed cost absorptions were not as much. As far as, 2 years are concerned, and the division has done pretty well. In fact, we have improved our EBIT margins and the PBT as well. As far as we have concerned, we are really very positive, and we are looking ahead for a good growth in the evenings. Understood, sir. And within the after auto after market, everything is doubled. Like, you mentioned it in the, in the, or did they hear it somewhere wrong? That is just the housekeeping there. No. Uh-uh, you know, the the I yesterday. That's what uh-uh, you know, I'm I'm sorry. She was trying to explain. Admir, we used to, you know, to know more focus on OEM. Now we shift this, the focus has been on the aftermarket. Actually, the earliest debit. Oh, so, basically, the, the 20% or 40% part of that is happen, Tom, because the OEM levels dropped significantly in all aspects. Yeah. Okay. Okay. Got it. Got it, sir. Got it. Just one question in the that caused that to move up. Understood. Understood. Just one question. In the annual report, we have highlighted, you know, a lot of import substitution opportunities, in the engineering segment and a very strong export order book in metal forming. Now exports have always been a a focus for us. I mean, in terms of the overall business, we've spoken about it in the past. If you can highlight what are the import substation opportunities in engineering and the export opportunities from the metal forming, slightly, if, a more perspective on that, it'd be very helpful. And that's what how does exports look from a 3 year perspective? Thank you. The medical experts is basically, medical experts predominantly industrial chain. Now we're beginning to explore auto chains as well. But your question on imports of for engineering, I'll let Mukesh answer that again. Yeah. In engineering division, basically, in post substitution, we made some in the last year, maybe to upgrade our capability where maybe we find there is opportunity available, a lot of cold rolled strips are getting imported from, in the industry. And we are focused maybe, let's say, customer wise and maybe, development are very progressing. And this quarter also, we could really, find out some new product development and we align with some 4 to 5 customers. And we see going forward, let's say, ADB growth area for us. Okay. Understood. Understood. Under Yeah. Thank you, sir. I'll call back in the queue. Yeah. Thank you. We'll take a next question from the line of Satik Patel from Nippon India. Please go ahead. Yeah. Hi, sir. Phil, could you just talk a bit about, are you thinking of the breakeven points and if there's scope to further reduce it from your commentary, it looked like that, breakeven points for us would be closer to 50%. Are there any thoughts about post COVID, you know, obviously, we have done a great job in terms of, you know, improving on breakeven points. But is there more scope or more juice to build on that? Yeah. So I think that's a good question, Mister. So, obviously, I think nothing has made us look at breakeven point as as keenly as this whole incident, right, of COVID. I say the encouraging thing for us is that we're seeing, I mean, the engineering segment, that we kind of done the most work on it. And has been able to kind of push that breakeven point significantly. Metal formed, we still see some opportunity there. And so we're gonna work on that kind of fairly keenly over the next 6 to 9 months. But I'm highly encouraged because a number that was no of, you know, 70% 2 years ago. We've been managed able to push it down to a point where it's 50%, 52%. We've been able to kind of, push the slight profit. So that in itself is encouraging to me. If your question on, is there no use? I would say kind of definitely we see opportunity in the metal form business. And so we're gonna focus there to kind of try and see how we can get more more from that. To see how we can push the breakeven down going further down in that business. Also, there will be significant production and the breakeven. Okay. Okay. So, okay. Understood. And her second question is post COVID, you know, one of the, growth strategies for DIA, as highlighted is, like, with acquisitions. Post COVID, bills that legs the acceleration now? Are you seeing more opportunities in terms of acquisitions? Could you talk about? I mean, I think, you know, we've had at least, you know, 2 more kind of opportunities get added to the mix in terms of what we're evaluating. And definitely, I think that that is going to be the case. So there will be more opportunities that offer themselves. So the pipeline is fairly healthy if I may, if if I can think of it that way, that, post COVID, the pipeline has increased. Absolutely. Okay. Okay. Thank you so much, sir, and all the best. Thank you. Our next question is from the line of Mister Kashup Pajara. Please go ahead. Yeah. Hi, Mister. Actually, I have a question in as an extension of what Pratik just asked. And, that was mainly that, you know, post COVID, how do you see the landscape changing? Mainly on, not just break in points, but how are you thinking directionally on cost? Earlier, I remember, you know, even before COVID, you had kind of alluded to, you know, achieving 10% PBT margin sustainably, which and we potentially taking that figure up to 12 to 15 percent over time on the core business categories that we currently operate in. And now that COVID has actually struck, do