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

Ladies and gentlemen, good day, and welcome to the Amara Raja Energy & Mobility Limited Q1 FY '25 Post Results Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir.

Thanks, Amit. Welcome to Amara Raja Energy & Mobility Limited 1Q FY '25 Post Results Conference Call. From the Amara Raja management, we have with us today Mr. Y. Delli Babu, Chief Financial Officer. I will now hand over the call to Mr. Delli Babu for his opening remarks to be followed by question-and-answer session. Over to you, sir.

Very good afternoon to everyone. Thanks for joining the call. I'll just briefly give an outlook on the quarter numbers. During the current quarter on a y-o-y basis, we have seen on a stand-alone level, the revenue growth was about 13%. But if you adjust for the last year, two months revenue of lithium, because April and May 2023, we had the lithium revenue also in the stand-alone results, thereafter it was demerged into the subsidiary. So if you adjust for that, then the overall lead acid revenue grew by about 15%. This revenue growth is coming on the back of a strong volume growth, both domestic and international automotive segments. In domestic 4-wheeler segment, the aftermarket grew about 11% in terms of volume and the volumes have grown on about 6% to 7%. And in 2-wheeler, we have seen about 18%, 19% volume growth in the aftermarket and volumes growing at about 25%. And even the other applications, predominantly the inverter batteries we have seen overall volume growth of about 15%. Of course, all these inverter batteries are traded, which is why the current quarter trading revenue mix is substantially higher over the immediately preceding quarter at about 23%. And in the international segment, the 4-wheeler volumes have shown a substantial increase of about 45% that is coming because of the new accounts that have resulted in higher volumes in the Latin American markets, which is why that higher export volume growth was registered. But in the industrial side, we have seen overall volume degrowth of about 5%, predominantly lead by the telecom segment, whereas the UPS segment and others have shown a growth, but telecom segment has shown a degrowth of about 20% on a y-o-y basis. Not only because the last year base member in telecom was higher considering the higher CapEx that was there by the tower companies in the last year. So we had a larger base as such the lithium migration is also something that is going on at a reasonably good pace in the telecom side. So the current volumes of telecom are a result of degrowth compared to the previous year. When we look at the margins on a Y-o-Y basis, there is an improvement in the operating margin by about 0.6%, 0.7%. That's coming on account of both the higher realizations we had because we have taken a price increase in the month of June, about 1% price increase was taken. And also in the month of July, we have taken another 0.75% rate increase. So when we look at it on a Q-o-Q basis, the numbers show as if there is a margin dilution that's predominantly coming as I explained earlier about the higher trading mix of inverter batteries and also certain other segments [indiscernible] revenue was recorded like Lubes. Overall gross margins would have shown a bit of a dilution because of higher trading revenue. We also had some bit of lead price increase in the current quarter along with other metals like copper and even plastics have shown marginal increase. So some of those costs also have impacted a bit on the margins but with the price increases that we have taken, I'm sure that should compensate to some extent. So as far as the NEB business is concerned, we have seen a revenue growth of about 20% in the New Energy side that is coming predominantly on both the mobility and the energy storage packs that are being sold on the storage side and on the telecom side. While we have seen the charger revenue getting stagnated during the current quarter, we have not seen much of a growth on charger, while once we complete some of our localization plans around new chargers that we have developed, I'm sure this revenue will again [indiscernible] as our substantial growth in the coming quarters. So as far as the overall CapEx program is concerned, we are constructing the tubular battery plant now. So it is expected to complete towards the end of this financial year so that for the next season, the inverter batteries will be available instead of what we are doing, what we are meeting the market demand from trading sources I think will be able to meet a substantial portion of it through the own manufacturing. And the overall CapEx investment into the lead acid business including the tubular batteries would be approximately INR 800 crores, about INR 450 crores of it going into the tubular manufacturing unit and rest into the small line expansions and maintenance CapEx that we incur in lead acid. As far as the New Energy business CapEx is concerned, I've explained earlier, currently, the pack facility, our new Telangana Giga Corridor is complete, and it is going to start the commercial production very shortly in about 10 days from now. And we are also -- the construction is going on in full swing, both with respect to our customer qualification plant and the E Positive labs plus the 2 gigawatt of our NMC line building construction is going on. So as I mentioned earlier, between these three projects we will be needing about INR 2,000 crores of CapEx and as far as the LFP program is concerned, now the plants are getting laid out. We probably will have an initial capacity of about 4 to 5 gigawatt hour, covering about 2 part members. And thereafter, it will be scaled up based on the demand signals. At this point of time, we estimate for this 4 to 5 gigawatt hour of LFP cells could also mean that another INR 2,000 crores to INR 2,500 crores of CapEx will be required. As I mentioned earlier the plants [indiscernible] plants and other things are in the working progress. So if there is any change in these numbers, I'll come back to you and then communicate later. So the overall consolidated revenue growth of 17% is coming both the New Energy Pack business as well as the automotive business domestically as well as internationally have grown pretty robust. While industrial, we have seen some hiccups on the telecom, the other segments like UPS exports have grown reasonably well. So with that summary, I'll now request questions that you may have.

