Divgi TorqTransfer Systems Limited (DIVGIITTS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Divgi TorqTransfer Systems Limited Q1 FY '27 Earnings Conference Call, hosted by Equirus Securities. [Operator Instructions]. This call is being recorded. I now hand the conference over to Mr. Ronak Jain from Equirus Securities. Thank you, and over to you, sir.

Yes. Am I audible?

Yes, sir. You are loud and clear.

Yes. Good afternoon, everyone. On behalf of Equirus Securities, I welcome you all to the Q1 FY '27 post results call of the Divgi TorqTransfer Systems Limited. From the management side, we have Mr. Jitendra Divgi, Managing Director; Mr. Hirendra Divgi Whole-Time Director; Mr. Sudhir Mirjankar, CFO; Mr. Satvinder Sabharwal, Chief Growth Officer; and Mr. Dipak Vani, COO, I will now hand over the call to Jitendra sir for his opening remarks. Over to you, sir.

Yes. Thank you, Ronak. Good afternoon, everyone, and welcome to this quarterly earnings call. I'm sure you've had the opportunity to go through the financial results and the presentation, which were uploaded yesterday on the stock exchanges and are also available on the company's website. As was mentioned, joining me on the call today is Sudhir Mirjankar, CFO; Satvinder Sabharwal, our Chief Growth Officer; Dipak Vani, Chief Operating Officer; and my brother Hiren, Executive Director, is traveling on business in the United States right now. Our Investor Relations SGA Advisors, SGA, also joined on the call. So let me begin by saying that, as you've noticed, Q1 FY '27 has heralded a very strong start to this financial year for us. And we believe that this quarter marks the beginning of a new phase of our corporate journey since 2023 when we went public. The performance demonstrates that the capabilities, investments and opportunities built over the past few years are now converging and beginning to translate into impact. We'll see this quarter not as an isolated strong performance, but as an early indicator of significantly larger growth opportunities ahead of us. We delivered our highest ever quarterly performance with total revenue of approximately INR 142 crores, surpassing all our previous quarterly milestones. So this represents an 85% year-on-year growth and a 25% sequential growth over Q4 FY '26. What is particularly encouraging is that this growth has been accompanied by a significant improvement in operating leverage and profitability. EBITDA for the quarter stood at approximately INR 42 crores, with EBITDA margins at nearly 30%. PAT came in approximately INR 25 crores. Importantly, return on invested capital without the cash component stood at almost 32% in Q1 FY '27, reflecting strong returns being generated on the investments made over the past few years. This performance is reflected by of, you could say, driven by a favorable product mix, increasing contribution from exports and the operating leverage that comes from just a higher scale of business. Importantly, the benefits of this scale up are not limited to our -- just our financial performance. They're also enabling us to accelerate the next phase of our growth. As I've been sort of stating in previous calls, our global strategy has 2 clear priorities: first, to support our key OEM customers in their global expansion. And second, to build a global footprint for ourselves. And I'm pleased to share that we have made meaningful progress on both these fronts. On the first, we are successfully on track with our Indonesia program supporting Tata and Mahindra in their work in Southeast Asia. This is an important milestone for us and demonstrates our ability to take our capabilities and partnerships beyond India. Building on this experience, we are now taking the next step in our internationalization journey. I'm pleased to introduce Project Naylor, our initiative to establish eventually a manufacturing presence in the U.S. Under this initiative, we have established our wholly owned subsidiary in Greenville and South Carolina at the International Center for Automotive Research and have begun building our initial team and operations. So my brother Hiren is in the U.S. in connection with this initiative. We are already seeing encouraging customer traction, including new RFQs for sourcing from this manufacturing proposed manufacturing site in the U.S. Our focus now is to convert these opportunities into concrete revenue streams, deepen our engagement with existing customers build relationships with new OEMs and Tier 1 customers and also evaluate the right opportunity then to establish local manufacturing. Together, the Indonesian or ASEAN program and Project Mayflower marked important steps in our evolution from an India-focused business to an enterprise with an increasingly global footprint. So I think the message from this quarter is not simply that we have achieved another record quarter. More importantly, we are beginning to see a fundamental transformation in the scale and breadth of our business and the benefits of the capabilities and opportunities that we have built over the past few years by beginning to see all of this translate into scale. Over the last few years, we have invested deliberately in technology, engineering capabilities, manufacturing, advanced manufacturing technology and customer relationships. We are now at a stage where these investments are translating into multiple growth opportunities simultaneously. In simple terms, all the cylinders are now beginning to fire together. Transfer cases, EV transmission components, exports and emerging transmission opportunities such as automatic transmission for front wheel and