Endurance Technologies Limited (ENDURANCE) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. And a very warm welcome to the Endurance Technologies Q1 FY '22 Results Conference Call hosted by Axis Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nishit Jalan from Axis Capital. Thank you, and over to you, Nishit.

Thank you, Ali. Good morning, everyone. Welcome to Q1 FY '22 Results Conference Call of Endurance Technologies. First, from the management team, we have with us Mr. Anurang Jain, Managing Director; Mr. Ramesh Gehaney, Director and COO; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Satrajit Ray, Director and Group CFO; and Mr. Raj Mundra, Treasurer and Head, Investor Relations. I'll now hand over the call to Mr. Jain for his opening remarks, post which we can have a Q&A session. Over to you, Mr. Jain.

Thanks a lot. Good morning to everybody. I would like to share details of how we have done in the first quarter of the financial year 2021, '22. In India, in the first quarter of FY '22, as per the CM data, the 2-wheeler industry sales grew by 116.9% compared to quarter 1 of the previous financial year. Scooters grew by 93% and motorcycles grew by 127.3%. The automotive industry in India had a growth of 138.2%. The 2-wheeler business, as you all know, is approximately 80% of our total Endurance India stand-alone business. As per the CM report, the 2-wheeler volumes for quarter 1 FY '22 were at 3.54 million numbers as compared to 5.46 million numbers in quarter 4 of FY '21. This 35% decrease from quarter 4 of FY '21 to quarter 1 FY '22. Two-wheeler volumes was mainly due to the lockdowns, which took place in the first quarter of this financial year. Against this 2-wheeler volume drop of 35%, Endurance stand-alone India top line fell by 28%. In our overseas operations, in quarter 1 of this financial year, the EU and U.K. market saw an increase of 66.7% in the volume of passenger cars sold, while our European sales, the top line grew by 104.8% in euro terms. I will now brief you on the financials of the first quarter of FY '22. During quarter 1 of this financial year as compared to previous year's same quarter, our consolidated total net income grew by 177.9% from INR 6,139.7 million to INR 17,063.6 million. Consolidated EBITDA grew by 379.8% from INR 535.8 million to INR 2,570 million, Consolidated EBITDA margin was at 15.1%. The profit after tax grew by 487.3% from the previous year and was at INR 965.5 million at 5.7%. This included the extraordinary expense of our Chakan-Pune plant voluntary separation scheme of INR 314.5 million and the income of the Maharashtra PSI scheme incentive of INR 287.83 million. If we were not to consider the onetime voluntary separation scheme payment of INR 314.5 million then the profit after tax would be INR 1200.90 million at 7%. With the implementation of the voluntary separation scheme, our company will save INR 86 million per annum with a payback of slightly less than 4 years. There was no consolidated net debt, and the company had a positive cash flow of INR 4,200 million. During quarter 1, our stand-alone total income grew by 221.3% from INR 3,603 million to INR 11,578 million, stand-alone EBITDA grew by 2,270.3% from INR 67.35 million to INR 1,596.4 million with an EBITDA margin of 13.8%. Standalone profit after tax grew by 278.3% and was INR 568 million at 4.9%. This included the extraordinary expense of our Chakan Pune plant voluntary separation scheme of INR 314.5 million and income of the Maharashtra PSI scheme incentive for INR 287.83 million. If we were not to consider the onetime voluntary separation scheme payment of INR 314.5 million then the profit after tax would be INR 803.33 million at 6.9%. We would like to mention that Endurance is focused in both its Indian and European operations for a profitable growth and on growing higher than the industry growth. The detailed financials are available with the stock exchanges and on the Endurance website. I would also like to share certain key points for quarter 1 of this financial year. 67.8% of consolidated total income, including other income, came from Indian operations, and the balance, 32.2% came from our European operations. In India, in this year, INR 513.8 million of new business has been won from OEMs, which include Hyundai, Tata Motors, Hero MotoCorp and Mahindra & Mahindra. I would also like to mention that in addition we have INR 16,581 million worth of request for quotes from OEMs, which are being discussed. Our focus is to supply all our 4 product area products or verticals to all OEMs in the next 2 years. I would also like to mention that Endurance is focusing on a more value-add and profitable product mix in its future business, which includes the 200cc plus motorcycle brakes, and clutch assemblies with help of our acquisition of Adler and Grimeca in Italy in the year 2020. Paper-based clutch assembly is replacing the cost-based clutch assemblies for motorcycles for a better value add, continuous variable transmissions or automatic clutches for scooters, anti-lock brake systems or ABS for 150 cc-plus motorcycles with our collaboration with Beijing-based industries. 200 cc-plus motorcycles inverted front fork and adjustable real mono shock absorbers as well as front fork and shock absorbers for electric 2-wheelers. This is with the help of our collaboration partners, KTM AG, now working with KTM to increase supply of both on-road and also start with the off-road motorcycle higher technology inverted front fork and rear mono shock absorbers, and we have made a 3-year plan for it. We are also focusing on fully finished machine castings as compared to raw castings and semi-finished castings for a 2-, 3- and 4-wheeler business. This brake assembly business is growing with addition of business from Bajaj, TVS, Royal Enfield, Yamaha, Hero MotoCorp and HMSI. We are increasing the disc brake assembly capacity from the existing 285,000 brake assemblies per month, which was in actually in March to 570,000 brake assemblies a month and discs, from 375,000 numbers a month to 675,000 per month by end of this month. A new plant at Waluj has been set up for this increase in volumes. This