Endurance Technologies Limited (ENDURANCE.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Endurance Technology Q1 FY '26 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this call is being recorded. With this, I now hand the conference over to Mr. Nishit Jalan. Thank you, and over to you, sir.

Thank you so much. Good morning, everyone. Welcome to Q1 FY '26 Post Results Conference Call of Endurance Technologies. We are pleased to host the management team of Endurance today. We have with us Mr. Anurang Jain, Managing Director; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Rajendra Abhange, Director and COO; Mr. Raja Gopal Sastry, Group CFO; and Mr. Raj Mundra, Treasurer and Investor Relations. I'll now hand over the call to Mr. Anurang for his opening remarks, post which we can move to the Q&A. Over to you, Mr. Jain.

Thank you. Good morning to all. As we conclude quarter 1 of FY '26, India's economic landscape reflects a steady foundation amid evolving global dynamics. As per latest government estimates, the Indian economy achieved a GDP growth of 6.5% in FY '25. CII and S&P have maintained a similar guidance in FY '26. Businesses worldwide are facing uncertainties with regard to trade barriers, rare earth magnet supplies, inflation and end-user demand. Very recently, challenges faced included the pandemic wars, chip shortages and energy price hikes. Individual businesses like ours cannot change the course of these events. We instead focus on building strength and diversity in our own business. At present, we serve multiple OEMs across India and Europe. Our products go into ICE and electric vehicles. In India, we are strong in 2-wheeler and 3-wheeler end use and are focused on growing our presence in the 4-wheeler segment, which is already our area of strength in Europe. We are also adding new products to our portfolio. In the automotive sector, as per CM, 2-wheeler sales reached 5.81 billion units in quarter 1 FY '26, down 1.6% year-on-year, with motorcycles at 1.8% degrowth and scooters at 0.8% degrowth. Passenger vehicle sales increased by 0.8% to 1.22 million units, while 3-wheeler sales rose 10.4% to 0.26 million units. Endurance in its stand-alone financials for quarter 1 FY '26 saw a year-on-year growth of 10.1%. In the European Union, new car sales saw a year-on-year drop of 1.8% in quarter 1 FY '26, while our Endurance Europe total income growth was significantly higher at 28.5%. If we also remove the impact of the Stoferle acquisition, our top line in Europe grew by 0.6%. In quarter 1 FY '26, industry volumes, there was a 15.9% share of battery electric vehicles, 9.2% for plug-in hybrids and 34.2% for hybrids in Europe. On the strategic growth front, we are pleased to share key updates -- as most of you are aware, the Ministry of Road Transport and Highways has proposed new safety requirements mandating 100% use of ABS for greater than 50 cc ICE 2-wheelers and all 2-wheeler EVs greater than 4-kilowatt motor power. This as of now is made effective from January 2026. As you are aware, Endurance had embarked upon the ABS journey and had rolled out its first ABS in September 2021 [Audio Gap] by MNC players. We have installed capacity of 640,000 units, both for single and dual channel ABS. Our single-channel ABS has been on the road since 2021 and our dual channel ABS final samples have been sent to Royal Enfield and Bajaj, and we expect SOP to start in the next month. The new safety requirements are expected to increase the ABS requirement in India fivefold. Higher ABS use would also lead to higher disc brake penetration. Endurance is in touch with its OEM customers to meet the OEM's deadlines for higher quantum of ABS requirements. This would involve expanding our ABS setup in Waluj, which process has already started and will complete by March 2026. We are planning setup of a new plant for disc brake assembly, including for master cylinder, caliper, brake disc and brake hoses in Chennai, where we already have a land bank. This plant will cater to the South Indian OEM clients, including TVS, Royal Enfield and Yamaha India, amongst other OEMs. I'm pleased to highlight significant progress also at our AURIC Shendra facility. We have successfully commenced shipments to a leading European OEM for pre-SOP bids, completing the journey from customer LOI to facility installation in a record time of 4 months. We have also supplied initial samples for the electric vehicle motor housings for Mahindra's 6e and 9e platform through Valeo within a record 10-week lead time, achieving first-time right parts to support the localization drive. The AURIC Shendra plant is a green building die casting facility and actively supports our ESG goals with sustainable manufacturing practices. Die casting press machines ranging from 1,100 tonnes to 2,500 tonnes are planned to align with market trends towards higher tonnage and lightweighting in electric vehicles and advanced automotive components. The SOP is now planned in quarter 4 of this financial year. I'm pleased to inform you that the SOP at our 2-wheeler alloy wheel plant in AURIC Bidkin will start in week 4 of this month. The plant has an installed capacity of 3.6 million wheels per annum and bulk of this capacity has been booked with orders from OEM clients. At our battery pack manufacturing facility near Pune, civil work and statutory consents are in place. Machinery has been ordered and we will install and will be installed at our plant in early next quarter. We had mentioned that we have received an LOI from a leading 2-wheeler OEM for a peak business value of INR 300 crores per annum. 