rail wheel drive. This gives us a much stronger and more diversified foundation to grow better, stronger and faster. One of the most significant changes that we are beginning to notice is the evolution of our relationship with customers. We started by proving our technology and manufacturing capabilities. Today, we are increasingly being recognized as a technology partner, working alongside OEMs to develop and commercialize new technologies at an ever increasing and faster pace. This is an important change in the way we participate in the automotive value chain. We are no longer looking at individual product opportunities in isolation. It's all about building deeper relationships across platforms, applications and technologies. We are strengthening our relationships with existing customers, while our capabilities are also attracting new customers and new applications at existing customers. We have already initiated discussions with several new customers across domestic as well as international markets. These include Japanese Chinese and Korean customers who, as you may have noted, are increasingly going to play an influential role in the Indian market and Indian and global markets. The other trend we are seeing is a transition from being just a PV player, that's passenger vehicles to a broader light vehicle and mobility player. So in other words, the addressable market is also evolving. Historically, we were identified to just passenger applications. Today, that is no longer the case. With our growing participation in pickup trucks and other light commercial truck applications, we are expanding beyond the traditional passenger vehicle opportunity. The pickup truck opportunity is particularly important because it allows us to participate in a segment that combines the scale of light vehicles with the requirements of commercial mobility. And we are not stopping here. We are actively evaluating opportunities to participate in other vehicle and transmission segments, which can further expand our addressable market over the coming years. So this is the transformation we're talking about from a company with a strong capability in a specific product and vehicle segment to a broader drivetrain and mobility enterprise. Let me shift gears and talk a little bit about our core transfer case business. So this business continues to be a key growth driver. The global market for transfer cases is in the region of about 14 million to 15 million units. And as you can see, we are still quite modest. The Indonesia program has significantly increased volume for us, and we expect further momentum through FY '27, including incremental volumes from the pickup truck program, new platforms, and facelift programs. Importantly, while the Indonesia program has required immediate execution and has influenced the timing of some other orders, we do not view the resulting revenue as entirely one-off. More than 50% of the business has the potential to become recurring in nature. Some of the opportunities that would otherwise have entered the pipeline were pushed out temporarily because of the immediate execution load, both at our end and on capacities at the OEMs. These opportunities have not disappeared. They remain part of the overall pipeline and will come back as the current program concludes its execution phase. At the same time, our OEM customers are establishing manufacturing footprints outside India and are looking to expand their own exports. This creates a much larger opportunity for us to participate in global platforms beyond the current Indonesia program. And 1 such program, we expect will start in FY '28. So our opportunity in transfer cases is not simply about executing what is on hand. It is about using this program as a springboard for sustaining the global nature of this business. Another significant transformation has been our export business. There was a period when our export revenues had become almost negligible because of external factors. Rather than accept this situation, we reworked our strategy. And within just 2 to 3 years, we have rebuilt a substantial order pipeline business that is very tangible and visible to all of you. . Our manufacturing -- so -- our technology is at par with international players and meets stringent European, American and Japanese requirements. Therefore, our opportunity is not restricted to any 1 geography. If an opportunity moves away from Indonesia, our abilities can be deployed across other export markets and global platforms. A case in point is a Japanese OEM who is targeting applications in the Gulf region. So the gulf region, as you know, is sort of in vicinity geographically of India and Japanese OEM wishes to take advantage of his fast structure in India to service these markets. So this is just 1 example. We are, therefore, building exports as a structural growth engine rather than treating them as newer transactional opportunities. A word about our EV transmission, which continues to be a very critical pillar despite showing a little bit of a dent in Q1. So while the transition from imported platforms to localize production at 1 of our key OEMs has taken longer than initially anticipated. The underlying opportunity remains intact. And as a matter of fact, for the remaining quarters of this year, we are seeing extremely strong schedules coming in. Our customer programs continue to progress, and we have already demonstrated our capabilities through times, proof-of-concept work and the approval we have received from OEMs for mass production of new programs at the customer. In particular, the Sigma program is progressing towards