Endurance Technologies Limited (ENDURANCE) Earnings Call Transcript & Summary

Hello, everyone. I'm Arvind Sharma, and I cover India Auto Sector at Citi Research. On behalf of Citi, I welcome you all to Day 2 of the fourth edition of Citi India Autos and EV Investor tour 2023. Before I introduce the speakers today, there is a disclaimer, which I would like to -- which I'd like you to pay attention to. Investments in Security's market are subject to market risks, please read all the related documents carefully before investing. So in this session we have with us today, Mr. Anurang Jain, Managing Director, Endurance; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Satrajit Ray, Director and Group CFO, Endurance; and Mr. Rajkumar Mundra, Treasurer and Head of Investor Relations of the company. On behalf of Citi, I thank all the representatives from Endurance for attending our session. Thank you so much for taking time off your schedule. I'd like to inform all the participants today that this call is only for Citi's institutional clients and closed for media. Also, clients subject to MiFID II regulations will have to comply with the unbundling regulations. Please ask your salesperson for details. Our disclosures have been mailed and are available in case needed. [Operator Instructions]. So that's from my side. And I hand it over to the Endurance management. I'd request Mr. Jain, to please take over for some initial remarks, and then we will open the floor for Q&A. We already have a few questions already on mail. So I intersperse them with the questions on. Over to you, sir.

Yes. Thank you, Arvind. Of course, in fact, I can start by giving a brief snapshot in case they want to know about Endurance, but it'll take me about 5, 10 minutes. So is that okay to give a snapshot or should we get into a question-and-answer session.

An opening remark would be great, sir.

Okay. So I just want to know that I just want everybody knows that we are auto component Tier 1 company we are founded in 1985. We have -- we are in the business of suspension, transmission, [indiscernible] drive shaft weighting and aluminum castings, which is low pressure gravity and high pressure. We are the largest 2- and 3-wheel auto component player in India and also the largest aluminum die casting company in India with a capacity of more than 100,000 metric tons. We are into 4 product areas in India, suspension, transmission, braking as well as castings. And also, we have acquired last year, EV advanced electronics company, which is focusing on EVs, which is the primary product being the battery management system. So that becomes our fifth actually focused area. We have 31 plants. There are 19 plants in India spread in strategic areas, next to clients, and we have 12 plants overseas, which includes plants 8 in Italy, 3 in Germany and 1 in Tunisia, which came with an acquisition we did of a 2-wheeler aftermarket company, which was last year. We are an end-to-end service provider. From design development, testing validation as well as aftersales service. We have very high focus on technology, with a focus on performance, durability and cost. We have already -- we have 36 patents to our name and 94 patents are under approval. We have 5 DSIR approved R&D centers in India and 1 technical center in Turin. High focus on financials. We believe in profitable growth and higher than industrial growth. We are a listed company since October 2016. And of course, our focus is to meet the expectations of all our stakeholders, including all of you on this call. So this is just a brief overview of Endurance, and I would like to invite questions.

Thank you, Mr. Jain. [Operator Instructions] and unmute yourself and ask a question. Just to set the [ bar ] rulings, one question which most people have is what's the demand situation in the 2-wheelers that you are seeing as a leading supplier, what are your early impressions of festive demand in terms of how prepared the OEMs are? Because you already know it before the sales happen in terms of what has been the narrative by the OEMs in terms of preparation of the festive demand?

So I would like to first say that since our listing in October 2016. We at Endurance have always maintained that uncertainty is the new normal, which means we don't know the kind of uncertainties which can hit your business. So we have taken a very conscious call of winning new business. And that's the reason, approximately in the last 4 years, EUR 240 million of business has been won overseas, which I believe more than 80% is for EVs and for hybrid vehicles. And in India, we have won almost INR [ 32,000 million ] worth of new business, out of which 75% is new and 25% is replacement. So that's the reason you're saying whether the 2-wheeler or 3-wheel or 4-wheeler industry volumes are down or not. We are growing higher than industry and with a profitable growth. If you see our quarter 1, in spite of, I would say the 2-wheeler industry in India are not doing well. In fact, there has been a very small growth of 1.6%. Endurance in India has grown 13.3%, consolidated 16.6% -- 16.4%. But like I said, profitable growth, we have grown 35.2% in terms of EBITDA, consolidated 38.2%. And in terms of profit after tax, we have grown 61.3% compared -- and this is compared to the previous year's first quarter, and 58.1% consolidated. So a very high focus on profitable growth and in winning new business. So to answer your question, is we are winning new business, and we are going with the trends of the industry, which is also EV and hybrid overseas and EV in India. As far as the demand situation for festive is concerned, of course, we are seeing a month-to-month growth, but again, like I said, we cannot run our company based on festive demands. We have to consistently grow our company quarter-to-quarter, and that is the focus we have in Endurance.

