Endurance Technologies Limited (ENDURANCE) Earnings Call Transcript & Summary

Thanks. Thanks, everyone, for joining us today. Though many of you are familiar with the company, we will run you through a quick presentation, and then you can address your questions to Mr. Gehaney and to me. So some of you may have seen this corporate presentation, which we put up on the website, the usual cautionary statement. So there's a recording device here. The meeting's being recorded. We'll first start with the company's snapshots. So like many of you know, we started in 1985, an aluminum die-casting company. And today, we are into 4 key product categories. Apart from die-casting, we are into suspension and braking systems, where we are the market leaders, and also transmissions. And through Maxwell, we've got into advanced electronics. We focus a lot on R&D, which is why we have 5 DSIR approved R&D facilities in India, 2 tech centers in Italy and a proving ground, we'll talk about the proving ground later. In India, our key customers or a market that we address in the bigger ways is 2-wheels and 3-wheelers, but we also have a presence in 4-wheelers. In Europe, which is Italy and Germany, where our plants are, our key customers are into 4-wheelers. In the last couple of years, we've been into 2-wheelers also in Europe. We have 19 plants in India, 12 in overseas, 11 in Europe and 1 small plant in Tunisia. We spoken to you about R&D. We are a complete solutions provider, which also we'll cover in greater detail later. And of course, you would have seen our financial numbers where, over the number of years, we've grown in terms of our networks through regularly being profitable, and today we have a deleveraged balance sheet. In India, we have clean corporate structure. It's only Endurance Technologies Limited, the listed company, where almost all the operations reside in India. We have one subsidiary, which is Maxwell, which we acquired last year. We've increased our stake in Maxwell from 51% to 56%. Similarly, in Germany, we have one legal entity, which is the operating entity. In Italy, we have a holding and a subsidiary structure because we made a number of acquisitions in Italy over the years. So our holding company is called EOSrl. And then we have multiple companies in Italy, which do aluminum die-casting [indiscernible] of the aluminum die-cast parts. And we also have companies in speciality engineering, which is a plastic parts, which supplies to automotive as well as to certain other end users. And then of late, we have acquired companies in the 2-wheeler space. So Endurance Adler, Frenotecnica and New Fren, we produce or they sell parts to the 2-wheeler space. Well, Endurance Adler sells to OEMs as well as to the auto market. In the case of Frenotecnica and New Fren, their focus is the aftermarket.

I'm okay. [indiscernible].

Yes. So we spoke to you about the fact that we have 19 plants in India, 11 in Europe, 5 R&D facilities in India. We have almost 4,000 employees in India, and roughly 850 employees in Europe. This slide tells you about the journey, the fact that our first company was incorporated in FY '82. And then over the years, while today we have a retail corporate structure in India, we've grown by setting up new companies, setting up a JV with Adler for clutches. But subsequently, these companies in India have been merged into what is today, Endurance Technologies Limited. Many of you would know that we had brought in a private equity player in FY '07 that was Standard Chartered Private Equity. And when Standard Chartered existed in FY '12, we brought in Actis as [indiscernible]. At that time, we had attempted an IPO, but that didn't sail through. Finally, we did an IPO in 2016. And in 2019, the promoter has valued offer for sale. So today, we are 75% held by the promoter, 25% by the public. The next slide talks about the fact that, over the years, we've built a number of plants, that's how we have 19 plants in India and 11 in Europe, and we also build a number of R&D centers. I was telling about the proving ground. So this is a very unique thing. There's no other auto ancillary company in India, which has a proving ground of this scale. So you will see that this has various phases. So there are surfaces which are straight, where you can drive a vehicle at very great speed and [ test the vehicle ]. You have these twists and turns for the maneuverability of the bikes. So when we build a suspension or on other parts, that should not hamper the maneuverability of the bikes, and that is something we take care of. We have -- you can see here very well, but these are different [ inclines ]. So these are [ 5 roads ] at different inclines, but then that is used to test our clutches. And then there are dust tracks and wet surfaces and moist environments that have been created where you can the vehicles on various surfaces. So this is very unique to Endurance, and we are able to help the OEM bring the product to market much faster because we have these kind of testing facilities. We are a complete solutions provider. We design and develop our products very much in conjunction with our OEM customers. After that, we test, validate before the manufacturing actually starts. We focus a lot on on-site delivery and aftersales service, which includes [indiscernible] being present in the aftermarket. We have a wide range of products. So like I told you, our legacy products are in 4 categories. We have aluminum die-casting, which also includes alloy wheels. And we are also into suspension, brake, where we have -- we are the leading players in the market, and we are also a leading player in clutches. So these are our leading legacy products. What we have recently added is ABS. So the ABS modulators have got added to the clutches. We recently added 3-wheeler driveshafts, BMS by acquiring Maxwell. We've added aluminum forgings, which we started on the backward integration project because this -- the front forks, the forgings here, we were earlier importing. And then we decided to build the forgings for our front forks in-house. Now we've got third-party orders for forgings from Hero MotoCorp [ JLR ]. Our brakes are largely sold to bikes up to 150 cc, 175 cc. We are not so much present in the 200 cc plus market until recently. We recently -- in 2020, we acquired Grimeca. And after that, we have been selling Grimeca brakes in the 200 cc plus market. Recently, within aluminum castings, we've been doing for automotive application. What we've done in the recent past is, we've added customers in the EV space and on the non-auto space, which is generators and cellphone [ towers ]. What we plan to do in the future? Of course, we have plans for more products. But what we've been speaking about is the dual channel ABS. So the ABS, which we currently do is for single channel usage. We are on course to very soon deliver the dual channel ABS. Our driveshaft is currently used for 3-wheeler applications. We have plans going to the 4-wheeler applications as well. Our clutches are largely for the sub 200 cc segment. Through Adler's APTC technology, we plan to penetrate the 200 cc plus segment. Embedded electronics. You know ABS and BMS has embedded electronics. So we've made our first steps into embedded electronics. And a lot of the parts in future vehicles will have more and more embedded electronics, and we plan to be in that space. One such electronic parts is the suspensions, where we are the leader in the country, but we are not yet into embedded electronics and suspensions. So this is the way ahead. Of course, when we look at the future, we would plan to launch more products. It could come by way of doing technology tie-ups. It could come by way of doing M&A., or it could come by way of hiring resources in half, which would then build the technologies. This gives us graphically where we are in our 4 products. So most of you would be familiar of where our castings, suspensions, brakes and clutches, the different parts that we do. Similarly, in Europe, we've told in the slide, where -- what we do in terms of structuring, body parts, engine parts, EV parts and transmission parts. So these are aluminum die-casting, which have been since -- after the casting process, we do a machining process. And you know that in Endurance Europe, we are a key part of the light-weighting and hybrid and EV parts -- EV plans, which is why we have sizable orders, which we normally put into our quarterly presentations. I told you, in Europe also, we are going into the 2-wheeler space, having acquired Frenotecnica and New Fren. So these are the parts that we do there, which are largely into brake systems and friction parts for transmission. So a lot of you have concerns about what -- when there is more electrification in the market, when more and more EV parts are launched, what happens to our parts? So this is the slide where we trying to show that. So in aluminum die-casting, which is 53% of our consolidated sales, because in Europe, a lot of -- bulk of our sales is into aluminum die-casting. Yes, it is relevant, these products, including alloy wheels are relevant for ICE, the EVs as well as the hybrid vehicles. We've done an analysis in India on how much aluminum die-casting parts are likely to be used in different models of EVs as they are launched, vis-a-vis what is the extent of usage in the ICE vehicles. So what we have noted is that while the weight of the EV-related aluminum die-casting parts will come down, the number is expected to be more. And therefore, we are expecting to see compared to that. So what we are seeing right now is that on a like-to-like basis for the same kind of power in a vehicle, we are seeing like-to-like value with more number of parts and lesser [indiscernible]. In suspensions, which is 28% of our consolidated sales, it's relevant for all the 3 types. Same is with brakes. Clutch, which is 5% of our sales, we note clutches would not be required in EVs. They would be required in hybrids and ICEs. What is important to note is that 80% of this 5% for us, it goes into motorcycles. And we are seeing a very slow pace of electrification in motorcycles. The remaining 20% of these sales go to 3-wheelers where we are seeing rapid electrification. So we can say that the product at risk is transmission, whether it happens at a slow pace as in motorcycles or at a fast pace in 3-wheelers. What we are bringing in -- what we have brought in newly is the BMS, which is not required in an ICE, but is required in an EV, and the driveshaft, which is required in all 3 product categories. We have not shown here the fact that we are also doing third-party sales of forgings, which is required in all 3 categories.

When you say aluminum die-casting, all the products that you're doing in aluminum die-casting are all used both [indiscernible] not just that -- just because it's aluminum die-casting [indiscernible]. It's classified as [indiscernible] are used in both?

Yes. Look, the nature of the parts will be different. For instance, over here, [indiscernible] will not be there in the EV. But then there would be [indiscernible].

So some of those revenues would still be at [indiscernible]. Some of the parts in [indiscernible]. So what is the component of that?

So we believe that the value will remain the same. Similarly, when ICE goes out and EV comes in, we...

[indiscernible] comes in.

In terms of market share, like I told you, we are leading player in suspension and brakes. Our front fork market share is 41%. This has been internally calculated. We know the number of vehicles sold in the market or produced in the market, and we know how many parts we supply. So for front forks is 41%, for rear shafts, it is 36% of all vehicles. For this brake system, it is 34% of the vehicle category wherein this braked are used. We are not counting the 100 ccs where the drum brakes are used. In brake discs, we have 52% of the market where these brakes are used. And in clutches, we have 15% of the total motorcycle market, because the scooters [indiscernible] by clutches. In castings, we don't try and calculate the market share because it's very complex to try and do that. And therefore, we're not stating the percentages for die-casting in India and in Europe. But we are among the key players in Europe and in India, we are the leader. In terms of the capacity that we have, [indiscernible] kind of capacity that we have. This slide tells us that from FY '13 to FY '23, where the 2-wheel industry has grown 2.1% in volume terms, 3-wheeler industry in India has grown 0.2% in the volume terms, and in Europe, the CAGR has been negative in a 10-year period. But our stand-alone sales has grown at a CAGR 9.5%. Our consolidated sales have also grown to almost 9%. Here we continue to be profitable. Our net debt to equity is now negative. And this shows that while we have a lot of concentration on players like Bajaj and the Volkswagen Group. But then overall, in fact, all those number of customers with INR 100 crores and more turnover in 2010, it used to be 5, and today it is 11. I will not go in detail into the financials because you [indiscernible] probably. And in terms of the headcount, as I told you, it is more than 4500 employees [indiscernible]. This talks about the European business, where I told you about the fact that we are more into 4-wheelers in Europe, but we also have our aftermarket presence in the 2-wheelers. It's been a growing presence there despite the capital of the new car registrations being negative. Aftermarket is a very key area. In fact, while we don't give any targets as to what we plan to do in 4-wheelers or in suspensions and things like that, but in the case of aftermarket, we've said that in FY '26, our target is to reach 10% of standalone sales. Today, it's roughly 6% to 7% standalone sales in different quarters in aftermarket. On consolidated sales, 5% of our sales is aftermarket in aftermarket, and this is just the Indian aftermarket that's been covered in this slide. What we do through Frenotecnica and New Fren does not cover here. In the Indian aftermarket, 65% of our sales is in India, 14% is in countries outside India, within Asia, 8% in Africa and 13% Latin America. So we are into 32 countries, in exports, and we keep adding countries. We've got an extensive network of distributions, and we have 69 full-time employees working only on the aftermarket sales. Here, we've tried to show the strategy for growth. We have multiple strategies at play. What we must speak about is that in existing products, we try and approach more and more customers, we try to cross-selling, and we try to move up the technology ladder. Like I told you, the 200 cc plus, we were not there in brakes, and now we are there in brakes. In clutches, we are not there, but we plan to do it. So that's what we plan to do as a strategy in existing products. And then there would be new product introductions. It could come through technology alliances, which would come through M&A, or it could come through internal product development. Aftermarket is a key growth area for us. And also transition to EVs, which is up, I mean, through BMS and through other electronic products and other products. We want to be part of the global transition phase. These are our key focus areas. Of course, ESG, all of this is very important to sustain our businesses and for us to keep growing in terms of launching new products, knowing the stated and the unstated requirements of automated OEMs, but also the 2-wheeler riders. So that's where technology and R&D comes into play. We have to keep our operations tight, and all of this, and of course, focus a lot of people, and all of this would lead to -- and is leading to are profitable and sustainable, and what we call our mantra is faster than industry growth. Our core values are customer centricity, integrity, transparency, teamwork and innovation. This talks about our safety-first culture, which we have strengthened over the years. The culture is to not tolerate any safety -- any practice, established practice of safety not being followed is not tolerated. And that is not only applicable for our workers, but also for our contract workers, and we spread the same message at our vendor facilities as well. In terms of people, we focus on culture of result orientation and continuous improvement. We focus a lot on DIE, which is diversity, inclusion and equality, and make sure that people are kind of growing in terms of capabilities. Sustainability. Our key focus areas are carbon neutrality, water savings and 0 waste to landfiill. And this is what we've achieved in terms of sustainability. This presentation is there on our website. In CSR, these are our focus areas, education, health care, sanitation, environmental livelihoods, and we do a lot of work in villages in and around Aurangabad and in and around other locations in India at present. This is the listing of all awards and accreditations. Deloitte nominated or selected us as one of the best managed companies in 2022. That's it. So any further details [indiscernible], we've recently updated and launched this on our website. So every quarter, we also put up a presentation on the website.

In the business, like we are a big player, and there's a competition. And how do we differentiate ourselves in terms of process and technology. Can you talk something on that?

Well, first of all, competition is everywhere. It's not only [indiscernible]. It's everywhere. It's how do you approach to your customers. See, we've got in-house R&D. We do a lot of our OEMs and essentially do the simulation to just a [indiscernible] basis. This gives us [indiscernible] going ahead to explain whether the design and build to print or whatever the [indiscernible], how well can that be manufactured? The second point is that we participate along with the customers, improvising the casting construction, in case there are some places where we can save on brakes by changing some [indiscernible] and all, without affecting the total overall construction of that part, which is required. That's one. A lot of process improvements and process technologies that we are doing is, first of all, we're trying to robotize all the heavy castings in not too manual operations, robotize, and the extraction of all the castings. And then we're trying to look into those parts where high-end parts, where a lot of machining is required, so we offer them fully finished castings rather than doing half castings, for example, in [indiscernible] machine casting. In India, we are [indiscernible] fully machine castings. Very recently, in case of Harley-Davidson and time, there also we have given fully machine casting. So that's the service that we are offering so that the parts can go directly on to the region rather than a step forward where the customers are also doing some machining work, that not only saves them investment, but also saves them the bother of holding inventories and taking goods directly online for the parts that we supply. So this is one of the key differentiators.

Okay. And in one of the charts, you mentioned about how we have grown standalone income at about 9.5% with industry volume was about 2.1% in the last 10 years. Now that we are at about 1/3, over 50% market share across most of the products and at the standalone, the export is not a large revenue at this point of time, maybe about 4%, 5% of the standalone income. How does the standalone income from here, or standalone revenues from here tend to grow faster than the industry number, now that we are the most [indiscernible] market share across the product. As for the clutches, which anyway under EV, they might not be needed. And again, given that still, even at this point of time, there are only probably about 16% to 17% or not even probably 10% to 12% revenue, which is ex 2-wheelers and 3-wheelers at this point in time. Particularly, standalone I'm saying. I'm not saying consolidated only [indiscernible].

So that's a good question. First, I think, in this 40% to 50% of market share, which you are seeing, right, it is of that particular product vertical. But that doesn't necessarily mean that I'm on that product vertical for all my customers. For example, in brakes, I'm a dominant player for Bajaj Auto, for Honda, for [indiscernible], I'm a dominant player. But -- and for TVS. But am I as dominant in other customers, right? So I find space, upward space where I can crawl and find more room over there. So that will increase my revenue. Irrespective of the number of vehicles being produced, it moves up or not, I still see a clear value add from this [indiscernible].

So then let's -- if you can, let's say, for example, this mix, which you have 52% market share in the product category. What is the product category to the market ratio? Is the market within each of these products, say, yet to be dealt by you, which is very large, which is what product categories you will include it in this market share? As what we understand, in the denominator, whatever you have included in this number, what is the market for -- so for example, let's say, 125 cc, you might need x product, but not staying y and z. What is that y and z element of x?