3D validation and simulations have been completed in quick time. Protos will be submitted in this quarter, which is in line with our planned SOP in January 2026. In quarter 1 of FY '26, we accelerated the purchase of the balance 38.5% stake in Maxwell. We are now 100% owners of this business and have strong plans to make it the cornerstone of our Electronics and Energy business. With good acceptance of reconfigured models of electric 2-wheelers, for our key OEM clients, Maxwell has witnessed a healthy uptick in sale of battery management systems. With our R&D and innovation, we have been able to improve -- we have been able to provide optimized products for each of their offerings. Apart from scooters, we also have orders for battery management system usage in motorcycles, 3-wheelers, tractors and have recently secured an order for airport cargo handling electric buggies. The BMS supply will begin in November 2025. The strategic transition also paves the way for future high-voltage platforms for 4-wheelers and e-buses. We have won cumulative orders to the extent of INR 156 crores per annum at Maxwell, which will reach peak in quarter 1 of FY '27. Maxwell is also pursuing leads now of INR 150 crores per annum. With increased business both in BMS and for future ABS electronic control unit boards, we would need to add capacity at our surface-mounted technology lines in Chhatrapati, Sambhaji Nagar. We have recently installed additional end-of-the-line testing lines. And in due course, 2 new high-speed surface-mounted technology lines will also be set up to cater to this increased demand. Our new generation suspension R&D center at Waluj for 2, 3 and 4-wheeler applications is fully operational since July '25, marking a significant milestone in our innovation journey. This state-of-the-art facility helps us to co-create advanced suspension solutions with OEMs further solidifying our leadership in 2-wheeler and 3-wheeler suspensions. Also, the new R&D center, 4-wheeler testing and validation capabilities, along with our expanded R&D team and our 4-wheeler suspension technical assistance agreement with a leading Korean entity will enable us to enter and grow in the 4-wheeler suspension market. We are actively pursuing new business prospects with multiple OEMs. Endurance is by far the market leader for inverted front forks. Over the years, this business has grown with demand from various Bajaj and KTM models. In January, we have begun supplies to TVS for the inverted front fork requirement. We have orders from Hero MotoCorp and a leading Chinese OEM, which SOPs will start in this financial year. The KTM export offtake has been lower than the earlier years. Now with Bajaj in full control over the global KTM operations, we expect demand to increase in the next quarters. Our aluminum forging products are used as components, namely axle clamps for inverted front forks. We are also offered to third-party 2-wheeler and 4-wheeler OEM clients. Our supplies to Jaguar and Land Rover are expected to begin in January 2026. We now have orders also from Royal Enfield and Hero MotoCorp and multiple RFQs are being addressed from Indian and international OEMs. This is a huge focus area of growth for us. Increased demand would require setting up of more aluminum forging presses. We have ordered our fifth press now, which we will install next year in our new aluminum forging plant at Waluj. Our existing aluminum forging setup will also be moved to this new plant where the civil work is on. We have begun SOP in May '25 for the first Hero MotoCorp clutch, which peak requirement will reach 100,000 clutch assemblies per month, which we hope to do in quarter 4 of this financial year. In September next month, we will begin SOP also for the first assistance slip APC clutches to Royal Enfield and Bajaj Auto. This introduces our Italian company Adler technology to the Indian market for the first time. We're also setting up a new R&D facility for ABS and 2- and 4-wheeler brakes at our second brakes plant at Waluj. This will have advanced test rigs focusing on higher-end 2-wheeler brakes, ABS testing, including electronic tests as well as 4-wheeler brake tests. We have also secured our first order for the 4-wheeler drum brakes from Tata Motors. This is the start of a journey where we would require and deploy technology for advanced 4-wheeler braking systems. Our aluminum casting plant at Vallam has won the Best Supplier Award for excellence in delivery from Ather Energy for the first-time right products and quick ramp-up. This is another testimony to our unwavering commitment to high levels of achievement in QCDDM. I mentioned to you about our first order in the 4-wheeler passenger vehicle driveshaft. We have begun on-vehicle testing at our captive proving ground in Chhatrapati, Sambhaji Nagar. Our testing facilities cater not only to our current needs, but also act as a pathway to reach our aspirations in new product segments. As informed in the previous call, we completed the acquisition of the 60% stake in the Stoferle entities in Germany in the beginning of quarter 1. Stoferle has an annual turnover of approximately EUR 80 million. From April 2025, Stoferle financials are consolidated in the Endurance Group financials. We had announced that under the Maharashtra PSI 2019 scheme, we received an eligibility certificate of INR 606 crores for CapEx incurred till September 2025. Under this 2019 scheme, we would apply now for additional eligibility for CapEx up to financial year 2026. Based on INR 606 crores, we have recorded a PSI incentive of INR 32.91 crores in quarter 1 of this financial year. You will recall that we have booked almost all amounts under the INR 446 crores under the PSI scheme of 2013 and have collected cash to the tune of INR 329 crores. Let me now give you a gist of orders won during quarter 1 of FY '26. Please note that the business value from new orders are without including orders from Bajaj Auto. Overall order booking in quarter 1 FY '26 in India business was INR 252 crores, of which INR 247 crores is new business. This is excluding the INR 300 crores per annum business, which we have won for battery packs. Key OEM customers in the list of quarter 1 FY '26 orders are 2-wheeler OEMs such as Royal Enfield, TVS and Mahindra and our first 4-wheeler formulation brakes business won from Tata Motors, which opens the door to a new vertical. We have won a total of INR 