Endurance Technologies Limited (ENDURANCE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Endurance Technologies Q4 FY '24 Earnings Conference Call, hosted by Axis Capital Limited. [Operator Instructions] Please note that this call is being recorded. I now hand the conference over to Mr. Nishit Jalan from Axis Capital Limited. Thank you, and over to you, sir.

Thank you so much. Good morning, everyone. Welcome to Q4 FY '24 Post Results Conference Call of Endurance. We are pleased to host entire management team of Endurance. We have with us Mr. Anurang Jain, Managing Director; Mr. Ramesh Gehaney, Director and COO; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Satrajit Ray, Director and Group CFO; Mr. Raja Gopal Sastry, Group CFO Designate; Mr. Rajendra Abhange, COO Designate; and Mr. Raj Mundra, Treasurer and Head, Investor Relations. I'll now hand over the call to Mr. Jain for his opening remarks, post which we can have Q&A. Over to you, Mr. Jain.

Thanks a lot, and good morning to everybody. I would like to share details of how we have done in the fourth quarter of FY '24 and in the financial year FY '24. In India, in the fourth quarter FY '24, as per SIAM data, the 2-wheeler industry sales grew by 25.87% compared to the previous financial year. Scooters grew by 21.82% and motorcycles grew by 28.21%. The automotive industry in India had a growth of 20.5%. In Europe, in Quarter 4, there was an increase of 4.4% in the European Union automotive sales. On the financials, I will first brief you on the Quarter 4 of FY '24 and then the financial year FY '24. In Quarter 4, our consolidated total net income grew by 20.2% and was INR 27,113.14 million as compared to INR 22,551.54 million in Quarter 4 of the previous financial year. Consolidated EBITDA grew by 35.8% and was INR 4,159.36 million as compared to INR 3,062.1 million in Quarter 4 of FY '23. Consolidated EBITDA margin was at 15.3%. The net profit grew 54% and was INR 2,101.54 million at 7.8%. This includes the f Maharashtra state Mega project incentive in Quarter 4 of INR 203.34 million. In Quarter 4, our stand-alone total income grew by 26.1% and was INR 20,931.19 million as compared to INR 16,595.76 million in Quarter 4 of FY '23. Stand-alone EBITDA grew by 51.5% and was INR 3,118.02 million as compared to INR 2,058.34 million in Quarter 4 of FY '23. The EBITDA margin was at 14.9%. Stand-alone net profit grew by 74.4% and was INR 1,823.13 million at 8.7%. This includes the Maharashtra state Mega project incentive in Quarter 4 of INR 203.34 million. For FY '24 -- the full financial year FY '24, our consolidated total net income grew by 16.7% and was INR 103,264.86 million as compared to INR 88,494.73 million in FY '23. This was the first time that Endurance Technologies crossed the INR 100,000 million mark. Consolidated EBITDA grew by 30.7% and was INR 14,135.99 million as compared to INR 10,816.93 million in FY '23. Consolidated EBITDA margin was at 13.7%. The net profit grew by 41.9% and was INR 6,804.88 million at 6.6%. This included the Maharashtra state Mega project incentive of INR 792.35 million. In FY '24, our stand-alone total income grew by 16.6% and was INR 79,204.71 million, as compared to INR 67,957.07 million in FY '23. Stand-alone EBITDA grew by 30.8% and was INR 10,557.83 million as compared to INR 8,074.34 million in financial year '23, with EBITDA margin at 13.3%. Stand-alone net profit grew by 43.7% and was INR 5,877.93 million at 7.4%. This includes the Maharashtra state Mega project incentive of INR 792.35 million. There was no net debt, and there was a consolidated positive cash available, which has crossed the INR 5 billion mark, and it was at INR 5.044 billion. The detailed financials are available with the stock exchanges and on the Endurance website. I would now like to share certain key points for the financial year FY '24. 77% of our consolidated total income, including other income, came from Indian operations and 23% came from European operations. In India, in FY '24 INR 11,980 million of new business was won from OEMs other than Bajaj Auto, which included Royal Enfield, TVS, Hero Motorcorp, Tata Motors, HMSI, Jaguar Land Rover, Hyundai, Mahindra, Tata/Punch Powertrain and Suzuki. This business win of INR 11,980 million constitutes INR 8,248 million of new business and INR 3,732 million of replacement business. This INR 11,980 million of business will reach peak sales in FY '27. The total 4-wheeler business win in FY '24 is INR 2,810 million, which is 23% of our total auto wins in FY '24. These orders are mainly from Tata/Punch Powertrain, Tata Motors, Mahindra, Jaguar Land Rover and Hyundai. I would also like to mention that we are in discussion for INR 18,440 million worth of requests for quotes from OEMs. Since FY '20 in India, INR 40,857 million of business has been won, out of which INR 29,306 million is new business and INR 11,551 million is replacement business. Out of INR 29,306 million new business, INR 26,900 million is expected to reach peak sales in FY '27 and is mainly for suspension, castings and brakes. TVS business win has been INR 5,320 million till date and is growing. The business win is largely for brakes, aluminum alloy wheels and suspension. The INR 5,320 million sales will reach peak in FY '26. The total business win for electric vehicles till date is INR 7,145 