increased to 570,000 brake assemblies on a month includes the 45,000 brake assemblies a month at another plant where supplies have already started. On 2nd February 2021, we started operations at our new plant at Waluj in H&I to supply machine aluminum castings for Hyundai, Kia, Royal Enfield. And we are already in the process and we have acquired new business from other OEMs all solar. We are also setting up an aluminum cylinder head low pressured head casting plant at Uttarakhand for 720,000 numbers per annum, and operations will start in next month. We are also happy to inform you that the supply of 2-wheeler assemblies will start in the second half of next month as we are in the final stages of testing and validation. As you may be aware, competition is mainly from Bosch, which controls 85% market share in the Indian ABS motorcycle market, which requires approximately 3.5 million ABS assemblies per annum. This is a large business opportunity for Endurance, as there are very few suppliers and all our foreign companies due to the high technology requirement. On 3rd May 2021, in our Chakan plant in Pune, we announced a voluntary separation scheme for ongoing -- with the aim of improving operational sustainability and plant operations. 177 confirmed workmen opted for the scheme with a onetime payout of INR 314.5 million. This will lead to an annual saving of INR 86 million and additional savings in Canteen insurance and other costs. We also focused on supply of products or for EV 2- and 3-wheelers, we have already started supplies of brake assembly suspension and aluminum castings for the electric scooters and 3-wheelers. As you may all know, in FY '21 totaled 238,000 EVs were sold in India, including 144,000 2-wheeler EVs, 88,000 3-wheeler EVs and 5,900 4-wheeler EVs. Our focus is to supply our EV products to all 2- and 3-wheeler OEMs, both existing and new, including Ola electric and ultraviolet -- Hero electric. Due to increased orders from Bajaj and Yamaha India, we are also increasing our capacity from 214,000 alloy wheels a month to 320,000 alloy wheels a month in our existing Chakan plant near Pune and the production will start in October 2021. As far as Europe is concerned, in quarter 1 of FY '22, we have a EUR 7.13 million business from Porsche, Daimler, Case New Holland and Stellantis. As mentioned in previous investor calls, I would especially like to point out that in the last 3 years, EUR 120 million of business has been won for electric and hybrid cars, which has started -- we've already started in FY '21 and will reach peak volumes in FY '24. Therefore, 50% of existing total out of business value has already been won by us. Out of this EUR 120 million value, EUR 30 million business, 1 is for electric cars for Audi and Porsche and EUR 90 million of business 1 is for hybrid cars for Volkswagen, Daimler, BMW, Fiat Chrysler, which is now Stellantis and Maserati. As mentioned earlier, in the year 2020, our overseas company, Endurance Overseas SRL acquired 99% stake of the 2-wheeler clutch company Adler SPA, and 100% stake of the 2-wheeler brake company Grimeca. Both these acquisitions include all know-how, patents, brand and trademarks, which has held Endurance to enter the 200 cc-plus motorcycle clutch assemblies and brake assemblies market. where the production of brake assemblies is starting next month, in September '21, and the SOP of clutch assemblies will be more in March, April of 2022. I would also like to point out that Endurance both in India and Europe is actively pursuing its focus on gaining access to new technology and focusing on new product organic and inorganic growth. I would also like to mention that Endurance has also entered 2 backward integration product areas, which are import substitutes also. First is the aluminum forging axle clients required by a growing business of inverted front forks, Endurance have entered into a technical collaboration with FGM in Italy and production will start at Aurangabad plant from next month onwards. The second product is wire-braided hoses for ABS applications for mid- and high-end bikes. Happy to inform you that supply has started in June '21 from our Aurangabad plant. Both of our projects will help us in our future profitable growth. In the first quarter of this financial year, our aftermarket sales grew by 270% from INR 169.16 million in the previous year to INR 626.47 million. Aftermarket business was 5.4% of our net India stand-alone sales in this first quarter. And as I mentioned in the past, our focus is to reach 10% of India's stand-alone sales in the next 2 years. We are exporting our aftermarket parts to 30 countries, and we're adding 4 countries in this year, which will make it 34 countries. We also started trading in 2 and 3-wheeler tires for both India and exports. In quarter 1 FY '22, the export sales for India standalone business increased by 141% from INR 150 million in quarter 1 FY '21 to INR 361 million in quarter 1 FY '22. Our target is to do approximately INR 2,500 million of sales in this financial year as far as exports are concerned. Since middle of April '21, we saw lockdowns in states, which has affected our sales in India, but our team has taken full measures on controlling fixed costs, variable costs and raw material costs with a full focus on a positive cash flow. On the environment front, I would especially like to mention that Endurance is striving to be in carbon neutral in plants by effective use of solar power and wind power creating carbon things by driving pre plantation and thereby creating -- and driving use of natural gas and LPG in place of electric power and furnace oil. We're also focusing on lowering highrises generation and to achieve Zero waste to landfill. At Endurance, it will be our continuous endeavor to grow through organic and inorganic growth with a focus on technology upgradation, quality improvement, cost and environment, health and safety. We will do our best to fulfill all our stakeholder expectations by following our 5 values of customer simplicity, integrity, transparency, teamwork and innovation. With his opening remarks, I would like to invite questions from all of you. Thank you.