you think that certain costs are being rethought about in a way where structurally the cost trajectory might look different and certain costs can be eliminated completely. And, hence, the margin trajectory given normalcy in top line, whenever it happens, the overall margin trajectory, should be, definitely, better. So one is how are you thinking on those fronts? And second would be on, you know, the overall strategy post COVID, do you think the way we were thinking about our business before COVID in terms of extensions or adjacencies and acquisitions and certain, you know, certain focused markets within the current, opportunity set that we, you know, have any of those elements gone through, change. And are we, you know, dropping some of some of the earlier plans or redrawing new plans how do you kind of, you know, uh-uh, you know, articulate these software aspects? Yeah. So so first Kashak, your first question, right, in terms of what changes do we see there? You were talking predominantly about kind of, you know, do we see our ability to change our cost structure a bit more the claim. And there, you know, the only thing I'd say is kind of to us, it's a combination of 3 things. Right? It's a combination of kind of industry structure, conduct, and performance. Right? And, what you're what you were talking about is kinda just more performance oriented, which is you see people kind of sharing off their or getting more aggressive on their cost structure. But also what we're beginning to see is kind of changes in conduct and changes in the way kind of some of the supply side conduct themselves, and there will be changes on the demand side as well. So because what's what's beginning to happen a bit on the supply side is that the weaker suppliers obviously are in more of a cash grant situation. Right? And so where they might have been willing to kind of be more flexible in the past, Some of them are less capable of being more flexible because they don't have the balance sheets to support it. And then so that, I think, will either lead to a change in industry structure over time. Or what it will lead to a city is a situation where the amount of pricing aggression or the amount of pricing competition kind of goes down a bit. Right? Because these guys can't afford longer working capital cycles or kind of spin on margins. So I think that industry structure changes that come out post COVID and industry conduct changes are going to far outweigh industry performance changes. Right? And I think that that's gonna play to our advantage because luckily, we have a stronger balance sheet. We have more staying power, and we we basically are playing a much, much longer game, right? So that is the to the first question. To your second question, Kashev, in terms of whether the strategy is changing. I think like I said earlier, what we see is that this market will offer up more opportunity. And, you just have to be patient and be able to kind of, you know, make the right calls when it comes to that opportunity and how we you know, and how we capture it. So I just think it kind of is coming back to a to a question of the level of, you know, just like how kind of calm we can be and make sure that we make the right choices when we kind of pick what we go after. Okay. Yeah. I'll put that on. Thanks. Thank you. Thank you. We'll take a next question from the line of Avishai Ghosh from DSP Mutual Fund. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. So just just continuing with the earlier point that you mentioned that there are changes that you're seeing in the way that business is being done. Now a couple of, other sector players tell us, you know, that, suddenly, a lot of the businesses had turned into cash, you know, whatever earlier you are having, you know, channel financing, other things. Certainly, the entire channel has or the entire business has turned into cash. Is is that Is that you're also seeing in your set of businesses? Now, when you say kind of on a cash basis, I mean, as you know, we deal with very large customers and very large suppliers. Right? So, for example, our largest buyers field right, and, you know, from the likes of GSW and Tata Steel. And our customers are also very large, right, like all the 2 wheeler, 3 wheeler, I mean, 2 wheeler, 4 wheeler, and CV Manufacturers. So if you're asking if those guys on either end are moving to cash basis, the answer is no. No. I mean, because I don't think that they're moving. So I don't know if that answers your question, or is it you had another kind of element to it? No. I think that kind of sensing in your, maybe since yours is more B2B, probably, at least difficult element to kind of, pursue with that kind of business model. Okay? Also, if you get on a quarter on quarter basis in this may not be so much relevant on a biweekly. We see a deterioration in the gross margin. Is it because of higher proportion of revenue, coming in from cycles. The cycle has obviously declined a lot lesser. So proportion of cycle business is a lot higher. Is that the reason for the gross margin determination on the gross margin in my schedule. Maybe let me answer that. Yeah. That's So one of the reasons that's not the only reason. So we need to see this as a portfolio of businesses also. So some of the high margin businesses in the total mix also, for it to see show that kind of performance. So we should not draw conclusions based on q 1 because it's