When we calculate the market share for suspensions, we've taken the entire 2-wheeler market in the denominators. When we've taken the market share for brakes, we've taken in the denominator all 2-wheelers which use this, which use hydraulic brake systems, because you see that a large number of lower cc bikes, the commuter bikes are using drum brakes, a mechanical brake, not hydraulic brake. So we've taken all the denominator only goes where hydraulic brake are used.

And as per the norms, as and when they get implemented more and more vehicle shift from, let's say, drum to disc, you have actually first -- advantage. They have ABS or CBS, you have a first-mover advantage...

So if you see what has happened in the last 2 years, the hydraulic brake system, which came into play because of regulatory requirements for 110 cc -- 125 cc for CBS and all that, they were all hydraulic brakes. People try to put a mechanical arrangement over there, that didn't really work and everybody has converted to CBS as hydraulic brake system. That's where we got the advantage. And our expansion on brake system has been more than double. Some -- if I remember correctly, from 3.75, we're now at 5.75 lakhs brake systems per month. And on disc, we are somewhere around 6.75 lakhs per month. And if I put that in median, I think that is 8.1 million per annum. So that's a huge upside that we've already captured. Those quarters have already inflowed to us. Now likewise, if the 2-wheeler industry, all of it comes to hydraulic brakes as a regulatory requirement, then what you said is correct, we stand first in the space, or since we are holding a very dominant position, I don't see no reason why all those orders will not come to us.

And in the 4-wheeler, the share that we have, I think, is about 7% or something like that in standalone right, in the overall revenue. That would be actually the Hyundai and Kia or is there anybody else in that?

Hyundai, Kia, Tata and Mahindra.

Who would be the largest partner in that revenue?

Right now, it's Kia. Hyundai, Kia same [indiscernible] supplies are one part [indiscernible] closed that one. Maybe used to do from a [indiscernible].

But any plans [indiscernible] product category since we are eying to [indiscernible].

See, we are not going to say no to no business which grows our way, which makes sense to our business model. If I'm already doing large castings for, let's say Tatas and Mahindras and like Maruti, if we make an effort and we get orders from Maruti, we're not going to say no to them.

See, in terms of skill sets, whether it is India or Europe, we have the skill sets to do large and complex castings. We have the ability to invest. Large castings require more investments, we have the ability to invest. So we are going to go on in business.

And this formula will be die-casting products. They will only be die-casting products, right? And whatever we have from the global market in terms of aluminum die-casting, high pressure, low-pressure as you're saying, is that replicable here in India? Do we [ chose ] an area of those type of products?

See, the European OEMs [indiscernible] well in India. So we don't see the volumes...

Hyundai or Tata or Mahindra, would they have those kind of products in their...

Yes. So transmission casings and covers and all these are all part of the Indian components. So what they do over there, the size and configuration would be different. The size of the casting...

If we can replicate -- If we want to add more products in India, then that know-how we used for the launching of the products in India?

Yes, why not, that's what we -- see, there are 2 entities, both are Endurance, one is sitting in Europe, one is sitting over here. So if I've got a leverage, their technical capabilities to India, that's not a point of discussion at all. I can get that over here within no time. And for your information, we keep on exchanging a lot of technical and improvement deals with each other. And our R&Ds are engaged quite intensively to look into all the new things that we can do over here in India.

So let's say, was it about -- I'm just realizing first quarter numbers. So let's say versus about INR 500 crores to INR 550 crore number that probably we'll end up during this year, what is the size of the market, including the components, which we do overseas, which can be done in India? I just want to understand, beyond that 9.5% growth that you have done based on 2-wheelers in the last 10 years, can the data be higher if you can do more of 4-wheelers in that time? And of course, aftermarket you have highlighted that...

That's a difficult question because it's -- I mean, again trying to calculate the market share. Not only in castings, calculating the market share, we found -- this is a very fragmented market. There are smaller casting, larger castings. Smaller, we don't what to do, right, so...

And large, you could identify, what the size of the component would be, at what weight?

It's not a question of component weight, right? It's the tonnage of machines, right? From, let's say, 900 to 2,500 tonnes...

The pricing...

The pressure, the die-cast machine, right. So it's mainly, you're right, lower castings, we don't do. Because where exactly do you want to position yourself? Like in motorcycle, we do crank cases, covers, we do engine blocks and so on. Likewise, the 4-wheelers, we do transmission covers, crank cases over there on 4-wheelers. Now similar other components which we will be -- being done in Europe, but for different cars and different applications.

But you would [indiscernible], this would be a fairly large market versus -- it could be equivalent size of the market versus what we're doing in 2-wheelers or it could be even larger?

What? the die-casting business? It can be larger because the size of the castings are much bigger. I'm talking about in terms of tonnage, total tonnage.

In terms of business, we'll be talking of potentially entering newer segments. Maxwell was one such for the embedded. In terms of scale, while we have order book of INR 300-plus crores per year, revenues aren't really that high at this point in time. Is there anything else you're looking forward to in terms of expansion? Because at one point, we looked at as we didn't go through, but any other segmentary or new foray...

See, new foray is something that has to fit into our business model. If you tell me that what I'm going to do with plastics, my answer is no. If you tell me to do seats and covers, my answer is no. Anything which fits into our business model. For example, wire braided hoses, that was an import substitution, which did not only help us, but it also helped our OEMs. And that was probably a perfect choice because I don't have to wait for external market. My capital consumption is so high that I can justify that investment. Likewise, in aluminum forging. So that's a product by itself. I can sell that as a product to more [indiscernible] to market, and I can use that for captive conversion. So it's a fit meant to my business model, which is more important. So getting into new products, it's -- we are always there to explore opportunities, which come our way. But as long as it makes sense to our business model. For example, BMS, you took that example of BMS. Now why is that fits into my business model? On one hand, you can see, I'm doing only hydraulic components, large casting components. It fits in my business model because, tomorrow, when you see the technology moving ahead, it will require embedded electronics. And that's where it fits into my model. If tomorrow all the suspension are converted to electronic suspension, [indiscernible]. I should not be in a position where I don't understand this language of embedded electronics. Today, we have got Maxwell, where a large amount of people are experts in not only writing configuration and algorithms, but they also understand what is electronics. This embedded electronics is something that we got into because our products are likely to move ahead in technology with electronics.

In terms of ownership, we, I think, added 5% more and took it to 56%. Is there a road map to further increase our stake in Maxwell?

Yes. So...

It was at 51% [indiscernible] in 5 years, north of 56% to 100% in 4 years.

What would you thought, it would have been a little bit more accelerated, just curious on...

So Akhil and Alex are the expertise, and we wanted their [indiscernible] site. Because see, EVs is not happening overnight. And market for Maxwell will mature only when the markets for EVs mature. And there are plans to launch new products in [indiscernible] products. So we didn't want lose whatever momentum has been created over years. Alex, specifically was a technical expert and actually who understands software [indiscernible] business around Alex. So we didn't want them to mention today. And there's a fair [indiscernible] availability to pay for the remaining share depending on the success of the business.

So this was on the fixed -- we had a fixed amount for this type of sale. After that...

Fixed amount for 51%, after that [indiscernible]. It's variable and move back [indiscernible].

In terms of post the same change, we've seen a slight slowdown. So it's actually the mix has changed. So the TVS have done extremely well in this -- you're seeing but are incrementally do better. But you see, Hero, who's been our customer, Hero Electric customer sales likely come off. So in terms of the outlook for Maxwell, do you see that being impacted by the change in same norms?

So we have to try and be [indiscernible] more over the years. Now [indiscernible] because of the penalties and for some people like [indiscernible], they could have -- I mean, individual OEMs could have more difficulties. So we have to try and diversify, which we've done to an extent. Even MotoCorp is the largest customer, provided the leader succeeds in the way he was planned to succeed. Hero Electric is large to all. And these are our 4 large customers in India. And then we have smaller customers in Europe to where the volumes are less, but the margins are...

Are we at [indiscernible]

No. And in the -- what we've seen in the ICE market is that we are able to penetrate the market, they have ordered more model launches. That's where we get to kind of -- each time [indiscernible] squeeze in and demonstrate your product superiority or your price [indiscernible] things like that. Similarly, when the launches [indiscernible] we believe we should be able to get...

So what is the opportunity for us in Europe in 2 years? This is the new area of [indiscernible]. So something on that lines...

The motorcycle market in Europe is not very large, but the e-bikes market is expanding a lot. There's consciousness about sustainability and product innovation, and things like that. So these companies, Frenotecnica and New Fren, they have very popular brands in the aftermarket, when it comes to braking, transmission parts and friction material. So we're going to leverage that. Wherever possible, we'll also supply from India. And some of our parts from India, which are Brenta and Frenotecnica or New Fren does not address today, we can penetrate that market also from India.

Any percentage contribution?

It must be very small and insignificant.

See, right now, they are around 5%, 6% of the Europe sales is 2 years already. So now when we ship in more -- but then see, we plan to fire on all cylinders when there is more and more casting sales, again, in percentage terms, this might stay at 5% [indiscernible] growth.

This is a very common question that everybody would like to know. What should be the margin trajectory going ahead? Because of our raw material at one point are softer, energy prices have come off for the period. So our margins are not obviously fully recovered. So how do we see that shaping...

In the past, when metal prices were softer and Europe did not suffer from high energy costs, yes, at that time, our steady state in India was 14 in quarter. And in Europe, it was 17.5 [ tax range ]. Yes. So from there, we dipped significantly. We dipped in both geographies. And now, we have recovered. So our brand has multiple reasons for the recovery. One is the metal prices are softening. Second is we are doing more and more value-added products. We are addressing the market for large vehicles. All that is contributing to some improvement in margins. There will be more improvement in margins when players like Hero and Honda, even their volumes go up because we have some of the newer plants, which are dedicated to these customers. Yes. The other approach that we are taking is we are putting in new orders where I mean, say, Ather, Okinawa and things like that. These new orders, we are putting into these low capacity utilization plants. So we expect these plants, which are currently pulling down the overall margins, to again [indiscernible].

In this quarter, we had about INR 34 crores of incentives from Maharashtra government. You mentioned on the call that this should continue for a few more quarters and to...

Our trend has been -- that it is around INR 34 crores, a little over INR 30 crores in Q1 and Q2 and it stops there. In Q3 and Q4, we don't take out any incentives because we are [indiscernible] sales we make in the state of Maharashtra. Yes. So we do a lot of sales in this state. And therefore, we are able to exhaust the entire [ booking ] in Q1 and Q2.

And this will continue in FY '25?

So this is under the 2013 scheme. And then, the government has also launched 2019 scheme. So talking about 2013 scheme, we have 1 more year of full recording, which is a little more than INR 60 crores, could be around INR 65 crores, should be in FY '25. And then from FY '26 onwards, we will be trickled down a bit, because the INR 65 crores, because it looks like almost 90% of the incentive. The remaining 10% of the incentive, we are supposed to do after some GST formalities. So that means we have some runoff effect after INR 60 crores, INR 65 crores in FY '25, with smaller values of maybe INR 10 crores, INR 12 crores in the next 3 quarters. So that's about 2013. Now coming to the 2019, where we will do application [indiscernible] supposed to spend CapEx between FY '19 and -- yes, all the CapEx that you spend between FY '19 and FY '23, in these backward region, we're supposed to collate, talk about the employment record in the most backward region and submit the application. So those are -- that application will go down. So there the basic threshold was INR 350 crores. So you have to spend the INR 350 crores in that region. We spent much more than that. So whatever we spend, we expect to get back. So the INR 60 crores, INR 65 crores are a little higher, will continue for a number of years.

And that scheme will also got finance, so potentially this continues...

It runs 7 years. So what we are recording right now INR 65 crores, it is a 7 years or so. We run it for 5 years now. So another 2 years. So this year and the next year, FY '25, that's 7 years running. Similarly, the FY '19 scheme, we have INR 60 crores, INR 65 of revenue come from 7 years.

Sir, [indiscernible] business, the CapEx intensity is almost about 10% to 12% of the revenue each year, and in a fairly highly volatile environment, is there any way that CapEx intensity can come down? Or we need to keep investing as...

In -- so the die-casting, you need to keep changing the asset, but the machining -- yes, in machining, we have to invest more for new models. So right now, we won a lot of new orders in EVs and hybrids, due to which, in machining, we are doing a lot of investments in this year, like the INR 30 million, INR 35 million investment that you've seen in previous years. This year, we've given a line of sight, INR 60 million.

60 -- 6-0. But at least for year to medium-term that CapEx intensity will remain. About earlier between 10% to 12% of your revenues will keep spending on CapEx.

This 10% to 12%...

In which case, your depreciation to sales will also continue to remain on most of our fairly high single digit or double digit number.

Yes. What we are expecting to work...

And unless in that business, you reached that 18%, 19%...

Yes. What we are expecting to work is that EV models that we have penetrated, those models are expected to last for a normal period of time. Reason being that, like in India, we have BSVI and so on. In Europe also, you have [indiscernible]. So the emission models have been made tighter, which meant that there lot of formal changes have been [indiscernible]. Now we [indiscernible] expect that to stabilize. So we will use our CapEx for a longer period.

So that's actually between ICE and EV, that's one of the fundamental changes, which happened in terms of your own CapEx intensity?

Yes.

I'm sorry, just on this question in terms of depreciation. We are currently at around 5% of revenues. You see that going to double digit? Did I catch that correctly?

In Europe, temporarily.

No, no [indiscernible] has also doubled from 5% to 10% in Europe, then [indiscernible].

Any new product categories that you are looking at currently? We are in suspension, braking. So are there any new product category?

We've already answered that question. Any new category of model or product has to fit in our business model. So that way, whatever comes our way as an opportunity and we find it a perfect fit, we will not shy away from taking that investment...

No, but my question was, have you identified something that we are working on that?

It would be difficult for me to answer that question.

So what we have given [indiscernible] already is about though our channel ABS. It's about 4-wheeler. So these are things which we have in our electronic suspensions. So these are extensions of our products which we [indiscernible] something which we've not spoken about, people are trying to speak.

So you mentioned about [indiscernible], electronic suspension and...

Dual channel ABS. The technology we got from BWI [indiscernible] dual channel ABS.

[indiscernible] was like that only, single channel and dual channel both [indiscernible].

But you need a customer also [indiscernible] because of Indian connections, the same ABS, which has been used in Harley in U.S., doesn't work here. So we got Bajaj and royal Enfield for ABS. We've done this in the single channels. We demonstrated [indiscernible]. So now we're working with the customer to do it in dual channel. And the capacity is also are fully utilizing the 400,000 [indiscernible] per annum, that capacity [indiscernible] increased very soon.

In Maxwell, we do everything, from designing to manufacturing, market [indiscernible]. Or is it only designing and...

Yes. So Maxwell owns or has developed the algorithm and currently manufacturing is outsourced. And in Endurance, we are putting up a surface [indiscernible] technology. And once that line comes up...

And where is this being done? Location?

[indiscernible] at least partial. And the total volumes that Maxwell will be selling, it will not be catered fully by Endurance. Gradually, we will increase our [indiscernible].

Just for understanding, you mentioned embedded electronics. So what are the other systems that you all could design?

See, right now, the flagship component is BMS and that's where we are focusing on, otherwise you can have BMS on storage systems and other things where algorithms are defined to run a particular product. The third thing is the ECU, or the brakes. So with this...

[indiscernible] providing the user algorithm?

For ABS, yes. Same.

That would have been already internalized, right?

No, there are 2 things. One is the manufacturing part of it, where you don't need the algorithm. We need only a separate set of files which electronically embed all the components. Second thing is the algorithms. That means, how does ABS or how the PCP that you've set up behaves to that particular software? Okay. So there are certain engineering inputs which go into writing of the software, okay. Then all the engineering inputs the software that has been written has to actually integrate with the vehicle, where the behavior of the vehicle is actually converted into electronic language, which is actually converted into a mechanical operation. So like, for example, the wheel speed sensor converts the speed and the wheel movement [indiscernible] to the ECU. The ECU further dictates, okay, now the pressure is going to be released or increased. It's something like that.

Okay. I was looking at Akhil's statements. So we disclosed what next, but then Maxwell is working on a few other products in electronics, not just BMS systems. So BMS is their first product?

There are other products.

There are other products that they are looking at.

Yes.

Of this INR 307 crores of order intake in India, how much more is EV order intake from India?

In Q1?

Yes. In Q1.

So in Q1, we didn't have any new orders. In Q2, there's something, we in fact disclosed it, but that's -- it's an important breakthrough because getting any new EV customers -- so HMSI came in for us.

Okay. I got a question in Q1 [indiscernible] worth of orders, which are there for a standalone business. What is the probability of them [indiscernible] somebody else offer [indiscernible] some business in same category of products? How much is the [indiscernible].