million. These orders are mainly from HMSI, which is Honda, scooters and motorcycles, Ather Energy, Bajaj Auto, Hero Electric, which is Ampere, Tata Motors, Bounce and Activa. This is apart from INR 3,785 million business win by a subsidiary company, Maxwell. Significant new business wins in this year are -- I mean, wins in FY '24 are, we have won INR 790 million of new business from TVS in FY '24, which included INR 309 million of inverted front forks a and rear monoshocks suspension business and also INR 404 million of the TVS Raider and HMSI bikes front fork and rear shock absorbers business, with SOP is planned in August 2024. We have also won INR 1,750 million of new business from Hero Motorcorp in FY '24, which includes inverted front fork new business win of INR 240 million and SOP is planned in June 2024. The brake assembly new business of INR 263 million, and this SOP has already started in April of 2024, and the front and rear shock absorber business of INR 1,247 million, and this business has also started. We have won Suzuki's new scooter front fork business of INR 253 million. This is an addition to the INR 1,400 million front fork business already won the previous year, and the SOP of both will be in Quarter 3 of this financial year. We also won the Honda scooters and motorcycle brake assembly new business of INR 294 million and the SOP is planned in Quarter 3 of FY '25. We have won Royal Enfield's Alloy wheel new business of INR 961 million and SOP has also started. We have won Tata Motors Punch Powertrain 4-wheel aluminum casting new business of INR 1,026 million. INR 582 million SOP has already started for its first project, and INR 444 million second proposed project SOP is expected in Quarter 3 of this financial year. The new 35-dia air suspension inverted front forks were supplied to KTM Austria will start by quarter 3 of this financial year with the help of KTM technology from our Waluj, Aurangabad plant. The value of the business will be INR 400 million per annum and will be exported to KTM Austria. We've also won INR 876 million per annum business from Hyundai for aluminum castings, which SOP is in Quarter 3 of FY '27. The HMSI has awarded us 2 new businesses in Quarter 4 of FY '24, which are 100 cc motorcycle front fork and rare shock absorber business of INR 343 million per annum, which SOP is in February 2025. We've also won the first EV scooter front fork and rare shock absorber business, which SOP is also in Quarter 4 of this financial year. For EV scooters, we are ramping up our sales to 240,000 sets per annum of aluminum castings, which are required for electric vehicle battery packs and motor housings. The total value will be INR 1,000 million per annum, which has already started and will reach peak sales value in this financial year. For EV 3-wheelers, we have won new business for case transmission and battery housing castings of INR 200 million per annum, which will peak in FY '26. Our customers recognize us as a trusted and capable partner in the value chain in terms of both technical and financial strengths. The electronic vehicles market offers significant opportunity for growth in future to the auto component sector. As you know, Endurance have executed a share subscription and purchase agreement for acquiring 100% of equity share capital of Maxwell Energy in a phased manner. We have last year increased our equity stake to 56% in Maxwell as per our agreement. Maxwell is in the business of advanced electronics, particularly in the battery management system for 2-wheeler EVs and for automotive and 2-wheeler battery packs. At Maxwell, we've won BMS business, battery management systems business, of $793 million in FY '24 and have a pipeline of RFQs of more than INR 1 billion. Till date, since FY '22, INR 3,785 million business has been won by Maxwell. Despite the latest strengths in the EV market, we believe that these orders will help us achieve sales in excess of INR 2,500 million in FY '27. With the current order book, order pipeline and technical strengths, both Endurance and Maxwell, we are confident of achieving our goals in this advanced electronics space. As the disc brake assembly business is growing with addition of customers like Bajaj, TVS, Royal Enfield, Yamaha, Hero Motorcorp, Ather as well as HMSI. Our second plant at Waluj, Aurangabad has been set up for this increase in volumes and has started SOP last year. We have already started the disc brake assembly supplies to Hero Motorcorp from April 2024, and the supplies to Honda scooters and motorcycles will start from Quarter 3 of this financial year. With this new plant, we have already reached a run rate of disc brake assembly volumes, which have increased to now 6.2 million numbers per annum and brake discs at [ 28.1 ] million numbers per annum. As you are aware, the supply of 2-wheeler ABS assemblies to Bajaj Auto and Royal Enfield have started. We have reached a run rate of 400,000 ABS assemblies per annum. As you are aware, the competition is mainly from Bosch and Continental, which controls a major market share in the Indian ABS 2-wheeler market of approximately 3.5 million number of motorcycles, which needed per annum. We are now in the process of supplying our dual-channel ABS from July 24, 2024. Today, we are doing only single channel, and we have scaled up additional assembly lines