truncated quarter and, the restricted operations. So as if you really look at the overall structure of business, nothing had changed when it comes to gross margin compared to the earlier year. There's only the mix of businesses which is playing the role. Sure. And if I went ahead and employed cost of almost about 4 to 3 or 4 because of whatever VRS they're kind of implementing, what should it look like? Obviously, there could be a lot many changes, but only because of the VRS impact, what can be the employee cost reduction late going forward. Yeah. So, So the VRS only part of it is implemented. The remaining part is yet to come, like what we mentioned in the earlier calls, we are typically looking at a payback of 4 to 5 years for the year spending, which you are making. So you can calculate based on that. Okay. Peram. And, just one last question in your annual report. You mentioned that, you know, if you look at the industry, of cycle. It's almost about 79, 80 percent of the industries controlled by top 45 players, and you almost have a 25, 24, 25% market share. And still we are, you know, the profitability is fairly low. So how should we look at that part of the business? Because there are very few businesses there Marketing is a bit 24, 25% market share. So either is a product demand, issue, or how should one look at it if you need help us understand So we do believe that there is opportunity to improve the margin in that business. Can Karan Paul, KK Paul, and his team have done a great job in actually turning that business around, to where it is today. Also, for the first time, last quarter, that business has gone to negative networking capital. But let me ask Paul to talk about the opportunities he sees to increase the margin in that business going forward. Paul? Hello. Good morning. Hello. Yeah. Call you around the line. You can talk. Yeah. Okay. I think, even in the first quarter, I think we have improved our margins over the last year quarter. And as we are moving forward, I think we are concentrating on certain specific segment. That will allow us to, you know, keep our margins not improve dramatically because last year, we improved a lot, but keep it at that level. We are actually going in for a share gain, you know, phenomena over the next 2 or 3 quarters because the market, we believe, overall, is going to grow. And, hence, therefore, we have to take this opportunity to do that. But there'll be an overall improvement in terms of you know, what kind of results we will show in the coming quarter. So that's distinctly drawn up, as far as we are concerned. And, you know, whatever new opportunities that are coming through in terms of exports, etcetera, will allow us to shore up the top line and ensure some stability in the business. And that's the way we are gonna proceed, you know, in the in the in the next 3 quarters. Cluster of answered. Yes. Thank you so much, sir. Just to add to what Paul said. Right? So I think the first thing is that this used to be a 0% PBT to sales business. Our first step will be to get it to, you know, I would say, like, about 6% PBT to sales. Right? And talk about PBT or PBIT. That'll be our first step. And just in that that's kind of, you know, some of the basic things that have been done is, you know, Paul's done a great job of kind of rationalizing the entire logistics infrastructure. We've eliminated 12 warehouses. We're down to kind of 2 warehouses across the country now in addition to the factories. We've also done a lot of work in terms of now channel development to basically improve our relationships with the channel. Done a lot of work on new product development to ensure that our products are very competitive in the market out there. And fourthly, kind of, in terms of looking at at both manufacturing and sourcing rationalization, to improve the overall margins of the business. You know, we shifted a large chunk of the production up to our Northern Factory, which is closer to the raw material supplier. So I think that some of these steps have begun to pay off where we've got a higher PBT to sales like fall sales and last year. But definitely, there is gonna be more headroom for improvement on that, which we will see playing out over the next 12 months or so. Sure. Thanks. So just one last question. Just one last question in terms of we're also hearing a lot on railways in terms of privatization of passenger train. Is that something that you're looking as an opportunity, for you guys from the listing or It's it's gonna be developed. Honestly, currently, no. Because that's a very different business. We see ourselves much more as an industrial and manufacturer and clear. And that is much more a consumer play. So for that, from that perspective, we're not looking at that right now. Okay. Okay. Thank you so much for answering my questions and all the rest of the day. Thank you. Thank you. Our next question is from the line of Bagesh Kagoka from HDFC Mutual Fund. Sir, regarding the, electric, motors, at least in the the cooler government has become very formed that in next 2 to 3 years, at least 2 or 3,000,000, EV tooler should be there. And then outside India also, governments have, hardened their stance. They are not bothered about whether the crew goes down or up essentially. So in view of that, what are challenges for us? 1 is, the China issue of the Korean components and the Japanese components. And, how do you see the path