Amara Raja Energy & Mobility Limited (500008) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to the Amara Raja Batteries Limited Conference Call hosted by Kotak Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishi Vora from Kotak Securities Limited. Thank you, and over to you, sir.

Thank you. Good evening, ladies and gentlemen. We have with us today Mr. Jayadev Galla, Chairman and Managing Director; Mr. Harshavardhana Gourineni, Executive Director; Mr. Narasimhulu Naidu, Chief Operation Officer; Mr. Delli Babu, Chief Financial Officer; and Mr. Vikas Sabharwal, Company Secretary, present from the company. The company has announced a scheme of arrangement with Mangal Industries Limited for the demerger of plastic component for batteries business of Mangal Industries into the company. The proposed scheme is announced with an objective of backward integration of operations and gain control over supply chain. On behalf of management of Amara Raja Battery Limited, we welcome you all for this conference call. With this, I would request Mr. Delli Babu to present on the proposed transaction. Over to you, sir.

Thank you, Rishi. Good evening to everyone, and a warm welcome to this call. As Rishi mentioned, the call is basically to inform you about the proposed scheme of arrangement that we have entered with Mangal Industries, which is a step towards backward integration of the materials required for battery manufacturing. We have uploaded the presentation and I'm just running through briefly the content that is there in the presentation and then give a brief about this proposed transaction. And after that, the management is here to take the questions. I will right away jump into Slide #6 that is posted on the website. Basically, to give you a brief about Amara Raja batteries, today we have 8 manufacturing plants, manufacturing 4-wheeler application batteries, 2-wheeler application batteries, home inverter batteries and batteries for all industrial storage applications as well. It's been -- we have been the large employer in the state of Andhra Pradesh, work force range of about 31 years. We have recently announced about a year back about our foray into the new energy business in terms of developing products and solutions for the -- in the advanced cell chemistry and EV applications and storage applications as well. Currently, we are making battery packs for 3-wheelers. On the industrial side, as you know, we are also developing products on the EFB and the AGM range. And then I've been catering to all the OEM and aftermarket customers. Today, Amara Raja is the second largest lead acid battery manufacturer. Now we are obviously moving into the new journey as well. Today, we have the capacity to manufacture about close to 16.2 million of 4-wheeler batteries and about 29 million 2-wheeler batteries and our industrial capacity is around 2 billion AH. Currently, all our manufacturing locations are located in the state of Andhra Pradesh, in Chittoor district. Our marketing presence across India and also across the Southeast Asia, Middle East and other export destinations. We have close to about 400 to 500 of our Amaron, the flagship brand franchises, and who are supported by about 30,000-plus retail network through which we reach out to the nook and corner of this country. And also, we are the second brand, which is Power Zone, where the retail partners are in the range of 1,000 to 1,500. To just give you a brief about the Mangal Industries Limited, Mangal Industries Limited has been engaged in the manufacturer of engineering components ranging from fasteners, auto components, forged components, plastic components for batteries, et cetera. So it's been from since 2004 Mangal Industries is engaged in this business. So we have given a brief about the journey that Mangal Industries had in Slide #8 as well as Slide #9. If you look at Slide #9, what we are talking about as a demerger is undertaking today is about the plastic components that are being manufactured by Mangal Industries, which accounts for roughly 39% of their revenue. So apart from that, they are into the product segments like storage solutions, metal fabrication and other auto components manufacturing, and they're also into trading of certain specialty chemicals. So today, the business that Batteries is interested is in the plastic components, that is the business that Amara Raja Batteries is trying to demerged from Mangal Industries and then vest it with the flagship. So I'm moving on to Slide #11 to give you a structure of the transaction. Today, Amara Raja batteries, the promoters hold about 28.06% and rest is held by public. And in Mangal Industries, 100% of the shares are held by promoters. And in Mangal Industries, these plastic components for battery is 1 business, and there is retained business, as I've explained earlier. What we are proposing now is to demerge this plastic component business. And eventually, the results in structure will be after concluding this transaction, because the swap ratio, as evaluated by the independent valuers, for every 74 shares of