Sure, sir. Thank you for this. I'm sure the focus on profitable growth and winning new business is there. Sir, the other question is, you have spoken about this in the conference calls [ earlier ], but content per vehicle, lots of question on content per vehicle. How is it changing and will it be possible for you to share the content per vehicle across the 4 segments? Will it be possible, if not a broad ballpark of the overall content per vehicle? How is it changing?

No, see -- see if you see other legacy products, of course, the front fork, the shock absorbers, the brakes, the clutch assemblies and of course, the castings, which are there. And like I said that based on the x factory selling price, 12% to 15% should be the right value. Now it depends upon the type of products. Now for example, if you see more than a 125cc bike that also has an ABS. So that increases the content of it. And in case now, look we have some customers like Bajaj going for inverted front forks on their higher-end Pulsars, 200 CC plus Pulsars. Now that price -- so that pricing is, of course, much higher, inverted front fork, though it is a value engineered inverted front fork, not like the KTM one, the value add is much higher. So I think if you see our focus is growing the content per vehicle. We want to move towards 12% to 15%, which today, Bajaj is there. RE must be there at about 11%. This is on the ex-selling factory price. But rest, I think we have a long way to go. We, of course, as far as TVS is concerned, we have done almost INR 5,000 million of new business, and this is growing as we speak. So that content also should go up. Right now, it must be about say 4%. Other customers would be 5% to 7%. Of course, HMSI, if I take grades and clutches, it could be more towards 8% to 8.5%. So we have a long way to go as we are building new orders for ABS, for inverted front forks and also for brake systems across. For example, we have just started supplying to Yamaha for their scooters brake system. There's a very large order, almost 400,000 brake systems per annum. Next year, we are starting for Suzuki, which is a [ INR 1400 million ] order starting from July '24. So all these new order wins are going to add more value as far as content per vehicle is concerned. When we talk about an EV, we will, of course, not have the clutch, but clutch, as you know, is a very small part of our business, about 5%. But we will be -- but it [ will be ] added by EV specific electronic products like the BMS. We're also focusing on new electronic products to launch in the next 1 year. And so apart from suspension, brakes, castings, we will also had our Maxwell BMS as well as other electronic products as we go forward. And also, I would say that -- so if you see -- see if I can comment on the future growth areas or should I answer that separately, because that's a bit linked to this question. But content per vehicle now, I'll even tell you about some future vehicles. If you say Harley-Davidson, our content per vehicle is almost INR 10,000. I don't know the selling price and also I don't know, what percentage it is. The Chetak is also INR 10,000. The Triumph which has just been launched, it's about INR 28,000. So what I'm going to say is we have -- luckily, we have EV agnostic products, except for the clutch with 5% of our business. But getting into the higher end ABS inverted front forks, acquiring Maxwell, getting into BMS and other products -- the content will go up, plus the brake assemblies and Front forks for scooters. That business is going up, like I said, for Yamaha and for Suzuki. So the idea is that all our 5 product segments now should be supply to all the OEMs, which today is only Honda, Royal Enfield and Bajaj. So we have a long way -- so the growth potential is quite high when you supply all your [ core ] product areas to the OEMs here.

Participants, again, online. While I'll take the questions that I've got on mail, but in an in case somebody has a question for the team from Endurance. [Operator Instructions] Sir, one of the things that has worked over the recent times is the import substitution, I think it's been a strong point given you replace quality manufacturing with more expensive and slightly unpredictable imported parts. You've already seen that in ABS and alloy wheels. Is there any other component or subsystem that you see would be a potential for import substitution whether it's in the current portfolio or something that you think can be a part of [ interventional ] portfolio.