by increasing the capacity by another 240,000 ABS assemblies per annum, which has taken now the total capacity to 640,000 ABS assemblies per annum. We are further planning to increase this capacity to 1.2 million single and dual channel ABS assemblies per annum for the second half of FY '26. We have also, as mentioned earlier, in March '23, started manufacturing the ABS valves which is not only a technology component, but has helped us to substantially lower our costs. Due to increased orders in alloy wheels from Bajaj Auto, Yamaha India, TVS and now Royal Enfield, we have added a new plant, as you know, in July '22 at Chakan to help increase our supplies to 4.5 million wheels per annum, which we have already reached. Now with the new order wins from Royal Enfield and TVS, we are now expanding to supply [ 5.5 ] million wheels per annum and the SOP has already started for April '24 for Royal Enfield and TVS will start from the -- end of this first quarter of FY '25. As far as Europe is concerned, till date in FY '24, we have won EUR 30.8 million business, mainly from the Volkswagen Group, including Porsche and Audi and Mercedes Benz. In the last 24 months, out of EUR 115 million order, EUR 61 million orders are for the growing battery EV business and EUR 35 million are for hybrids. In 2023, the battery EV penetration in Europe has been at 15% and hybrids at 33%. We are, therefore, well placed in terms of securing orders for this growing segment. I would also like to point out that Endurance both in India and Europe is actively pursuing its focus on gaining access to new technologies and focusing on new products, organic and inorganic growth. At Endurance, our future focus will be on the following projects for a better product mix and better profit margins, increase our 4-wheeler share of consolidated business from 25% now to 45% by FY '30. This increase is going to come from aluminum castings and aluminum forgings, as we are going to be increasingly used for light-weighting as we can see now, and also from proprietary products through acquisitions, joint ventures and technology agreements. We will be focusing on increasing our share of business for the premium bikes, 150cc and above, for our brake assemblies and ABS suspension as well as -- plus assemblies with upgraded product technologies and process. We will focus on increasing our business for electric vehicles with existing and new products. We will also increase our embedded electronic business by becoming a significant player in the future for battery management systems and electronic products required for EVs and other applications. We will focus on nonautomotive business, which has large opportunities, especially in aluminum castings. We are now in the process of setting up a new plant in the 11-acre land at AURIC, Aurangabad, 17 kilometers from the Aurangabad Airport, where the SOP will start in Quarter 1 of FY '26, which is the next financial year, where our focus will be on 4 wheelers, including 4-wheeler EV parts and nonautomotive aluminum casting business. The total CapEx is expected to be INR 4,009 million, which will be spent in stages from now to March 2028, with a sales expectation of more than INR 5,000 million per annum. Our focus also is to reach 10% of India sales in our aftermarket business in India by FY '28. In FY '24, our aftermarket sales grew by 6.92% from INR 4,310.9 million in the previous year to INR 4,609.36 million in FY '24. With 3 more countries added to our network, we are now exporting our aftermarket parts to 34 countries. Aftermarket sales growth is a large focus area for us, and we are targeting a good growth in this financial year. In FY '24, the export sales for India standalone business grew by 4.43% from INR 2,116.23 million in the previous year to INR 2,210.06 million in FY '24. The sales growth came from 2-wheeler suspension exports for KTM plants in Austria, China and Southeast Asia and from the aftermarket export sales. On the environment front, I would especially like to mention that Endurance is striving to be in carbon neutrality in plants by effective use of solar power and wind power, creating carbon sinks by driving tree plantations and thereby creating dense forests and driving use of natural gas and LPG in place of electric power and furnace oil. The use of furnace oil has been completely stopped now. We have achieved now a carbon-neutral percentage of 35 in this -- in the financial year FY '24. And the aspiration is to reach a carbon-neutral percentage of more than 50 by FY '30. This has increased from a carbon-neutral percentage of 22.6% achieved in FY '23. We are also focusing in lowering hazardous waste generation and to achieve 0 waste to landfill. At Endurance, it will be our continuous endeavor to grow through organic and inorganic growth with a focus on technology upgradation, quality improvement, cost as well as our focus on environmental health and safety. We will do our best to fulfill our stakeholder expectations by following our 5 values of customer centricity, integrity, transparency, teamwork and innovation. We, at Endurance, have a very positive outlook based on our new large business wins in the last 4 years, including for electric vehicles, both in India and Europe. With these opening remarks, I would now like to invite questions from all of you. Thank you.