See the [indiscernible] like Mr. Jain said on the call, these are new models. So we were not serving that quarter than we are now going to serve that...

But when you see this, does it mean that, let's say, a 125 cc [ ABC ] bike is being relaunched as 135 cc maybe [ BCD ], and you got that order, does this...

No, no -- if the OEM itself has declared the [indiscernible] is a replacement of ABC...

That's not in [indiscernible].

But suppose, I have got for a Suzuki scooter, a front fork order, which I'm calling a new order. And in the past, [indiscernible] front fork for the [indiscernible]. I don't know how much of [indiscernible] cannibalized because Suzuki and [indiscernible]. I think if could come from the [indiscernible]

And once you start doing this production [indiscernible] also from Maxwell, how much does the value go up by? I mean does that [indiscernible] you would provide straight to the OEM, which can be [indiscernible] vehicles?

Yes. So that is something that we'll be supplying to Maxwell, not to OEMs directly.

Okay. So [ ATL ] will supply this to Maxwell. And their algorithms in this or their software in this and then you finally put it on to the OEM.

And Maxwell will sell it. [indiscernible].

See the BMS mode is a small electronic [indiscernible] with various chips and [indiscernible]. The chips, which have really random simple software, that means a lot of the manufacturing partner [indiscernible]. So right now, the printed circuit board then comes to Maxwell's office, call it a plant, and then Maxwell will put in the proprietary software, do the testing, the end-of-line testing, and then ship it to the customer.

And so, for example, and where I'm coming from is that some of those [indiscernible] auto OEM industry, then came about 16%, 17% margin only when they are not -- they are not doing algorithms as a part of that. But when we do this, the whole product, plus the algo, the margins can be significantly higher. Is that assumption correct?

The 13%, 14%, they are also playing the [indiscernible] who don't actually do the algorithm work. Or some other -- not the BMS, but some of the other auto components...

I don't understand.

Sorry. Some of the BMS guys who provide auto components even in [indiscernible] phase or manner, they claim to have about 13%, 14%, but that's not BMS. That's something else. Other products that they provide, they're lot of electronic settings. And there margins are anywhere between 13% to 15%.

My understanding of [ BMS ] is what Endurance is going to do.

[indiscernible] Maxwell put together, that could be very high-margin business, including the manufacturing margins also, which will be a standalone.

That's why we are doing this. And [indiscernible] margins will be [indiscernible].

Thank you all for joining us today. We have a short presentation. It's there on the website. It's around past [indiscernible], so that will take some 10 minutes. And then Mr. Gehaney and I can answer your questions. We begin with the usual cautionary statement. And we are talking about our company, which started in 1985 as an aluminum die-casting, supplied to Bajaj Auto. We started with one plant in Aurangabad. Today, we're the largest aluminum die-casting company in India. And our other key products are suspensions, transmissions and braking systems. The die-casting we do for 2-wheels as well as 4-wheelers in India and for 4-wheelers in Europe. And the other 3 products, suspension, transmission and braking, we are largely only in India, only for 2-wheelers and 3-wheelers. We have 19 plants in India and 12 overseas. We have 5 R&D facilities in India, 2 tech centers in Italy. And with our R&D efforts, we have roughly 325 people working on R&D. We've generated 36 patents and 33 design registrations. In India, we have a very clean corporate structure with the listed company, Endurance Technologies Limited, housing almost all the operations. The only operations outside of Endurance are in Maxwell, this is a company we acquired last year. And today, we hold 56% in Maxwell with a line of sight to achieve 100% shareholding. In Germany also, we have a clean corporate structure with all the plants being housed in the single operating entity. In Italy, we have a SPV structure, where Endurance Overseas Srl is the holding company, which has done a number of acquisitions over the years. But all these companies, apart from Maxwell, are 100% owned by Endurance. Yes. Like I said, we have 19 plants in India, 5 R&D facilities in India, 11 plants in Europe, 2 technical centers in Europe, and then we have a test track in India. We have a total of 4,800 roughly employees. This talks about our journey, the fact that we established 2 or 3 different legal entities in India. And then subsequently, we've merged it into one legal entity, which is Endurance Technologies Limited. Meaning, if you would know that we first brought in a private equity player in FY '07, that was Standard Chartered Private Equity. And then when Standard Chartered wanted an exit, we brought in Actis. We had attempted an IPO around this side in FY '11, FY '12. But then since the IPO market was not very conducive at that time, we replaced Standard Chartered Private Equity with Actis Private Equity. Finally, in FY '17, in late 2016, we did our IPO, and in FY '19, we did -- the promoter diluted its stake to 75%. This tells us about the journey. The fact that we have 19 plants and 11 plants in India and Europe respectively, this tells us when different plants were set up. Also our 5 R&D centers. So it's been a long journey from FY '86. And today, our latest facilities in FY '23 are captured here, which is the driveshaft plant and driveshaft R&D. And also the alloy wheel, which is an expanded facility in Chakan. It also tells us about the various collaborations that we've done. For instance, the ABS, we did a collaboration in FY '17 with BWI. This is a unique proving ground or test track that we have in Aurangabad. It's spread over 29 acres. No other auto ancillary company has a test track, which is as extensive as this one. For 2-wheelers and 3-wheelers primarily, we are able to test all our products. We sometimes also offer the test track to OEMs when they want to test their own products. But otherwise, we try and test our own products on this. We have trained riders who are able to communicate with riders of the OEMs and give us feedback on what the actual feel is when they are using a brake or riding with a vehicle with a new kind of suspension that our R&D team would have developed. We are a complete solutions provider. It starts by designing and developing the part in conjunction with the OEMs and then testing and validating it before actually starting to manufacture. Our focus is on 100% on-time delivery for the customer and also on aftersales service, which includes being present in the aftermarket for the end user. In terms of our range of products, our legacy products, like I told you earlier, it's like 4 legacy products, aluminum die-casting; suspensions, which is front forks and shock-absorbers; brakes, which is the entire brake assembly, which includes the disc brake, the caliper assembly and everything that a 2-wheeler brake or 3-wheeler brake requires. In die-casting, we also do alloy wheels. And we also do clutches for 2-wheelers. So these are our legacy products. What we've recently added is firstly, the ABS modulator. So for 2-wheelers, we do ABS. Yes. So we were talking about -- this presentation is already uploaded on our website. We were talking about the fact that we have 4 legacy products, aluminum die-casting, including alloy wheels, suspensions, brake and clutches. Our recently added products are ABS modulators, 3-wheeler driveshafts, BMS. So we've acquired Maxwell, which is into the embedded electronics space, which includes BMS. Aluminum forging is something we started as a backward integration project, but now we are supplying to third parties as well. We've got orders from Hero MotoCorp and from JLR. Brakes. We have hitherto been doing brakes for up to less than 200 cc vehicles. But now, for 200 cc plus vehicles also, we are able to supply brake. This happened after our acquisition of Grimeca, which we did in FY '20. So Grimeca is an Italian bakes company. And finally, our aluminum die-casting, which we were using for automotive applications now is also finding usage in non-auto applications. When we talk of future products, we mentioned about the ABS. So this 2-wheeler ABS, which we have already launched, it's been 2 years since we launched the product in the market. Now we will be going into a dual channel ABS. We will also -- we also plan to do our 3-wheeler driveshaft as functional. I mean, we are supplying to Bajaj, and we have a couple of other models also for 3-wheeler driveshaft. We will also be doing 4-wheeler driveshaft in the future. Our clutches, like our brakes, was primarily aimed at sub 200 cc market, but we are now supplying brakes for over 200 cc also. Similarly, our clutches are also primarily being supplied to sub 200 cc market. Going forward, using Adler's APTC technology, we would be supplying clutches for the 200 cc plus market also. BMS and ABS, both of these are embedded electronic products. ABS, we are doing ourselves through BWI technology. BMS, we have acquired Maxwell, which has the algorithms for this electronic product. Similarly, we'll be doing other embedded electronic products also. So our electronics engineers, whether they are in Endurance or in Maxwell, they are planning, and we will launch newer products in embedded electronics space. One such product will be the electronic suspension, where there is a market in the 200 cc plus motorcycle space. There is room to launch an electronic suspension. This slide tells you graphically where our different products are going. Similarly, for the European market, wherein aluminum die-casting, the machine parts for aluminum die-casting, it could go as a structural or a body part or it could go as an engine part, it could go as a transmission part, and there are certain EV specific parts. Through our new acquisitions in Europe, namely Frenotecnica and New Fren, we have made a presence for ourselves in the European aftermarket for 2-wheelers. So in India, we are primarily -- a large part of our sales goes for 2-wheelers and 3-wheelers, and a small part of our sales growth for 4-wheelers. In Europe, a large part of our sales is into 4-wheelers. So all large companies like Volkswagen Group, which includes Audi, Porsche; Stellantis, which includes Fiat, and BMW, Daimler. All these large OEMs in Europe are our customers in the 4-wheeler space. We are establishing a small 2-wheeler market -- component market in Europe, primarily aimed at the aftermarket. So a lot of you would have concerns as to whether our products are relevant, if there is rapid electrification in the market. So for us, our aluminum die-casting, suspension brakes, these products, which comprise 95% of our consolidated sales, for us, it is relevant, whether there is slow electrification or fast electrification, our market size is expected to remain the same. The addressable market is expected to remain the same. In the case of transmission, which is 5% of our sales, if there is full electrification, then the clutches will not be required. So that portion of the market is at risk. Having said that, out of 5%, we have to see this in 2 categories. One is 4% for motorcycles and 1% for 3-wheelers. The 3-wheeler market we believe is at rather immediate risk, which is 1% of our total sales. The 4%, which is for motorcycles, we believe, it is at risk, but motorcycles will take a much longer time to transition to yields. In fact, there was a KPMG study, which said that by FY '30, we are expecting less than 30% of the motorcycles being sold in the country to be in the form of yields. So 70% will remain as ICE motorcycles, less than 30% as EV motorcycles. And then there are new products, which are -- so driveshaft, is relevant for all. Forgings, it's not shown here, but it's relevant for all. In fact, due to light-weighting, it is probably more relevant for EVs. In the case of BMS, it is not required in an ICE vehicle, but it is required in an EV vehicle. Yes. You might be interested in knowing what our market share is in most of the key products that we do. So for front forks and rear mono shocks, which are our suspension parts, our market share holds around 40%. In the case of disc brake as systems, we control 34% of the market, where there are hydraulic brake systems. Here in the denominator, we have not included the drum brake market, which is non-hydraulic. And in the brake disc market, we have 52% of the hydraulic brake system market. In the case of clutches, we look at only the motorcycle market and within the motorcycle market, we contribute 15%. So we are a dominant, very dominant player in front fork, so in suspension and brakings. In the case of clutches, we are in the top 3. In aluminum die-casting, we are the largest player, but it's difficult for us to calculate market share because of the fragmented nature of the market. But in aluminum die-casting, we are the leader, we are the largest in terms of the capacities that we have. Similarly, in Europe, we are among the largest aluminum die-casting companies, and the marquee car makers, they rely on say, 4 or 5 suppliers, so we are one of them. So when Volkswagen or Stellantis is launching a new model and requests for quotes are sent out for aluminum die-casting, we always receive those quotes because not only have we demonstrated our technical capabilities, but we are financially also very well off in both regions, both in India and Europe. We are debt net negative. And the European carmakers know that this is a company where if there's an investment requirement, we will not shy away from it. Here, we've tried to say that compared to FY '13, how large is the market today in FY '23. So in the 2-wheeler industry, there's been a CAGR of 2.1% in volume terms. In 3-wheeler industry in India, there's been a 0.2% CAGR. In the European new car registration, there has been degrowth over the last 10 years. So looking at this modest growth in volumes in India and the degrowth in Europe, I think we've done fairly well to say that in our stand-alone sales, we had a CAGR of 9.5%. Of course, this is in value terms. So it's not exactly comparable. But even if we remove the value impact, we would be ahead of market. And in consolidated sales, we are 8.7% CAGR. Here, we've shown our PAT margin here and a consistent track record of profitability has led us to a very strong net worth today. Our net debt is negative and our large customers, where sales is more than INR 100 crores, the number of such customers has gone up from 5 to 11. Sorry. So this is all our financials. The fact that we've been growing in Europe also. This is a very key element of our growth strategy, the aftermarket. So our Indian aftermarket contributes to 5% of our consolidated sales. We export to 32 countries and have a wide distribution network to 69 full-time employees engaged in the same. Sorry, I have a bad throat. But this -- I mean, these slides talk about our strategy and our focus, as well as our focus on our values and ESG safety people focus. So this presentation is there on our website. So I'd like to invite questions now.

In aluminum die casting you have a split per se between 4-wheelers and 2-wheelers, how much would be towards 4-wheelers of this? And within that 4-wheelers, how much is towards the engine kind of components and the rest of the [indiscernible].

See, our European sales is at least 25% of our total sales. And Europe make almost 95% of aluminum die-casting in 4-wheelers. So you can say that 25% is fully for 4-wheelers. In India, our die-casting sales, including alloy wheels is roughly 41%, and our 4-wheeler sales is roughly 7%. So then 41% and then 7% and 25%. So roughly 1/5, 1/6 of our die-casting sales in India goes into 4-wheelers.

And within the 4-wheeler aspect, especially in Europe, how much would be your critical components for the vehicle, especially your engines and transmission component?

Everything is critical, what we manufacture for the 4-wheeler...

But the latter part of the question as to how much is going into engines. So that proportion is reduced. And what is very key is what we highlight in our quarterly presentations. The fact that we are getting a lot new orders in the EV and hybrid space. So in the last 5 years in Europe, we've said in our quarterly presentation, in the last 4 years and 1 quarter, we've got EUR 237 million worth of orders, out of which 86 million worth of orders are for BEV applications and 112 million is for hybrid applications. So 80% of our new orders in the last 4 years have been in this EV and hybrid space. So that's -- it's a very significant number, and it tells you that in next 3, 4 years, so European Parliament has said that in FY '35, they will not be registering any cars, which has an ICE engine. Yes. So by that time, the domestic market will have all EVs, no hybrids and no ICE vehicles. So it's very important that we have around 40% of our new orders in basically BEVs.

Just to make sure I underline that question a little bit more, it's not clear to nonengineers actually, that when you look at the aluminum die-cast market as it stands today, if you cut it on the dimension of engine and nonengine, you make the projection that in a battery electric vehicle, there'll be more aluminum die-cast products. But is there any relevance of having a large market share in aluminum die-cast, non-electric vehicle products and trying to make those products which are not really in use today? Is there an overlap of products that are required in battery electric vehicles and what are required in ICE vehicles?

See, to answer your question, battery electric vehicles also got a transmission. So they would be having the [ leading ] component over there. There are other side channels and other things which have got a battery, this, I am talking about [ chassis ] right now. So there are also side channels that there are part of the frame. So these are aluminum components. So engine goes away, but some part of the casting or, let's say, a larger part of the casting still remain on the vehicle, because like it is an important element of that. So larger part of castings remain on that. And what we analyze that the content or weight of castings, which are used for EV is higher than what is used in ICE.

So what would be effect or aspect, let's say today for a 2-wheeler? What would be the weight/value of an aluminum die-cast per vehicle? I mean, I guess models will vary but take any vehicle.

We've done that analysis on comparable -- so of course, battery -- EVs don't have CCs, but if I take a certain CC of a scooter, and then try to take some EV scooter with similar power.

Let's take Activa and Ather.

So we've done that study. So the number of parts, aluminum die-casting parts are more in an EV, the weight is lesser. But the aggregate value for players like us for aluminum die-casting is similar.

So what you're saying is that in a market that's already transitioning actively, between Activa and Ather which obviously if we take an example, it could be other products we comment. The volume of vehicle -- volume of aluminum die-cast in both is roughly similar. So what goes away from the engine probably gets needed in other parts of the vehicle and the value is the same? And is there a difference in market share or market capability that you need to have for these other products that a factory vehicle has? Like given that you are -- other products relevance, is capability relevant in both parts of...

See, capability comes from where, from the equipment and infrastructure that you have. These are die-casting components, high-pressure die-casting components. So that capability is built up in the processes and the machine itself and your design part of it. So if you look at the engineering parts, of course, these are built to fit, which have come from -- the design comes from the customer. But there also we do a lot of value add by reducing the weight and seeing wherever there is an extra mass, we can reduce it and we offer it to the customer as a value engineering, more value-engineering proposals. In EV, what happens is in some way similar. But the content on a motorcycle, when you have all of our parts put together, I'm answering your question correctly, when you have all your parts put together, the configuration of the vehicle is bigger than what an EV is, right? For example, an alloy wheel on a motorcycle would be bigger, alloy wheel on a scooter would be small. So weightwise and other things can be a bit different. But otherwise, the content of aluminum is critical in both the vehicles.