So if you see, it is import substitution is helping us not only in alloy wheel or brakes but it is also helping us to get into backward integration. For example, we are a large manufacturer of inverted front forks. Now we used to import from Italian and Austrian suppliers the axle clamps, which were aluminum forged. Now we make it in-house with the collaboration with FGM, it has given us good savings. And this is a focus towards profitable growth. Now for the ABS, for example, the steel braided hoses used to be imported from a Spanish company. We started steel braided hoses manufacturing already. The [ valves ] used to be imported for the ABS. We started that in March '23. And now in future, for example, with the help of the acquisition of Maxwell also the ECU for the ABS, we want -- we plan to manufacture ourselves. Similarly, for the clutch because clutch I think, is here to stay because the motorcycle EVs are not seeing much traction in India. It will take time, but there also, we have got into backward integration instead of importing it from the U.S. and China. But of course, that will continue, but we are putting up our own small plant for paper manufacturing. So it's also a cost saving to us helping us to a profitable growth. And in these technology areas also making us self-sufficient in terms of technology, but we don't have to depend on suppliers and the increased prices. So we are actually safeguarding ourselves and really focusing on the profit growth. So import substitution is not only for our main products, but even the back-ended products, which are helping us for profitable growth in our main products like the ABS and the inverted front forks and the clutch assemblies in future.

Sure. And I think the other -- the next question is probably what you were alluding to in the earlier part. Is there any other segment or component that you are planning to diversify, which could be a major addition to Endurance's current portfolio? And I know if you cannot talk about a specific component, but some sort of a segment or some [ parallel ] line of parts that you plan to diversify or think is attractive.

See, one thing which I can tell you see, we are growing in all the areas. I've already told you about in ABS and inverted front forks and brake assemblies is huge. I mean, brakes we have gone to almost now 6.2 million brake assemblies capacity, which will be realized in the next, I would say, 6 months, 8 months, an 8.1 million disks. So huge growth area for this inverted front forks as we are value engineering and getting them to the Indian market to about Bajaj 200 plus are already started using inverted front forks. When I talk about TVS, we've got an inverted front fork new order, which will start in first quarter of FY '24. So the suspension is increasing, the brakes is increasing. Transmission, I mean, we are introducing a new clutch with assistant slip clutch with the acquisition of Adler in 2020, which will give us stiff competition in a much better clutch system to the customers. This we plan to start in the first quarter of the next financial year, and we engage with all the OEMs for that. So this will also add to the content per vehicle once we go into the assistant slip clutch as well which is there. But I would say a very large growth will come from aluminum castings. And there's a huge focus on not only 2-wheeler alloy wheels, where today, though we have mentioned that 4.5 million alloy wheels per annum is what we have capacity, but we've already reached it. And now we are further growing this capacity with new orders of about 400 million from Royal Enfield and even other customers like TVS and all are asking for more wheels. So we are increasing the capacity in the new plant. So you will see in aluminum cast a 2-wheeler alloy wheels, you'll see we go towards 100% machine parts from 70% in the 2- and 3-wheeler space. 4-wheeler is a very large focus for us, domestic as well as for exports, where you see a large growth of business. We are just, I mean, recently won -- we just got a LOI from Punch powertrain, which is owned by Stellantis, we had to [indiscernible] merger and a Chinese company, it was originally a Belgian company. It started operations in India. So a INR 600 million business, we just got it. Of course, I didn't announce it in the investor call, but what I'm just telling you about our focus on castings, Hyundai, Kia, Tata Motors, Mahindra, we are focusing now on exports to Ford and to other customers. So 4-wheeler castings will be a major focus for growth for us. Machine casting will be a future growth. 2-wheeler alloy wheels will be a future growth and even structural castings, even for 2- and 3-wheelers like you have structural fairings or you have subframes or you have swing arms. So these -- we have won large orders for this. Also for the -- for focus on EV, parts if you see castings. Castings that are almost 9 parts in a 2-wheeler compared to -- I mean, the EV 2-wheeler compared to 7 in ICE 2-wheeler. 3-wheeler, you have 11 parts compared to 7 parts in ICE 3-wheeler. So there will be a large focus on casting. So people like Ather have introduced new casting like the side channel, which we are supplying from a Vallam plant. So I would say EV casting parts also will be a very large focus, and we see the content per vehicle going up in EVs because of castings. Also, in terms of -- also, another area for our growth would be the aluminum forgings, which is a light-weight material. We have recently won an order from Jaguar Land Rover, which is a direct export to U.K., and that's for a EV passenger vehicle. So though we started aluminum forgings as a backward integration for our inverted front forks. But now we are getting new orders directly from OEM because of part of light weighting for EVs. So this becomes also a very -- I mean, a very potential growth area for us. So I would say all these areas are growth, of course, the drive shaft, which we started, as you know, last year, we are winning new businesses, and this is mainly for 3- and 4-wheeler. So this is another focus area part of our transmission segment, apart from the clutch, which is there. And of course, we are looking for organic and inorganic growth areas in technology as well as EV agnostic areas, which are large focus on 4 wheelers, okay? I cannot tell you products and things like that, but whether it's a large focus on 4 wheelers, both organic and inorganic, in technology and EV agnostic areas. This is very, very important for us. So these are some of the -- I mean, focus areas we have in India.