MIL, they will be allotted 65 shares of ARBL. So with that, the expected promoter stake will be around 32.86% versus the public stake of about 67.14%. Moving on to the next slide, which is Slide #12. Today, this business is operated out of -- it has commenced in 2004, and this business is catering to Amara Raja Batteries Limited. And it has 3 manufacturing facilities, as you can see in the bottom left side of the slide, we have 1 facility in ARGC Chittoor, the other is in Karakambadi. These 2 facilities are co-located with the battery manufacturing. And the third facility is in a location called Petamitta. This business has about 150-odd ingestion molding machines. And as part of the scheme, what we are proposing is both the land, building and plant and machinery along with the facilities will be taken over by ARBL in ARGC in Karakambadi and the machinery which is there in Petamitta will have shifted to the ARGC and Karakambadi locations so that the entire plastic manufacturing will get co-located along with the places where we make battery so that it will further optimize the overall logistics cost as well. So this transfer of machinery will be taken care by the demerger undertaking over the period of next 15 months so that the entire manufacturing will get located at a single place, which will give us synergies in terms of both the logistics costs, manpower costs and so on and so forth. Moving on now on #13 slide. The Mangal itself has done a lot of process improvements within their business. Over a period of time, they have automated several of their processes, which has helped been building their efficiency within their business. They have developed certain compounds for plastic materials, which also helped us in developing a good amount of quality containers for the battery. It also helped us in maintaining our designs and other mold maintenance in an integral manner to battery manufacturing which has helped us in terms of turning out any new product -- the speed at which we could turn out those new products was really at a faster pace. It also helped us in having -- minimizing the number of molds that we need to maintain for this kind of business. Today, they have a 37,000 tonnes PPCP processing capacity with about 1,400-plus employees and 3 manufacturing facilities. And their revenue for last 3 years, we've mentioned over there about INR 412 crores in FY '20 and INR 421 crores in FY '21 and in FY '22, INR 569 crores. Of course, FY '22 was also a year where we have seen a phenomenal increase in the PPCP prices. that's also a reason why the revenue got inflated. So on an overall basis, the business is at about 17% EBITDA margin and at about 10% PAT margin. The net debt of this business is about INR 99 crores, which is going to be assumed by Amara Raja Batteries as part of this transaction. This -- taking this business into Amara Raja Batteries will be EPS accretive from the word go. And the reason the -- if you move to the next slide, which is Slide #14, the reason why this transaction has been undertaken is basically to look at backward integration of all the major material that we need for battery manufacturing. You may be aware that we have recently started constructing a battery recycling plant, which will also provide us the entire plastics recycling also we are setting up as part of the battery recycling plant. That means the reverse -- the backward integration for all the raw materials required is also going to be a step taken as part of our sustainable initiative as well. So this will further help us in ensuring that we are making all the components required for the batteries that will further control the entire supply chain related to the battery manufacturing. And as I was mentioning, as part of this transaction, about 1.22 crore shares will be allotted to the promoters of Mangal Industries Limited at a swap ratio of 74 to 65. And the approvals that are required for this transaction obviously is from SEBI and then to NCLT and various other regulatory approvals, apart from taking approvals from shareholders and creditors and bankers as well. So today, the Board has considered this scheme and then it is approved, and then we will be filing the required regulatory approvals speaking from SEBI sometime in this month. And then the NCLT process will take over. And we expect for the whole transaction to conclude, it may take anywhere between 12 to 14 months. I'm now moving to Slide 15, where we are explaining the transactional rationale as it is going to be a backward integration process. Secondly, there are synergies that are going to come in with optimization of employee costs, power costs and also the logistics costs. And then ARBL will be in a better position to make further improvements in the procurement processes and then help further improve the material cost side of it. We expect this to be EPS accretive in the first year itself. And in terms of the simplification of operations, it will also have been -- the Related Party Transactions, which we have been diligently disclosing to our shareholders will also come