[Operator Instructions] The first question is from the line of Ronak Sarda from Systematix Shares & Stock.

Sir, a couple of first few questions on the order win side in the India business. So the rubber hose business, which is mentioned that started in June. Will this purely be for captive usage? Or are we supplying it directly to OEM? And along with that, can you explain us how the ABS production will ramp up, let's say, over the next 6 to 9 months?

Yes, sir. So as far as the wire braided hoses are concerned, we started June 21, our supplies are to OEMs. Now definitely, these wire braided hoses are being used even for other suppliers like Bosch -- so -- so we -- our orders are to Bajaj Auto at present and in future will be to other OEMs. But it can be used even for our competition. So we applied with that -- so that is the first part. And the second part for the ABS, of course, we will be starting next month with around maybe 2,000 and going slowly up to 20,000 a month by I think March, April '22. And as you know, we have a capacity of 400,000, which is built up, and of course, we would like to ramp up as fast as possible. But like I mentioned earlier, we have to focus on quality also by way of better process controls in our plants, it's a completely new product, very high-tech products. So we'd like to go step by step say, 2,000, 5,000, 10,000, 15,000 and then 20,000. So that's the way we are planning it, and so that's the plan.

Sure. Sure. And I mean the kind of orders we have for ABS, when do you see reaching full capacity of 400,000. I mean will it be by end FY '23 or?

Yes, I think as our target is end of FY '23. That's our target.

But we have visibility of the orders in hand.

Yes, we are in touch with a lot of people. The market is 3.5 million. Price is cheaper, the technology is matched with Bosch. So I don't see any issue there.

Right. And another question for Massimo. I mean the Europe business has performed the industry growth in a fairly significant manner. So what has driven that? And should we expect this to continue for the entire financial year '22 as well, especially in the scenario where semiconductor issues are now selling among Europe OEMs as well.

Hello. Can you hear me?

Yes.