One question is on customer concentration. Bajaj is still by far the largest. You did share that in the 1Q FY '24 presentation as well. So first to comment on that, but I'll probably also add the second part, a very similar question. We see that HMSI has fallen a bit, while TVS has grown on a Y-o-Y basis as per the 1Q FY '24 results. Now is that a trend that we should expect? Or was there a blip in 1Q and HMSI should be back? So yes, your views on the customer concentration and the trends that we witnessed in 1Q FY '24?

See, HMSI is back because when they grow, we grow much higher because of all our core product areas being supplied to them. When they don't do well, then our degrowth is more than that. That's what happens in HMSI. Now they are back to, I think, normal from July, and there were very good growth, I would say, from August to March. The schedules we have got. So now we're looking to see that we are back second, third, fourth quarter will be back with higher than industry growth as far as HMSI is concerned. And same thing you will see even for HMC. Your question was only HMSI or was...

No. Sir, it was on a broader customer concentration. Is there any target in mind like some component makers have that x percent would be the threshold. Is there something that in mind? Or is it something which is more organic grow as per the orders that you get?

See, what happens is Bajaj has been a leader in introducing us to all the new technologies. Whether it's inverted front fork, it's rear mono shocks, high-end, with the help of KTM technology, for this ABS. They are the ones who have always taken the lead. So for us, what happens is that in spite you see -- now if you see with Bajaj, we have really grown in spite of them not doing too well in quarter 1, isn't it? We can grow with Bajaj because the content per vehicle is going up with that. Inverted front forks, ABS, brake assemblies, and higher-end brake assemblies for 200 cc plus brakes, which we were not present until last year. So what is happening is that -- no, because of that, the value is also going up. I've always said that Bajaj is a strength to us because financially very strong, payments on time, very, very strong customer and gives us the first opportunity. So for us, I cannot lose any opportunity from Bajaj. Our focus is to win business with other OEMs. Like I said, large focus on 4-wheeler, large focus on EV, large focus on supplying all our product areas to all the customers. So this is a growth area and looking at organic and inorganic growth, like I said, mainly for 4-wheelers and for products which are technology and EV agnostic. So Bajaj, if it's high, I think -- and we are really focusing on getting a lot of non-Bajaj customers. And that's why on the investor call, if you see me, I always give figures for non-Bajaj new business first. So like I said last time, INR 370 million in quarter 1 per annum. We have won, which is non-Bajaj. I didn't talk about this thing, new business wins for Bajaj, whether it's Chetak, whether it's Triumph, whether it's their high-end bikes. So I don't talk about that. But those business wins anyway are coming. So my focus when I talk on an investor call is non-Bajaj. And we -- like I've said, we've already won approximately INR 32,000 million of business in India, which is non-Bajaj in the last 4 years. And that's why you're seeing this growth in spite of a 2-wheeler industry not doing well. So like I said, we cannot depend on the outside world or external factors. We are going after business at Endurance. And luckily, most of our products, except clutch is 5% is all EV agnostic. So huge opportunity for castings, brakes, suspension. And now with Maxwell, the EV specific products.

[Operator Instructions] Sir, there is a question on the order wins, and I don't know how to put it, but how concrete are the order wins? When you talk about, say, x amount of orders, 1, that's on a per annum revenue basis. Is that dependent on the specific model? And if suppose that model sales more or high, can this number also change? So I think the question is on the mechanism of order wins and how do you account for it?