commercialization while localization and validation activities continue across other programs. Significantly, we are building this capability not merely for 1 EV program, but with the objective of creating a technology platform that can address multiple EV hybrid and emerging transmission applications. So I think the takeaway is that the assets, both in terms of hardware and the intellectual capital that's been created both at product design and manufacturing process level is all very fungible and can be taken across the verticals that we have. [indiscernible] also become increasingly important. We are seeing great acceptance of the precision standards that we have in international markets. And customer engagement is increasingly opening opportunities across components, transfer cases and broader drivetrain systems. But eventually, our ambition is to move beyond individual component supplies and build higher value recurring global programs in products. So this is another area where our technology and manufacturing customer relationships can create significant operating leverage as commercial volumes present themselves. In the midst of all of this, we have not lost sight of the next set of growth engines that will drive the business over the next 10 to 15 years. Excuse me, alongside our established businesses, with great deliberation, we are building the next generation of opportunities. We are evaluating and working across automatic transmissions, manual transmissions, hybrid technologies and power troughs and active systems for front-wheel drive-based all-wheel drive applications in SUVs. But not every opportunity will commercialize at the same time. But we will remain disciplined in how we allocate capital and develop and sort of shaped this business growth. But the important point for you to take away is that our opportunity funnel today is significantly broader than it was a few years ago. And in the last months, have added 2 new applications, 1 is a front-wheel drive-based all-wheel drive application, where the content is upwards of 30,000 per vehicle. And the second 1 is transfer case for a Japanese OEM, which is Japan's oldest and fairly renowned truck company. Now looking ahead, I think it's fair to say that we have a vision of a company that is fundamentally different from where it was a few years ago. And how do we see this evolving? So we no longer have to prove ourselves as a technology player. We are increasingly partnering with OEMs on technology development. and very active R&D programs that we are doing are a clear evidence of that. So the second point is from a predominantly passenger application to broader light vehicle commercial applications, and I would even go to the extent of saying mobile construction equipment manufacturing. Predominantly domestic business to an increasingly global opportunity although it is much work to be done in this direction and from individual product opportunities to multiple technology and product platforms. In other words, from 1 primary growth engine to multiple growth pillars. What's interesting is the development of these opportunities is coming altogether. So the opportunity also therefore, execution bandwidth and that is what continues to preoccupy us. In short, transfer case business is scaling. Component exports are gaining traction. The component business in India is growing with our customers. TV transmissions increasingly moving towards commercialization. Our 3-wheeler product now is also ready, EV reducer. And I think what makes us very distinctive is that we are not building to print. We come with our technology and our products. with which we can solve problems for OEMs. This enables us to optimize upfront tooling cost, upfront engineering costs and bring a very high level of assurance very early on in the vehicle development program. What we are also doing is now working on the next set of opportunities, which I've mentioned earlier, automatic transmissions, manual transmissions, hybrids and other drivetrain technologies, both at a component and system level. both domestic and global. And so this is why I say that we are entering a qualitatively different phase of growth. The investments made over the past year and the confidence shown by all of you, I think, have helped us create these capabilities. The relationships we have with our customers, some of them going back more than 60 years are creating these -- enabling us to create these insights. Our technology is the, I think, differentiator and the expanding addressable market is bringing us more and more opportunities. We now have multiple strong pillars supporting the business, and all of them, as I said, are beginning fire together. So where do we go from here? I think the idea is that we convert this expanding opportunity pipeline into sustainable, profitable and increasingly global growth. And that is where I think the timing of project Mayflower could be better. We believe the opportunity ahead for the company, for your company, is significantly larger than the business we have today, and we are building the organization, technology and manufacturing capabilities to capture that opportunity. So this is a historic crossroad that we are at. And we believe that the Divgi TTS is leading the revolution in India to create India's first generation of genuine Tier 1 companies. With that, I would like to conclude my remarks. We will have a Q&A session after my colleague, Sudhir Mirjankar, has had a chance to talk about the financials. So let me hand over the proceedings to Sudhir, and then we'll take -- we'll have a Q&A session. Thank you very much.