[Operator Instructions] The first question is from the line of Jinesh Gandhi from AMBIT Capital.

Congratulations on excellent set of results. A couple of questions from my side. First is if I look at the India business margin has seen a very sharp improvement even if we adjust for incentives. What are the drivers for the same, any one-offs in the margins and are they sustainable margins?

You are talking about India as -- okay, yes. So India margins have been largely helped by the increase in our volumes and the improvement in the product mix. At the same time, there has been an approximate INR 200 million impact -- I mean, gain impact both on the client as well as on the vendor side because we have got a onetime gain of INR 200 million. But largely, it has been because of the good volumes we have seen and the product mix has been improving every quarter. So that's the reason for it.

Okay. So no one-offs there as such. I mean just for this INR 200 million of incentives, 13.5% margins are still -- I mean, driven operationally and no one-offs there?

Well, I'll only tell you that we will continue to do our best.

I understand that you don't guide for margins, but just that there was a sharp jump so -- and directionally, our mix is improving and there is recovery in the 2-wheelers as well. So that should also aid margin recovery process, I understand that. Secondly, if I look at the European business, so there has been -- the new order win has slowed down considerably in the last 9 months. Is this largely a reflection of slowing EV sales in EU or there's something else which we're seeing there?

Jinesh, can you repeat your question because the audio is somewhat unclear.