Sorry, just to add. [indiscernible] understand. Are you saying that the designing is largely done by the customers and ours is more of less you said the other value-added services when it comes to aluminum die-casting?

See we are largely currently if I look into ICE, it is, we are into engine components. The engine components are designed by the customer, not by the -- but we have engaged with them right from day 1, because certain design aspects are also taken care of by us, where we do the more close simulations and other things along with the customer for them. That design aspect to me is [indiscernible] we do the simulation. We offer them value engineering ideas over there. Okay, you can cut the corners over there, you need the thickness over there, there is no need to have heavy mass or heavy section over here. And what are we, we are doing manufacturing process, that is something [Technical Difficulty] When it comes to process. What -- how good or how good is your process for controlling on to productivity, reducing rejection, controlling the porosities, which is a natural phenomenon of -- which is a natural defect phenomenon of any casting, porosity [indiscernible] what kind of porosity you have. [Technical Difficulty] so that's where the process plays and important role, in which the customer has got no role. It's a manufacturer role for the key strength.

Just a follow-up to the question. The fact that engine is such a central part of the ICE vehicle, it seems to infer that people would be willing to pay, and of course they will pay for your engineering jobs, but also they will pay a little bit more premium for the criticality of the component. In a factory vehicle, is aluminum die-casting used for something peripheral? You know people will say okay that's commodity-ish in nature, we can get somebody else to make it or it's still a central?

It is still a central. Because battery pack, as well as aluminum casing on those. If you look into the machine, it's very, very critical. The parallelism or what they do on a battery pack can ruin the battery performance. So these are very critical, dimensionally very critical components.

Okay. I was talking to our R&D team. So they said that if the battery pack has to fit in like this. The tolerances are so strict because any water ingress would spoil the battery.

And what happens to the legacy business of aluminum die-casting for ICE vehicles? Is the capacity sort of technology agnostic? On the same machines, you can sort of manufacture components for electric vehicles?

See the process is either gravity die-casting, low-pressure die-casting or high-pressure die-casting. The machines used for them are simple.

Effectively the molds and stuff.

Molds are different. But the manufacturing technology of making the molds is the same. The equipments used to manufacture the molds are the same.

Molds, we have to take from the customer. So whether we take it as a CapEx. So we sell them over to the customer or we amortize it over the life of the...

Perfect.

You mentioned that you have entered into our aluminum forging correctly [Technical Difficulty]. Do we see it as a growth vertical [indiscernible] further deploying capital to take external orders as well [indiscernible].

We've already taken a couple of external orders. So we've taken orders from HMCL. And very recently, we got an export order from JLR. So we see it as a business opportunity.

For the captive consumption [Technical Difficulty].(11:13)

These are aluminum forging components, which used to be coming from Europe, and there were other players in India also. We are supplying specific forging component which are the axle plants for our suspension. See, earlier, we didn't have the plant to bring that as import substitution because the volumes did not substantially the investments required. We have the investments required that are huge. Even the presses are very expensive. Look, the entire process of heat treatment and all are expense. But now we are doing close to 20,000 inverted front forks every month. So the requirement of aluminum forging has increased and it completely fills up our capacities, which we have installed. So captive consumption makes a lot of sense in the case. But as we move forward, we found various OEMs are finding that aluminum forging companies in India are less for doing such big part and that's why they have given us orders for that.

And like you mentioned, what is front forks, how the volumes are gaining actual even for incremental order, let's say US also coming up with [indiscernible] orders with [indiscernible].

No, I can't say we got orders from every one, but we are a dominant player in the market. We've got orders from Hero. We have got orders from Honda. We have got orders from Bajaj.

How much this in terms of cost saving, let's say captively if you have aluminum forging, how should we take [indiscernible] scope of expansion, margins and suspension is a big challenge.

I think you should look at it from the perspective of import substitution, nothing else. And it's a complete derisking plan for your own self. Today, if I'm doing 20,000 inverted front forks a month, that means I put a substantial requirement for my captive consumption itself. So instead of having huge inventories, if you buy something from Europe, you need a 6-month inventory. The order cycle is 6 months. So anything which I need 6 months hence, I have to order today. So it is for that reason that your inventories pile up. And we've seen a substantial reduction in our inventory ever since we started forging components and all. It's a huge saving. And secondly, you're more accurate on your production planning. So there are multiple savings. So I would not look into only new increasing margins from it. I look at it from many other bigger prospects.

On EVS [indiscernible] we have -- we have started manufacturing EVS valves and hoses [indiscernible] So we might be more competitive than existing guys because we are [indiscernible]. So how do you see EVS [indiscernible]

We are already at our full stage capacity. The ramp-up capacity was 400,000 in a year. We are already at that stage. And we are also adding what we have said, we are also adding 4-wheeler channel assembly. That's being added for another 200,000 per year capacities are being added. As far as valves and hoses are concerned, where we have to meet the regulatory requirements, the time that we had for ourselves was less. So the shortest possible route was that we buy these critical components from our collaborators. So there we get on board. As far as supplying EVs is concerning, a bit faster than expected. Otherwise making valves and hoses and understanding that technology would have taken time. So we took some critical components from direct purchase from our collaborators. Now to become more competitive and have a[indiscernible]content, we started manufacturing the valves in-house. So there were 2 ideas behind that. One is to save cost and be more competitive as and when -- because every import has got a cost, it's higher than what you may make it domestic. So to be more cost competitive and also to have the technology, the key technology part is also in the valves to have that in-house. Secondly, derisk yourself and be competitive to the extent that any cost or price competition comes in, you were able to match that in fact.

One question I have in terms of the slide that you showed legacy current engineering. What's the thought process and how we will you take this company forward in terms of the new parts because multiplicity of engines, so your transmission is changing, your engine power is changing, your fuel is changing. So how do you see this overall? And of course, you have 2-wheeler, 4-wheeler kind of mix happening at the same time. So it is becoming pretty complex as a business from -- at least from an outsider's perspective as we look at it. From your perspective as an insider, how do you see that? How do you kind of drive through this noise, which is happening and can steer the business longer term?

Related question. Last 10 years sales [Technical Difficulty] maintenance averaged 7%. Now with all the new technology that we are working on, the acquisitions that we've done [indiscernible] where do you see the next decade [Technical Difficulty] assuming that the industry remains [indiscernible] and the industrial growth rates are unchanged.

So let me answer that question in 2 ways. One is that I can't make a forward-looking statement for 10 years because I don't know what's going to be prevailing at that time. But I only know one thing, to answer your question. That vehicles will coexist like EV will also exist and ICE will also exist. That means any product which I take, or I have for myself, as part of my horizontal expansion and vertical expansion. What is my horizontal expansion? Something like I bring in wire braided hoses as import substitution -- reenforcing import substitution. I do valves in-house. These are my horizontal expansions solution in products. What are my vertical expansions? Premiumization. Instead of my existing product, I know that premium vehicles are also going to command a very strong position in the market. So what I do, I have brought this inverted front forks and mono shocks and for ABS, I have graduated to ABS -- for brakes I have graduated to ABS models. So this was a vertical expansion of the product. The moment I add wire braided hoses on to it. Right? I'm actually creating an entry barrier for my competition, right? Because a customer would not want -- there are too many players making 1 product and finding any one. But if 1 vendor has got all the products in-house, and if his quality assurance is higher, [Technical Difficulty] warrantee becomes my complete responsibility otherwise I can push it back to -- into the hose supplier or I can push it back to the valve suppliers and so on. At least we eliminate all those controversies, right? So I hold responsibility of the entire braking system and for that matter suspension of all the products that -- so the strategy behind is to remain over there, and ensure that we are there in all possible product segments that we have. Our products are configured in such a way or brought up in such a way to the OEMs that we don't lose out on any position. So that CAGR that you are talking about 8.9% or whatever, that should not be lost in the middle, by not being on certain platforms. So being present on all platform is more important to us, vertically expanding your product in such a way that you would miss out on the advancements of technology that is happening on the vehicle or on your products we don't miss out on that. And that's the reason why if you -- what I say is matching the business model, products that we bring are matching our business model. Somebody may think today that why didn't get into the BMS. BMS is electronic embedded systems, embedded electronics. So embedded electronics now mean all the products that were made, right, ABS for brakes, electronic suspension, [indiscernible] suspensions. So all these electronics have to talk to each other on a vehicle. So at that moment, if I don't know what electronics is, and I stand like an alien over there, it's difficult to hold my business. So that's why embedded electronics coming through BMS. So that I understand what is happening with my product. I understand how the contributions are changing. I understand how the expectations of the customer are changing. So if you look at our philosophy right since day 1, complete solution is something that we have always spoken about. So if I'm offering complete solutions to customers, it is by way of expanding my own product.

I flip this question, say, how does it expand the opportunity for you over the longer term? What do you do to kind of -- so what you're doing is pretty complex because you're serving a lot of different product range. How are you going to leverage this and take this to global and Indian customers to kind of grow this quite bigger?

Okay. That's a good question. First of all, have I consumed the entire space in India? The answer is no. So we should we all have to grow bigger, I still got a lot of space ahead of me. For example, the regulatory requirements give you ABS. Right? So 150 cc and above bikes got an ABS configuration on them. That means hydraulic brake system is there. Now if that same thing, regulatory requirement has got to move downwards on 100 cc bikes that you could have hydraulic brake systems, if not ABS. Hydraulic brake system because that's better than mechanical brake system. That's better than -- so there where do I stand a chance? I stand on a very dominating position because I have got all the experience of supplying hydraulics brake systems to the world existing. So there, I find the first mover advantage, I find being the dominant there. I find myself in a stronger position because I understand the market conditions. Market conditions does not mean sales and revenue. It's the vehicle, what the vehicle experience is on the road. So my quality is actually more superior by the way of my exposure and understanding on the field failures. So today, if I'm giving brakes, which are running in PPM of failures, right? So PPM is what? Today, we have supplied more than 400,000 ABS modulators with 0 defect. So how does this come? It's based on the knowledge that you have acquired from all the failures that you experienced on the field, redesigning your product in such a way that those phenomena and events, even if they happen in the field, your product does not give away. So that's how you will go on improving the quality of your product. The more you go in doing that, it's a huge warranty cost, which comes down and a huge lot of botheration or a big question, which happens in the field -- these days media is so fast. The communication is so fast. Something put on WhatsApp, something put on anywhere that a failure has happened spreads like WiFi. And that's why people are very worried about that. Our job is to ensure that there should be no premature failures. There should be no failures of the product. There should be no failure, no warranty costs, which goes so high that it becomes intolerable. So it affects our product also. So that's where we place in ourselves to find a proposition where we give qualitative product to our customers.

So that kind of expand your market. That is why you are saying that it is longer term expansion, that kind of fix there, whatever you're doing can be replicated on other stuff in terms of other product ranges and other -- also in the 4-wheeler and 2-wheeler, how do you see that mix for shifting?

Well, yes, another good question. We are already there into the space of 4-wheeler. You must have seen in the last 3, 4 years, we've expanded. We expanded primarily into [indiscernible] domain expertise is there since last 30 years plus. So we've added up more customers. Hyundai and Kia, the kind of dependence which they have on us today. We're doing how much, INR 200 crores, INR 300 crores of business? So that is coming from where? Only in the last 2 years. So if our business is increasing to that extent and whereas I've been a historical supplier to Tata Motors, which I'm still very actively supplying, I think, close to INR 75 crore, INR 80 crores or INR 100 crores, around that much. But Kia and Hyundia, I have gone ahead of that.

Which is quite small in terms of number.

Yes. But what I'm trying to say is that we are expanding our base on 4-wheeler. [Technical Difficulty] If I look into Europe, [indiscernible] business there is almost 100% 4-wheeler. And here, we are around 8% or how much?

7% of the domestic business.

So I'm expanding my ground on 4-wheelers also.

And what is the kind of opportunity here on the 4-wheeler side for the product that you have currently?

See, it's the domain expertise of die-casting. So if at all we got a transmission case for a [indiscernible] block or something, there are only 2 different types of technologies used. High-pressure die-casting, low-pressure die-casting, third is gravity die-casting. So I have got expertise of all the three. It depends where do I exactly want to move in. So what road map I have declared for myself that I'm going to do fully machine castings to it, which saves the bother of the customer to put in investments that he reserves. Earlier, if you look into earlier years, yesteryears as I may call it. OEMs used to do final bore and final finishing of the casting or any kind of machine parts in-house, probably because they never believe that the capability exists outside. Great. Now that was a huge investment for them. But in 2007, I'm talking about a smaller casting now. In 2007, we were the first ones to do a fully machine castings, even including the final bore. From there, we gained the confidence and then we graduated to 4-wheeler. Orders from [indiscernible] in 2013 or 2012 that was large order that we picked up for Mexico in 2007, [ ECB ] 250 something like that. And then [ MX65 ] was to follow. These are 2 platforms that we got. They are fully machine castings. So what do you save for the customer, not only the botheration of investing, but the responsibility totally comes to us where we can simply define the product is not good or the casting is not good. He can only reject it. But nothing goes from his side. He doesn't lose on capacity. He doesn't lose on the investment. He doesn't lose on anything. At least he assures business to us and we assure the quality to him. This is how the expansion can happen. So we've chosen the way of doing fully machine castings, not doing [indiscernible].

But just give the line of thinking forward, if you pick the entire system of all the 2-wheelers being sold in it, you reached a fairly high market share. And like the slide you were showing, you reached a high market share. If 5 years out, 10 years out, basically, the overall consumption of vehicles does not grow up. The market is growing at 2%, let's say 4%. Your ability to outgrow the market in terms of share gain is that much more limited right now. You might -- you will substitute your current sales with sales of battery electric vehicles. But you will not be able to gain much more market share. The absolute pie -- you will never reach 100%. So there's a natural limit in terms of what market share you can...

So what is that limit? I will keep on making [ interest ]. Today, I'm aligned with Mahindras and Tatas and I'm with Mahindra, Tata, Kia, and Hyundai, I am with all of these guys. Am I exploiting the hidden potential of Tata's [indiscernible] die-casting [indiscernible]? Answer is big no. The space is there. It depends how much we want to grow. I want to go for as much as I can, because it requires capacity, it requires investment, it requires... So finding our own space is something more important. Like, for example, in 2-wheels, we said for ourselves that smaller tonnage casting we are not going to do. Well that does not mean that, that opportunity is not existing. 660 ton and below, 420 ton and below, we don't do these castings, because you've got to position yourself. If I look at the total content of aluminum that is required on bikes and total auto industry, I'm not able to count it, because I'm not in a space where I don't want to be. I don't want to make these levers and footrests and other things. I don't want to be in that space. I'm making engine components, cylinder heads, cylinder blocks, crank cases, [indiscernible] So where you position yourself, you got kind of where do you want to expand from there, rather than finding space for your total market.

[Technical Difficulty] struggling on the export side. So since we will get production steady [indiscernible]our revenues are slightly getting -- growth is slightly getting exert because of that. Will we see that situation improving?

Why not? Nothing is forever.

But do we at moment see it because [indiscernible] earlier production, so you'll see [indiscernible] coming, let's say, within a quarter?

What has been their strategy. I am not going to comment on much on Bajaj. How much of export is getting recovered for them. I don't have that. I can only tell you what views I get a better order or not better. So the status in -- as far as the export is concerned, is not going to remain stagnant like this. The geopolitical situation will change. It will come back because the market is huge overall. If I take world as the market then the potential is enormous for me.

Also in their quarterly call, they mentioned about some countries reviving in the next 3 to 6 months and other countries will take longer.

Do you see that in your [indiscernible] right now? Is there [indiscernible]?

From your growth perspective, can the data [indiscernible]?

As I said, when will that come then they've already seen there in the -- in 3 to 6 months. So obviously, they are lower on sales. Right now, those schedules are not with us. But when exactly which platform will pick up, that will happen in 3 to 6 months now. Earlier, we had a figure that, okay, Q2 of this year should be better. So if that's the number, if that's the phase that you're looking for, Q2 of this year should be better. If it is not better than export is something that you can catch up at any time.

And one more thing like whenever I need -- in terms of growth opportunities, you talk about 125 cc or 200 cc and above, we have orders in this segment. Does it mean that you are not looking at 100 cc [indiscernible] We never mentioned Honda Shine earlier we are receiving incremental orders.

We never said that we are declining 100 cc. We never said that we are not going to pick up orders for 100 cc.

But in terms of [indiscernible].