Thank you, sir. Good afternoon to everyone on the call. Before presenting the financial numbers for Q1 of FY '27, I would like to highlight a few key points. I am pleased to share that we have started FY '27 on a very strong note, delivering another record quarter across revenue, EBITDA and PAT. Following the strong performance in Q4 of FY '26, the momentum has continued in Q1 of FY '27, reflecting a sustained growth in the underlying business. The transfer case business delivered strong growth during the quarter, supported by higher volumes from key OEM customers and sustained demand across upgraded platforms. We also continued to strengthen our presence in export markets. Our E-gear drive business remained relatively subdued during the quarter. However, we continue to see opportunities for the business to scale up supported by approvals for new platforms and programs in the pipeline. Meanwhile, the Components business continued its strong growth trajectory, supported by higher contribution from precision components and continued growth in exports. We remain focused on expanding into new geographies and deepening our engagement with global OEM customers. At the same time, we are building opportunities for the next phase of growth through new platforms, export opportunities and expansion into adjacent transmission products. We continue to work on opportunities in automatic transmission, manual transmission and hybrid transition, which will further strengthen our product portfolio over the long term -- longer term. Speaking of the financial performance of Q1 FY '27. In Q1 of FY '27, we delivered our highest ever quarterly revenue of INR 141.8 crores, registering a strong 85% year-on-year growth from INR 76.8 crores in Q1 of FY '26 and 25% sequential growth from INR 130.8 crores in Q4 of FY '26. On revenue mix, the Transfer Case segment delivered strong growth during the quarter with revenue increasing 93% year-on-year or INR 76 crores compared to INR 39.3 crores in Q1 of FY '26. As mentioned, the growth was driven by strong Transfer Case volumes and healthy demand for existing OEM programs. The segment contributed around 53% of total revenue during the quarter. The E-gear Drive segment reported a revenue of INR 5.7 crores with the business positioned for a gradual ramp-up, existing platform scale and new programs move towards production. The Components segment continued its strong performance with revenue increasing 83% year-on-year to INR 34.4 crores compared to INR 18.8 crores in Q1 of FY '26. The growth was supported by improved realization, a higher mix of precision components and continued growth in export business. Exports continued to strengthen during the quarter contributing around 16% of the geographic revenue mix. Other business also recorded strong growth with revenue increasing to INR 21.4 crores compared to INR 6.5 crores in Q1 of FY '26. This includes contribution from [indiscernible] aftermarket and other operating income. Gross profit for Q1 FY '27 stood at INR 88.6 crores, compared to INR 48.3 crores in Q1 of FY '26 representing an 83% year-on-year growth. Gross profit margin stood at 62.5%, broadly stable compared to 62.9% in Q1 of FY '26. EBITDA for the quarter stood at INR 41.6 crores, raising a strong 118% year-on-year growth from INR 19.1 crores in Q1 FY '26 and a 50% sequential growth from INR 27.8 crores in Q4 of FY '26. EBITDA margin improved to 29.4% compared to 24.9% in Q1 of FY '26 and 24.5% in Q4 of FY '26, supported by our favorable product mix, higher contribution from exports and better margins from the 4x4 products. Profit after tax for Q1 of FY '27 stood at INR 75.2 crores reflecting a strong 133% year-on-year growth from INR 8.9 crores in Q1 of FY '26 and 63% situation growth from INR 15.5 crores in Q4 of FY '26. PAT margin stood at 17.8% compared to 11.6% in Q1 of FY '26 and 13.6% in Q4 of FY '26. Overall, FY -- Q1 of FY '27 replaces the continued tendering of our business momentum with higher volumes from key OEM programs, growing contribution from components and exports and a healthy pipeline of new opportunities. With the visibility we currently have across existing programs and upcoming platforms we remain confident in sustaining this growth momentum in the coming quarters. So that's it from my side. Now I would like to open the floor for questions and answers. Thank you.