Yes, it's very unclear from your side. I could understand it, but Massimo could not understand it.

The question is on Europe about the new orders wins have slowed down considerably in the last 9 months. So what are the reasons for that?

New orders wins have slowed down.

So in the previous financial year, we acquired only EUR 31 million business. And I agree with you this is less compared to the previous year, but considering the situation into the market from my point of view is a very important result also because we acquired business for the strategic project of Mercedes and Volkswagen. So the total acquisition reached EUR 250 million in the last 5 years. And so more or less, the total turnover of [indiscernible]. So I'm really optimistic for the future, and you will see an important increase of volume in the next financial year due to the business acquired in the previous 3, 4, 5 years.

Okay. Okay. And Massimo, on the European business, margins are also flat on a year-on-year basis despite sharp decline in energy costs. So what led to offsetting of this benefit of lower energy cost on margin side?

Yes. So not flat and now I'll explain to you why. If you analyze the last quarter of previous financial year, we closed with 17.8% of EBITDA that is true is the same of the previous financial year. But please consider that in the previous financial year, January, March 2023, we received -- from the government 45% of grant for the energy cost. And also in the previous financial year, we received money from the customer for the impact of energy cost of the total previous financial year. And so if you compare the profitability of the previous quarter, compared to the previous financial year, from my point of view, we are growing more or less 2% of EBITDA compared the previous year. From an industrial point of view, we are doing better compared previous year. In fact, if you analyze our profit and loss, you will see a reduction in the material cost of 12% compared to the previous year, more or less with the same turnover, an increase of other expenses of 26%. The material cost is due to the fact that we are producing a lot of part only machining. And as you know, in this case, the profitability is higher compared to the robot, okay? And in the other expenses, the increase of the previous financial year is linked to the increase of energy cost due to the fact that in the previous financial year, we have this grant from the government and the customers. So the profitability in this quarter was very good compared to the previous financial year. Speaking about the total financial year, we closed with 16.1% of EBITDA, compared to 14.5% of the previous financial year. And please consider that even if the energy goes down in an important way, we continues to pay more or less the double 3x compared the pre-COVID situation. And this affected our EBITDA of more or less 1.8%. And so if I do have a statement of the EBITDA in this moment Europe, we have more or less 17.9%, 18% of EBITDA.

Your next question is from the line of Mumuksh Mandlesha from Anand Rathi.

Congratulations on the strong results. Just on the incentive part, will there be any intensive FY '25, sir, like last quarter, we saw?

Can you repeat the question? The audio is not clear.

No, he is saying, will the incentive be also in FY '25? The Mega project...

Yes. This is -- I'll explain. See, we are looking at the incentive scheme of FY '13 to FY '19. So in the last year, we have booked close to INR 79 crores as incentive. So in the current year that means FY '24-'25 under Mega project incentive team of 2013 to '19, we expect to book something around INR 30 crores plus/minus in that region. So I hope that answers your question.

Got it. And it would be like spread out equally sir, across quarters?

No. Normally, the way we see -- as you know, this incentive is paid by government based on our SGST paid sales in the state of Maharashtra. So therefore, this appetite is normally consumed over 1 or 2 quarters. So I don't expect it to go beyond the second quarter. But also, there would be incentive for 2019 to '24 scheme as and when we apply, as and when we get approval, but that is not within the purview of this discussion right now.

Got it, sir. Just on the -- next question just on the new capacity we announced for the 4-wheeler and non-auto went of 200 million of per annum potential. Any orders -- what kind of order wins we have already won for that plant?