Okay. So yes, if we have to compare the figures of the first quarter compared to the 2020 is not so useful because, for sure, we have last year, we locked down. But the important thing is that if we compare the first quarter 2021 with 2022, 2019 before the COVID situation, we lost more or less 21% and all the carmakers suffered an important way compared to the previous COVID situation. Let me say, probably the France carmaker and speaking about, they had a very important reduction compared to the German competitor. But at the end of the day, the problem is that the -- in July, we are seeing a reduction of volume, not only compared 2019 but also compared to 2020. And this is due for sure to the semiconductor situation. And let me say, the COVID continues to be a problem in a lot of the country in Europe, but our expectation is to reach more or less a stable situation starting from October. This is the feeling that we are receiving in this moment with -- from our customers. And also speaking with the dealer in the European market, in the last 6 months, there was an important reduction of stock. And certainly that now in some way, we have to increase again the stock to the dealer and we have to increase the production. If you analyze the production of the German manufacturers in the last 3 months in the European market, they reduced 200,000 car the production compared to the previous year. And this is a clear signal that there was an important reduction into the market, not only analyzing the registration because if you analyze the registration of this quarter, Endurance give 100% better compared to the market, which was with the increase of volume compared to the previous year of 104.8% and the market grew 66.7%. But this is due only to the reduction of stock and increase the stock.

Sure. So if we compare our top line growth to, let's say, how the production has been, have you still outperformed the industry for the first quarter?

Absolutely, yes. More or less, my estimation is 15%, but this is an estimation because as you know, we received the information regarding the reduction of stock at the end of the financial year. And also the production is more or less information that we can receive per quarter. And in this moment, we haven't import from the lot of countries, for example, in the U.K., for example, France. We have only the information regarding introduction of the German manufacturers. I can tell you that there was a reduction of 200,000 cars.

Got it. Got it. And Anurang, just a clarification. What was the export revenue for the quarter? And the target was INR 250 crores, right? You mentioned for FY '20?

So far I think exports more instances I think it was 36 -- 361 million INR, 36.1 crores.

And we are targeting INR 250 crores for the full year? Sure. And this will be driven by?

It is -- I mean see, it includes customers like get aftermarket has included KTM, exports, shock absorbers. So to give a view on that.

The next question is from the line of Ashutosh Tiwari from Equirus Securities.

On the aftermarket, we did 63 crores in this quarter versus INR 119 crores got impact, but just on July, I think we're reaching those levels of fourth quarter?

On July, yes. So we are very confident that we should reach the level of fourth quarter. We are quite confident -- few states like in down south paralyze an issue. Still, there are rising cases. I don't think the sale is that significant in Kerala. But things are definitely improving and our target is to reach the quarter 4 sales in the aftermarket. But only there is one -- this thing right here that what happens is that the month of March always sees a very high sales. So of course, our target is, of course, quarter. I mean to answer your question, the target is to reach because we have to make up a lot from quarter 1 in the next 3 quarters. So yes, so as a thought we -- I mean our target is the quarter after market shares.

And secondly, on the ABS side, well, you said that INR 2,000 per month will start from next year, that is ramping up, what would be roughly realizations over there for?

See, I cannot tell you the -- because they know the price, which I cannot tell you. So I cannot tell you the realization, but it's a high value-add item. It's a high value add item.

Okay. And lastly, if I subsidiary numbers, the other expenses jumped quite sharply on a quarter-on-quarter basis if I do consultant stand-alone. So what is the reason behind that? So it was around INR 127 crores in the previous quarter, now INR 155 crores in Q1?

Sorry, which subsidiaries I didn't get the question.

If I do consult my stand-alone And I require other expenses, it was INR 155 crores in this quarter versus INR 127 crores in the previous quarter, while sales in subsidiary kind of remained flat Q-on-Q. So what's the reason behind that?

Okay, you're talking about the overseas now?

Yes, yes, yes. Consolidated minus stand-alone.

I mean, see, I mean what I can say is that India was more affected by the lockdowns. With a 35% decrease in volumes, 28% increase in our top line. And so ultimately, it was the -- I mean it was a business which we -- but if we are talking on the top line, less you know.

No, no, no, I'm talking about other expenses?

Other expenses, okay, or request Mr. Ray to answer that.

Massimo, you're there on the line?

Yes, yes, yes. I can answer [ this ]. No problem.

Yes, yes. The question is the change in -- the first question is the change between material cost percentage and other expenses between quarter 4 and quarter 1.