[Operator Instructions] Your first question comes from the line of Mahesh Bendre with LIC Mutual Fund.

Congratulations. Fantastic results. Sir, you spoke about the setting up the facility in U.S. So what kind of investment you required. And overall level, if we have to look for next 3 years, what kind of resources we require in terms of the growth we are talking about both capital as well as any new set of factories that we need to set up.

Yes. Thank you, Mahesh, and thank you for your compliment. Very relevant question. I think it comes straight out of the remarks that I made. So there are 2 areas we are looking at. One is RFQs on new programs that we are working on, and the feedback in that regard is very, very positive. The challenge, of course, is to now convert this into awards and awards into revenue streams. On the new RFUs, the SOPs are towards [Technical Difficulty].

Ladies and gentleman, the line for the management has been disconnected please stay connected while we reconnect the line for the management. Ladies and gentlemen, we have the line for the management reconnected. Sir, please go ahead.

Yes. Apologies for that little disturbance and interruption. I was answering Mahesh Bendre's question on what the outlook on our investment is. And what I was explaining was, there are 2 types of opportunities, new RFQs and existing work going on in plants where we can quickly play a role by bringing proximity and cost reduction to ongoing business. And we are looking at both opportunities. Essentially, what we -- the initial feedback that we have is that there is the possibility of an opportunity of arbitrage with the application of technology in manufacturing technology and the intelligence that we have uncovered is in the process of being verified in interactions by now our program launches in the U.S. And if that is borne out, then in the first phase, now this is directional numbers I'm putting out this -- please don't hold me to this could evolve. But the figure that we're looking at is about $5 million in the first phase. So the idea is to build a small compact facility in South Carolina, near the city of Greenville in the general vicinity of our current largest customer in the United States, which is BorgWarner. And there are opportunities there that we're looking at, at supporting their plant, which is North America and therefore the words, largest plant for transfer cases in the U.S. The other point I wish to make a relevant point is that the United States government now in working with the automotive industry is mandating a certain minimum local content produced in what they call the U.S., Mexico, Canada, North American region. So to qualify for this cluster of opportunities, you absolutely need a manufacturing location locally. So that in and of itself presents opportunities. So this is a quick concise answer to the question that Mahesh asked.

U.S., but we spoke about or -- I mean the company is on the verge of in terms of business, we are in a breakout stage. So in that context, do we require to invest more in Indian facilities?

Yes. The Indian -- what we are seeing is perhaps for the first time in history of certain global. It's still not global volumes, but in the direction of global volumes of upwards of 5,000 units a month. Such opportunities will come in mainstream transmission products, which is what we are working on. And these opportunities, we believe, will come in the area of manual transmissions and automatic transmissions. Automatic transmissions then become the foundation to go and evolve into more sophisticated hybrids. And even further dedicated hybrid transmissions. So that will take some time. As we have mentioned in previous calls, we are actively working on automatic transmissions. The complexity of a program like this means that a transfer case will have 80 to 90 line items in its bill of materials and automatic transmission has upwards of 250, and we have to have a very systematic coherent phase line localization program. to deliver cost savings relative to imports. We believe we have the formula and the recipe to do that. We have the assets. And if I may say so, the financial resources to pull this off. And that's what we are now engaged in figuring out how to help our OEM customers. The imperative for our OEMs in India is pretty clear. they have to upgrade their powertrains with localized automatic transmission offerings, Otherwise, they risk losing market share in the years to come. And given the diversification of the time mover in terms of having petrol, diesel, hybrid, pure electric the complex plus vehicle segment, the complexity of the automotive business is growing. And therefore, OEMs need fast, agile Tier 1 companies like ourselves to work with them, which is why I said in my opening remarks that we are seeing our evolution from just being a transactional supplier to a technology partner who is like an influencer of not just the product, but the manner in which you rate, the introduction of that technology into the vehicle portfolio of the company. And unless 1 is willing to walk up to the line in this manner, I don't think you can have a sustainable formula. All this is going to require investment in India. The reality is that the investments within India will definitely be more than overseas because it is the Indian market that will give us the better opportunities much higher technology and value addition compared to overseas markets. But given the exchange rate and the regime of India, to one simply cannot neglect exports and global ambition. Otherwise, you run the risk of this macro economics, some kind of causing problems to the business model. So this is how we see it. Broadly, 25% to 40% of our -- as I see it, will continue to be either exports or global operations and the remaining 60% to 70% will be domestic. And increasingly, domestic will mean proprietary products. because it's pretty clear to us now that it is very, very difficult to scale up, doing just components and build to print. It will work if you're doing just components, commodity components with a little bit of automation. But then the attendant factor then is going to be relatively more modest EBITDA margins. If you want to remain a distinctive company, Tier 1, a product leader, it will come with its risk, but the promise of much better EBITDA margins. So taking all this into consideration, the investment in India is going to be -- is going to take a primacy, if I may say so.

And wishing you the best.

The next question comes from the line of Vimal Gohil with Alchemy Capital Management. Mr. Vimal Gohil your line is unmuted. Please proceed with your question.