Yes. So the value which we gave you is based on the LOI volume and value, price finalist. So it's based on that. So when I tell you, INR 32,000 million is based on the LOI. Now, that model can do better or it can do worse. That only time tells but we've also seen that sometimes when they give us a projection for a new model, it doesn't do well, the existing models are doing better. Which we were phasing out, which are called as a replacement business, which I've said in the INR 32,000 million, 25% was a replacement. So sometimes the new models don't do well, the existing are doing. You know what I'm saying. So the way we tell you the business win is based on the LOI value and the volumes and the price. So that's the basis. It can do better, but it can do worse, that only time can tell.

Sure. And sir, staying on the same question, this is from my side. When we have a certain value of the order and by the time the order starts fructifying. What is the time lag between the -- between -- if there's a fluctuation in commodity cost? And how do you pass it through? So is there a time lag? Or is it like on a continuous basis at every month or thing that you are...

The lag is a quarter normally, except for proprietary in HMSI, which is 6 months, otherwise, it's always quarter, we are focusing to go towards quarterly now. With also HMSI, we have made a request, so let's see what happens. But mostly, [indiscernible] this quarter, mostly.

Sure. question on the European front, and I'll also request you and Massimo to add to it. What's the demand situation in Europe in the conference call for the quarter, you spoke of soft demand in the near-term. When can we expect a recovery? And what are the signs that one should look out for?

Okay. So the situation in this moment, the demand in Europe is not so good due to the recession, the situation of interest costs that are very high because as you know, the European bank is trying following also the federal reserve to increase the interest cost to offset the inflation. And so for sure, in this moment, the situation of new order is not positive. Even if the market closed in the previous quarter in a good way because the market grew 18% in Europe in each country. But as I told you during the conference call, this is due to the fact that in this moment, all the OEMs are registering car order 24 months ago. Because as you know, we have had a lot of problem in terms of the shortage of semiconductor, and in the past, the OEM produced this car, assembled this car without specific chip, without specific semiconductor. And now that fortunately, this problem is solved, they are registering this car. And for this reason, there is this contract between the production and the registration. If you see the production basically in Germany, there was a reduction of 15% in this moment. Germany is the worst situation in Europe in terms of production capacity. And this is due to the fact that the dealers are not taking new business. Apparently, this situation will go ahead in the next month for sure. And I hope in 2024 to recover part of this volume. Please consider that even if we close with the [indiscernible] of increase compared to the previous year, we are doing more or less 20% less compared to the pre-COVID situation. So in this moment, the European market is not so good in terms of volume, but in [indiscernible], we are performing better compared to the market because if you consider the previous quarter, only part, only production without tooling and [indiscernible] close with 20% of increase in terms of turnover. And also for the next month, the expectations are very positive due to the important business acquired, as Mr. Jain told you before, more or less [ EUR 240 million ] in the last year. In this moment, we are developing basically 100% of the project in the electric field for Volkswagen Group, not only Volkswagen, but also Porsche, Audi, Bentley, Fiat, [indiscernible]. So all the brand and we are producing also for Mercedes and also for Stellantis, a lot of new components that will start starting from September 2024. And so, in this moment, our program is only to install the production capacity as soon as possible and to respect the timing that we received from the customer also because in this moment, the people want to buy Electric Car. This is the feeling to the market, till 2 years ago, the situation -- this situation was unpredictable. But in the previous quarter, the market reached 15% only for electrical vehicle. The people want to buy electrical vehicles. And this is one of the reasons why a lot of Chinese customers are entering in Europe with competence expertise with the car very competitive in terms of price. And this could be a problem for the future. For this reason, all the OEMs in Europe are investing a lot of money in order to enter into the market with the Electrical vehicle. As in Europe, we are in 100% of this project, and this is absolutely important from the point of view.

Thank you Massimo. There's a question on the market share part, and it's been asked earlier as well. But is it possible to share details on what would be Endurance's market share in Europe as well as if possible in India in the 4 segments?

Well, I can tell you, as far as India is concerned, we are 40% in front forks, 37% in shock absorbers, transmission, we are at 15%, brake systems, I think we are at 43% and about 59% in disks. These figures could be slightly, I think, lower but higher -- but these figures will increase, when we start supplying all our core areas to all the customers and the increase in 2-wheeler EV with Maxwell products. These figures will increase.