forward for the next 3 to 5 years? What are the initiatives? Yeah. So, Dakesh, it's a good question. See, first off, we've looked at the space and we were seeing 3 wheelers and 2 wheelers quite differently. The, you know, right now, we're seeing, that there seems to be a massive crowding going on on the two wheeler side. With almost 35 new entrants. And I'd say between kind of existing players or 35 or say kind of new you know, companies with products coming out there, right, whether it's a new company or an existing company with an electric product. You seem to be kind of a a whole plethora of them. And honestly, I think that, you know, we are trying to see what is gonna happen, how the in that industry kind of is gonna conduct itself in the near term. Right? Mhmm. So it's unclear. So so, basically, what we're saying is in two wheelers, we are continuing to evaluate kind of how we will go to market. Mhmm. So being a bit more, we're standing back a bit because we see a massive rush right now. And so much crowding that we don't feel like going in as a 36 player makes sense. Okay? On the 3 wheeler side, we're getting a bit more kind of aggressive with our plan. So there we're kind of doing some development But, you know, so we're just trying to establish now how long it will take to get a product to market in that space. But we are keen on that space. Right? We think that the 2 wheeler space, we'll go through first off, you know, massive kind of, you know, price competition. And then, you know, a lot of players will get burned. So I don't know if it kind of and, you know, I don't know if it makes sense at this stage to go into a massively crowded market, though we are evaluating kind of you know, the space and seeing if there are potential kind of, you know, empty areas that we can go in and compete. But it just looks very crowded right now. Okay. We will be more serious now. And it doesn't have too much comparison, actually, as of March. Correct. Okay. Right. Yeah. That that's a good start. Thanks, sir. Yeah. Bye. Thank you. Thank you, Pagesh. Thank you. Our next question is from the line of Anupam Gupta from Good morning, sir. So just three questions. Firstly, continuing with Bagesh's question, let's say in terms of the in terms of the market size for you, if, if we move from the internal combustion engine based vehicles to electric vehicles across, let's say, 2, 3 wheeler, and 4 wheelers. What sort of what sort of market size scheme happens for you in terms of what products you can offer to the OEM? Yeah. So, again, they're, we're not looking at offering products to the OEMs. Right? We're looking at being the OEMs. Okay. Okay. So in that sense, what you're saying, let's say, if if I take example of where you say front park is a large product for you, you keep supplying that to OEMs, or you'll, will that not be a part of the strategy? Just as an example. We will I mean, the front hook basically, by the way, obviously, exists in both of a an IC 2 wheeler and an electric 2 wheeler. Right. And we have, you know, a, we will continue to to obviously supply the sun folks to both I see 2 wheelers and electric 2 wheelers. Okay. So, basically, the way I understand is you're saying the whatever the existing portfolio continues, if it is has a market in electric vehicles. And along with that, you'll also be wanting to be an OEM in the electric side. Absolutely. That's correct. Okay. Okay. Understood. Secondly, in the call, earlier you mentioned changing the conduct of, OEMs and suppliers and your peers. So one thing if you see on, at least on the supplier side to you is that a lot of metal companies, even though they are large, they're also focusing a lot on the working capital side. Similarly, I would assume on the auto OEM side, they will also want to be focused on the working capital and other terms. So are you pressure from those side, or are you are you able to take advantage of that in terms of getting lower cost of products, lower cost of, the I can assist you by. What sort of dynamics are you seeing there? Yeah. So, obviously, there is more pressure from the OEMs. There always is. But like I said, I mean, if you have a stronger balance sheet than your peers, then you are able to handle that better than some of your peers are able to. Right. So, basically, what you're saying is given the pressures, you'll be stronger and maybe take advantage of this eventually. That's what that's what it is necessary. Okay. And, thirdly, on acquisitions, so you have highlighted that you are obviously keen on acquisitions in certain products. But let's say if you look at it from the balance sheet perspective, what cycles of acquisitions, whether it's single or multiple, would you want would you be comfortable doing, going going that existing balance sheet and the cash flows which you'll see over the next couple of years? Yeah. So, obviously, kind of, we had said, that, you know, what we would put kind of outside is about three times cash flow. You know, and that would kind of help determine it. Now, obviously, we can't get very deterministic about the size of the acquisition. It'll depend on the opportunity and whether we feel like it's a good opportunity for us to grab or not. But that's the indicated range that we have given, I believe, Austin will continue to speak with them. Okay. Okay. And, railways, you mentioned is obviously, needs an acquisition there, but which other segments like the