down with this proposed scheme, which will further help in improving the profitability of Amara Raja Batteries, and it will be a win-win situation for everyone involved. I now move in to Slide #17, where it indicates the time lines that are required for this transaction. As I mentioned, today Board has approved, then we'll move to stock exchange and NCLT process. As you can see thereafter the shareholders and creditors meetings. And then we expect the transaction to get concluded sometime around September 2023. We have engaged the advisers for this transaction. Kotak KMCC has been the financial adviser and the fairness opinion provider. And Transaction Square has been working with us on these transaction processes. And JSA did the legal due diligence and also advised us on the legal matters with respect to this transaction. We have engaged a couple of valuers, Bansi S. Mehta and Mr. Niranjan Kumar, who are the registered valuers, and they have provided their independent valuation certificates, which are placed before the Audit Committee and the Board Committee today, along with the Board. And EY did the financial and tax due diligence for this particular process. So we have completed these process so far. And then today, the Board has -- both the companies have approved this transaction today. So just to give a brief about how we are going to go about our future building blocks at this stage, naturally with the lead-acid battery business having expanded both in India and across the Indian oceans rim countries. It is time for us also to focus on efficiency initiatives and then getting to the recycling piece of it, both from the sustainability angle as well as from the -- ensuring the regulations are thoroughly met. And then there is also an effort to continue to cater and then improve the batteries, lead acid batteries by launching the EFB and the AGM product range and also how do we penetrate deeper into our export markets, that's the strategy that we have articulated last year. There is considerable amount of action that's happening in terms of deepening our export presence so that the export volumes will further help us continue the growth momentum. And in all this, digital transformation is a very important piece in our overall strategy, be it in terms of improving the internal processes or with respect to improving the customer experience. That's been a very focused and steady amount of resources are being spent on that side so that we are in a much better position in terms of serving our customer needs. And as you know, the next journey that we have articulated earlier in terms of moving on to EV and energy storage with advanced cell chemistry, that's also a very important piece. That's going to take equal amount of focus both on the lead acid battery business as well as on the new emerging EV business as well. So lastly, I would like to give you a glimpse of how are we approaching this whole sustainability piece, as I have mentioned. Right now, we need to make the battery recycling as an integral process for the entire battery manufacturing, which is where we are trying to bring all of our stakeholders into a common platform so that the whole recycling initiative becomes a success, which will help us not only to save cost, but also to complement our focus around our environmental and safety measures that we take as a core priority for us in our business. So it will also -- it is also a step in that direction. And it includes a good amount of circular economy getting established around lead acid battery manufacturing. And over a period of time, this should help us even in our new energy business as well. So in terms of our growth momentum, idea is how do we leverage our existing OEM relationships or our channels and then grow more with what -- with the existing distribution network that we have set up by driving digital-enabled innovative business processes and also expand our international market reach. We know we are currently strong in the Indian ocean rim, Southeast Asia and Middle East are one of the largest markets in some of the countries we are present in a significant manner. And how do we continue to enhance our customer experience and brand strength, that's another major initiative that is being considered apart from continuing to work on advanced products using our advanced stamp grid technology and then providing advanced lead acid batteries to our customer segments. So this has been an approach that we have been consistently following and this step of bringing the entire plastic manufacturing into Amara Raja Batteries business is a step in the right direction on many counts; one, to improve the efficiency of the business; second, to ensure that supply chain control is better and simplify the organization operational structure, and that's going to create value for all the stakeholders that are involved. That is what I wanted to say about the presentation that we have posted. Now all the management team is available here. I request you to ask any questions and clarifications around it. Happy to answer them.