No problem. I understood, Satrajit. Thank you very much. So the answer is very simple. It's only a question of mix because if you analyze the turnover of this quarter in the first quarter of 2020 '22, the turnover is total to not 62.3%, and in the fourth quarter of 2019, 2020, the total turnover was 61.4%, okay, so an increase of 1.3%. If you analyze the cost of material, we have a reduction compared to the previous quarter only due to the mix because we produce more -- where we have a lot of component that we assembled. In fact, you see the compensation in the line other expenses. You can see that there is 17.5 million compared to 13.4 million over the previous quarter, and is due only to the different mix of production.

And if I may ask, what was the change in realization on a quarter-on-quarter basis basically, I mean, because of the alumina price increase?

If we speak about aluminum, if I consider there is a EUR 0.17 per kilo. The very important impact is compared to the previous financial year because even if we close with 18.2% in terms of EBIT in this quarter. If I do the same analysis with the price of aluminum of the previous financial year, the EBITDA is 19%, 0.8% due to the increase of raw material in our price.

0.8% is because of the increase in the material first.

Sorry?

No, I didn't get you what you said in terms of quarter-on-quarter order inflation due to material?

Yes, if I consider the quarter 4 compared to the quarter 1, there was EUR 0.15 of increase in material. If I consider the first quarter 2021, '22 compared to the first quarter 2020, '21, the difference in 0.4% and has an impact in our EBITDA of 0.8%. We closed with 18.2% should have been 19%, and certain higher compared to the previous financial year, where we closed with 18.5%.

The next question is from the line of Vimal Gohil from Union Mutual Fund.

Sir, just -- just 2 data points. I guess you gave those data points in the call, I probably --One is you spoke about some new orders from the electric 2-wheeler. The new edge electric 2-wheeler OEMs in India. And the second one is on the European car production for Q1 FY '22? And what is the outlook for overall FY '22 in terms of the fast production for Europe?

Okay. So as far as the EVs are concerned, as you know, we have already started with Bajaj Auto, and as well as we have started for the green group for the 3-wheeler EV brake systems. And I can only tell you this much that we are engaged with all the names which I took, whether it's Ola, it is ultraviolet, Hero electric. And I also said we have also got a business from Aptiv, which makes battery packs for Tata Motors and now with Fusion. So we are very, very actively involved for the suspension and breaks and castings with all the players. And of course, as you know, the OEMs are also working. I don't think they're going to lose their SOB, they'll do their best to see they don't lose it to start-ups, the new startups. So we are engaged with OEMs as well as the new companies.

Right, right. Okay. Sir, 1 related question here would be, sir, in the present form of your products, the products that you have in the present form -- If you could just broadly state what portion of your products would be completely ICE dependent and how much was the engine agnostic?

So the only product which is ICE dependent is the clutch. -- for scooters, we have not started. We will start, and we are working with both Hero MotoCorp and HMSI. So the product which will be totally dependent on ICE engine would be the clutch for both I would say, motorcycles and 3-wheelers. So our clutch business, which is approximately 5% of our consolidated business or 7% of our India business is basically 80%, I think, approximately for motorcycles and 20% for 3 wheelers approximately. So unless these motorcycles and 3-wheelers become 100% electric, we won't lose this whole 5% business. I don't see motorcycles happening that fast because of the higher speed levels, higher performance criteria. But scooter and 3-wheelers, of course, as you can see, the -- I mean already the sales are increasing for scooters and 3-wheelers. So that, of course, will be the rider. But to let you know scooters, we have not even started foreseeing. So that doesn't hit us.

Sir, what about castings? -- would they have come -- would they be very relevant in EVs, especially EV scooters, et cetera.

Yes, sure. So basically, what is happening is, first look there issue on the content per vehicle when it comes to the aluminum content in KG. Now what is happening is the type of casting that changes. So if I had for ICE engine cylinder head, cylinder blocks, crankcases and covers. Now you have battery housings, which are lower. You have case transmissions left and right. You have right various types of plates and so there are many types of castings which are there, which are not used today for ICE. So basically, the shape sizes, the type of castings are changing, but the content is not changing. You know what I'm saying.

Right. So the assumption is -- I mean, the outlook is that you'll be able to sort of safeguard your casting business?

Like I mentioned in the past, casting business has so many opportunities, and there are very few players with capabilities.

Be able to engage with these new edge start-ups as well as existing OEMs for their electric vehicle ambitions?

Yes, absolutely. Absolutely. Absolutely because we have been...

Aluminum casting, right?

Sorry.

Yes. So most of them will be looking for aluminum casting because of light-weighting, et cetera. So do you think you're well prepared for that?