Yes. Am I audible?

Yes, sir, you're audible.

Congratulations on a very strong quarter and the outlook as well. Sir, what I wanted to understand is basically on the domestic business, how has the traction been in the transfer casing piece if you take out our top customer. So that is 1 data point that I required. The same thing for our -- I missed out on the export piece, sir, how much was the export revenues this quarter and the kind of performance we have seen ex of the order that you are executing in Indonesia. If you can give me to these 2 numbers, sir.

Yes. The -- so the principal customer is Mahindra, the #2 customer right now. and sort of in close step behind Mahindra is Tata Motors. Tata Motors is also exporting the Xenon or the Yoda pickup truck to Indonesia. So that, I think, is the answer to the first part of your question. As far as exports are concerned, because -- well, let's put it this way. the Indonesia order through our OEM customers in India is a kind of export order because 70,000 of our transfer cases are going to land up in Indonesia in the next 10 to 12 months. But right now, it is not showing up as an export order on our books. But this domestic business has kind of a little bit eclipsed our exports in terms of percentage. In absolute terms, the export has grown. I think it's almost INR 34 crores to. Yes. For the quarter, it is around INR 23 crores. If you annualize it, you can see it is INR 92 crores. Considering that just 2 years ago, it was down to almost INR 0. It tells you the -- and with the tariff war with all the geopolitics going on, this kind of scale up in exports tells you that India as a source and Divgi as a participant in this market cannot be wished away. Many of these, in fact, not many all of these contracts that we're executing that are contributing this INR 23 crores per quarter or almost INR 90 crores per year are all exclusive contracts. We are the only supplier of these components into the North American market. So this is the second part, I think, of your question. Does that answer the question?

Yes, sir. On the exports, it does. Just trying to understand better on the traction transfer casing piece, apart from M&M and Tata Motors, which other customers are looking to adopt all-wheel drive 4x4 transfer casings or that technology into the business at this point in time because -- why am I asking this question is that domestically, most of the OEMs are right now contemplating EV drivelines versus ICE within petrol and diesel and also looking at hybrid. So given this scenario, how do you see the acceptance or the adoption of 4-wheel drive for the longer term in India going forward?

So I think 4-wheel drive cannot be wished away because the commercial truck market will continue to be diesel. And we have done prototypes development work with Force Motors, Eicher, Ashok Leyland and of course, Tata and Mahindra. Our applications in these commercial drops have a huge potential for globalization. And it is to be noted because this information is now public domain. You are aware that Tata Motors has acquired Iveco in Italy. And Iveco has a really global footprint and 1 of the markets that Iveco is extremely strong in South America, the entire South American continent, with sort of Brazil and Argentina, as the center of gravity. So we believe that the opportunity truly is global. The products are ready with us. maybe manufacturing capacity, a little bit of extra localization in some instances, is needed. It is -- nothing is beyond us. We have to prioritize our work because the volume of work is so much that we have to sort of sequence it and prioritize it a little bit. But it is all extremely doable. Having said that, at the end of the day, the largest truck maker in India is Tata Motors. They operate from smaller commercial vehicles all the way to big trucks. So the segment is pretty dense as you go from, let's say, 1.5, 2 tonnes to something like 12 to 14 tonnes. And it's in this space that 4-wheel drive is needed. The numbers obviously are much more in the lighter range, but in the medium to slightly heavier range, the margin realization and the unit prices are significantly higher. Applications include general utility, off-road, forestry, mining, defense, construction. These are the application areas where 4-wheel drive is needed. And it's not going away. When you look at India is a huge 3.5 million square kilometers. There's a tremendous amount of geographic diversity. So if we meet Indian conditions, we can pretty much take care of anything around the world. So I'll just give you a pretty quick example. At 16,000 feet in the Himalayas where the army operates the temperatures can go minus 20 Celsius. This is a temperature you might see in Siberia, in Russia or the Canadian Prairies. But it is also there in India. Plus you go to the desert, we have sand and heat going to 45 to 50 Celsius. So we have to design products that can handle this kind of a climatic range. And that's what we are doing, which is why our transfer cases, 2 of our transfer case models are extensively used by the Indian Army, which, as you know, is the world's like third largest standing army. And that in and of itself gives us a certain brand. So 4-wheel drive is not going anywhere. It continues to require a lot of attention. And let me say the incumbents like Mahindra and Tata are investing heavily in capacity building. The Indonesian order, you could say, is a for test of things to come. because the competition in Indonesia was from the Mint Japanese, Toyota, Nissan, Mitsubishi, Isuzu and 2 Chinese companies, Greatwall and Photon against 6 formidable global competitors, much bigger than Tata and Mahindra our combat rates have won this prestigious order and swept clean, 1 of them probably would have taken everything, but none of them individually had the capacity. Now asked ourselves, what do you think the leadership in these companies is thinking. Having proven this, do you think they are just going to rest on that laurels? I think not. ASEAN is a huge region. It is bigger. So the initial -- I'm calling it a beachhead contract will start earning revenue next year. As far as automatics are concerned, the earliest now that we see is second half of '28. Essentially, what the -- see, we have the technology, we have the product. We have to work with OEMs and their cycle plans and sort of dovetail into their overall time lines, project time lines and vehicle project time lines. So this is where the work is going on. We think that automatic transmission programs at a minimum will deliver INR 300 crores to INR 400 crores. So at the end of the day, if you have to hit that holy grail of that benchmark of INR 1,000 crores, it's the automatic transmission, which will give us the afterburner thrust, if I can use that analogy to get to that point.