engineering will be the key focus, wouldn't be domestic or whether it will be exposed if you can just elaborate a bit on that. Yeah. So, obviously, we like the idea of having a strong domestic base because our fundamental premises that to be to be good at exports. It's always useful to have a strong domestic base. So definitely on the engineering side, having a strong domestic base, we see as an advantage. But is there any great export? Just fully export base of opportunities that come up? You know, In the sense, with manufacturing in India, that part we're very clear about. Right? Manufacturing has to be here. Right. Right. As long as the manufacturing is here, we will evaluate that offer. Okay. Understand that. Thanks a lot for the time, sir. Thank you. Thank you. Our next question is from the line of Sasan Khan Nordea from ISESSA Securities. Please go ahead. Yes, sir. Good morning, sir, and thanks for the opportunity. Sir, my question is pertaining to the bicycle division that we have. So initial, newsletter mentions about, you know, a bicycle is a segment getting traction in the law of birth, both for fitness as well as social distancing on obviously, this quarter, there was a supply side issue, but on a demand side, have we witnessed any green shoots or some initial color on front? Yeah, I think that's a great question. Again, I'll turn it over to Paul who runs that business to answer because he's got a closer perspective on it. I'll be happy to supplement if needed. Hello, Paul? So could you please unmute your line? I guess, Mister Paul, you have muted your phone. There seems to be no response. Maybe I'll disconnect and call him back, sir. Okay. Okay. I'll so I'll take the question and if, Paul joins back in, then we he'll answer that. So To your question, yes, we are beginning to see more domestic demand. And, the demand in the month of June was quite strong. And, we do feel like that demand will sustain, coming in for the next couple of months. Visibility beyond that is a bit tough, but we are seeing a lot of encouragement, where people are looking at this as more of a lifestyle issue. And, lot of demand, both in kind of the in slightly more premium bikes and in in, you know, the high range as well. So, yes, we are seeing kind of green shoots there, and it is quite positive. Okay. And so secondly, sometime back, there was also a newsletter mentioning, at least, like, has been closing the shop. So is it a, a permanent thing? And does it make, grips some some info yet? Yeah. So definitely, they are pretty much out of the market right now. Whether it's permanent or not, we can't tell, but they're out of the market right now. And, that is definitely helping kind of us increase you know, share a share. I mean, basically, there are a couple of people who are benefiting from it, and we are one of them. Okay. So what they mentioned, what are the should say it or more than a premium cycles budget? They were more on the we they were, I mean, they were there on institution, but I think, basically, where it's helping is on the trade, on the trade side, there are, I mean, there's a standard, which is where Atlas was larger. So it's definitely helping us there. An address was smaller than the specials. So there's some benefit in the specials, but more and more of it is on the standard. Okay. And so lastly, on the overall business perspective, it could share your share of revenues between auto and non auto, and within auto, if you can share some segmental between tubulars, PB and CV segment, Broadly, we've indicated these numbers in the past. Mahindra, do you want to give broad indications on this? Yeah. So Q1 may give a misleading picture, but generally, if you if you see the full year of last year, it was about 60% auto and the 40% non auto. Okay. And, sir, billing auto, how much between, 2 less PB or probably CV seconds, more or less, 50, 50, you can say. So 50 percent, 2 less than 50% four wheelers. 2 wheelers. Right. And, sir, within 2 wheelers, we, to supply to, the likes of Yiran Bajaj, right, or we are more towards Yeah. That's all for us to go into almost every 2 wheeler. Okay. We'll populate to many, many OEMs. Thanks. Thank you, sir. We'll show all the best. Thank you. Before we take our next question, we would like to remind participants to ask a question you may enter star and 1. We would also request participants to please limit their Our next question is from the line of Nimish Shah from MK Investment Managers. Please go ahead. Yes. Thanks for the opportunity. Just a couple of questions. Data points question. What was the export mix for the quarter? What was the question? Exports mix the quarter. For the yeah. Exports mix. Okay. One minute. Okay. We'll look at that. What's the next question? Yeah. And I want so on an you can share what was the real, mix of railways, for the full year or number? Small. Actually, we don't release kind of the same specific data, but I would say, uh-uh, it's maybe 5, yeah, somewhere within 5 and 10% of the overall, 5 and 7% of the overall. So exports for about 14% during Q1. Okay. And, sir, one last question is, sir, to launch. So the, are they on track? Or is this a relay or a? Sorry. We can't I couldn't hear what you said. Mister Shai, your voice is breaking up sir. If you're now hands free, please switch it to handset. Hello? Can you hear me now? Yeah. Yeah. So I, so I was asking the in terms of a new product. So is there a are