Absolutely. We are fully well prepared. In fact, we are getting into structural aluminum castings for 2-wheelers also. So these are new parts we were not doing so far.

Got it. Fair enough. And sir, last question on the European card products, and I missed that number, sorry, car production for the quarter? And what is the outlook for FY '22 Europe?

Okay. So Massimo?

Okay. Yes. So first, it's very difficult to predict the future, but I can tell you 1 thing. We did an exercise months ago in order to prepare the budget of the company. And we consider the actual January, June 2021, plus the actual July, December 2020 in order to have a total financial year. In this case, we are -- to close with 11.8% of the increase in volume compared to the previous financial year, but this is the best estimate. And what we said, we will also be optimistic. If we consider that in July, as I told you before, we have had a reduction of less 24% compared to the previous year in our volume. And this is in each country, in Spain and France, Italy close with minus 19% was the best, German minus 25%, France with minus 35.4%, Spain, minus 29%. And so from my point of view, is absolutely optimistic to say that we can increase the total volume for this financial year, 10%, 11% compared to the previous financial year.

The next question is from the line of Sonal Gupta from L&T Mutual Fund.

So just continuing with the question on castings. Like you said, cylinder heads, cylinder block, et cetera, and you're supplying, I guess, fully machine casting. So these are very high precision castings and the content, therefore, and the value add is, I would think, fairly high. versus that if you were to get into EV structural castings, wouldn't the value add be much lower? I'm just trying to understand.

No, I don't believe so. Because I would say the -- I mean, the EV castings are as complicated are complicated. We'll have similar machines, machining centers with the fixture changes, what we will be doing. So in fact, what I've been told is like battery casings and transmission are more complicated than the existing is what I'm told.

And the -- like you talked about Aptiv also on the battery casing side. So -- That's also on the castings business, right?

Yes. So they are housing, at. So they are housing for the battery pack.

Right. And just on a broader level, I mean, given the acceleration in -- I mean, like, the government clearly showing its intention to accelerate the EV transition. And if we assume that like -- I know you are sort of growing ahead of the industry given your content and the order wins. But if the industry volumes, say, on the ICE side don't really grow beyond FY '23 or something. Then do you still see growth for yourself, I mean, like I'm just trying to understand?

See the growth will come for us from a few points which we're taking into account. One is, we are not supplying all our 4 products to all the OEMs. We are only supplying today to Bajaj, RE and HMSI, all the 3 product areas. Plus, we have to supply to, I mean, all the others, all the 4 products plus, we also have to Bajaj and where we have high SOB, we have to increase our share of business also. Secondly, what is happening is the product mix, which I mentioned in my opening remarks, is changing. I mean the fastest growth I see is in brake segment. Brakes is going to have the CBS for all OEMs, I mean, like I mentioned, we are supplied to each and every OEM for orders. We are setting up a second plant starting next -- starting in September. So -- the question is CBS, then we have the ABS. We have inverted front forks. We have got a new order from HMSI, apart from Bajaj and KTM business increasing, going to paper-based clutches and brakes, CBT for scooters, which is 0 today. Going to fully machine castings, adding a lot of new 4-pillar business like Hyundai and Kia, we have taken INR 250 crores of business, mainly fully machined. And this business is growing. We are adding even a business of -- I will not give the names, but nonautomotive applications, which we had advanced to of getting orders for aluminum casting business, which will be mainly done in our plant in Chennai. So we are looking at a lot of new possibilities which are going to definitely take place for our existing 4 products. Only, of course, concern is if 80% motorcycle -- like our flash business of 80% is for motorcycles. Now whenever that whole 80% become electric, which I don't believe so, because of the high performance criteria and the cost, someday it may happen, I don't know, nobody can predict the future. I don't see any kind of risk for our business, whether it's with existing OEMs or it's with a new start-up with whom we are fully engaged. And they fully recognize our strengths on technology, on pricing, on quality and our ability to introduce the products first, first time right. So they know we're already a leader in our product verticals in the Indian auto component industry, we are fully aware of it. And that's why they are all engaging with us, though we were a bit late in the day. Earlier, we only want to deal with OEMs, as you know, but now we are fully engaged, our marketing is fully, fully engaged.

Right. But just on this again, from an EV perspective, I mean, even on the brake side, I mean, wouldn't you have to go to regenerative braking when you go to EV??. And therefore, is your current like sort of break type really valid for EVs?