3,225 crores worth of RFQs in hand. Cumulative India business orders for EV segment till date stands at INR 864 crores. And with Bajaj Auto, this figure is now at [ INR 1,017 ] crores per annum. Total orders won since FY '21 is INR 4,950 crores, which INR 3,986 crores is new business. Out of the INR 3,986 crores new business, close to INR 1,400 crores saw SOP in FY '25. A further INR 1,150 crores is expected in this year FY '26. The rest of the business will be realized in FY '27 and FY '28. In our Europe business, we have booked orders worth EUR 2 million during quarter 1. These are electric vehicle component orders for our specialties plastics unit in Turin. In continuation of the strategic aftermarket plan started with a global consultancy firm, on-ground activations have begun across the top 100 high-potential districts in India. We've also begun test marketing new product ranges with a focused go-to-market approach. For exports, detailed market studies were conducted to have a robust product and channel strategy for high-potential countries. In addition, we have introduced front fork pipes in Indonesia and Brazil, catering to both Indian and non-Indian 2-wheeler platforms to further expand our range in these key markets. Coming to our financial performance. The information has been uploaded at the stock exchanges last evening, along with our presentation explaining the numbers. I will, however, highlight some key numbers. During quarter 1 FY '26, the company recorded a stand-alone total income of INR 2,351 crores, a year-on-year growth of 10.1%. This growth comes majorly from content addition as the industry volumes were tepid in this quarter. The major content addition comes in new business, especially in brakes and suspension segments with OEMs such as TVS, Royal Enfield, Honda, which is HMSI, Suzuki and Hero MotoCorp. A significant portion of the growth in the total income is also from price corrections to compensate increase in commodity prices. Unfortunately, the commodity inflation based total income increase had a negative impact on our percentage margins, which is evident in the 0.5% drop in the EBITDA margins. Further, this is a period where we are investing in our future. And along with the lands, factories and assets, we are also hiring the talent required to further our multi-prolonged business growth plans. The people cost increase reflects our talent acquisition, which is a strong positive for us to consolidate our growth plans in the future. Further, quarter 1 FY '26 had its own seasonal and mix factors. Therefore, the stand-alone profit after tax is INR 166 crores or 7.1% against INR 163 crores or 7.6% in quarter 1 FY '25, which is a INR 3 crore increase in profit after tax. Europe topline increase in Euros is 28.5% with the car market in Europe being 20% below the pre-COVID size. We have achieved higher sales through the acquisition of Stoferle. Even without Stoferle, our European product sales had a year-on-year growth in spite a decline in new car sales. The European profit after tax is at INR 62 crores, which grew 42% over quarter 1 FY '21 profit after tax of INR 44 crores with margins slightly improving. In quarter 1 FY '26, our consolidated total income grew 17.3% over quarter 1 of last year from INR 2,859 crores to INR 3,355 crores. The EBITDA grew 17.5% to INR 408 crores to INR 480 crores and the margins was maintained same at last year's level of 14.3%. The profit after tax grew 11% to INR 226 crores at 6.7%. I would like to also mention specifically that our consolidated earnings per share have more than doubled from our IPO year FY '17 to FY '25, that is from INR 23.48 per share to INR 59.46 per share. A high-performing inclusive culture remains core to our success. We have deepened our focus on inclusion, capability building and employee experience through sensitization programs, upgraded HR policies and infrastructure enhancements. Flagship skill and capability programs like Saksham for the white-collar people and Unity for the blue-collar employees are helping nurture talent across levels while also grooming high-potential employees for future leadership roles. On the sustainability front, we made significant progress this year onwards towards our ambitious goals of -- for FY '30. We achieved a 45% carbon-neutral percentage. We lowered specific electrical and thermal energy as well as specific water consumption, while water recycling and hazardous waste recycling stands at 96% each. We also enhanced our renewable power share from 23% in FY '24 to 25% in FY '25. We have now increased this share to 31% in quarter 1 FY '26 through expanded rooftop solar and wind power agreements. We contributed 300,000 KL of water through water augmentation projects. CSR is a strategic priority for Endurance, rooted in our belief that real impact comes from reducing inequity, which means one community, one child, one individual at a time. And this will help in every community we transform, every child we inspire and every individual we empower. I'm happy to inform you that our CSRM Safer Trust has transformed 55 schools with solar energy and hygiene-focused facilities, enhancing attendance and outcomes while training over 900 adolescent girls in health and skills. With sustainable agriculture training, our farmers empowerment program has benefited over 4,000 people and ECO, which is our vocational training center in Chhatrapati, Sambhaji Nagar has imparted training to over 2,000 youth, securing over 85% employment. Our health work has reached 42 villages, serving 17,000 people, and we have built 2,300 toilets to improve sanitation. Our wet van program, too, has been successful, providing treatment to 40,000 animals in 47 villages. I'm happy to tell you that in quarter 1, 3 of our plants have received the National Award for manufacturing competitiveness and awards from integration from International Research Institute for Manufacturing. With these opening remarks, I would now like to invite questions from all of you. Thank you.