they on track, or is there some delay or in terms of the launch? There have been a delays, you know, especially like, for example, for the lens business, we haven't been able to kind of get it fully up because of the challenges we've been having, you know, it's all, you know, the the equipment is coming in from Korea. And, you know, though the though the equipment is here, it's been a problem getting the experts to install it. Because they're all Korean. So things like that have been delaying some of the some of the products. So say most of it is seeing at least a 3 to 4 month delay as a result of this. Okay, sir. That's it from my end. Thank you and all the Thank you. Thank you. Our next question is from the line of Darshan engineer from Alkemi Capital. Please go ahead. Yeah. Good morning, sir. This is Darshan here. Sir, I wanted to know what one bookkeeping question from FY 20, the export of diameter tubes, what would I be in the degrowth in FY 'twenty? The large batch you're saying? Yes. Yes. Yes. Mukesh, do you wanna take that? Yeah. Large diameter too. Basically, it's associated with the commercial vehicle. And, like, your witness, maybe commercial vehicles were down close to about 35% last year. So we have seen similar kind of, downturn in our numbers. Okay. Okay. And also, sir, going ahead, what kind of growth outlook do we expect for this particular line of segment, considering that, there were 3 restrictions imposed by US and anti dumping duties on this diameter tube? The irrespective of that, what has happened? Your IT said that maybe US has put some anti dumping duties and all these things. We started this work maybe around 2, 3 years back itself to develop alternate market and we are progressing well to what is that alternate markets, in case this US anti dumping is not working it out, and we are well prepared to handle that. Okay. And, sir, secondly, on this, new business initiative, like TMT BaaS and the truck body building business, my, longer term structural question is that, why do we plan to, enter into this business? This is because these are fairly commoditized business, I would say. And therefore, I mean, what would be our right to win in this particular two business lines? And therefore, then it's, this 20 percent plus ROCs in this kind of business offer. Yeah. So, obviously, kind of the answer is a different See, for example, it is a commoditized play today, but it's a play that we see shifting significantly from an unorganized to organized. You know, the average top body guy, you know, makes, like, 3 bodies a month. Right? And the quality is very suspect. And we're already seeing that a lot of these guys now shutting shop because, you know, it's just a tough working capital business. And it's not ideal to be in the unorganized state that it's in. We believe that India is gonna have a shift to quality. And some of these unorganized businesses will shift to more organized. And that's where we basically see the opportunity. In both truck. First, definitely much more in truck. And I think the truck is less of a commoditized player than TMT. Mhmm. But even in the TMT space, basically what happens is that, you know, it's pretty much an unorganized business today. And there are huge premiums associated with the brand. Right? So if it when you call TMT BARS commoditized, you should also see that there's almost, like, more than a 15% spread between pricing, in some cases, more than 20% spread between pricing of, like, Tata, JSW, TMT bars, and other TMT bars. So there definitely is value for a brand. And so we don't see the space as commoditized, as as, you know, as it's kind of sometimes made out to be. Okay. So we can expect that, I'm sorry, one last so we can expect that similar level of ROCs and these 2 business also in a steady state environment. That is correct. Right? Because we're very conscious as to how much capital, we employ in those businesses as well. Okay. And, sir, one last question from my side. I mean, you have done a great work in terms of improving gross margins and reducing working capital cycle across all businesses. At the same time, we are planning to enter into a big we, as well as, enter into some of this, other business lines, which, again, I mean, I would say, I mean, railways, we know, I mean, because the government oriented, the working capital sector would be quite elongated. So how do we plan to resolve this dichotomy? On one hand, we want to reduce and improve our ROCs and everything. And on the other hand, despite being a very strong lucrative business, the the capital employed in such businesses are quite high. So Yeah. What are your thoughts on resolving this, bank settlement? Honestly, this is a this is the mix challenge that you gotta constantly keep juggling. Right? You know, somebody asked a question on on cycles, right, saying, hey. Listen. How will you make 10% PBT to sales. Right? You know, it's a valid question. Right? But cycles now has got a negative networking capital. Right? Now some other business might help kind of push PBT to sales up, but might take so much a bit more working capital. Right? So, basically, what I'm explaining is that this is the constant portfolio decisions. That basic as a management committee, we need to constantly make to play these trade offs, right, to ensure that you know, if we take all of our businesses, government business, obviously, that. Right? But all of our I mean, so all