Sir, in casting, is there -- I mean, I know casting is too.

Very difficult, it's too wide. There are very few players of our size, there are hardly 4 more. Rest are many, many small casting players. I can only say we have a capacity of 100,000 metric tons, we are the largest, which has been -- which we get a letter from Alucast, there's like a die-casting association of India. So they tell us, otherwise, there's no way that we can know we are the largest. So there's no way we can know because all our castings, we do larger castings. So it's very difficult.

And is it possible to share on -- in Europe as well? Or is it again too varied product set to talk about market share there?

No, no. In Europe, it's very difficult to speak about market share, but I can tell you one thing. Considering the first quarter of the previous financial year, Volkswagen Group was with 27%, Stellantis 18%, BMW 7% and Mercedes 7%. It should means that our 4 major customers had more or less 70% of the total market in Europe. As in Endurance overseas, in 90% of our product range, we have 100% of the business. We have no competitor. We are the sole supplier for 100% of the business. And so you can imagine what does it mean.

So Massimo, these numbers that you spoke about, they are the wallet share. So for your line of product side, VW 27%, Stellantis?

In Europe, the total market of our major customer is more or less 70% of the total market. The 4 customers do more or less 70% of the total market. In this business, in this relationship with them -- the relationship with them, we have 100% of the total business. We are the sole supplier for 100% of the business. And so it means that, if Mercedes as, for example, 6% of the total European market for the product of Endurance overseas, we have 6% of the total market. For Volkswagen Group is the same, 27%. It means that we enter in the total volume registered in Europe with the same share of the OEM because we are the sole supplier.

I think, again, a question probably for both Indian and European businesses. What should be your current capacity utilization? If you could throw more light on the potential margin expansion due to higher operating leverage, what's the scope there from the current levels?

See, I think then, okay. First, should Massimo, would you like to go first?

Yes. So in terms of margin, let me say, we call the previous quarter with 16.1%. In this moment, we are recovering the profitability compared to the previous financial year where, as you know, we have had several problems over -- with electricity with the gas energy. Now the situation is not comparable with 2019, 2020, but is absolutely under control. From my point of view, for sure, there will be an increase of our EBITDA due to the fact that in this moment, we are taking business 100% machine, and so they are the values as compared to the past where we have had even if small quantity. But in the past, we had more or less 15%, 20% of our product [ range ] in the casting field. In this moment, we are taking the electric business only part completing machine. So the value will be higher compared to the past. And the second point is that in this moment, we are acquiring business with high level of volume. And as probably now, this is one of the peculiarity of Endurance overseas. We are specializing the high level of volume because we have a high level of automation. And so it means that with the higher volume, we are able to increase our contribution margin compared to the fixed cost. And for this reason, my prediction is that in the next months and also in the next financial year, we have been able to recover the profitability that we have had in the past because as you know, in the financial year 2019, 2020, we reached also 18%, 19% of EBITDA. In this moment, I don't see any kind of problem to come back to this situation.

And I believe that if the volumes also rise, you could have even further operating leverages, is that right understanding?

No. Let me say -- about the volume, it depends on the market. But as Mr. Jain told you before, in this moment, if the new model in electric are not so appeal in terms of price, it means that we will continue to produce the internal combustion engine component. And so from a point of view, it's only a question of the reaction of the market. For sure, I can tell you one thing. In this moment, if you want to buy an electric car in Europe, the only way is to receive the incentive or subsidy from the government. If the government want to go ahead as per the decision to stop the production of internal combustion engines starting from [ 2035 ]. If they want to increase the appeal of electrical vehicle in this moment, they have to put money into the market. Otherwise, there are no solutions. But I can tell you that the appeal of the customer is for electrical vehicles. The people want to buy electrical vehicle because they don't want to have any kind of problem for the future. This is the feeling into the market.

And so Massimo, what would be the broad capacity utilization in Europe as of now.

In terms of -- also in this case, very difficult because if we consider an internal combustion engine, probably for specific products, we have 40%, 50% for example, in the past, we had more or less 40% of in the diesel technology. Today, the diesel technology reached in the previous quarter, 15% of the total market share, more or less unlike compared to the electrical vehicle. But if we speak about product, for example, in the electric component, Porsche Taycan, Audi e-tron, in this moment, we are working 6 days per week. And so it means that our situation is more or less 100% so it depends on its product.