[Operator Instructions] The first question comes from the line of Aditya Jhawar from Investec.

Congrats on a good set of numbers. My first question is on the PV brakes business. It's a very encouraging start. If you can just let us know that what could be the SOP and broadly the order size? And one pertinent question here is that based on this breakthrough, do you think that we could get access to other OEMs? Or do we still need a tech tie-up on this? That's the first question.

Yes, yes. So of course, it's very heartening to do it too because we did first break to start the business. Right now, the drum brake assembly business on a per annum basis, I think the value is a small value, it's about INR 25 crores per annum. And this will start end of quarter 4 is the plan as of now. And as far as the collaboration is concerned, ultimately, our aim is to go into advanced systems of braking like the ESP, for example, which is required for 4-wheelers. We have a collaboration with Beijing West Industries, as you know for 2-wheeler ABSs. And we are totally involved with them to try and introduce this. Of course, this will take some time because there's a long lead time for the 4-wheeler advanced braking systems. But we are totally focused to try and get and try and increase these orders in the 4-wheeler space.

Yes. Second question is on our ABS opportunity. So clearly, this regulation change has come in our favor. If you can help us understand that what could be the opportunity size in ABS and plus the disc brake. And how is your discussion progressing with OEMs on this? Do you think that there could be some postponement of the timeline? And if you look at a slightly few quarters or, say, by end of next year, do you think that India would have enough capacity to support the ABS requirement for the 2-wheeler industry?