[Operator Instructions] The first question is from the line of Pankaj Tibrewal from IKIGAI Asset Manager.

On the export side, can you give us some flavor how has been the demand and what's the outlook going forward there? And second, on the lithium side, the project which we are coming up with. Is that something which we can also be used for energy storage factories at some point of time? Or is the technology completely different?

As far as exports is concerned, we have seen some good traction for the AGM batteries, particularly in some of the Northern American and European markets, apart from our regular markets Middle East and the APAC and African markets are also registering robust growth. The overall number of countries that we are currently serving having have gone up substantially beyond 55 to 60 countries now, while the objective is to improve our market share in some of the newer markets that we have recently penetrated into. And I'm sure our overall objective is to grow the export business, as mentioned earlier, at a CAGR of 15% at least for the next two to three years. With that intention, I think there are plants that are being laid out. As far as the lithium project [indiscernible] and the cells will definitely cater both to the energy storage market as well as the mobility market. We believe LFP cells will be required for energy storage side. So we have seen already some of the packs that we are selling on the telecom storage side and other smaller storage applications are actually based on lithium -- LFP chemistry. So these cells that are expected to be produced will cater to both the mobility and the storage applications.

So there's no different technology per se, which is involved on the energy storage side, which is you are trying to say.

There will be a difference in ratings of the cells, but the base chemistry will not have a very significant change.

And as a company, are we looking at that opportunity because that seems to be a very large opportunity coming along?

Absolutely. Cells, there is no way we can say that it is only for mobility. Definitely, the storage is going to play a significant role in the overall new energy chemistry requirement in the market because battery energy storage system, both at the grid level and also at -- let's say, smaller micro-grid level will also play a very significant role. So C&I and grid level applications for battery energy storage system is expected to be a big area of growth, and it is definitely in the radar for us as a growth area.

The next question is from the line of Mumuksh from Anand Rathi Institutional Equities.

Sir, company is seeing -- doing well in terms of market share gains. I just want to understand what is driving such strong market share gains? And how do you see the market share over the medium term?

I think one of the ideas of -- domestically speaking, the 2-wheeler aftermarket and 4-wheeler aftermarket have shown strong volume uptake, particularly some of the newer brands that we have launched like Elito have really helped us to improve some of the volume of take around the domestic side. But otherwise, our approach of creating better availability and visibility for the brand at the local level and the retail efforts, which are continuing only for us are definitely helping us maintain these higher volumes on an overall basis. But this quarter, I think the overall volume jump, I think is coming more from the international side as against the domestic business.

Is it possible to indicate what kind of market share we would have in a 2-wheeler and the 4-wheeler segment, sir?

Today, on the aftermarket side, both on the 2-wheeler as well as on the 4-wheeler, we should be having around 35% kind of a market share. When it comes to the OEMs, as we know we have the lower market share of about 25% in 2-wheelers, whereas in 4-wheeler our OEM market share could be around 35% or so. So in 2-wheeler in some of the brands, our market share is as high as 40%. But on an overall basis, we should be around -- because we have been growing consistently on the 2-wheeler at about 18% to 20% kind of a growth rate, so we believe the 2-wheeler after market share would have closely inched up to 40% of the overall market share, while in the 4-wheeler we may be around 36% or so.

And also if possible on the industrial side, on the UPS and inverter, what kind of market share there would be, sir?

On the home inverter side, obviously, we are only using our traded batteries at this point of time. We believe our market share could be in the range of 15% or so as far as the home inverter market is concerned. When it comes to the industrial UPS, we should be around 40% to 45% in between range on the industrial UPS, whereas telecom on a overall basis, both lead and lithium put together, we should be around 60% kind of a market share.