I'm saying is that this balance is the constant portfolio balance that the management committee continuously needs to evolve and ensure that we are delivering the right results to you, our owners. Please go ahead. Yeah. So on the on the, we had a plan of almost 200 crores in this year and, last part of the new product. So is that intact or in the current scenario we cut back on the CapEx plan? The, the, there are a couple of components that are intact. The, which are, you know, the, like, there's an adverse by email, for the engineering business that's intact. But we'd also talked about, you know, a particular kind of stress asset that was available in China that we were evaluating. Now we are kind of we we have we we can't kind of push to push forward with that. Right? I mean, we're just evaluating the geopolitical situation as well. Because we don't feel like it's the right time to do some of those things. So I'd say kind of there are chunks of it that are still intact. But some of it, is gonna depend on the environment. So I'd say 50% is certain. The other 50% will depend on the environment. Okay. And then secondly, I mean, the we talked about that product, of a dealer products for export market on the leading side. So, like, because of China issue, I was thinking about such opportunities, like, say, I mean, more opportunity in terms of, doing some product and export market or it is too early to say. Well, Mukesh, why don't you answer from a tubular product perspective? And then others can give their perspective as well. Perhaps policy. Uh-uh, like, our MD mentioned, particularly, whatever CapEx we are investing it in that particular direction. We already started the work with all the OEMs. And it is a global product, what we are developing it, and we are in the stage of sample submitting and all these things. And hopefully by the time your CapEx is in place, maybe, our customer approves and all these things should also progress, final dynasty, and maybe let's say, and this is the approach what we are following as well. But are we getting more opportunity in the are are looking at more opportunities in China's institution in export market as well or domestic? Yes. Yes. Maybe let's say this is, looking like opportunity going forward. And maybe we are in touch with, let's say, because we have a already maybe, let's say, good customer base for our, exports market. So we are in touch with customers it looks like to be opportunity, and we are evaluating that. And maybe, like, you are aware in the sports market, maybe it takes time to get the approval cycle and all these things. So those we have started. Let's see how it goes forward. Okay. Thank you. Our next question is from the line of Jigisha from Financial Research. Please go ahead. Thank you. My questions have been answered. Thank you. Our next question is from the line of Anad Balakrishnan from Spark Fund. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. I have I have 2 questions. So when I look at your numbers or FY 20 because I think they are more representative than looking at Q1 numbers. So what proportion of your metal formed products business is comprised by your auto change business. I don't think we gave, individual components, but man Mahindra, you can give a directional number. What is it about? One third? Yeah. We don't give the segmental information, actually, for metal forms. But one third to give you. One third. I I'm okay. Fair enough, sir. And will it be, again, fair to assume that that is against split equally between OE and replacement? Sorry. You said, between OE and? Replacement. Replacement. Yeah. That's fair. Okay. So, my my second question, eventually, sir, is again, you know, looking at this number in the context of, you know, the trust on easy. Now how do you see the OE piece of your auto change business, you know, in the of course, the replacement fees will continue to remain, but is is that something that you see as a business that is being overtaken to the OE piece of your change business? Yeah. I mean, definitely in our planning, we see that that will go away. It will go away? Okay. And and and what is your timeline in your assessment in terms of timeline by which this will happen. Yeah, your guess is as good as ours. The other thing is that, you know, we're not gonna put more capital into that business because we see it going away. Right? Okay. We'll have to keep kind of looking at it and seeing, you know, seeing how it kind of evolves over but it's it's not gonna take our capital investment. There are some questions between drive chains and cam chains. Cam chains will post COVID. Drive chains are expected to continue. Okay. Okay. Okay. No, that's it, sir. Thanks. Thanks for your all. Thanks for your time. Thank you. Our next question is from the line of Sri Man Dothoria from Unifi Capital. Please go ahead. Good morning. Thanks for the opportunity. So a few questions. Firstly, you highlighted about the the year 3 year growth opportunity in the seating solutions business yesterday in the AGM. Just wanted to understand how big be this buying. The seating solutions. Oh, you mean, you will Oh, see if you're talking about client banking. Okay. Recliners and stuff. Okay. Yeah. Yeah. Yeah. So you you talked about, you know, the growth in in this business from a 3 year perspective. Just want to know on absolute basis, could this be a big opportunity? Yeah. Obviously, we see it as a big