Yes. Why? Because see, what you're finding on each conversation that we have, right, probably they met on 5 different occasions. What is new is something that you're more inclined to know. So that's what he's saying what is new?

Even Honda Shine 100 cc, it is a new model so probably.

So we've spoken about Suzuki scooter front forks. So that's sort of very high-end scooter, but it's something new for us though it is in a lower CC category, spoken about it.

I have one question. This last thing for my end. Did this investor now see an accelerated consolidation because of the complexity increasing?

That's a very good question. And I'd be happy to answer that in a way. The number of models that are there in the market, the number of players that are there in the market, all of them cannot coexist. Some kind of consolidation will happen. The smaller players will merge into the larger ones. Which one will merge where, I don't know.

I'm just saying that it will accelerate and how quickly [indiscernible]?

I don't know because right now, being subsidy 1 or this has gone and impacted some part of the industry. I think they will recalibrate themselves. But some small players may get tied up with each other. Like today, the example is Triumph and Bajaj, 2 big players who joined hands to make one vehicle. Hero and Harley Davidson.

[indiscernible] You have to deal with lesser number of suppliers.

[indiscernible] Complexity becomes mind-boggling in terms of just transmission change, engine change and the model change is so rapid, everything is so rapid, the accelerating...

Are we finding mind-boggling? I don't think so, see what we have to focus upon is resource allocation.

I have 3 power [indiscernible] on 3 model. Just imagine that you are in a 2-wheeler, you have multiple models on multiple power [indiscernible] .

So agility, flexibility is something which every business model will have to have. I gave this example earlier this morning that somewhere around in 2012, I was in Europe. In those days, Piaggio was doing very well. The owner [indiscernible]. He traveled with me from Milan to [indiscernible] just near to these, 600 kilometers up and down for just 6,000 sets of [indiscernible]. Just 6,000 [indiscernible] number. So what was that reflection that I got from there? That you have to be present on every model, because which -- what is the end user, end user is who, the consumer who in driving the bike. What will be his perception of adopting a vehicle which is market quality, market save, feel, his personal choice and everything. Once all that comes into play, then which model is going to be excelling, nobody knows. So I can't change the complexity of auto industry, but I can definitely change the complexity of my plant to be more agile to be more flexible, so that if any of the model goes up and down, I am able to quickly adopt. So my assembly lines and my manufacturing facilities should be as such, that if I want to change one model to the next, I can do that in very, very less time because I can't afford to lose any model, not to be on any model. Which one does better, I don't know. And all this that I'm talking about is coming out of experience, the experience of what? multitude failures. What is that failure -- in one of the bikes, we were given ZXi and VXi. There were 2 models of the same, 2 variants of the same model. We were given a larger share of LXi, because they expected that ZXi being a superior model, it was something around 1500 more expensive than LXi. So the more volumes will come from the LXi, not ZXi. It happened absolutely reverse. People preferred to choose a higher configured vehicle rather than a lower configured vehicle, and I was not on that platform. So I lost. I didn't lose on business. It's just a choice of the market. Choice of the end user. So today, what's important that you got to be on [indiscernible].

Final question what is our total share in total [ vehicles ]?

9%.

You are talking about the OEMs outsourcing. The battery management system which you[indiscernible] to the ancillary. So when I look at the electric vehicle, there are 3, 4 critical components apart from the battery itselt, right? So the battery pack is something that they're also willing to do an [indiscernible]. So where is it that we get the competitive advantage as again -- we wanting to do some of the solutions in-house because there are limited components, how do they retain their identity against the competition?

See for them it is also a question of speed of launch, because if they need to create internal resources, have to test their algorithm for 5 years. Maxwell algorithms have been running on the road for 5 years. Yes, they are not giving to launch quickly. They will get beaten by comps.

Then also, I understand that right now when there's urgency of launching [indiscernible]

Once the space is created, then that's straight. I don't think it's a new [indiscernible].

Sir, just one question, margin trajectory with all the value addition and the premiumization. Medium term, how do you see your [indiscernible]?

[indiscernible] number of that but I can say that we are a very focused company as far as margins are concerned, [indiscernible] some part was diluted because of the [indiscernible] and we are very focused on what we are doing and changing that to bringing it back to the original [indiscernible]

15%, 16% operating margins.

I do not like to push that number.

Not immediately. I'm saying -- is that the volume term range that we are seeing at? Okay.

I think I'll be seeing you next week. Other plans?

No, I'm not done. I'm not done.

So great. How would you like us to proceed?

I think the key idea of this meeting was to just go a little bit in more depth and understand, then how do we see Endurance from a slightly longer-term perspective. And then obviously, there was this con call where you spoke about a lot of new orders, et cetera, that the company has been getting doing. But just wanted to get, as I said, more ingrained perspective, where is the company heading next 3 years plus? How do you see the company shaping up? So if we can start off with what are the key strengths that we see as a company and how we've been taking this journey, I see this diversification happening in terms of the client base that we are doing. How do we share the European business from here? Yes.

Okay. Let me answer this a bit differently. We have got 4 product verticals, transmission, braking, suspension and chassis and then we got subverticals on brakes, for example, we got braided hoses which we do in-house. That's an integral part of brakes as far as the product is concerned. And we also got on transmission, but aluminum forging but that's a part which we supply or make for captive consumption for our suspension. Now let's look into the model that is emerging for Endurance. Our prime slogan since our business -- since the inception of our business model has been complete. So have we been able to give complete solutions to our customers? That's where we're going to look into because that is what it's going to follow up further. For example, when ABS came into play. First, I'll just give you an example and then you can correlate to the in longer term strategy. When ABS came into this [ universe ] nobody was thinking that how to optimize the configuration. First requirement was to put the ABS into regulatory norms and have the vehicle [indiscernible] in ABS which we will do. Now what was missing in that, it was an import substitution of wired braided hoses, which is coming from Spain at that time. He was the dominant player [indiscernible] dominant player. So import substitution of that had to happen, which is offering the next level solution to the customer that, okay imports is going to go away if that is localized. Likewise, in aluminium forging which was around 13, 10 years back when we started inverted front forks. Aluminium forging were -- there were 4 elements in that, in one front fork, 2 axel clamps fans and 2 triple clamps. 2 triple clamps are the one which hold the leg assemblies and axle clamps are at the bottom there, which hold on to the wheel. Now these are structural components. We probably did not have that much of experience and neither did a [indiscernible] on die-casting and high-pressure die-casting. This was imported forging. India did not have a very strong players on aluminium forging, especially in these typical structural parts. So this was imported from the company called [ Liber ] in forging aluminium. Would you like to have something?

1 normal tea. And if you can pass me the water please.

So that was an import subscription. Now what are these -- these are actions justifying your position with a customer that you've got a problem in hand or you could have -- they can configure with some imported parts to localize them, is giving you a solution so the dependency is less. Now what we have found, that when we may localized that after 10 years today, the volumes that we have substantiated that investment. It's a capital consumption. Now what are 2 advantages that we got to-date, is not only we use our capital for them, but have also a reduction of our inventories. Inventory is also our cost. The order cycle with Europe for especially for [indiscernible] is 6 months, if I need this in 1,000 components, 6 months since I would order this. So huge inventories are -- building huge inventories in e-transit and not. And then was model will do well, which will not well. An axel plan for an adventure would be different and axel plan for pulsar would be different, for a KTN would be different. So I had to keep a lot of inventories. That inventory count has come down. Okay. And I've localized that. Now it has helped me 2 ways. I'm protecting my margins because the value-add comes in-house, and I'm protecting my customer by saying that okay, I've got a product for you. If you give these orders to someone else, he does not have that product. You will still have a imported material. I will not supply forgings to my competition to survive. [Foreign Language] So I get a clear advantage. So that was creating an entry barrier.

But do you compete to somebody like Bosch. So like if -- the way they started first and now we are catching on them. What kind of price differential are you able to offer to the customer what...

So when it comes to -- When it comes to ABS modeling and all. So I'm just giving example that what does complete solution mean to us. We mean that anything that we are offering to the customer, be it design, be it development, be it manufacturing, be it after sales. Anything that the customer does at his place, we offer that solution first. For example, design is something which is always done by the customer. They are still doing the design, but now suspension design is not their job. We do the suspension design. We only get something like DIDS, which is design input data sheet. We get that from them. And we tell them for this vehicle configure that you want, this is how the suspension will be. Okay. So now there's zero participation from his side. I give him the suspension.

So basically, now that you've done so many models that experience and all adds up and then we are able to...

And we are able to -- within [indiscernible]. So design is the first solution and then development. Earlier years means yesteryears, maybe 20 years back, the customers were doing a lot of operations in-house. We've got the -- they started outsourcing. We picked up all those opportunities, we are doing that. So now it's not only doing those outsourcing activities, but actually giving them solutions. Not only design, but development of child parts, development of child part, testing those child parts, validating those child parts. Seeing that they integrate with my product or not. And seeing that with all those components, which are assembled to make one front fork, are they assembled together perfectly to give the right performance for all the child parts [indiscernible]. When I say suspension, suspension has got 20 different elements into it, right? Be an outer tube, be an inner tube, be it oil, even oil has got a performance level. So the viscosity level, and anything as well we could do. And every small element on oil, oil color or a CE or something, everything is performance. So how do every -- how does every element assemble together to give the best performance of the [indiscernible]. So that is offering complete solutions. So design, develop, validate, manufactured, supply, and service. So like supply and then given the service. Service means aftermarket, give them sale service, post-sales service. Now post-sales service is something people think that is spare parts, department supplier [Foreign Language]. That's not my thinking. That's not to be rethink. I'm sure others also think this way. That we actually go down to the field, understand from mechanics, what are they -- what do they perceive of our products? We assemble a -- configure a vehicle with all instrumentation and run it ourselves on the field, which is RLDA, road load data acquisition. So all the events which have captured on the road may not be the total events which you do at design stage. So we simply bring all those extra events that happen, simulate them in our lab, simulate them on the machines and ensure that our products are good to encounter those. Okay. So that's 1 step ahead on sales -- on after sales. So offering complete solutions has been our prime definition.

But just tell me one thing, is the customer willing to pay you for this? Because we know how cost conscious or like trying to squeeze the maximum on it is what they are looking at. Then how does this value addition helps the customer in [indiscernible]?

If he -- even if he's not paying for this. He's offering the business. He's offering the business. I'm doing business. You tell me one company in India, just name one company, except for Endurance who's -- test drive at their own. 29 acres of land converted into a test drive in which I've got at least 13 different types of tracks over there. Testing the vehicle so that I ensure that I give them a product which is first-time right.

Got it. So you were at say, between the competing companies and obviously [indiscernible] fair chance. Okay.

So I'll be getting the first move. Today is because of this reason probably I'm into a very prominent position as far as high-end suspension is concerned.

Right. It was a pleasant tier addition, we got to know that, okay. What the new launch is, we are [indiscernible].

So this is what we do. Now how do I look at 3 years? So what I'm doing today is a protection for 5 years. [Foreign Language]. Now how did I modify that? ABS modulator, we were also -- you got you tea?

Yes sir.

So we were also challenged by the regulatory norms [Foreign Language] we were very dominant in hydraulic brakes systems. So hydraulic brakes system what was required in order to enhance or graduate to the next level ABS model [Foreign Language]. If I'm not there on the ABS modulator, the I'm going to keep on buying the modulator from Bosch and do only a job work by filling oil into it. We didn't want to get into that. [Foreign Language] Let's not get it to that to be started [indiscernible] more later also. [Foreign Language] More than 400,000 modulators are there on the field and all of them are defect-free, zero defects. So now that puts me on to lead with Bosch. If I'm not equal to Bosch, but at least I'm doing that broader which he was supplying to.

I got it on my phone not on this recording.

So I'm actually preparing myself for a tomorrow -- for a better tomorrow. How do I do that? Let us suppose [Foreign Language] Assume that this regulatory requirement extends to lower bikes also. Then ABS is required in every bike...

Then you'll expand...

[indiscernible] then for all that expansion, I don't Bosch support. I'll do it on my own. Now when ABS came, I'll give you the same example of complete solutions. Wire braided hoses were required, that was important. Valves, which were important for us. We want to get on to the earlier stage of regulatory requirement. We said, okay, what's the best way to get on board fastest. Buy those components from my collaborator [Foreign Language]. Now we got to be cost competitive.

Correct. So now you're doing it on your own...

So we did 2 step -- 2 pronged strategy. One is, first, get onboard fast and then correct the cost. [Foreign Language] then correct the cost.

But again, from the 2-wheeler companies, OEM perspective, were you able to get the cost advantage also versus somebody like Bosch? In they could take you or?

No. Because for them, it was very easy no? If at all -- [indiscernible] he would talk to price for that much. [Foreign Language]. So he would actually wipe me out, but we didn't allow that to happen. We went through a particular strategy. And we told our customers, okay this is what you're getting from Bosch. This is our step, step, step. [Foreign Language] we'll be cost competitive also. Now for them, it was important to put Endurance on board because these big weeks, they keep on changing the amount of money which we charge to customers. Even they need a; second source. [Foreign Language] We bought and because we know as the backdrop, we were the latest technology of APTC clutches. So this way, we have actually moved -- prepared ourselves for a tomorrow. Tomorrow means what? High yield configurations. Tomorrow means what? High-end suspension, high-end race. And now the next thing that we are doing is units. Now adding up embedded electronics to our portfolio makes complete sense to our business model. [Foreign Language] We have already made that. Clutches [Foreign Language] there's a lot of integration which is having this is long term [Foreign Language]. Now eventually, the bike configurations were the highland bike configurations for years ahead. We'll be having a lot of electronics talking to each other. [Foreign Language] What would I do the? And I'm dependent on people who'll rob me...

So it this makes sense that we do have our own BMS. Again the question was that companies want to have BMS in-house. Somebody like a TVS already has BMS in house, how are -- we having that BMS.

[Foreign Language]. Maxwell has got a very strong technology and I am more confident after I talk to them again and again, and they -- the kind of configuration that they have written and the kind of -- their product is already AS156 compatible. In fact, they said that they are the only ones manufacturing in India who could get it the fastest. Because they had already made more than 60,000 BMS supplied through the world, and they knew what the road conditions are. How the BMS is going to behave, how it's going to be configured, how the [indiscernible]. [Foreign Language].

So then how will it work? Again, to give you an example, I don't know what Bajaj Auto [indiscernible] even Bajaj Auto would be having for the EVs in-house BMS? They are taking it from the warehouse.

I think they were they're into contract manufacturing and so on. [Foreign Language]

Okay. Is it BMS too critical software controlling various things integrating for OEM to...

So what will finally happen. The way I forsee it. There will be a language, which will be for individual elements. And there will be a language by a central algorithm or software, which talks to all. [Foreign Language] This is what I feel. The element which talks to all will be with the customer. [Foreign Language].

[Foreign Language] going ahead of that is the future, and you don't have it, then how do you develop the understanding?

[Foreign Language] I will be less than a middle of nowhere because [Foreign Language] That means I be holding a primitive technology at that time. 10 years later, if I don't know what is electronics or what is the embedded electronics, then I'll be holding a primitive technology..

Got it. And again from the company's perspective, I don't want to come to believe very quarterly margin or something, but just trying to understand that we, as a company, we're at a different margin levels a few years back. I'm just talking standalone, not even will be upside right now. Now that the margins have come off a little bit, like we're talking about, what, 12%, 13% range is a stand-alone business for our margins. What has changed in the profile? As the market becomes more competitive, is it the new segments we are getting in with [indiscernible] or is it temporary.

There are 2 thoughts. There are 2 elements to this. [Foreign Language] Raj can explain it, I'll take the flavor a bit. [Foreign Language] which changed the arithematical opticals of this thing...

Optical is understood.

[Foreign Language] That is #1. #2, #2. What has changed? Fuel costs changed [Foreign Language] which if a customer does not immediately address for you. He addresses this cost after, let's say, 2 quarters. [Foreign Language] So as and when it gets indexed as it gets indexed and corrected, this will come back. And as and when the aluminum or steel prices softened down, this will come back.

But again, if it's not making any difference to absolute numbers, that is what.

In the case of aluminum and steel, it doesn't make a difference to the absolute amount. But in the case of fuel or wages -- in the case of fuel or wages, all contracts will not have pass-through contracts -- or clauses for fuel and wages. And even if there is pass-through on minimum wages, in reality, we may have to pay more than the minimum wages. And the increases could also be more than the minimum wages. So all these factors affect us for existing contracts. Newer contracts, of course, one has to build in future wages. And in Europe, at least for newer contracts, we are also building a price fluctuation for energy, because they suffered a huge [indiscernible] last year from 17%, they went up down to 10%, 11%.