The types are similar. And I'll tell you, there's 1 customer looking at even ABS option. I'll just tell you that also. But I've not heard of regenerative brakes so far from any of the 2 or 3 well so far.

Okay. But are we looking at that as building the capability on that?

Once that opportunity comes, we will get that technology. That's for sure. We got to have a line of sight on that. And whether the Indian consumer is willing to spend that kind of money on a 2-wheeler, which with already so many things being added up on a 2-wheeler?

Right. I mean, like because longer term, I would think that, I mean, you would -- because that range is the ultimate issue and in the size of?

Here what happens, I just have to tell you, we are very closely engaged with our OEMs. So today, whatever product upgradations are happening, they are happening with a line of sight which they give us. And they are the best people to tell you how we are going because we are working on many other new products, upgradations. I cannot talk about it, which you will see in the future. So we are always ahead by knowing we sell us in 2 years, 3 years, 4 years what they expect. And then we, accordingly, we get ready for this.

Right, right. No, sir, I mean I think just a point I don't want to sort of discuss this, but just like -- I mean, like there is clearly industries going through a disruptive phase. The existing incumbents could sort of fall behind, right, in terms of their technology road map or their speed of inflection and shift that they expect. So and you could have new players sort of coming in. So just relying on the existing OEMs may not really work.

So that's why I said we are engaged with all the new, I would say, EV players who matter in the 2 and 3-wheeler space, for sure. Four-wheeler yet has not really picked up. You only see the Tata, I think, Nexon, I think, and you have the MG Motors. They are mainly, I think, more into EV. Otherwise, there are hardly any sales of EVs for 4-wheelers. But we are totally -- except for Aptiv, we are engaged for the 4-wheeler battery packs, we are engaged with each and every new player who matters. Like I said, look, they recognize our strengths in our product verticals. So I'm very confident that we will get new business from them also.

The next question is from the line of Nitin Arora from Axis Mutual Fund.

Sir, you talked about the new part, whether it's the OEMs of the startup, and you stated how much EV sold in India and 2-wheelers, the numbers. In aluminum casting, even the new starter which has set up the plant and the product we started and the vendors are known, aluminum-casting vendors are different. I mean collection has been that different players have been already been selected. -- for, let's say, the new startup in like one -- and they are doing pretty good. And there are other admin costs on players who are doing for other players like net trade and turbine there report. What is the reason still not breakthrough has been done in any of the areas, whether it's an OEM or a startup? What will change, in your view, there a new startup like home or an OEM would change the existing suppliers and say, look, let me buy from Endurance? So if you can throw some light, it would be really helpful, sir.

See, see, what I've seen is that the technology and price always gets you into a business, and there is a quality sustenance on customer complaints and warranties. And as I've always said, quality is the highest when the rating for any of the customers. So I think as far as -- I think one of our biggest strengths because of our structure, because of our whole cost structure is -- and because of our purchasing part, we have our own Endurance vendor association. So I think price will be a very key factor to get business. So I believe being cost competitive and having the technology will be a big factor to getting new business even with the new players. And I'm very confident, actually, of being able to get this new business.

The next question is from the line of Pramod Amthe from InCred Capital.

This is with regard to the aluminum casting. In the annual report, you had talked about expanding into non-auto tractor. What is going to drive this in the sense, are there any regulatory changes which are happening or are these the import substitutions you are trying, -- Why is these segments looking for aluminum castings?

No. See, what has happened is that what we call a segment as adjacencies, which are nonautomotive applications. So these are, I would say, new requirements. I would say that I think this make in India drive is basically helping many of the players, foreign players also coming into India and looking and their products have aluminum castings, fortunately. So that is why what we call adjusted tractors is not an adjacency. It's just a new business for us. We were not good at tractors with Mahindra & Mahindra, and we have won this very good business with them. We are very closely interacting with them also for the automotive business. But I will not call tractor as adjacency. I don't know whether it's taken in the part of automotive or not. But if it's not taken as part of automotive, then I would get tractor is adjacency. But I think these are new opportunities coming because of, I think, the Make in India focus, which our Prime Minister has brought in, I think, and there are many new plants which are coming in and we are getting -- we are really engaging with them for large orders. So this will also be, I would say, in castings, the adjacency business will be quite attractive for us in future.