[Operator Instructions] The first question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services.

So first of all, thanks for taking this step in terms of merging promoter-owned businesses into the listed entity. Any plans of merging remaining businesses, which are currently supplying to Amara Raja listed entity in foreseeable future?

Hello, Mr. Gandhi. This is Jay Galla speaking. See, what we did is we evaluated the various components that Mangal is currently supplying, and these are the components, the plastic components, where 100% of the supply from Mangal is going to only 1 customer, which is Amara Raja Batteries. Whereas some of the other components, which we're making, we have other customers that we're supplying to as well. So for that reason, we continue to grow those businesses where Amara Raja is not the only customer. We have several customers that we're catering to. And that, therefore, that will remain with Mangal and not be transferred. That has been the decision that we made as of now.

Add on that point, Jinesh, is basically, we looked at businesses which makes for ARBL also to take some of those elements, which are smaller in size. It doesn't make real economic significance for Amara Raja Batteries per se, because those operations are better when they are serving both for external as well as internal customers. So that's the reason that's not being considered.

And it cuts down the related party transactions from Mangal to ARBL by about 60%.

Yes.

Right, right. And would 100% of Amara Raja plastic component requirement would be solved by Mangal Industries? Or you also source from open market?

At this point of time, it is being served by Mangal Industries 100%. So there are no outsourced plastic components that we are buying now.

Okay. Okay. And can you share the capital employed of the acquired assets, what it could be?

You are talking about the demerger undertaking?

Right. Primarily the plastic component business' capital employed.

Yes. On the book value basis, it may be around 25% or so. Once we have the fair valuation of the assets being completed, then we will understand what will be ROCE impact on that.

Okay. Okay. Understood. And 1 maybe broad question. I mean, given that this business was already part of the promoter group. So there would be some form of synergies which are already in place and considering that technological changes happening in our core businesses would not make have made sense to deploy more capital towards future technologies rather than going backward integrated at this point in time?

Yes. See, as you know, this is an all-share transaction. At this point of time, the ability for Amara Raja Batteries to deploy capital into the new energy initiative or maybe strengthening the lead acid battery per se are not going to get affected. Secondly, when we look at our overall thought process around lead acid battery business also is that we still see a very clear runway at least for next 15 years at the minimum. After that, we have -- I mean that's a crystal ball gazing anyone can do. But in that sense, taking this business into as now will help us improving our overall profitability and the efficiency metrics will improve. So in that sense, it makes sense for the lead acid battery business to backward integrate and improve the efficiencies and deliver the value.

So let me just add, as Delli was saying, this is a cashless transaction. So there's no financial burden on the company as such, which will prevent us from making the other investments that we need to make. Secondly, also as Delli mentioned, we have -- we are very bullish about the future of lead acid batteries. Even with the transition going from IT engine to EV taking place, the low-voltage system in every electric vehicle also requires a separate battery. They don't tap into the main lithium-ion battery, which is used for the propulsion of the vehicle, but all the low-voltage electronics and other gadgets in the car need to be serviced by an auxiliary battery, you could call it. And that is currently the lead acid battery is playing that role in every electric vehicle as well.

[Operator Instructions] The next question is from the line of Abhishek Jain from Dolat Capital.

Sir, this business has a 17% EBITDA margin and 10% PAT margin. So is it only for the demerger business?

Yes, Abhishek, it is only for the demerger business matters.

Sir, operating margin of the company, especially for this Amara Raja, we have seen a massive correction, about 500 basis in the last 5, 6 quarters. And that was due to the increase in the lead prices plus the non-lead cost, which was difficult to pass on to the OEM, and it includes the plastic and separators parts also. So you're talking about the 17% EBITDA margin and the 10% margin. Is it for the last year only? Or it is a historical margin? Sorry, sir.

Please go ahead. Please go ahead. Please go ahead.

So that means if we merge this business, there will be a significant impact on the margin side?

Yes. See, we believe once this transaction come in, at least there should be an EBITDA impact in the range of 0.75% to 1% on the Amara Raja Batteries business because this business currently at an EBITDA of about INR 100 crores with the processing capacity what it has, it should be helping us in the -- improving the overall profitability of the lead acid battery business.