Yes, yes. See, we are today engaged with most OEMs because there are not many players. You have watched Continental [indiscernible] it is us. We are the only Indian company doing ABS. And as I mentioned, the -- what we feel is that the -- at least 16 million and in case not more, at least 16 million 2-wheelers will need ABS. Of course, as per the draft this thing -- draft which we have seen from the Ministry of Road Transport and Highways, [ they are talked ] about January. But if I look at our past experience, which has happened, normally, the delay could be 3 to 6 months. But of course, we don't know what will happen. We expect that we get some clarification by next month is what I'm told. So let's hope that happens. But definitely, I think this is here to stay. It could be 3 to 6 months of delay is what we feel based on past experience when such drafts have come in the past. But we'll have to wait and watch that. As far as Endurance is concerned, of course, our capacity was 640,000. We are expecting a tenfold growth for sure. The commitments which we have already got from certain customers, we are immediately going ahead with 2 lines, which will add another 2.4 million. The line should be ready by March 2026. And as we engage and as we get commitments, we will keep adding more lines. But for us, this opportunity is definitely 10x. And I also expect the 2-wheeler industry to grow because as per figures, which they say of FY '30, even if you take a small growth, I think we should reach 29 million, 30 million vehicles by FY '30. So today, we are talking about a figure of 16 million on a 22 million sales, which we expect in both in India as well as in exports. But this industry will also grow. And so at present, we feel it's a tenfold this thing opportunity for us to go to at least first 6.4 million. And then looking at technology and pricing, we'll do our best to try and increase this in future. So this is, of course, for Endurance, it's a real game changer.

Yes. That's good to know. My final question is on CapEx. If you can help us understand that how should we think about CapEx for FY '26. In the presentation, you've included for the quarterly CapEx. But for a full year basis, how should we think about that number? And directionally, if you can give us a sense that what could be the CapEx in '27 and '28 as compared to the last couple of years?

Yes. So the CapEx has been growing every year if you see our past track record. And we have been growing. You are seeing in turbulent times, which I mentioned in my opening remarks, we have been growing both in India as well as in Europe. Europe also with acquisitions. And also these acquisitions make a lot of money for us. And so if you see quarter 1 in India, we have spent INR 286 crores. And as you know, there are 3 projects which I already mentioned. The big ones are the AURIC Shendra starting in quarter 4. There's a slight postponement to that. And then you have the AURIC Bidkin, which is starting in week 4 of this month. And also, we have the battery pack plant, which is starting in January '26. And of course, we have our existing business expansion, which is going on. So I see looking at the capacities which we need to sweat also, the CapEx crossing INR 800 crores in this year. In FY '28, or I would say, FY '27, definitely, this figure, of course, very, very difficult to say. But the question is, we believe in sweating our assets. That's why you see operational efficiency is quite good since the beginning. So we only spend when there is a requirement to spend. But as we look at inorganic growth opportunities also, both in India and Europe and which is actively going on as we speak. So I don't see this figure, to be honest, as of now going down in FY '27. And of course, we at Endurance will take all opportunities. We have now aluminum castings, the AURIC Shendra, which is a very good margin export plant, mainly starting with EVs to start with. It's a huge opportunity, if you ask me. Alloy wheels is a large sales business plant, aluminum forgings, which is a new product segment, which is coming up. We started at a backward integration. That is starting. Battery pack in the new energy space is a good business opportunity for the future. And of course, I would say, like I've always mentioned, and I mentioned earlier in my opening remarks, we don't supply all our products to all the OEMs. I just mentioned suspension and brakes in quarter 1. We have really increased business for brakes and suspension. In Suzuki, there was no scooter front fork last year. Now we are doing 60,000 a month from April to June. As far as Hero MotoCorp is concerned, it was 5,000 brakes a month Today, we have gone to 30,000 to 35,000 brakes a month. TVS, we were doing 75,000 brakes a month. Now it's 100,000 brakes a month. Royal Enfield brake discs per month have increased from 50,000 to 100,000. So there's a lot happening. And as we increase new customers, to all our product segments, that will be the biggest growth driver. It's not just the industry volumes. So we are very excited because of our strength in process product technology as well as our ability, the trust we have created with the OEM clients of 2- and 3-wheelers, now starting on a new 4-wheeler journey. And as I also mentioned in my distinct that today, we have last -- end of last month started solar suspension called solar tracking system. We have a INR 200 crores order from a Spanish OEM -- a Spanish client, not OEM, Spanish client. It's INR 200 crores per annum, which will be reached -- will reach peak next year. And now we are talking to somebody else. I mean there's a huge business opportunity for profitable growth in the non-auto also. We are looking at non-auto inorganic growth also. So -- and of course, when you talk about CapEx, there would be CapEx, high CapEx now for the ABS. So I've said more than INR 800 crores, but it could go higher. So we'll see what really happens because ABS is also there, which is -- plus with ABS, I forgot to tell you, there are new brake systems which are coming in. So because ABS requires a brake system and not a drum brake, so -- and it is above 50 cc. So all the drum brakes will convert to ABS. Now that requires a disc brake assembly system. So whatever orders and business nominations we are getting since this announcement, even the brake system orders are increasing. And that's why I mentioned that in Chennai, we are planning to put up a brakes plant. And because we can't handle it in these existing 2 plants. So I would say there's a lot happening on the growth front at Endurance, and we are really, really excited about that.