So just back to think of Endurance in the product portfolio, et cetera. Again, stand-alone right now, not year. But what kind of margin profile or really, should I consider for Endurance on a long-term basis range, if you can give fair bit and I...

That we will leave that to your own judgment.

But yes. I mean -- Your question was, are we planning or do we see coming back to where we were? Yes we are back.

Is it like a 12%, 13% range that we should expect?

More than that, I would say. Reason being, so for me to answer that, you have to answer whether the volumes will come back to 2019 levels. So if volumes come back, I think we will easily come back to the older levels of margins.

The newer products and new businesses that we are getting out in understanding.

It's a mix, and it's -- I'm sure the mix is not such that it brings us to lower margins. So there are more value-added products. At the same time, sometimes there is a need to get into a certain customer where we might take a call that okay, we'll do it at a slightly lower margin, so all that. But on the mix, overall, the mix, the margin profile has not worsened. What has worsened is lower utilization in some of our new plants, which if volumes come back in the industry. I'm sure players like Euro and Honda will do well, and then we'll get the operating leverage.

Okay. So then earlier, we were even at 15%. But again, just I think 13%, 14% should be like a normalized, comfortable range?

[Foreign Language]

[Foreign Language] but with some subsidy and some comfort as well, right?

But that was also -- that was there, fee back also.

No, no.

[Foreign Language]

[Foreign Language] So then you are seeing that really comes at 12.5%.

[Foreign Language] the INR 60 crores, INR 65 crores that we are looking every year that will in FY '25, again, we will book the same level. FY '26 to FY '29 can be at a much truncated level. [Foreign Language]

[Foreign Language] which I spoke about also earlier, but as to earlier that Bajaj Auto earlier used to be like a very big client for us now, still on stand-alone is 50%, but are we like really trying hard to make that diversification happen this year?

Of course, you must have seen that over the past 3, 4 years, 5 years, 6 years. We have done anything and everything to...

There are two ways to reduce Bajaj share of business. One is to refuse Bajaj business, which we are not doing, and the other is to grow others.

No, I think TVS in itself was a big thing not easy place, but that has happened. So again, if you can just take TVS as the case study, what actually happened, what efforts went into it? And then how do you see it growing over time?

Okay. Let me put it this way. If you are comparing to with Bajaj. [indiscernible] 2,500, 3,000.

3,000.

3,000. That means all my other customers. I've got a potential to grow and make another Bajaj out of it. [Foreign Language] That means a lot has to be done in TVS.

Yes. First question [Foreign Language] like how were you able to crack TVS?

See, there are 2, 3 things. First of all, they -- I'm assuming that they always thought that we are a Bajaj Auto [indiscernible] in the sense that they had some equity also, which we somehow constant mailers and all, we do that. Bajaj Autos has got nothing as far as equity is [indiscernible]. That is a stand-alone company.

IPO may have also helped. Because Bajaj doesn't even appear as related party.

[Foreign Language] that must have heped. Secondly, [Foreign Language] I think they were largely dependent on brakes from a company called [ Ante ] which is a Chinese company, and they have to localize that. [Foreign Language] which I believe is not the option of everyone. 100% dependent on Brembo because that is also in Italian company [Foreign Language]. But I don't see that as a -- because cost competitiveness and other things we there -- and that's where the first opportunity was to come. Now in spite of our first dominant being die-casting, we didn't get any orders from die-casting. [Foreign Language] So we started with brakes and there -- and then again, [Foreign Language] alloy wheel is a big revenue in the [indiscernible]. They have -- In fact, it is because of TVS that we have expanded now to, 210,000 [Foreign Language] So alloy wheels and brakes [indiscernible] very strong.

So basically, import substitution is something that we could crack?

We could crack. Then in what we have delivered to them in the past 2 years or something is a performance which they have much appreciated.

Yes, you have to get, first of all, tour it to something in the [indiscernible].

They had a visit to our place. They understood, they understood the capabilities, the capacities [indiscernible] everything and they realize that no, we mean business. [Foreign Language] So when it comes to ramp-up periods. Will our choice, first area of preference will be Bajaj Auto.

Okay, okay. You won't end up giving better [indiscernible].

Volume-wise. [Foreign Language] within my capacity, if Bajaj goes up and consume their capacities for their requirement, that was probably a bigger apprehension. Second -- third apprehension that designs and everything, which, if at all we engaged with them to make new designs and all. If their designs are better than any configuration of Bajaj Auto will be passed on to that. But now they are away from all these thoughts.

You were able to give confidence on all these, not easy.

I think word of mouth [Foreign Language]

[Foreign Language] They must have also thought in these the confidential. It's nothing [indiscernible].

How long did it take to break through though in that company? How long [indiscernible]?

We started our intensification activity way back in 2013 [Foreign Language] Where the intensification was one of our strategies. Intensification was to get more customers, to get more business, to get more revenues to our R&D facilities [Foreign Language] Yes, other customers are also giving us orders. And something that our Kawasaki would have -- they give us all this, directly was surprise to the financer, to their vehicles, then high-end suspension. If at all, we are getting technology from KPM, that means we are enhancing and upgrading our product also. So they would have clearly seen the suspension of the asset wherever they would have also tied up with BMW and also, any kind of high-end suspension required could be routed through us only. So I'm sure they must have seen the merits of holding around the vehicles and today...

But in 2019, we ran the first business at...

2019 was -- of course, April 2019 [Foreign Language] service level will talk more.

Correct. Then, so now the number that you are saying, say, INR 500 crores, what is the time frame where we are expecting it to scale up to that level? Right now, we must see INR 100, INR 125...

No, we are already at INR 500 crores.

INR 500 crores, previous revenue run rate [Foreign Language]

[Foreign Language] Order value is INR 500 crores.

[Foreign Language] order value, annual run rate [Foreign Language]

[Foreign Language]

I thought it's INR 100 crores, INR 125 crores.

[Foreign Language]. We are around 4% of India business. So INR 60 crores into 4, INR 240 crores, INR 250 crores.

[Foreign Language] INR 240 crores, INR 250 crores. And that INR 500 crores, what we say is like the annual revenue that we'll reach. So maybe in year's time or -- so that should happen. So whatever this new order inflow that we've spoken about, new lines, new products, EVs, combination everything. In this, we make several assumptions also, right? There's an assumption of how much time will do, how much, et cetera, as other models will do as well. So just trying to understand what is the reasonable asset with which we should take the numbers? When you give us an understanding that maybe you have a few order ramp up of INR 1,200 crores this year. So are you like toning it down and giving it to us or these are like the numbers you get from the clients and you're just passing it to us?

These are the numbers which we get from our clients. For example, if I say my order book is this one, it's based on [ the ROI ]. It's based on the -- now how much will Bajaj or other customers perform...

Correct. How much will Harley do? How much will the...

That, I don't know as yet. If at all, I've got orders book, that was buildup capacity is that one, then I have to take that order book value only.

So how will it happen? Suppose Harley has given you that order of a particular amount and they don't reach that number, just imagine. Negative? Obviously, they can give positive [indiscernible]. If they don't reach that amount, it will just get spread over a longer period, right? From their point of view.

From their point of view. We can't build them because they haven't met their only commitment.

So right now, it's just like an estimate that they have given you they'll do so with numbers and from there you...

See, they're into the business of selling vehicles to the end users, to the consumers. So their market study must have already said, okay, vehicle is segmented. [Foreign Language]

And then they're coming to you. But my question was, are you toning it down in game or are you just giving directly? So you're saying directly is what you're giving?

No. The volumes given on, let's say, news channels or something is x, but LOI of x minus or x plus, I will give you only the LOI numbers.

Got it. You all have nothing to do with that. You're giving it directly here.

I'm not playing around with their projections. I'm just giving the LOI, that is my business. It's fair to say that, you know?

Yes.

Yes. For the larger volumes, yes. So some very small OEMs, even if they give us larger numbers, we -- if we don't believe those numbers, we give [indiscernible].

As in, in the past, if you would have tried this number, like we started getting this number now. But in the past, if you would have tracked this number, there would be what, plus minus 20%? Leeway to this new order?

See, HMSI gave us a very large order in 2017 and 2018. Yes. From there, there has been a minus of more than 20%. But...

And it is surely because they missed their volumes.

Yes, their scooter volumes were much lower than -- I mean, in 2017, '18, there were the heros in the scooter market. Scooters were doing very well, motorcycles were sinking a bit. And within scooters, Honda was doing very well. So there was no reason for us to not believe the numbers of that. And in any case, large OEMs, we believe their numbers.

So they're giving at present 20% back?

[Foreign Language] 20% [Foreign Language], which is why our Sanand and our Narsapur facilities have extra capacity today. But then we build capacities for that.

But Hero, we had an LOI for 6,500 vehicles for...

[Foreign Language].

[Foreign Language]

Again, I'm asking, [Foreign Language] because Hero didn't meet their numbers? Or...

Hero didn't meet their numbers, Hero...

They don't change it like [Foreign Language]

[Foreign Language] 100% suspensions in their own factory.

[Foreign Language] business guidance [Foreign Language] every year. They did not meet that guidance [Foreign Language]. If I've got an LOI of INR 6,500 crores, and I won't tell Hero, then I'm putting a capacity of only 4,000 because I don't believe your numbers. They'll will start...

But did they do us favor by giving us some volumes?

Yes, they did.

So they did us a big favor in Halol because they didn't reach volumes.

So they gave you some?

Yes. [indiscernible] Neemrana.

Okay, Neemrana also we did.

This is like same thing? No, this is good.

When they started -- when they wanted to start the loan, they were delayed. And we said that we are setting up capacity, you are not delayed, your numbers are not coming up. And this -- to start with they give us Neemrana. We supply to Neemrana. Then when this -- we continued Neemrana because we said we are not reaching this project. Then we said, now you've not reached Neemrana and both this put together. So give us Chittoor also, Neemrana and Chittoor.

So generally, as a company, when we say like 2-wheeler growth, let's say, 6%, 7%, putting a general number. I know what you showed is -- it's been far more than 6% or 7%.

1.2%.

I know -- I was shocked to read that number [indiscernible]. But if it's 6%, 7%, then Endurance, as you said, that we'll grow a tad faster than that. So how much is that number which you kind of assume that you should grow in addition to the 2-wheeler and the C group, maybe because of...

I will never try to put that number because if I got a potential of moving higher than what I can project from my side, I will go there.

That is good. But again, just for understanding.

No, we don't give that number. We give you the pillars of why we believe there will be growth. So that was again obvious.

Is there value addition a part and all the production presented or it's -- and then how do you say? Suppose you were giving a suspension for so much value and now the profile of the bikes has moved up. So the value of the...

If the contribution of the bike changes, yes, then the value adds up.

Yes, because premiumization in bikes would be happening. So then your part value also increases.

So that premiumization, which is happening, say, for a high-end bike, more higher CC bike, that we also try and convince the customers that if not the same premiumization, give some features of that in your lower CC bike also.

Got it. The way the new business pipeline is looking right now, at least it looks very good to us because 10% growth right now on base business is straight away, which is visible from this new business group. So has it been the case in the past few years also? Or is it only now the case that these numbers are looking so high?

No, it's now that these numbers are looking good. Because I think the acceptable or the acceptability of high-end bikes is more on the use now. Since earlier, [Foreign Language] the disposal income with the parents or people has increased.

Sir -- and willingness to spend has also increased.

And willingness to spend has also increased.

No. But for you as a company, when you talk about the new orders that you are bringing on, which can get executed, that number used to be historically also 10%, 12% or historically, it used to be like 5%, 6%?

I think it used to be high. I'm just trying to guess. I think it used to be high, but it used to be highly skewed towards 1 or 2 customers. [Foreign Language] when we are saying INR 307 crores in FY '24 Q1 or INR 935 crores in FY '23, it's quite wide spread. I mean this is a quick judgement from me, but I don't know whether what I'm saying is correct or not.

And again, if we talk about the efforts of the 4-wheeler seg, I mean, that is one area that you, yourself are trying to make inroads working. But what is the hindrance there? One obviously, we are not present in that space. But is it like certain profitability number, which is kind of stopping us from getting more orders than the 4-wheeler segment? What is the roadblock in that business?

There's no roadblock. See -- there are opportunities are coming, obviously earlier -- okay. Let me answer this in different way. First, we always wanted to capture that space, which was available to us in which we had the domain expertise. Okay? And that was 2-wheels. Now if I have not captured the space that is available for me in which I'm an expert, why open a new subject? Tata, I was supplying castings in Tatas and Mahindras in the past 25 years. So we continued with that. While we were down at South, the purpose we opened the plant over there, that was Hyundai and [indiscernible], they give us the models, Hyundai cars. So we went over there and opened up. Now while we were there, Kia and this Hyundai and all, they said, okay, if you're willing to expand, we'll give you more orders. So we said, yes, we are willing to expand. So while we started expanding our South zone operations, these big opportunities came to us. So Hyundai for the new model and the Kia model gave us the opportunity. That's why we are at some INR 230 crores or so with this. And Tatas and Mahindras, we don't say no to them. We are still supplying around INR 100 crores to Tata and -- even now. So we are not going to say no to no business. The change point is that we are trying to supply fully finished costings. So that our value add -- in-house value-add increases and we become more profitable. But 4-wheeler, yes, our focus is there. If at all, there are bigger opportunities which come to our way, to expand, we will do it.

But [indiscernible]?

It will be incorrect. Because other segments, I don't have any collaboration or backup technology. Although we had some [indiscernible] earlier, but we still did not move with it. That, of course, we broke up [indiscernible] at least. That was for 4-wheeler suspension. But right now, we don't have any backup -- collaborative back up with any of the technology providers for [ Ford. ] And so we start with die casting.

Okay. And how is the visibility there? Again, when I'm saying like, say, 3 years down the line, you'll see that 4-wheeler proportion could become bigger. Why are you saying that, okay, it would be like 2-wheeler is also growing.

No, 4-wheeler proportion can grow further.

Okay. And why do you say that? [indiscernible]

See, first of all, vehicles are -- family vehicles, luxury cars, some of the vehicles are [indiscernible]. Die casting technology is that -- [indiscernible] needs a lot of R&D and design and other facilities in-house, which probably we are probably at much higher than our competition. And thirdly, main die casting companies are not doing well. I can't name them, but main die casting companies are not doing well.

You mean financially, right?

Financially. So that's where we hold an edge.

Got it, okay. So these pieces of businesses can start coming to us. And on the side wheels and machining part, so up until now, the clients have been doing their machining in-house, right?

Yes, true, quite a lot of parts, but now they started buying fully machine only from us.

Yes, because they have also [indiscernible].

[Foreign Language] zero investments if they are getting a product investment [Foreign Language]. They become far more intelligent. When I [indiscernible] and leave the industry, then I will tell you, okay, in the quest of earning more business, we kept on investing.

Obviously, [Foreign Language] advantage and that is either [indiscernible]. We clearly said you can [indiscernible] some of the selling. I know that the way we are diversifying going away from IC and building on that high space, EV space as well -- so some bit on that? And secondly, a perspective on why does European operation need so much of CapEx? On general, I always thought that we are not like a focus area. But when the CapEx number comes, not INR 600 crores now, even earlier at INR 350 crores. And then why do we need that ongoing CapEx in Europe?

But earlier year, they were doing some around EUR 25 million, EUR 30 million.

EUR 30 million. INR 300 crores. [indiscernible].

In Europe, the number of models that come, the number of platforms that are coming, if you are not keeping pace with those, then soon you'll be outperformed by someone else. The opportunities that we have picked up over there are large orders, strong. Customers like Volkswagen, Stellantis, and others, which are new platforms. So you have to invest over there.

Okay. But this is the case now this year? Or this is the case like...

The die casting machines are common, whether it is for the old part or the new EV part. The die casting machine is common. The dies have to be replaced. And when it comes to machining for specific new parts, they are having to invest in new machining assets. So after the aluminum product is cast where it has to be machined, so machining [Foreign Language], depending on the end product, then some CapEx. And this new [indiscernible] INR 300 crores or EUR 30 million is steady state. That we will be doing year after year after year. The EUR 60 million which we announced this time, that is a onetime, you can say, because of the large number of EV and hybrid orders that we have got.

Okay. So it's like new models, you've got and then...

Yes.

And so European side, what kind of growth do we post?

And in Europe, we've also invested a lot in automation, which has helped us in this downturn. So our fixed cost was lower than competitor.

Yes, in Europe, it makes sense for the salaries, et cetera., you are investing in automation is a good investment.

And we are also investing in solar power. Having seen the [Foreign Language] of energy crisis last year, our solar panel investments are also growing.

So European side, what is the kind of growth that we foresee?