I just want to -- what you mentioned in the press release about the Highstar partnership. I'm assuming it is for the NMC technology. Can you further provide any details around this partnership?

It's a same technology licensing arrangement what we have with Highstar coupled with our own internal development of NMC service. It is a technology fee arrangement that what we have with. Beyond that I don't think that there are other details that I can share.

Sure sir. And sir, just lastly, any full year volume guidance for the auto and industrial segments, sir?

No. At the company level, we have not been giving any guidance, but when we look at the growth rates in the aftermarket, I think 4-wheelers will be able to sustain about 7% to 8% kind of a growth at the industry level and 2-wheelers maybe around 12% to 13% kind of a growth rates are possible as far as 2-wheelers is concerned. I think we will be able to grow a bit higher than the market. That's about it. I don't think we are giving any specific guidance on our volumes.

The next question is from the line of Kapil Singh from Nomura.

Can you hear me?

Yes, yes, I can hear you, Kapil.

Sir, we saw a very strong growth in the 2-wheeler OEMs. So can you give some color there, if you have added any new customer or any new product here, which has helped this?

No new customer addition per se, Kapil. It's basically the same customers that are higher volume through offtake this quarter.

So it is share of business gain or -- if you can give some color on that.

In the models where we participated, I think we had a higher volume offtake that we have seen during the current quarter. No new customer addition per se.

And sir, in the telecom business, you mentioned there is a decline. So I just want to understand here that when we compare your market share in the lithium-ion business and the lead acid business, is it similar and the profitability profile also is it similar? And who are the competitors here?

See, in telecom, there are at least about half a dozen players on the lithium side who are actually currently supplying packs. All of them, obviously, are importing with the cells from Chinese market. So naturally, the margin profile will be completely different from the lead side, so it will not be as profitable as the lead acid batteries. But from an overall share point of view, because we do cater to customers like BSNL, Indus, et cetera, even on the lithium side as well, I think the market share on the lithium cannot be compared with the lead acid side considering the number of players that are there. But over a period of time, I think it will be too early for us to say any particular market share as a number, but I think it will take some time for the domestic supply chain to stabilize and then over a period of time, we are confident that we should be able to continuously maintain the overall market share at the current levels of what we are having today, considering the strong relationship what we have with the existing telecom companies. But I think these are early days. I don't think we should be able to put a number on it and then start discussing at this point of time.

Sure sir. Because one concern here is that last time you had also discussed that in China, there is a big drop in lithium cell price. So will the local manufacturing be competitive enough. If you could give some update on that? Like if there is any change in the pricing of lithium cells in China? Or it is still operating around similar lines?

No. See, I think the Chinese ecosystem, the excess supply what they have currently and the price levels at which Chinese companies are operating, I don't think there is a significant change in that in this immediate quarter. I mean, like I explained earlier, even for them to sustain these prices for a longer time is not going to be profitable at all, but I'm sure as I mentioned earlier, we will fund our cost competitiveness on the conversion cost side, but they will definitely have that edge over the fact that they have a stronger material costing ecosystem that is available in that country. So we have to figure out a way how to be competitive enough with them both with the support of the government and at the industry level efforts. We should be -- it should not be hurting the applications. As long as it doesn't hurt the applications and we are able to provide cost-effective solutions, I think this business will in long-term be a profitable business. But at this point of time, yes, your concerns are valid by the fact that there is a current supply push that is happening from the Chinese ecosystem considering the fact that they have higher capacity.

So sir, the pricing will be in what range? Around $60 for the cell right now?

The latest data that I saw is listing around $65 at the cell level $65 to $70 at the cell level.

And just, sir, one last question. You mentioned trading revenue this quarter was around 23%. So how much was it in 4Q? And broadly, what is the annual mix that you would expect?

This year, because next season, we'll have partially our own manufacturing inverter batteries coming up. On a full year basis, I think it should not cross 15% is my estimate now, but much will depend on how much of the next year's -- next season's demand we will be able to meet with our own manufactured batteries and also how the Lubes offtake increases. Because we Lubes is also gain reasonable traction now while it is still not a very material number, it is gaining some traction. So if that number increases, then yes, there could be a change in the number, what I have said as 15%. But more or less, we should not be more than 15% for the current year.