So I just want just one clarification. If you have to summarize what you have just said that in terms of numbers, last year, overall, we spent about, what, a little over INR 1,000 crores, including Europe business in terms of CapEx. This year, we are talking about India CapEx of north of INR 800 crores. And Europe CapEx, should we assume about a INR 550 crore number? Or is there an update on that? So -- and what could be the total CapEx in terms of absolute…

I would [indiscernible] because there's a lot of money which has gone into Stoferle acquisition and which will go in the next 5 years, like we said. We're exploring new acquisition there. Okay. So I will request Massimo to answer this question. Massimo, could you answer this CapEx question please?

Yes. So in the first quarter of this financial year, we spent EUR 9 million in terms of CapEx for the new project with the Stellantis Mercedes basically and also Volkswagen. For sure, in this financial year, the effort in terms of CapEx will be lower compared to the previous year where we spent EUR 50 million due to the fact that in this moment, the market is waiting an official position about the European government for the new rules of green deal and everybody are stopping the investment. And this is positive from our side as in [ Europe ] because we can use the cash profit of the company for extraordinary operation in inorganic growth that we are evaluating after the acquisition of Stoferle. The European market, as you know, is consolidating the business, we are part of this consolidation from a point of view on the right side on the part of the customer and so we will see. But for sure, the impact of the CapEx for this financial year will be 50% compared to the previous year, a maximum of EUR 20 million to EUR 25 million.

The next question comes from the line of Pramod from InCred Capital.

So first, I wanted a clarification on this Europe sales. So if you have to look at the Stoferle, can you give a similar breakup in terms of EBITDA where it stands now? Because you have given a breakup of sales addition, how much it brought to...

Absolutely yes. So we closed this quarter with EUR 103.2 million [indiscernible] of the previous financial year. So we grew 28.5%, of which [indiscernible]. As Mr. Jain told you before, without the acquisition of Stoferle the European company grew more or less 1%. EBITDA, we closed with EUR 18 million 17.4%, compared to 13.3 million in the previous financial year 16.5% so we grew in terms of EBITDA EUR 4.7 million, 25.1% compared to the previous year. In terms of net result, we closed with EUR 6.4 million, between 6.2% compared to EUR 4.9 million of the previous financial year 6.1%, with an increase [indiscernible] 31.3% compared to the previous year.

[Foreign Language]

The second question is with regard to the APS side. I wanted to know, based on your experience on R&D over the last 4 years, what's the ideal timeline you would require to do R&D for this 100 cc and come up with a product, one? And second, what cost efficiencies or the product improvements can be brought in because these guys will look for a more economical solution. Would you feel you can be a better position to give much better solution than the MNC players and how?

See, I think cost is a very big strength for us because we have our own R&D. And as I've always said, it's not the performance and durability we do in R&D. We do a lot of value engineering. And I've been saying over the past, ABS, stainless steel grade hoses, which used to be imported, valves, which were imported are being done in-house today. The electronic control units, which I've been mentioning will be started from next quarter in-house. So these are all ways how you lower the cost. Plus, definitely, when the volumes go up, your fixed costs are spread. That also brings down the cost. And I can only say that we are very strong as far as the cost controls are concerned. So that's why we feel very confident already based on the -- I mean, confirmations we have got, we've already started the work. We are not waiting to be honest, for the final because final this thing to come, the note to come from the Ministry of Highways and Road Transport. So we are going ahead because we want to be ready with the capacity which I said should be by March 2026. But that's the time it takes. So there are some long lead machineries in that. So we are going ahead and we'll be very fast on the CapEx. But that's the time it takes to set it up because I don't think that capacity is there in India right now.