See, this is an activity we started actually at the beginning of this calendar year in January 2024. I cannot disclose that much to you an order wins. It won't be correct at this stage, but let me just give you just a brief idea of what we are doing. These are basically for 4-wheeler parts with a EV focus and a technology focus. This also has non-auto parts, could be for segments of 5G, 6G, ATVs, UTVs, 5G telecom, like I said, and other industrial areas. These will have special -- I would say, special processes. It will have automation, very good surface treatments. And there will be self-sufficient sales with minimal handling because largely, this project will be for exports. So I'll just leave it at this. But definitely, to answer your question, already, we have order wins for this and that's the reason we have committed to this project, which will start in Quarter 1 of FY '26. And only the buildings -- the construction has started. So as you know, our strength is in aluminum die-casting and machining. So we are very well equipped with our own engineering skills and tool room and over 35 years of experience in this line. To explore these new opportunities, I've already told you about the 4-wheeler focus and the nonautomotive focus. So this is in line with that kind of focus and strategy, which we have for the future.

Got it. So this is helpful, sir. So on the CapEx side, what the guidance is there for FY '25 and '26, sir?

See the CapEx will be -- see we have done a CapEx of about INR 3,833 million in FY '24, which was 81% of growth, which included building plant machinery and dies. Rest was, of course, in quality, process efficiencies. There was also routine CapEx and then there was R&D. Next year, the figure should be similar to about say INR 4,000 million. We don't -- at this stage, unless there are new opportunities, this is a very dynamic situation. So practically, we see -- we will say that we'd spend a similar kind of money because we have this new plant also coming up at AURIC. Plus we have very, very key investments in our growing business of brakes and alloy wheels as well as suspension. So that's the kind of figure that I have been talking about.

Got it, sir. And just lastly, sir, any growth outlook for the disc brake and alloy wheel for FY '25, sir? Revenue growth outlook, sir, for these 2 key segments?

Already, the capacity in alloy wheels of INR 5.5 million I have mentioned. And I can only leave it at this as there are huge -- which not only potential but large requests for increasing the alloy wheels sales. So we are looking at it in a very serious manner as far as alloy wheels is concerned. And your second question was on brakes. Brakes is the fastest-growing segment we have. And the requirement is just -- I mean -- in fact, our head for brake was telling me, in April itself, we have crossed, I mean, the volumes based on our plan, which we had for our budget so -- because we have a huge requirement to fulfill. We have taken a large number of orders. So brakes is really growing, I would say, very, very well.

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

So the first question is, if I look at your Slide 8, where you talk about EV order wins for India, there seems to have slowed down drastically in FY '24. I can understand it is a function of the industrial activity also. So what are your customers looking at? And how are you planning to address this if the -- for the medium term?

See the way we look at it is we follow the -- I mean the customers and their requirements. We ensure that we are connected with all the OEMs, especially in the 2- and 3-wheeler space and, of course, also the 4-wheeler in terms of aluminum castings. And looking at their plan, whatever is their business plan or -- so we basically do our best to take orders based on that. Definitely, the frame 2 subsidy in India where a large part of the subsidy went out -- was taken away, I think, in July 2023, has definitely affected a lot of 2-wheeler EV OEMs, who were lead -- who were like in the top bracket in the head, but we'll see how it plays out in the future. I can only tell you that, say -- we talk about, say, Honda -- okay, I say, we talk about any 2-wheeler OEM, which is going into its EV platforms, if we are not in the first, we are at least there in the future platforms. With some, we are right from the first platform. So I would say that if you see that the orders have lowered, it's a function of how the industry is doing, but nowhere are we going to lose any opportunity on the EV front because that's a very large growth area for us. And also our Maxwell business is launched to do with EV.

Is your question on India or Europe?

I had on India. I wanted to follow up on the Europe also. I think...

So I can only tell you that we are highly focused. We are connected to all the OEMs. And we are really doing our best. We have taken a good amount of orders. And of course, sometimes the LOI showed lower volumes. If the volumes increase, the value will increase. So we'll see how it goes. But we are not leaving any stone unturned to take orders. So this is to answer your question there is a function of the industry and how it's functioning.

And the second related to India business or stand-alone, if I had to adjust for incentives, still the gross margin expansion is pretty comfortable and seems to be the raw material has come down for the first time from that 66% to 63%. Do you feel structurally you are back in that zone or it's a one-off? And hence, you still have to work on it to get the gross margins back to the olden days?