Now it depends how the geopolitical situation improves over there. Although Ukraine is a history now means nobody bothers about the war that is going on, although people may be concerned, so would anybody. But I think they're recalibrating themselves to things like energy and other things. Vehicles will happen because the configuration of the vehicle is converting from ICE to EVs. So new platform and opportunities will come. There are fears -- fear factors over there because earlier the vehicles which are -- if they see a 17.9% increase in new car registrations this year or last quarter is finally because the orders which we picked up long back, they are being getting delivered now. That's a reason. Now how does it stand from here onwards? That is -- that will depend on many factors, especially as Massimo says that inflation is becoming a big issue over there. Interest rates are becoming an issue there, so they -- these are their worries over there.

So because of which overall growth itself could be a bit constraint and then for us the growth in Europe is linked to the EV growth happening there or...

Linked to the performance of the OEMs over there.

It has to be and that is a big factor.

Number of new orders there also, the way we talk about here?

The number of new orders there has also been growing. Which is why, I mean, they have had -- in a 10-year period, they've had CAGR negative in new car registrations. And our growth has been roughly 8%.

Okay. And what kind of focus area does Europe continue to remain for us? Again, from a company perspective, how important is Europe for us?

It is -- I mean, our traditional die-casting operations, it continues to be very important. It's 25% of our revenues. So it's not something to be ignored. And then from a 2-wheeler perspective and an aftermarket perspective, it's gaining new focus.

When you talk about how important is our Europe business, I think it's a model that we have built up with a lot of intelligence and strategic reasons. And -- how many companies of India stationed in Europe are doing as well as we are doing? No one, probably. So it's a profitable business model, which has sustained something like a COVID in a downturn and given this Ukraine war and still made money. So it's a very strategic positioning over there that we have. From there, we can cater to different parts of the world. Competition -- suppose if I'm unable to supply anything from here to any of the OEMs, I can supply from there, somewhere else. So we can probably leverage our...

So basically it sounds like more like diversification again, part in the scheme of things. But when it comes to growth, et cetera, the stand-alone piece grows faster and hence, the proportion that we can reduce.

And there it has exactly come from, how did Europe get bond for us, it was diluting Bajaj [indiscernible]. I think the acquisitions...

Those are the first thought, yes.

Acquisitions made us do that fast. We haven't back in 2008 what we face was nothing less than a nightmare.

[Foreign Language] I think everybody had to go through their learning cycles in that phase. So that happened, but okay. Got it. So that's the understanding there. Great. Anything else that you would want to share and talk about?

Anything else that you would have to know?

I mean there's more to know if you come visit us some time.

At a place in Mumbai. Aurangabad is a direct flight. It takes only 35 minutes -- 35 to 40 minutes to land. You can come in the morning and go back in the evening. I can show you what we do over there. So -- and there's an old saying, a picture is better than 1,000 explanations. Whatever I explained, it can be much better seen on the ground. You're most welcome.

Just your comment on the EV side. So EV side is there's a lot of noise and no substance? Or how do you see the EV side?

No, there's a lot of substance. That's why 479,000 vehicles have already been sold into [ 479].

You start FY '23.

FY '23, [Foreign Language]

[Foreign Language] including 2-wheelers?

Including 2-wheelers, yes. Yes. So overall segments are better and the noise of Tesla coming to India [Foreign Language] talking so much about EV and [indiscernible] talking so much of robots and all [Foreign Language]

Two-wheeler [Foreign Language] 1 million cross [Foreign Language] FY '23.

So that's there to stay and then [Foreign Language] INR 600 crores back to the EV order book? Again, [Foreign Language] that you see becoming INR 600 crores, annual basis?

FY '26.

So what if RVs and EVs are going to coexist? They will coexist. They are vehicles. From there, [Foreign Language]

[Foreign Language]

Nice talking to you. Good set of questions. You were well prepared. You didn't have any notes but you were well prepared.

I guess if we have invested in your company better no.

Hope you're going home with satisfying answers?

Yes, definitely. And it always makes sense for us, we can talk about not so near-term things to understand how the company is thinking. [indiscernible] So we are not very -- just to tell, I'm happy about the bad things happening. Our ideal is always to know if bad things had to happen. We don't like surprises that much. I think that's the only thing, understand difficult times, that's fair, it maybe business, including [indiscernible] difficult times and good times. So just try to meet with the company that I understand that, okay, there's something happening, you should know why it's happening.

Yes, the only difficult thing that we see is the opening registrations. So new car registrations will [indiscernible].

I think the bad thing that you are talking about which requires a surprise, neither they are known for you nor for us.

[Foreign Language]. Companies know, but I don't know for what fear or something they don't wish to sound out investors. So I think that is the only thing we try to do in these on our minds and that we have a good understanding of the business so that we stay through the thick and the thin.

But why would somebody say that, okay, that he's foreseeing some problems?

But they also both acknowledge the mistakes like we told the public that we were late in submitting...

I'll tell you one very big reason for this because many times good investment times when difficult times are there. So this I have in my portfolio. And I know that there's a good coming from long term, but maybe impending the IT just to give an example. [indiscernible] they are running round waves. So we use the same quick [indiscernible]. So we do know if you are being long-term investors, you don't have to worry that like next quarter has to be very good, but yes.

So it seems that we also need a one-to-one session with you.

Which is not allowed to, I guess.

Thank you all for joining us today. My name is Raj Mundra. Mr. Ramesh Gehaney is our Director and COO; and I head the Investor Relations function. We'll tell you a brief Endurance. We have put up a brief presentation on the website and this tells us about the company. We started in 1985 as an aluminum die-casting company. Today, we have the largest aluminum die-casting company in the country. We are also into -- for 2-wheelers and 3-wheelers, we are also into suspensions, transmission and braking products. We are also into embedded electronics as we had acquired Maxwell last year. We have 19 facilities in India and 12 in Europe -- and 11 in Europe. And we have 5 R&D facilities in India, which are DSIR approved. We also have 2 technical centers in Italy. We have a 29-acre proving ground in Aurangabad for which there's a detailed slide. Through our R&D efforts of 325-plus personnel, we have generated 36 patents and 33 design registrations, will tell you in greater detail. We have a clean corporate structure. In India, we have the listed entity, Endurance Technologies Limited. All the 19 plants in India are part of the listed entity. In India, we have another company called Maxwell, which we acquired last year. We had acquired 51% last year, we are owning 56% now. In Germany also, we have a single legal entity, which houses all the 3 plants of Germany. And in Italy, we have an SPV structure because this SPV has a series of acquisitions over the years. Like I said, we have 19 plants in India, 11 in Europe, 5 R&D facilities, and we have a total of roughly 4,800 employees. Our presentation tells you about key corporate events. So Anurang Engineering was the company that was formed in 1982, and this is what is today Endurance Technologies Limited. As a group, we had first raised funds by way of private equity in FY '07 from standard charter to private equity. Standard charter had exited in FY '12, and that was where active private equity had come in. We offered active and exit by way of IPO in FY '17, and we did the offer for sale in FY '19. Today, 75% of our shares are headed by the promoter family, 25% by the public. [indiscernible] Sure. Yes, that's very clear.

How many people are not aware? That would be unfair for us to skip the presentation and give [indiscernible] One for Q&A?

Yes. Please, you should be first.

Obviously, I think we've been interacting with the all the 4 as well, but how your -- what is your on the kind of product to call revenue for bike part and EV that we are able to capture incrementally? And if that is a percentage of increment and visibility going up...

As we said on one of the calls also that in the case of Bajaj Auto motorcycles, our parts as a proportion to their expectory price is between 13% and 16%. In the case of Royal Enfield, it is roughly 11% without the alloy wheels. Now we are doing alloy wheels to go up. And in the case of Honda Activa, it was roughly 8%. In the case of TVS, where we made a start only 3 or 4 years ago, I think it's 4%, 5%.

And electric? Like all the electric versions like -- Ola, I think they are not yet.

In electric, we have calculated it. See in electric, our total orders is worth INR 600 crores of annual sales, which will happen in FY '26.

So what do you see incremental? I just spoke to Bajaj in the morning also that volumes are not doing like -- so the OEMs are yet okay because the realization went up by 40% over the last 3, 4 years. So the EBITDA is up, the margins are up. But as an ancillary fall to below. Considering that the volumes are not going up, your revenue -- your EBITDA per product cannot grow the way it grew...

In Bajaj, volumes will not go up from the next 3 years?

That's 5 years. They managed with lower volumes. Much better because their realization went up by maybe 30%, 35%. So the EBITDA also went up. But for an ancillary company, if the volumes continue to remain a challenge, if they do, and we do not have any other J-curve to latch on, where we get our significant growth stock?

Okay. There are 2 answers to this. One is the OEMs have probably got a better realization because the vehicle configurations are cheap. Right. So for a vehicle configurations [indiscernible], right? So for a vehicle configuration of x, if my suspension was a carryover from my interesting, I do not get any extra, okay, so some of my products are a carryover of existing models, which get -- which are compatible to the new models also, right? So that can be one reason. Secondly, as volumes are concerned. See -- we know that the volumes have shrunk for the entire industry. It's not for Bajaj, it's entire industry. Now in spite of the industry coming down by almost 4 million vehicles, if I say that the peak was 24.42 in FY '19. And today, it's just about 20 million or 21 million, 4 million vehicles are out of the system. That means there's an upside on that. So that upside will probably later it will come. But in spite of that, our revenues have grown from, let's say, the best of INR 5,000 something crores to INR 6,750 crores last year. So there is a premiumization which holds on our products also, which is seen on the actions that we take. Now our revenues or change points are coming by the strategies that we've laid down for ourselves. And what are those strategies? Going into fully machine castings, going into expansion of alloy wheels, having a handsome gain on base facilities. So all these things have actually added up just by the change of vehicle configuration, which was in the case of brakes, it was hydraulic brake system where we were a dominant player on hydraulic brake system. The order flow was -- through us was higher. And that's where our revenues went up, in spite of the same number of vehicles, we are, in fact, a lower number of vehicles, we're still at higher revenues. So this is how it changes. As far as EBITDA margins, what you said that they are earning more or something? In our case, there are 2 things that have happened. One is that the aluminum and steel prices have gone up significantly, where because only indexed to the level that the price change was there. So it was not...

We don't get any margin on that?

We don't get any margin on that. So that's an optical illusion of the balance sheet for the margins. Yes.

So I am [indiscernible] for an ancillary, the amount of volume growth of the EBITDA go financially. So if the volume growth doesn't happen or whatever, there is a change in volume growth, how do you increase that EBITDA to much higher than industry growth?

Yes, 2 things. One is that you increase your SOB, which is share of business negative. You increase that because if my wallet share is x and we can do x plus something, then that increases the life, fixed cost gets spread. Now will that happen until straight? Yes. Why will that happen? Because what I've done for myself or what Endurance has done is we have created those extra elements, which will make a better configuration supply to the vehicle. For example, earlier, we were into brakes -- hydraulic brakes, we added ABS modalities onto that. After getting ABS, we have added vibrated hoses on to that. So it's the configuration of the -- our products which we are adding will bring better value add at the back end for us.

Do have official guidance for this year? Revenue range or something like that?

We don't give any official guidance as such. We only say one thing that yes, with all our endeavors and we'll be better that -- we'll perform better than the industry. And that I think Raj can speak volumes about that last 10 years, we've been moving at an average CAGR of 8. 9% to 9%.

Is the Honda coming under this new range of electric vehicles? Do we have anything there?

Yes. The HMSI EV, right?

Yes.

How many? 4, 5 launches.

I think they've just began to give orders.

There are only 2 right now.

So they will be supplying?

Yes, we've only got deals.

Just from a strategy perspective, can you almost give us a sense of right, where the almost -- as you think about what you might want to build in terms of incremental M&A or into organically? Is it one on the EV side at any specific kind of -- any specific specialties that you are missing right that you're especially focused on?

Yes. See, I talk about this on vertical expansion and horizontal expansion. Horizontal expansion would mean where I add more products for myself and vertical expansion would be where I increase or build higher continuation of the same product. For example, in hydraulic brakes, I added ABS. On ABS, I added [indiscernible]. So I'm improving on the confusion. That is vertical expansion on my product. Like in suspension, we went into higher premium products like -- with WP Suspension, we have the collection we got into inverted front forks. Now the configurations which we had for inverted front forks, we changed them also and made them suitable for lower-end bikes also. So for each product that I'm making, I'm adding a value, which is better than what was originally offered to the customer. So premiumization and adding value vertically on the product so that I create entry barriers from my competition is probably one of the strategies.

Is that M&A or just anything in terms of opportunity set, what you see out there, I missed M&A.

As far as M&A is concerned, we will be adding only those or will be on the outlook of only those products, which make business sense to our business model. Now when I say that, like BMS. BMS made sense to me because tomorrow in years to come, everything on a vehicle will have electronics talking to each other. Okay. At that moment, 5 years down the line or 4 years down the line, there will be too many ECUs and too many electronics on the vehicles. I should not be sitting like an idiot, saying that, okay, what are these products and how does the vehicle talk to each other? All these elements are -- so embedded electronics is what was required. And that's why BMS came into it. So today, although BMS is a flagship product for Maxwell, it adds a lot of value to us as far as our understanding towards the electronics is concerned. So tomorrow, when all these are converted into electronic language on a vehicle, at that time, I have the answer to all these things. And M&A for something like if you tell me to do from tomorrow morning, just because I'm going to expand, and I start doing seats and covers, I'll not do that. I'll not do small casting, which are kick starts and footrests, I'll never do them. Even though I got a forging background now, I'll never do that.

Yes. Maybe just going to back to your metric as well. The -- just almost can you just give us -- if you can just give us a sense of not the 1 to 2-year strategy, but just almost a 5-year strategy, there's some remarkable change in India in terms of OEMs, there's a lot of uncertainty in terms of how the industry can play out. But there's also an export opportunity there, right there to potentially change relative to the current mix and things like that. Just -- what's the bank you will make to buy basis on the object?

See, the products that we hold have are really agnostic except for the clutch, which is just about 5% of our business. Great. When I say suspension, brakes and casting, all the 3 products that we hold, including BMS now is -- part is EV agnostic. So getting additional revenues from there in case that volume is over and above the ICE, right? If that's there, then we have already acquired some around INR 600 crores of business. Way forward, going forward, as on when this market expands, the revenues are looking our view. For 2 reasons I say this because the scooter market earlier was -- even today, it's working on a mechanical basis. But the moment EVs came, they didn't go into mechanical actuation updates. We went into hydraulic actuation. So today, if I got business from Ather, it's all hydraulic basis. So the vehicle configuration will play a much bigger role in moving forward our products.

The margin would be lower for the EV...

As compared to what?

As compared to the products of ICE vehicles?

It all depends on the configuration of the -- see, let's try to understand. A suspension, which is used for a motorcycle need not be a carryover on a scooter because there the vehicle configuration is different. Now a scooter, just mentioned, need not be a straight replacement or a carryforward on a EV, because the EV would have a different set of configuration on the vehicle. Yes, the size and composition -- or the size and configuration will change, the envelope size will change, the attachment or how to hold the vehicle on the frame would change from one vehicle to the other. But that doesn't mean that it's going to be a carryover of one product to the other. Technology will remain the same, suspension will remain suspension. You get my point? So margins will depend on the configuration of how much value add do you have at your end.

So just one question on your Q1 number. When I look it your standalone revenue sequentially, as of the year, sequentially to remove the effect of commodity costs, we've grown by around 19% and if you look at the too many customers for Bajaj [indiscernible], most of them sequentially the production growth has been quite strong. So I was just trying to reconcile have we -- are we not hedging in some of the models and that could have been the effect? Or is there anything else to think about?

I don't think it's correct for the HMSI, I don't think it's correct for Bajaj because we are in line with their production growth.

Bajaj's Q2 production [indiscernible]

In June.

I haven't done the analysis on Q2 because Bajaj, we have done almost all their products. I don't see any reason for that unless if it's an inventory shift, if they bought from us in the previous quarter and we use that. For HMSI, it is about which models are selling well. And we are not in all their models.

So in the bike or the scooter?

In the scooter, I guess, we are there in most of their products in the bike...

You said HMSI bile or scooter?

We sell to both. But in HMSI bikes, we are not all [indiscernible] unlike in the scooter...

See the number which you see on Bajaj, that's primarily being driven by 3-wheelers, the 10%, which you're saying. If you see -- look at the CRM report, it says more cycles up by 3.2%.This is Q-on-Q.

Similar question on the margins. In fact, it won't be incentive, again, quarter-on-quarter, this is can EBITDA margin [indiscernible]. Just trying to understand commodity cost generally has been lower. So how...