And sir, just one last clarification. You mentioned that we will supply to South Africa very soon. The South Africa and the global pickup trucks, these are not 2 separate contracts, right? They are the one in the same.

One and the same. So there is an India portion of it and there is a South African portion of it.

The next question comes from the line of Sumit Ambekar with [indiscernible].

Congratulations on great results. Sir, regarding a transfer case out of 70,000 units, how many were dispatched in the first quarter? And what is the balance to be executed over a period of this year? And second, can you quantify the monthly dispatch run rate for EV platform?

Yes. So I think roughly, you could say some 30% of the total contract has been roughly broadly in that range. The remaining will get executed over the remaining months because the OEMs also need that capacity to absorb what we are supplying them. So I think right now, the good news is that the DiTTS manufacturing line and system is 2 steps ahead of the OEM. So on account of us, the customer should not have any complaints of quality or delivery. So DTS has done a good job in supporting the OEMs. I can very categorically tell you that. But because of their impediments in the rest of the supply chain and all that, some of this contract may spill over into the 1 or 2 months of the next year. So this is as far as the transfer case is concerned. What was the other question?

The second is on dispatch of EV transmission systems.

EV. So I don't know, call it the effect of the Iran war and the general scare created in the market, we are seeing scheduled releases that are coming from the customer, which are significantly higher. And the shock to the system has reinforced the importance of a local supply chain. Now I have to tell you that the Indian EV market is highly competitive. There are incumbents and the new entrants are from the clutch of multinationals in America and Europe, but also Japanese, Korean and Chinese. So the market is beginning to look crowded, but not all -- very few of these have any significant extent of localization. The one company that is a market leader in terms of localization, I have to say, is Tata, Tata Group. And we are their primary transmission supplier. And because of this, call it, the scare of the Iran war and its ripple effect in the marketplace on petroleum products, we are seeing a distinct impact on the schedules. And the new program that we have, I think given their preoccupation with product development, the vehicle testing got delayed. But interestingly, we are sitting with the production part approval process. It's a protocol that is followed -- quality protocol that's followed in the automotive industry. And we have a PPAP approval today from Tata. But because we are waiting for them to finish their testing as soon as that happens, I can tell you that if you look at the I'll give you a directional feel for this. We were averaging -- let's say, INR 7 crores to INR 8 crores a quarter on the EV products. Our forecast now are in the region of INR 10 crores to -- so there is a distinct uplift that we are seeing in the schedules. As with anything else, whether the market holds or not, time will tell. But I think practically speaking, over the next 3 quarters, we think it will hold. And there is a lot of focus from Tata Motors on this. So that's where we are. Interestingly, because of our success primarily with Tata and a little bit with Mahindra on the commercial side. This has attracted attention of Chinese, Vietnamese, Korean companies. and we are in active conversations with the Koreans as well. So which we think is a very significant -- otherwise, the Korean market is very, very difficult to price open without an active association and a partnership with the Korean firm. But the way things are going, we are looking forward to getting a first. It will be a little modest but it will be at the key event, winning an order from Korean EV or an EV application. So this is broadly where we are.