See the whole question, which happens is that, why I don't like to talk about the percentage of the gross margins or EBITDA margins is because it all depends. Like I mentioned earlier, we are focusing on product technology and ensuring that the product mix is increasing in all the areas, and we are looking at new areas, which has helped a lot. What work we did 1 year, 1.5 years ago, has paid off in quarter 4. At the same time, also I mentioned about the volumes. As you know, we are 80% in India on -- with 2-wheelers, which I would say in the last 2 quarters has done very well. And what I -- and what I'm seeing in April doing very well. So the question is the product mix and volumes will definitely help in our EBITDA margins, but I also mentioned there was INR 200 million onetime gain, which has come both on the vendor side and the client side. So that may or may not come in future. So I can only say that we will do our best to see that we do our best on the margins. We'll continue to do our best.

And coming to the European side on the EV front, I think there has been a lot of recent noises about slowdown in the EV penetration. So considering that, how are you looking at your order book wins to be consumed this year, one. Second, do you see any opportunity for any M&A in this space in the medium term to add considering this confusion in the marketplace?

Okay. So Europe in September 2023, there was an important reduction of registration of electrical vehicles due to the fact that a lot of countries stopped the incentives. In this moment, unfortunately, without the incentive, it's very difficult to sell a car with -- and leverage of price is very high compared to the general market. And this is the reason why they are waiting -- everybody are waiting the new election in Europe to understand, which will be the situation in the future. As you know, a lot of OEM in the last period of time officialized that they will continue to invest also in the internal combustion engine. Speaking about Endurance, from my point of view, we are in a strong position due to the fact that we have already in the standard production capacity for the electrical project. So starting from April of this financial year, we are already to reach more or less 50% of the total peak capacity of the business already acquired for the electrical vehicle. Please consider that in the previous financial year, we did EUR 62 million of investment in order to scale this production capacity, maintaining the cash free so -- it means that we invest -- we spend this money with our cash profit. Speaking about the future 12 months, in this moment, we have seen an important increase in internal combustion engines and this is true. In the first quarter of this financial year, there was an increase of 2%, also in the diesel technology and 5% in the [indiscernible]. But as you know, we are seeing about a range of products where we have production capacity. So let me say, in this moment, we are seeing which will be the situation on the market. And please consider that a lot of our business, we have a take-of-control without customers so that we are protected from potential slowdown of volume in the electrical, battery, internal combustion engines. My personal opinion is that it's only a period of time in the future when the government will invest in important way infrastructure, the electric vehicle will continue to grow in the general market. Speaking about the opportunity, at this moment, unfortunately, there are a lot of companies in bankruptcy due to the fact that the strategy of the OEM in the last period of the time -- in the last 5 years was to focus in fuel supplier for the electric development. And so there are a lot of opportunity. And frankly speaking, we are considering possibly a possible acquisition in order to continue to grow also because we can't continue to grow from greenfield. We need to enforce also our team, our knowledge, our people. Otherwise, we can't be -- we can't grow in an important way in the future years. So we are ready for potential acquisitions.

The next question is from the line of [indiscernible] Family Office.

Congratulations on the great set of numbers. So I just wanted to know about the brand in the aluminum prices and the outlook going ahead in the aluminum die-casting.

See, what is happening in India, unfortunately or fortunately, the aluminum alloy prices are not dictated by LME, in the London Metal Exchange. It is dictated by the availability of the scrap, which is required -- the aluminum scape which is required which largely is also imported. Now I believe that because of -- what I hear is because of the sea frights going up because of this crisis of Israel and Hamas, the rates keep going up and down. So the way -- so for me to say that exactly how the trend will be -- I mean, my answer would be that it should go down.

It's for aluminum or aluminum die-casting?

No, it is only aluminum alloy pricing, right? Is what you're saying?