opportunity. You know, in that business, we see that as the biggest growth line. Okay. Okay. And and secondly, what kind of kind of asset turns you are looking from? My investment, in in the in the bus body building solutions in the truck body building solutions. So there is not that intensive. Right? Like, I think you had asked the question only yesterday and said, the total capital outlay will not exceed 9 crores. Yeah. So basically, obviously, kind of the asset turns are very high from that perspective. Fixed asset turns at least. So the, you know, we believe that we can turn around a lot from that because it's not dependent on just these four locations. We also use partners to help build the bodies for us. Right. Okay. Okay. Sure. Thank you. Thank you. Our next question is from the line of Anupam Gupta from IISL. Please go ahead. Thanks for the follow-up, sir. Just, just want to get, an idea of the export side. So exclude has seen significant growth for you except maybe last year, but let's say in terms of, can you give me some idea on what is the sort of OEM addition which we are seeing over the years and in terms of your, development team which you have put in, how has that expanded, to grow the export business? So I'm okay. So you wanna take that for the tubes and then Yeah. On the export side, maybe, like, like we discussed in the previous car, we see that maybe, let's say, opportunities also coming from the China, let's say, ultimate solution also. And also maybe we are working since last 2 years. With the selected OEMs, maybe to take our exports growth power. And in fact, maybe let's say day 4 yesterday, we assigned 1, maybe let's say, contract for, let's say, exports to, China and all those things, and we're just going to give a good growth to us in the coming quarter. Okay. But in terms of OEMs, what sort of addition if you can, let's say, if you put it in a number, sort of, what sort of customer relation we have seen over the year? Actually, maybe let's say the concept remains same only. Maybe let's say we are because in India, also we are strong in the supplies to the automobile market. So maybe say here, maybe the concept is we are, going to supply to the auto EMsteer ones. Like maybe, let's say, something to do. Propeller Sharp, something with the steering systems, something to do with Skyroads, and French folks, even in the South Asian markets. So these are our product focus areas. Okay. Okay. Understand. That's all. Thank you. Thank you. We'll take a last question from the line of Rohit O'Hari from Progressive Shares. Please go ahead. Mr. Rohitori, please go ahead with your question. Yes. Can you hear me now? Can you hear me now? So these questions are related to Chantiggers. You know, we seldom talk about them so if you can just give a broad outline as to what is the order book for, Shandiga, the CapEx in terms of growth CapEx that they have done, new products if Shanti is launching any because I read somewhere that they're looking at some robotic processing as well. And, I know the exports of Chantigarh should be around 4 or 5% is what I remember from the previous phone calls. So in in the next 3 years down the line, what do you think that Shanti can take the exports to? And, the parent company, I also speaks about sales and services. If I'm not wrong, Shanti girl can play a very major role over here. So if you can just Very parent company said about talk about the sales and services, after sales, aftermarket? Aftermarket. Yeah. So the aftermarket for the parents is predominant parent company is predominantly in the auto change area. Okay. Whereas, Shanti's applications are mainly industrial. Okay. Right? So, their service business, which is a growth area for Shanti, doesn't help too much the aftermarket change business. Okay. Because aftermarket change is predominantly talking about auto change, like, 2 wheelers and stuff like that. Okay. Okay. So that was your first your second questions were, the CapEx for Shanti, I believe that you're in the range of about 15 to 20 crores. 20 crores is my guess. You had a couple of other questions on Chantee. Right? Sorry. So these are, the growth CapEx, would be what and what would be the maintenance CapEx out of this 15.20 crores? So it's all it's all growth, yeah, actually. Okay. Okay. I was asking about the order backlog and the new products in terms of the robotic process. Thing that they were working on because I don't know if we've talked about it in public. We are looking see, basically, we're constantly evaluating new So we are looking at things in the robotics space, but, it's a very complex years to produce. So it's it's still very early. Still very early in the evaluation stage. Okay. And, the export expectations from next 3 years or so? So we're trying to push that number up. And like you said, it's about 5 to 7%. Right now, we're trying to push that number up to double digits. Okay. Sir. That would be great. Thank you. Thanks a lot. Thank you. Thank you so much. I now hand the floor back to mister Kasher Pajara from Access Capital for closing comments. Over to you, sir. Yeah. Thanks, everyone, for being on the call and, all the best to the management of tube investments to continue delivering on, investor expectations consistently over the next 3 to 5 years. Thank you. Thank you, guys. Thank you very much. Ladies and gentlemen, on behalf of Access Capital, that concludes this conference. Thank you for