You're talking about India, is it? You can't remove the incentive policy because that has been on the previous balance sheet also.

Part of your Q4, you didn't get margin?

Yes, Q4, yes.

In Q1, you had some INR 34 crores of the year. So I'm just trying that effect. I believe if commodity costs being lower, we should have seen better percentage margin. So any other factors that...

No. Commodities have been -- so the raw material cost as percentage of sales is where there is increase Q4 versus Q1.

Is that mix or that...

It's likely to be a mix because I do think they actually have gone down.

The RMs have not up, they actually have gone down. So the gross margin -- a low gross margin mix has gone up.

We can't see quarter-to-quarter like that.

Have we seen gross margins? Have you seen the order cost increase, and that should help?

I think presentations because we pass on the commodity price increases or decreases, but lower metal price scenario helps our margins in percentage stocks, right?

So that we should see that playing through in the next few quarters.

Yes, it depends on the metal prices, but I know that is automatic and adequate.

Some impact on sequential growth, all revenues.

Yes. Yes. But I guess most of you are not really so concerned about what happened in the quarter.

So just trying to understand the data was...

At times, would I believe Q-on-Q comparison is not truly the rate picture because we've got 2, 3 things which affect. One is the peak period, for example, the Q2 is generally a peak period. This time, you can see a shift in the Q2 also, there -- you got Divarian -- so you can have a good September, good October and probably a reasonably okay November. November can even fall because I think 11th is Diwali after then you see a big slump generally year-on-year. 4 months having one slightly sluggish month is fine. We will gain on the average. So you'll see 3 months in Q2 and you'll see a peak month in Q3 also. So let's not compare Q-on-Q. I know it gives you some reference points. It helps you out in many ones, but still every quarter has got some element, which disturbs it or improves.

So there are many things in [indiscernible] that's why we see Q-on-Q just to ensure that the base effects are long.

Once I was speaking to be news channels and this reference that I said the reference sponsors become so many that you can't even remember what are you referring to. Q-on-Q also take it to some extent. Now what -- let us see how many changes, how many done which have played on the auto industry? I said there are a series of disruptions starting from demonetization. Why today? Right from demonetization, we have seen only disruptions, BSV, BS VI, BS VI, then ABS, ABS regulatory, then comes into play, then you got COVID, high commodity prices. And then we've got one of the worst ones that struck the whole world was international free falling going here. Samsonite is available for $1,000 of containers now moving at $5,000. That was ridiculous.

Any new product introduced, which is specifically for maybe addition in EVs or anything, which we currently don't do but maybe they are working on or something that would be in the BMS side or anything.

Electronics engineers who are doing BMS currently are also taking on a few new products. So electronics, certainly would remain the focus which will include electronic suspensions.

Anything on the PV side that we are working on. Obviously, we have the subsidiary in Germany, but anything in India that people have?

Subsidiary Germany we are doing in India as well. What they do is aluminum die casting, we are doing in India as well. We are doing in India for Hyundia, Kia, Tata [indiscernible]. And it's roughly 8% of our standing.

We look at it 3 years on like the 8% even?

I think we should be firing on all cylinders. So it may stay at 8% to 10% is on a higher base. That is just aluminum diecast. But then there are other products that we are looking at, where we will require a technology collaboration on an M&A. So we have the dry powder. We have the firepower to go for M&A, but then we go target and we are not people who would rush into an M&A. We'll have to evaluate those, which I explained anything which makes sense to our business model, you develop to make seats and frames. I'll not do that. It has to make sense to my business model.

And so, I think from the time wave launched some home we've not been keen to entertain we know that they're going to allow to make money. But how have you seen this market share typical incrementally valuable from now? We will talk about market shares in the states as the eventual market share that will happen 5 years down the line when we become safe.

I can give you my personal opinion, right? I can't talk about that industry, but is evolving. I can give you my question. There are approximately 40 to 50 players, which I saw in some lists, which I reviewed into. Now on the lighter note, although I know that it's getting recorded, but so many cases also don't exist in the market, which has got a volume of millions and trillions. But -- so a lot of mergers, acquisitions, consolidations will happen. And that's when we will see that the 2 configurations of the EV will come and emerge. Maybe a couple of years down the line. And right now, what is the best -- what is the best brake, what is the best suspension, what is the best frame? What is the best outlook of a vehicle that is yet to be seen? Because what will happen a couple of years on the way, the best of BMS, the best of brakes, the best of styling, the best of -- all will get assembled together to make a vehicle which is -- which catches the attention of the target audience. Right now, do we have the entire mass of the target? Of course, the answer is no. The answer is no. even that mass, which is waiting for the EVs to come, they are also not buying the first week. They're also watching the credits. They're watching what is happening around, watching carry some rising [indiscernible]. So all these are different statements which come from. But does anybody talk about, yes, I've got the best of EV? The answer is no. Couple of years down the line of end users for patent is going to pay INR 4,000 crores or INR 5,000 crores just to change the entire battery can probably then his reaction would be different, which I don't know. It's too early to comment on what will be finally even. If it becomes couple you've got to deal with the world.

And if it's a question of market share in your question, sir, if Ola is going to have a dominant market share in the future just like we cracked into EVs after a number of years. Yes, we will be tracking to owners.

I mean they know that we have the skill when it comes to suspension makes.

[indiscernible]

Well, yes, if you look at the auto industry as such, how historically has been going on. There's a prime tier and this is a second review. Prime tiers are those which are earlier, they were far later will tell you about the car. But now that is not there. But still, you've got a prime player in new cost. So right now, if we hold my competition is by trying, they are over there. We make some improve over there as the time comes. We're not saying no that we are not going to take all our business.

If you have to look at our revenue mix, 80% is times, 7% is our 4 wheelers now. And then we have 3-wheelers also around 7%. In 2 wheelers, we have a combination of, one, the industry growth and the share of business. I think PVs and motors where our share of business is going quite significantly. And 4 wheelers would be more a case of adding on clients? Or are we -- you said there is a product addition also happening there. So what I wanted to understand is. Yes. And each of the segments independently, as an in 2-wheelers based on your existing products, what's the kind of industry growth that you're looking at, separate of our improving share of business? Because the 2-wheeler industry growth is something that every one of us is really coming with.

We don't have a guess there. don't answer your question. I don't have a case, but I'll answer your question. All the big units when they started this 2013, 2020 projections, everyone came up with a figure of 29 million to 31 million vehicles. The peak that everybody saw and that will merely saw 24.42 million vehicles because after that, it's right now 20 million, 21 million. Despite the fact that approximately 700,000 vehicles are 3-wheeler also gets added. That's an addition. Over and above because it's still not replaced the scooters. So that's an addition. So first of all, this is a space of 4 million to 4.5 million vehicles. Now if I look into the same end we talk about 2013 -- they're still not reached 30 million. So all that business, which is sitting over there, if they can't reach 30 million. How do you expect me to give you any number?

[indiscernible]

No, from. I mean my theory is that if somebody has a doubt on 2-whetherelers in the future, bike, you should go to the wholesale markets of any city were place to park at. People's residence most Indian middle class households, maximum you can park one car.

4- wheelers, how is the share of business in each of these companies? And how we see that -- next I'm looking at around 2 years kind of.

Strong share business in Hyundai, Kia. We've made very significant inroads in Mahindra of late. And Tata, we have always been there, but fairly small share. Their models are doing well, which has led to our sales through Tata growth. But on the share of business terms, I don't think we are very high in.

And also after markets are a bit muted in this quarter any?

This quarter muted is that in the domestic normally, aftermarket last year, it was exports, which had got affected. This quarter, it was domestic. So what has happened is that we have -- so this is more about dealer discipline. So we have force from 1st April 2023, we posed some delay disciplined measures, which has had the short-term impact. Our team is very confident that in Q2, we do the cash flow.

Just come back to the question on clients again, we on the slide -- in your slide deck, you give a breakout by I think centrality things like that. But where is there maybe the emphasis across 2-wheelers, 3-wheelers, 4-wheelers, any specific clients? I can just mention here right, where you're starting to make invest forward. Are there any specific clients that you've almost told your operations team that took this is more of a focus because we see -- because we see upside because you can displace somewhere else or something. And any specific accounts like that, that you're more focused that you can share with us?

Yes, EVS because I still have got a lot of room over there. I answered this question in a bit different way. Bajaj Auto is the single largest customer, right? I enjoy a share of business of almost 80% on large. So can I make a Bajaj Auto out of every customer that I have? One of them are key, all of them are good. One of them are trying for me, everybody's trying. So can I make a Bajaj Auto sales of revenue from all of them? Answer is yes. I have to build in that service line metadata service of 25 years. And here, I just moved into the 8, 10 years mood interest. So give me some time, the customers also take some time. For example, TBS. They give us a liability and they give us free. And that business is not just small. It's substantial now. We're doing approximately 50, 60,000 sets per month with them. With all the appreciation that have gone from them, right, they're increasing month on month. Secondly, on brakes, I have replaced HanTing, which is a Chinese supplier to -- and they've localized this. They have wanted to gear because we were already dominant as in brakes. So likewise, I look forward to see other brakes or other customers also. So the more we can ingress to my marquee customers, I'm actually replacing someone because the volumes are not increasing. I'm actually replacing. And how am I replacing -- how I creating space for myself, it's by technology, QCDDM, I do quality, cost, control, everything to my customers to development and development is my strength. Today, we have a test track of my own spread about 29 acres, spend INR 55 crores to INR 60 crores on that. That was basically to build products on an everyday basis or first time right. So that they don't to customers don't be -- these days launching of a modern new model is the key to success. The motor model is delayed, you -- you get into the next year's prime period. You may have lost already the prime sales as some other model as configuration that we go machine next year. So it's very important to hit the [indiscernible] spot. And when is it hard win when the OEM was that launched perfectly, and you are there to give them their product right on time, first and right.

We have asked you peer competitive set. Just any general comments that you can give in terms of in terms of what you're seeing in terms of the level of competition and as you're moving off in terms of premiumization are you're getting significant pricing. But now that relative to historical periods as you move up that line like getting?

I got your question. Right now is not looking to the pricing product. Am I getting that space is more important for me. Because the more I get space, the more performs, the more number of vehicles that I get into a larger space of performance, and that will give me economies to scale. I already have got capacities, built for them. already have capacity are going to utilize them for -- as far as premium elections concerned, I know have been a prime driver for high-end suspension, doing approximately 20,000 front focus in these inverted front focus and these and motor sorts every month. There's no other possible. There's no other competition we might be doing this level of different. I want to the extent of giving a similar configuration downsized a bit for lower in bikes. We are going a step ahead to attract that target audience who we want inverted front overlooking a pie, but at a lower cost in a lower configure. So I've done that. I'm offering all those value engineering proposals. So I'm probably moving a step ahead of my competition with due respect, given competition is being lot reduce segment, I got to say how I'm stable. So these are actions which I take to be stable.

We also haven't asked in Europe as well. Any general a smaller piece of the business for you just in terms of big picture comments.

It's a very significant part -- it's a if -- it's not a small business. Okay, relatively small, but yes, 25%. And what we're seeing there is mutual demand because of inflation and high interest rates, we are expecting to see lower new car sales -- and there has been some new car sales based on old production with new insertion of chips. So production in Germany, Italy, France is likely to drop in the next few months. So that's the negative aspect. The positive aspect is that our plants have a lot of automation, which means that relative to our peers, our productivity per employee and things like that are much better. So in a lower production scenario, we stand to gain -- or rather we stand to lose less because of our better low fixed costs. On the order front, we are doing pretty well -- so you would have noticed in the quarterly presentation that we have given about the quantum of orders that we have won. And more significant is the fact that the orders that we've won roughly 80% is sold EVs and hybrids. 83% of our total orders in the last 4 years in 1 quarter have been in the EV and hybrid space. So out of the 83%, 36% is the EV. Now European Parliament has said that from 2025, we stock sale of ICE cars in Europe. Of course, there will be export-related production. But in FY '25, as we move towards sitting into FY '23, 36% of new orders had a sizable quantum of new orders, that for this most.

And in some countries, especially some of the big ones. We're now starting to see the signs of the slow down, right? So what is almost how are you thinking about the lag in terms of just -- if there's a significant slowdown that Ukraine in right? This win there's going to be coverage quality basis to Europe again last up out a little bit and what happened globally this year, it might not be slightly right? How are we -- from a strategy perspective, are you seeing lot risk there's a significant European.

So we are committed to our European operations. We have all full the plug for a small I'm you create more in the energy all the things of that we flex it up and down -- so we did that in core, we shut down 1 plant and we consolidated operations out of our 3 plants near to will for aluminum diecasting brought down to -- so that is something we have done during calls. After that, we've been using a lot of external capacities -- so that gives us the flexibility that in case there are lesser number of orders to be served, we can reduce external capacity. Right now, what we're seeing is that there's 100% utilization, 7-day working in plants, which are producing 4 units. It's the plants which are producing for ICs where the capacity utilizations are low. So I think with the mix, we should be able to pull through and see the tough time -- and it certainly helps to be in a good financial condition, like it happened during the energy crisis, some of our competitors went under because they wanted to sustain the -- so we will start that our 17% EBITDA margins had dropped people who had 7%, 8% EBITDA margin move it out.

That's a very difficult question because from the same set up, I can make embodied front forks and I can be financial on the same plan. So if my current capacities are utilized for higher configured vehicles or higher configured, my revenues will go proportionately up. So it's a very difficult question to answer.

Depends upon the mix.

Yes. It depends on the product base. And we said that for brakes, we set up a new plant, right? And we've taken into consideration the fact that we are getting more orders in books. So after getting the orders, we decided the configuration. Now those orders are not full up yet. So there is going to grow in our end, the new Bakari -- in the case of suspension, our Karnataka plant and 1 of our Mudra part is seeing low utilization because MCL and HMSI have not seen kind of volumes that we anticipated when we set up these plants. So we have capacity to grow without adding CapEx in brakes and interest. That's correct.

But I think equation was with the current capacity, how much can we grow our revenue. Yes.

So difficult to tell you but I don't want to give you favor that we can grow without adding CapEx.

Which gets to the new order ramp up. So it seems like about INR 700-odd crores is a ramp-up. How much of that is typically a existing models where we might have not now on a new product or you want to?

So in our chart, we have shown you only for the new orders.

I'm just trying to understand if, let's say, Oasis manufacture 100 end manufacturing there effectively your order book also. I'm just trying to get some color. How much is it from, let's say, a brand-new model on fire on out on of the INR 700 crores.

For this year's revenues in FY '24 revenues, I don't think there is much for brand-new model.

Not one? No new one?

Not one. I don't remember every order, but not much. Okay.

And next year, similarly, the it's about INR 900 crores.

So next year, there will be some new models coming in.

So let's say something like a time when Yes, this would be labor?

Also -- I mean some of the EV orders also would be having next year ramp-up. But -- I mean, we would not like second guess the volume projected by the OEMs. In fact, we are creating capacities if we don't have capacities based on such volumes.

We've got to time for one more question.

Yes.

My apologies for that. You just have a look at the high portfolio of go I mean our product portfolio for the ice I mean, for the semi engine -- what so you're aware of -- most of these are a right? -- sorry, insurance and management conditions -- so let me just at the EV part, both are aggressive more wanted to catch a new market or wanted to launch a number of power longest you get any agreement between the 2 companies.

The agreement between [indiscernible] and Endurance is there for the traditional products that -- so we don't get into lighting, they don't get into suspension. That's been there for the traditional product. So -- and we do the electronics is all provision. It's difficult for either us or for Eric to say that we won't be able to embed because it's going to be there across the way or current -- so the EV-related parts, we had 100% utilization. They normally don't work 7 days a week, but they are working right now in EV-related parts. But in the ICE parts, it's between 50%, 60%.

And what was the lease?

EV and hybrid, I have to put that together. I think they've touched 50%. Yes.

So the margin registry from I mean from the gates come down to 11%.

That was primarily due to energy -- so it's come back to 16. In Q1, it came back to 16. Yes.

So this should broadly sustain by any other I mean if there's something unforeseen, we don't know, but otherwise, it should cost.

Talked about this is for [indiscernible]

In terms of new orders, 80% is Indian hybrid in terms of current production, I think close to. In Maxwell, we can assume EBITDA SP-18. Yes...

And next year, what would be your margin rate for Materially after 2, 3 years of that.

See, a lot depends on -- we have orders of more than INR 300 crores. on a, I think it will be around 10%. So INR 300 crores or revenues of around INR 150 crores to INR 200 crores. Thank you all so much. I hope you got your answers to all your questions or nearby even in somewhere nearby.

Thank you as well.