Right. And what's the -- you also supply CBS. So incrementally, it will be a CBS vanishing and ABS coming for you, right, if I'm understanding right.

So it is not only ABS growth, and it took us a day to realize that, that is also a CBS growth because ABS needs CBS and not a drum brake because it's above 50 cc now. It's 50 cc and above. So for example, if scooters had drum brakes, now they'll have ABS with a disc brake.

Right. But you will lose out on the CBS, right, sir, if I'm able to understand it and then gain on the ABS front?

No, no. In fact, there are many vehicles, like I mentioned, scooters, which are largely, there was a drum brake in the front. So now when you have an ABS, ABS requires a disc brake assembly [Technical Issue] and it doesn't need a drum brake. So that becomes an added volume. And the reason for this new Chennai plant is those volumes are also going up. So based on that, we immediately have started this thing. We are just planning to start the work there.

Sure. And considering your experience with the higher CC, would you still be looking at giving a full system or you would also be open for just supplying disc brakes and capture a value with the customer? How are you trying to approach this?

See, we are a complete solution provider, Endurance. It is the whole system. But what happens is some customers have a step-by-step approach. So like I said, we first start with the brake disc and then they get into the brake system. So that is normally what also happens sometimes. That's been our journey of last 20 years. First, some are directly the system, some are brake, disc, and then the system.

Okay. Okay. And if I were to look at the current market size and the market share, how it has traveled for you, would you give some color what's the size of the market in terms of value?

See, value, I will not give you, but the value I can -- see, okay, leaving the value apart, I just mentioned that we are gauging the market to be 16 million out of 22 million. Now maybe that's a conservative figure, I don't know, okay? So that is the volume. But I've seen some analyst reports talking about INR 2,500, INR 2,750 as the price. Now you can gauge what the price would be.

Okay. Sure. And where is your market share currently, sir? And where you expect to be post this 100 cc.

Right now, because we were doing single channel on a 640,000, we were at a run rate of 400,000, which I mentioned earlier. Now with this happening, I mean, I've already said 640 plus 2.4 is confirmed. That's why we are replacing the orders. Now rest, we are in talks. I mean, I'm again going next week to meet a major customer. So all this is in process. But we're also just waiting that finally, will it be January, Will it be April, will it be July, it will be when. But some people don't want to wait. So they've already started giving commitments. So -- so that's where it stands. But we have got this thing -- I mean, we are going ahead.

Okay. Sir, is it fair to say you have a single-digit market share now and which can be substantially moving up? Is that a fair understanding to have?

See, right now, not single. It would be -- I think it should be about -- I mean, the market size, I thought was 3 billion. I've been saying we are doing 400,000. So it should be about 13% to 15%, I think.

Okay.

No, no, sorry. No. Right now, it's 13% to 15%, but we should now with this higher volume, our target is at least 25%. 25% of a higher number.

Yes. Got it. So you are ambitious to ramp up. And how do you -- the last one is with regard to R&D capability, even though you have been seeding this with the R&D capability in the ABS front, how is it prepared to handle this rush of customers? And how are you better placed on R&D and test track versus the others, if you can quote them.

Yes. See, I don't like to comment about others. I would like to talk about ourselves. We are fully ready. I can only say that.

Okay. Sure. And how does it compare versus when you started in ABS? Is that substantial improvement in capability on R&D side?

Yes. Yes, yes. Yes, absolutely. A lot of learnings because you learn a lot from customers, your experience, lowering costs, improving efficiencies. The main thing is on the software front, the calibration of software. Right now, these too depend a lot on our collaborative [indiscernible] industries. Now with the test riders and our internal team, we are able to do it ourselves. And that's, I would say, one of the biggest learnings and also the speed and the cost comes down.

Okay. And I hope that should also substantially reduce your development time.

Yes, absolutely.

The next question comes from the line of Arvind Sharma from Citigroup.

Sir, first question would be on the ABS part. So just to confirm, your current capacity is 640,000. And on top of it, you plan to add another 2.4 million. Is that I can understand.

Yes, absolutely.

Great, sir. And any timeline for the 2.4 million, sir?

Yes, I said March '26, we'll be ready. March '26 will be ready March '26.

Got it, sir. So March '23, you'll have a total capacity of almost 3 million units.

Yes, yes, yes.