Sure sir. And 4Q mix will be how much?

Sorry?

Fourth quarter mix of trading revenue would be how much?

The immediate fourth quarter was around 12%.

[Operator Instructions] The next question is from the line of Raghunandhan from Nuvama Research.

Sir, first question on the lead acid side. In terms of industrial, other than telecom, how was the growth in Q1 and if I look at Q2, Q3, Q4, that is rest of the year, generally, what is the kind of growth you expect for industrial ex of telecom and for telecom?

Around 7% to 8% is the growth that we have been consistently seeing in other than telecom revenues. And I think that trend will not be any different as we move into the next years as well. But on the telecom, I will not be able to put a number around now because much will depend on some of the CapEx programs that they have. I don't think will be -- I am in a position to give you a number as far as telecom is concerned.

On the lithium side, any time lines you can share for when the NMC project will come online and when the LFP project can come online? And only when these come online, that is when you would start supplies for companies like Ather. Would that be right understanding? And also, if you can talk a bit about the PLI incentives. So what would be the status of that? When is that likely to be announced?

Yes, as far as the NMC, the expected date of commercial production, as I mentioned earlier, it should be towards the end FY '26 or maybe the Q1 of FY '27. And at this point of time, we believe even the LFP cell's commercial production should start sometime in the calendar year '27, while I may be able to discuss a bit more granular dates once their designs are over. So it should be both -- at this point of time, both the NMC and LFP moving towards H1, NMC will happen and towards the end of H2, LFP might happen. That's the time line that we are currently looking at. And as far as the sub OEMs is concerned, it is obvious once we start right now because the OEMs that -- Ather that you have referred to, they do their own packs. So obviously, when we manufacture our own cells is when there will be a commencement of supplies to people at like Ather.

And anything on the PLI scheme, sir, when it is likely to be announced?

I think there was the PLI scheme for the second 10-megawatt was opened. I'm yet to get the official confirmation on the results. I'll let you know as and when there is an official announcement.

So we have been selected or that is yet to be officially announced?

Technically, we are qualified, but I'm sure it's a competitive bidding process, so unless there is an official announcement, I don't think I should be in a position to talk about it.

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

Firstly, on your New Energy business, just trying to understand the volatility in EBIT margins? I mean just seeing it ranging from negative 6% to 13% in the last three quarters. So could you just help explain what's happening here.

Sorry, what number are you referring to?

The other business, which is primarily the New Energy business, your segmental margins basically was around 5% this quarter, 13% in 3Q. Yes, so just by the volatility.

Yes. I think, as I mentioned earlier also, because the packs and chargers revenue depending on the mix and also depending on the volume, for example, if I do a larger volume then obviously being a thin margin business, the margin shall be better. This quarter, as I mentioned, the charger volumes was not growing, it was more or less same as what we have done last year. And also, we are ramping up on the costs from setting up the cell and some of the expenditures which is incurred on the research and also some of the costs that we incurred on setting up of the cell units will charge it to revenue. That's where you will see a margin oscillation in this business. But if you look at it at the contribution level, I think around 7% to 8% kind of a number on the charger manufacturing -- sorry, on the pack manufacturing and about 13% to 15% kind of a margin on the charger manufacturing or possible in a stable scenario. But obviously, that also is subjected to the base cells and metals cost as a number. But these are still early days. I don't think we can fix on a particular margin number other than those broad guidance that what I have just mentioned. So these margin oscillations will be there considering the fact that there be costs that will be going in the cell as well, because we are right now calling both cell and pack into a single segment, which is why you will see those numbers getting oscillated. But from a revenue traction point of view, we are -- probably we are doing better than many of our peers.

And second question is basically on the lead acid battery business. Any CapEx that you think might be in store over the next few years just because you've been growing at very strong double digits? And are we managed out on capacity and any CapEx that you see going forward?