So as the lead prices has corrected in last 2, 3 months, and there will be backward integration. So what kind of the EBITDA margin we are targeting for the next -- in the next 1 year, sir, I mean from the Q3 and Q4, if you will merge this business?

Yes. While we have not been giving a guidance for the future, we have been telling that 40% to 50% as an EBITDA margin on our legacy business is something that we can continue to earn based on the liabilities, but definitely, this plastics business also coming in will further improve the reach. But as I was mentioning, it should, based on the things that we have done so far, it should give us at least a 0.75% to 1% kind of an impact, but would like to do -- I mean, for me to go ahead and then give you a commitment around that, it will be a little too early, but definitely, yes, it will be -- profitability-wise, it will be improving as well as it will be EPS accretive as well.

Okay, sir. And my last question is related with this lithium-ion batteries plant, you are established -- setting up a plant of 3 to 4 gigawatts. And you are also looking for the strategic investors also. Sir could you throw some color on that part, that will be great, sir.

Ladies and gentlemen, thank you for patiently holding. We now have the lines of the management reconnected. Over to you, sir.

Sorry, we got cut off. Could you just repeat that last question, please?

Sir, my last question was related with lithium-ion battery plant, you are going to set up 3 to 4 gigawatt plant. And so just wanted to understand, are you looking for some strategic investors, if you can throw some more light there?

Yes. This call is actually meant for a different purpose. But since you asked this question, I'll give you a quick answer for that. We're not looking for strategic investors as such at the moment. We are looking for tying up technology partner. We're in the process of that -- the search process. We also have identified -- are identifying the location that we're going to be setting up the plant. And not -- this current -- earlier question that somebody asked, will this affect our ability to invest in new business? This will not affect our ability to invest in those new businesses. We intend to first start investing through debt mechanism. And then in future, as the value of the business gets created and improves, then we'll think about dilution at that point of time.

Yes. Abhishek, just to add 1 line on that is our investment plans are definitely to build a giga scale plant. There will be a step-based implementation of that program. Initially, we are not looking at any immediate strategic investors per se. ARBL has the wherewithal to do the initial investment. As the business scales up, we will take those calls at an appropriate time.

Currently, we have an R&D facility, which is a product scale R&D facility in Karakambadi, in the Tirupati site, where we are manually manufacturing cells just to understand the technology more. The next step would be to establish a mega scale plant, which is also going to be a pilot plant in order to establish the manufacturing process and validate the manufacturing process. Once we complete that plant, then we would go to the giga scale plant.

Sir, in Industrial segment, demand for the lithium-ion batteries is accelerating and many players have infringed into this space. So how you are coping up with this sort of the situation?

What was -- sorry, what was the last part of the question?

So how you tackle this situation where there's a huge competition in the industrial segment; lithium-ion batteries is gaining its traction and your contribution is from the industrial side is around 30% of the revenue.

Yes. As of now, there is nobody who is manufacturing the cells in India. There's a lot of people who have made announcements, and they talked about their intent, but there's actually nobody who's actually manufacturing any cells in India today. Everyone is only importing the cells from other countries and packaging them into systems. That is the current status. We don't believe we're far behind anybody in that sense.

So your market share is intact in the telecom segment?

Yes. Telecom, if we look at lithium-ion has started to penetrate in telecom, especially in some of the smaller sites; with 5G rollout that would increase to some extent, but otherwise, in the lead acid battery space, we continue to maintain our market shares.

[Operator Instructions] The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services.

Can you indicate what is the current capacity utilization of this 37,000 tonne capacity for the plastic parts?

There are almost around 90% of the capacities that are being utilized, Jinesh. So currently, utilization levels are.[indiscernible]

Okay. Okay. And secondly, the technology of plastic parts, which we have, how future presents with respect to application and now so lithium-ion battery, would the same technology be applicable, used there as well? Or how do we see that?

The injection molding machines generally based on how you develop a mold and the tonnage capacity that will be there in each machine, can be definitely repurposed even for our lithium battery pack related plastic component. But as such today, if you look at in an overall battery pack, the component of plastics will be limited. But nevertheless, I would request Harsha to add...