And sir, if you could also talk a bit about the utilization levels in India.

Yes. So in our 12 plants in Maharashtra, 9 in Aurangabad, 3 in Pune and 2 in Tamil Nadu. These plants are occupied almost 75% to 85%. So here, we have better economies of scale. But if I see the outstation plants, Gujarat, Karnataka and Pantnagar that is between 50% to 65%. So that is where we have -- of course that will improve during the festive season for sure. So this is where our focus on getting new orders in these plants and making them multiproduct because you need economies of scale. Like I said, the profit comes from the plants. So this is where we have to focus and work hard.

So you said 55% to 60%, right?

I said 50% to 65% in the outstation plants. Gujarat Karnataka, and in Uttarakhand which is Pantnagar.

We have a question from Venkatesh Sanjiv. Venkatesh, can you please unmute and ask your question.

Just a couple of questions, sir. You mentioned a long list of customers in India. Is Ola, one of the customers, like do you work with them?

Ola, not yet -- but I would say, TVS and Ather and Ampere, Greaves Electric, Mahindra Electric, Okinawa, all the others. But our focus is also on Ola and on others let's see when the opportunity comes. But Ola is not there. I mean -- I mean to answer your question.

So is it because Ola doesn't outsource these manufacturing they do it with in-house? Or is it because somebody else?

To be honest, that they have reasons -- I mean, in the sense, sometimes they need only a part of the brake assembly, for example, I will not talk too much on it, it's not correct. Now we are a complete assembly maker. Because we take accountability for the braking system. To just give you an example that we cannot supply in parts, looking at the master cylinder, caliper, disk, everything. I'm just giving you an example. So that is something also which is an issue.

Right. Okay. I mean just given that EV is an area.

They may do it in-house. I don't know. What's their plan.

Right. No given EVs, your focused area, and they are the largest players right now at least in India.

But it's still a long way to go. It's just a start, a long way to go. All the OEMs, HMSI, I would say, Bajaj, Royal Enfield, all are coming in. So I think like next 3 to 5 years should be very, very exciting. And we are in with everybody who matters.

So that actually leads me to my second question. Is there any segment or any product which could, at some point, be of competitive nature that somebody may not come to you for business because you supply it to their competitor in the market. Is that matter at all in the space or it doesn't.

No, no. That is not the case at all. We are not seeing that happening at all.

Right. So [ Eicher ] wouldn't mind giving you business, although you would be working for Triumph in their competing segment, so that doesn't matter at all.

Not at all. We are -- I think very important supply for Royal Enfield. And you take the case of HMC and Harley-Davidson, for example, and Bajaj Triumph, we have got orders from both.

How does it actually work? I mean are there nondisclosure clauses which you have to complete with the clients or...

So of course, when you are going in for a development, they have an NDA, which is normally signed where certain aspects of sensitive technology cannot be shared. But having said that, in the proprietary business, most of the technologies is ours. So we are the ones who are contributing more in terms of technology. So for proprietary though we have this, I mean, NDA clauses agreements, but I think it's more of working together to come up with these -- with a good quality product.

Next, we have a question from Prerna Goenka.

Yes. My question is more generic on the electric vehicles progress in India. So basically just wanted your view on how this is progressing in terms of different segments. We know that 2-wheelers are the largest segment and gaining a lot of traction in terms of EVs. But is there a similar traction as well in 4-wheelers or any other segments?

So as far as scooter is concerned, of course, we are seeing a very good traction in of course, in scooters and in 3-wheelers. These are 2 areas with great traction. Tata, Mahindra, I would say, are leading the way for hybrid vehicles, even EV in India. And because -- and in aluminum castings, we are really very strategic, I would say, supplier there and winning new orders. So the traction we are seeing -- and of course, we are also Hyundai, about Hyundai and Kia, which are also into hybrid, and they are coming up with EV vehicles. So I would say our 4 largest customers in 4-wheeler, Hyundai, Kia, Tata and Mahindra. We are definitely seeing a traction from these 4. Of course, we have a focus now on Maruti, we want to -- we already supplying them something we have a vendor [indiscernible], but we have a lot of work to be done there. But the traction we are really seeing is on, to be honest, on the scooters and 3-wheelers as far as the EV space is concerned.