As I have mentioned earlier, we are not saying we will not do any CapEx on lead acid, but obviously, our intention is first to get the maximum out of the existing plants. So some of the throughput enhancement exercises that we have taken up recently have really given us higher capacities. We were able to add another 5% to 6% of the capacity without adding much of a CapEx. So that way, our current capacity of close to 21 million batteries on 4-wheeler and about 32 million batteries of 2-wheeler are running at a utilization of about 85% to 90% and we have some line additions for the 4-wheeler that we have already planned for. So as of now, as a greenfield unit, I don't have any announcement to tell you that we are going to put up the capacity, but we will continue to work on increasing the efficiency of the existing machines and also add the required lines in the existing facilities. So that way, I don't have a larger CapEx announcement at this point of time. But we will not shy away from adding CapEx if we see a robust demand signal, which can actually help us get the payback as we envisage for any CapEx cost.

The next question is from the line of Aditya Jhawar from Investec.

Sir, if you can help us understand that in this quarter, we have adjusted about INR 180 crores in InoBat. And last time around, we had given a debt of INR 100 crores to the same entity, which got converted into equity. So if you can help us understand the objective of this and how it is tied up with Gotion. And what we understand so far is that Gotion payment is on royalty basis that should ideally start once the sale commences. So if you can throw some light on this?

See, as you know, InoBat we have made the investment almost two years ago, they are working on certain high-power NMC cells for vertical take off and landing vehicle requirements, and they are also working on certain other high-power NMC cells for some of the fast cars. And they are also now invested into -- they're mostly even -- they have a tie-up with Gotion for some of their requirements as well. And the Slovakian venture, which is getting set up between Gotion and InoBat is also something that InoBat is participating in. So with all this happening, we made the initial investment of EUR 10 million about 2 years ago and thereafter, we made another EUR 20 million investment in this quarter. So right now, InoBat is focused both on developing some advanced power cells for -- in the NMC chemistry and also working along with Gotion for setting up factory in Slovakia. So those are the two projects that they are working in. And obviously, GIB is where -- GIB is the entity, which has given us the technology as far as LFP is concerned.

Sure, sure. And sir, the second question is on this investment in Circular solution that we have made of INR 125 crores. And cumulatively, we have invested about INR 445 crores. So what is the thought process here? And what is the -- the next question is what is the current debt level as on Q1 end, and what is our plan for funding for our lithium-ion business?

As far as the Circular solutions is concerned, as you know, in the first page, we are setting up 1 lakh tonnes of lead recycling facility. The refining operations that is from the RML to pure lead are expected to commence the commercial production in the month of September or October. And then we'll be using that lead coming from that factory for our purposes. And the battery breaking operations are expected to commence the production, maybe about 4, 5 months after the refining operations are completed. You know that this is part of our overall recycling initiative and also this should improve the overall recovery rates what we currently get from the outside smelters from the batteries and should help us improve the raw material security as well. So once we do the entire 150,000 tonnes, that is what is being envisaged in that particular location, that should give us close to about 30% of our overall requirement from our own internal recycling sources. So that's the objective of that investment. I think after this, there may not be much of an investment that would be required into that subsidiary, maybe for working capital we may have to invest some money. And as far as the current financial cash flow position is concerned, I think we remain debt-free as we speak. I think towards this year with the overall CapEx requirement between the lead acid as well as the New Energy, maybe approximately around INR 1,000 crores to INR 1,500 crores could be the overall cash out flow number. I think we may have to go for a certain short-term debt in this particular financial year. And then we are also working on the long-term financing program considering the overall CapEx investment that's being done. So once we agree on a particular approach, I'll keep you posted. This year, I think we will go with...

Sorry, you can continue, sir.

Yes. I said for this year CapEx, we should be capable of funding it using the deleverage on existing balance sheet.

The next question is from the line of Jyoti Singh from Arihant Capital Markets Limited.

Sir, just wanted some clarification on the price hike side that you have mentioned, we have taken 1%, respectively for June and July. So that is 1% only or between 1% to 2%?

No, it is 1% in June and another 0.75% in July on certain aftermarket products.

And sir, second on the -- some of the brand that you have mentioned, we are having major market share in the 2-wheeler of 40% and 36% in 4-wheeler. So if you can name it if possible?

Sorry, sorry. Can you repeat the question, please?

Major, major market share we are having with which OEMs?

On our -- I mean will with all the volumes put together on the 4-wheelers, we are having roughly about 35% as a market share. And on the 2-wheelers, we may be having around 25% to 26% kind of a market share as far as 2-wheeler OEMs are concerned. On the aftermarket is where I think in 4-wheeler, we should be around 35%, 36%. And in the aftermarket, 2-wheeler, maybe we are inching very close to 40%.