Yes, Mr. Gandhi, with injection molded technology, it's always possible to change the mold and suit the product required. But as we're experiencing with [ our current pack ] development, most casing is done in metallics. But as and when a suitable plastic casing can be made for different applications, we can definitely take that out.

Got it. And with respect to shareholders' approval, just to clarify, that will need majority of minority shareholders' approval, right?

Absolutely, yes.

[Operator Instructions] The next question is from the line of Rishi Vora from Kotak Securities.

Yes, sir. Just about the plastic business of Mangal Industries. Could you also give us some idea about the profit, like EBITDA margins in FY '21? And what would be the asset turnover of this business?

The asset turnover of this business also is around 2.5x the revenue. And if you adjust for the PPCP price, the business has been making similar level of margins even in the earlier year. Obviously, if you look at the reported numbers, it will appear higher because the PPCP levels in FY '20 and '21 will be at a lower level. It was around INR 80, INR 90 at those levels. So naturally, that base impact will be there. So there will be a little bit of higher margins in the earlier years. But on stabilized steady-state business, it is a business capable of delivering about 16% to 17% kind of EBITDA.

The next question is from the line of Vibhav Zutshi from JPMorgan.

Just wanted to understand a bit more on the synergies on the EBITDA margin side that you highlighted about 75 to 100 bps. If I look at the different cost item lines you mentioned, there's going to be synergies even on power cost and especially if you look at the recent power tariff hikes in Andhra Pradesh. That's something which has gone up. So just wanted to understand, if I look at different cost item lines; logistic costs, raw materials, power cost, broadly what would be the synergies in terms of percentage points that you can highlight?

See, the synergy cost because as far as power is concerned, you are right, while the recent duty hike has definitely caused the power cost to go up for all businesses in AP. But with ARBL coming out with the 50-megawatt ground-mounted solar power and also already, we have about 20-megawatt of rooftop solar power that's existing, our -- the impact of this additional tariffs that has come out is going to partially absorb with these initiatives. Apart from that, Mangal being earlier they used to have a smaller kVA connection. So when obviously, these facilities get integrated into ARBL, by virtue of we running the higher kV connections, there is an element of fixed cost absorption happening over there. That itself should give us another INR 0.25 kind of saving on the power cost. So all in all, when we calculate, the overall synergies will be in the range of around INR 6 crores per annum should be the result of these employee cost synergy, power cost and the ability to improve further on the raw material cost side, all these score number, what I have mentioned is on a post-tax basis. So these are all the areas which should result in some more synergies for us.

Got it. And just how much would plastics be as a total proportion of the raw material costs, assuming that lead is like the substantial part. So how much of plastics account to be?

Around 10% will be the -- in the material cost, around 10% will be the plastics component.

[Operator Instructions] The next question is from the line of Shashank Kanodia from ICICI Securities.

Sir, you have a leadership position in the lead acid space, right? But in the initial -- in one of the previous con call you expressed a desire for a 10 gigawatt kind of a battery cell manufacturing capacity. So given the fact that there are new players who are setting up the lithium-ion cell manufacturing space in India like Reliance or some of the OEMs like [indiscernible] Hero Motocorp as well. So how do you see -- do you feel that you're lacking in that space in also investments and commitment or any forward journey road map that you can share over the next 3 to 5 years?