Okay. Okay. And sir, in terms of your business, like how do you see EVs, say, 5 years down the line contributing to your revenue.

See, I think it will depend upon how the EVs will do. Of course, I think our Maxwell EV products will substitute the clutch, is the way we see it. And I think it will all depend on the growth. It's very important that we are involved with all the major EV makers, including our existing OEMs like Bajaj, TVS and Royal Enfield where, of course, already we are winning new orders. But what I'm saying is it will also depend because we don't see so much of a traction in -- I mean motorcycles. Though scooters as a percentage has gained in the total 2-wheeler market. It's about, I think, 29% in the first quarter. So that's slightly gained. But motorcycle is still at 69%. And BMS is [indiscernible], but we are not seeing so much of a traction in motorcycles yet. Maybe it's a total cost of ownership, the cost of, I think, the battery, the battery pack, which is very high because the because the speed requirements -- or performance requirements are higher in the [ motor vehicle ]. So I think it all depends how quickly the motorcycle traction is seen, how the scooters do well now with the pain to subsidy, 70% going out balance also by next year, whether there will be a new [ pain to ] subsidy or I know that a lot of the scooter OEMs are downsizing their battery pack systems and doing value engineering as we speak. So that will help to grow the scooter sales for sure in the EV segment. But I think motorcycles have to do really well for it, to really do well. I would say, when they talk of 2-wheeler, today, it's only scooters, motorcycles, we don't see it. 3-wheelers we see it. So I think time will tell. I think the question of costs also further going down for the battery pack as a whole. In spite it has gone down substantially, I would say, in the last 2 weeks. But still it's very, very high. It's almost, I think, 50% of the cost of the vehicle, what I'm told. So I think so we'll see how it works out. As far as Endurance is concerned, we are doing a part of this journey. The important part of this journey, both in India and Europe. Europe already we are there. India, we are really working hard to be there.

Thank you, Prerna. participants. We have actually past the 5 minutes deadline. A couple of questions I have on mail. [Operator Instructions]. Else, I will take some liberty and ask 2 questions, I'll probably club them together. First is a question on commodity cost trends and this is asked quite often. Where do you think they are headed to as a supply because you have a pass-through clause. And how do you think it will impact the margins going ahead on the commodity part?

Yes, yes. So in India, of course, in quarter 1, we have seen aluminum going down by 9%, which is a very large part of our purchasing in commodities and steel by about 1.8% or 2%. And we see that it's going down. The trend is going down as of now. So let's hope it continues. And that's why you see better margins also from India compared to the previous year -- previous year first quarter. So like I said, that mathematically, you'll see the percentage going up as the commodity prices go down. So even overall, if you see the RMC percentage sales in India went down by 2%. And that's why it look -- it had that impact on it. But if you see the good part is if you see the growth in EBITDA and PAT in absolute value of [ amount ] terms, that has substantially grown, which is very, very important. Grown much higher than the industry, like I said, in India, 13.3% growth in income, but 35.2% growth in EBITDA and 61.3% growth in PAT, that shows the strength of the company.

Just 1 last question. Is it possible to discuss the difference in profitability between an EV and ICE. I know it's not a one-on-one comparison, but if say an ice scooter and EV scooter, the same component, what would be the margin difference between the 2?

I cannot tell you the margin difference, but I can tell you that the pricing is better in EV. But having said that, let's see when the volumes increase, the volumes become like ICE, then definitely, we'll have to be more -- we'll have to offer lower prices, but we don't know and only future will tell. But it will depend on how much the volumes go up because ultimately, pricing depends on the business line, the volumes. So -- but we won't mind. I mean to pass on when the volumes go up, and we don't mind passing on, with the prices similar to ICE. But right now, the prices are higher, of course.

I wish that we have slightly accelerated the 50 minutes timeline. But thank you, Mr. Jain, Massimo, Mr. Ray and Raj for joining in. Thank you so much. On behalf of Citi, I conclude the session. Thank you to all the participants for joining as well. I'm sure it was insightful and valuable. Thank you so much. Have a great ahead.

Thank you. Thank you for your time.