The next question is from the line of Abhishek Jain from AlfAccurate.

Sir, as you have taken the price hike in the month of June and July both and the late prices are also going down. And you also mentioned that there's a ramp up in the invertor battery plant. So just wanted to understand how much benefit we will see in the operating margins in the coming quarter because of these initiatives.

See, I don't think I would want to put a number around it. I think some of these pricing actions is not only purely linked to let there are other operational costs increase and also some of the metals like copper and plastics have shown increase. Copper also has substantially increased. So I think it will be a call that is taken based on the costs and also the competitive pricing scenario. So it is not that the price increase is all pervasive, it's more on the aftermarket side and obviously, on the OEM side, some of this gets passed on with a lag. So I don't think I would want to put -- there is going to be a material number because of this in terms of the overall margin profile. This is more to take care of the inflationary impacts in the business.

But we have seen a sharp cut in the price that is laid in last 10 to 15 days and most probably that it will go down further. So is it the benefit of this in the coming quarter in terms of the margin?

Like I said, in the aftermarket price correction is not done for every price change that's happening on the lead. So we have seen a sustained price increase for the two months where it was started holding around INR 2,150 level. And also the rupee depreciating by almost INR 0.5, from INR 83 to INR 83.5. I think based on that sustainable price change, we have taken some correction. So when there is a downward revision, it depends on the market action and also based on how other costs are behaving, pricing decisions are taken. So I don't think for every change in the metal price, there is going to be a price action. As and when some pricing action happens either because of a first signed low-cost material or because of competitive action, we'll let you know.

And you mentioned that now the cell prices have come down to $65 per kilowatt. At this price of $65 to $70 per kilowatt what margin you would be able to make in your lithium-ion battery plant, including PLI calculate and excluding PLI calculate. Can you please throw some more light there.

Again, as I mentioned earlier in my earlier calls also, is it too early to get fixated on a particular number and things that this is how it is going to be? Because we need to achieve a given scale for us to really put a margin target and then see how we can achieve them. So right now, what we have is what the experience of other cell makers were at a higher scale with maybe around $70, $75 kind of lithium price -- cell prices is where you can see a lower double-digit of operating margin at EBITDA level. So that's the broad understanding what we have, but I don't think we can right away say that this is the exact way we're going to plan out because the CapEx investment required and the material costs that are involved in the lithium manufacturing do keep changing. So I think we need to hold our horses for some time.

And my last question on the lubricant business revenue in the first quarter? And what would be the full year target for this?

So as I mentioned earlier, we don't give any full year guidance numbers in these calls. We believe that there is a reasonable traction happening on the 2-wheeler and 3-wheeler lithium pack business along with the energy storage requirements that are coming up. We believe our charger business also will ramp up towards the second part of the financial year. So last year, we did about INR 500 crores of revenue. I think we should grow at a very aggressive percentage. This quarter, we have grown about 20%, 25%. I am sure, such kind of numbers are repeatable, but I don't think I'm in a position to put a number with...

Sorry sir, I'm talking about the lubricant business revenue?

Sorry?

Lubricant business revenue.

I think those numbers are still to gain that traction. I think we have been growing reasonably, but maybe in the next quarter, I'll try to -- based on half year numbers, I'll try to share you some of that.

The next question is from the line of [indiscernible] from Tiger Assets.

I would like to know how much of lead you consumed in this quarter? And how much was that recycled and from whom all do you source?

80% of our lead requirements will be from recycled sources. We have a host of vendor partners from whom we buy, and we also buy some lead from people like Hindustan Zinc and then we also import some lead from the abroad sources as well.

Can you name a few of your vendors?

I don't think I'll be able to do that. There are -- I mean, in the listed space itself there are good many number of players, I think you can look at it.

After commencing of your lead recycling plant, how would EPR provisioning benefit from it or any idea on that?

The extended producer's responsibility is to ensure that as far as batteries are concerned, procure the waste batteries and then recycle them -- ensure the recycling in a responsible manner. So right now also considering the fact that we collect batteries and get them recycled through the our own partner recyclers, we are meeting those obligations under the battery waste management rules. And once we have our own facility, we will be able to do it at lot more ease and then even the recovery percentages will be to our advantage. So that way from a compliance of BWMR rules are concerned, I think we are meeting those rules as stipulated under those routes, and I don't see much of a challenge around.