Well, it's -- I mean, when we indicated about 10 gigawatt hours would be the capacity, that is an estimate only. Once we get into the detailed project execution, when we finalize the technology and everything else, then only we would decide on what our initial capacity would be. In fact, we quoted more than 10 even in the PLI scheme that government of India has recently floated. There I think we quoted 12 gigawatt hours. So finally, depending on the manufacturing process and the machinery that we would be selecting, and the product technology that we would be selecting, that would determine the final initial capacity. But one thing we need to keep in mind is that this is a very different industry than what we're currently in. Even though both are batteries, the application is -- and they are both being used in vehicles, the lead acid battery is only doing the starting and lighting and providing the backup for all the electronics on board, but this is getting into propulsion of the vehicle itself. And the scale is different. The technology is different. The manufacturing process is different. Only customer base remains somewhat similar. So that's where we have some synergy with our existing business. But we would be competing with very different people, as you rightly said, the likes of Reliance and Tatas and other big corporations are all eyeing this. Earlier, our competitors were a different list. Going forward with lithium, our competition would be a different list. So having said that, the demand is only a projected demand at the moment. The conversion is only a projected conversion at the moment, moving to electric vehicles. Today, the volumes are still very, very low in India in spite of all the announcements being made by many manufacturers. It is a very small volume. And if we invest ahead of time, I think that would also be very wrong. So I think the timing of the investment also needs to be carefully planned out, especially the scaling up has to be carefully planned out, where there should be a real demand coming up, we should be able to see them before scaling up to any huge scale. Otherwise, it becomes a nonperforming asset. And we've seen industries where people have invested too early or unviable investments where they have become NPAs; we don't have any intention to become an NPA.

Sir, what's the normal gestation period from the timeline when you decide to step a project and actually comes on stream for let's say, capacity of 3 to 5 gigawatt hour?

About 2 years. That would be -- and as of now, nobody has grounded or started construction of a manufacturing plant for lithium-ion in a giga-scale that I'm aware of. It's only been announcements that have been made. Nobody has actually started the process of constructing a plant.

And you plan to go it solo or you're looking for some technology partner in this space?

We are looking for a technology partner. We're in the process of doing that.

Okay. Any timeline say, like to step to it as we can have some tangible things to talk about in this space as in 6 months, 12 months or...

No, we don't want to put a timeline on the table. As you know, the products that are required for the market, the way the Indian market is evolving is also changing. That's the reason, as you are aware, we have been placing those strategic bets in some of the start-up ecosystem where we are in a position to tap those technologies as and when they are required for the market. So while there is a broad strategy in place, putting the deadline for any of these capital commitments at this point of time is not something that we would like to comment on. But definitely, as and when a decision is taken in terms of form factors and chemistries, we'll certainly come back and let you know.

Also One more thing I'd like to add on that and then we can move away from EV subject is that -- if you look at all the announcements made today also by various people and the capacities that they plan to bring to -- or planning to establish is still lower than the projected demand by 2030.

Sir, we are investors in long line right -- long line materials?

Yes.

Okay. So what is the present stake? And what was the valuation that we did with the last equity raise happened -- if you can help us with that? I think we will take that question sometime later, Shashank, because that -- I'll be in touch with you on that because this call, we have scheduled for different purpose, I guess. So we will come back to you on the details later, please.

[Operator Instructions] The next question is from the line of Jaiveer from [indiscernible]Metal.

Sir, could you please highlight all those shareholding, which has increased with which has happened and how it's going to benefit the shareholders?

Yes. The overall increase in the promoter side shareholding will be about 4.8%, and this has been done on a relative valuation basis, both the demerged undertaking and ARBL have been independently valued by 2 valuers considering various approaches starting from market price to income approach. On a relative basis, if we compare the valuation of both businesses, the PE multiple of the demerged undertaking will be at a discount of about 25% compared to that of ARBL. So as I was mentioning earlier, this being a very independent and transparent exercise that we have undertaken, this will be margin accretive as well as EPS accretive from the word go. In that sense, it should benefit all the shareholders in terms of their value additions.

And by how much are we expecting the EPS growth?

The EPS should increase based on the estimates that we have done. It should have at least a 2% increase on the EPS.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Delli Babu for his closing comments.

Thank you all very much for your time and all the questions that you have asked. I just would like to reiterate that the whole exercise has been done in a manner that is going to be value accretive for all the stakeholders in the business, and we expect this to help us in improving our cash flows and further improving the business profitability. And thanks once again for all of your time. And thank you.

Thank you. Ladies and gentlemen, on behalf of Kotak Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.