And Amara Raja recently partnered with Ather for [indiscernible] tests. Can you give more color on that?

It's a MOU that we have entered with Ather for supply of cells for the 2-wheeler application, both on the NMC and LFP chemistry. As and when we commence our -- the production capacities for the cells I think Ather has agreed to buy the cells from us. So we'll be working with Ather for any new product requirements that they may have so that it will help in filling our capacities for lithium as well.

Does the company have the plans to get into the lithium-ion recycling in the future?

I think it is little too early for us because right now, the idea is to get the lithium cell manufacturing going and I'm sure at an appropriate time depending on the business scenario, we can take those calls. But I think I don't have any immediate plans to say that we are going to get into it.

The next question is from the line of Sanjaya Satapathy from Ampersand Capital.

You might have already covered but still excuse me for asking this. I just wanted to get the specifics in terms of your CapEx plan and what all factories will be getting commercialized in the immediate future?

Sorry, I think we have discussed about the CapEx plan as far as the current year is concerned, I think we will come back to you if there are any other plans around capital for on he higher...

I just wanted to know some of the factories that you are starting in this quarter, where -- what are the time lines for that? If you can just -- and also the lead recycling plant that 150,000 tonnes, when exactly it is likely to be commissioned?

I think I just mentioned those dates, the pack facility is going to start the commencement in this -- mostly in this month and the recycling facility first phase of recycling is going to start in the month of September or October. And then the lithium factories are something that we will see happen in sometime towards the mid of financial year -- calendar year 2025.

The next question is from the line of Akshay Karwa from Anand Rathi.

Sir, two questions from my side. Firstly, on the AGM batteries, [indiscernible] batteries. So how has the battery has been performing? Like, do you have any comments on this batteries, sir, in terms of the volumes, the customers, or any feedback that we have gotten for these batteries?

No. I think internationally, we are seeing some good traction around AGM battery demand. And domestically also, we have introduced that to some of the OEMs handling the aftermarket. As of now, the performance is quite satisfactory.

Sir, in terms of the capacity, so what would be the capacity for these batteries subjected to your [indiscernible] batteries, sir?

I don't think I would want to put the number. These are basically [indiscernible] that should not be a problem.

So my second question is towards the revenue breakup. If you could highlight some information on the auto OEM, auto aftermarket and industrial segments, the revenue mix for the last quarter is possible?

Broadly, the automotive business forms in the stand-alone revenues, about 70% of the revenue is automotive and balance comes from the industrial segment. And beyond this, we are not discussing further subsegment revenues in this call.

The next question is from the line of Chetan Doshi, an individual Investor.

Congratulations for the good set of numbers. My first question is regarding your industrial segment, Indian Railways is expanding very fast. So what are the opportunities the company is looking forward for Indian business from Indian Railways? And the second question is regarding solar. Because the solar is also a big emphasis. So how we are geared up to target this market?

As I mentioned earlier in this call, the Indian Railways, we are present on the coach side and on the signaling side quite significantly. And then we continue to leverage on some of the newer initiatives like Vande Bharat trains that are coming up significantly. So we have a reasonable presence in the railways. I think we will capitalize on all the opportunities that are coming up at least on the energy side. As far as solar side is concerned, the battery energy storage system is definitely going to be one of the large volume driver, particularly with the newer battery chemistries that are coming up in terms of lithium. So I think we are developing those solutions around energy storage and then it will be an opportunity for us to sell more and more lithium cells around those areas. So there is a team that you spoke on energy storage as a business, and then we will be developing that business with the same vigor that we have been working on many other industrial products.

And one last question is, how the response is there for -- you have been participating in autoexpo in South Africa [indiscernible] so how is the response for some direct tie up with some OEMs in those places?

International markets, we are currently are more of an aftermarket player than of a volume player at this point of time, and we believe there is enough headroom for us to grow in the aftermarket side of the business. Our product is definitely well recognized in many of the markets that we are currently operating. So as and when there is -- from a margin point of view and a capacity point of view, there is an exciting opportunity to work with [indiscernible] we will think about it. But right now, our international presence is more [indiscernible].

That was the last question. I would now like to hand the conference over to Mr. Annamalai Jayaraj for closing remarks.

We thank all the participants. We thank Mr. Delli Babu for taking time out for the call. Have a good day.

Thank you.

On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.