Endurance Technologies Limited (ENDURANCE) Earnings Call Transcript & Summary

So good morning, everybody. Welcome to Endurance. I assume this is your first trip to Aurangabad. Is it? Would it be your first trip to see our facilities?

Yes.

So as you all know that I've been in Aurangabad. It's my home since 1986, when we started our first aluminum die casting plant. There is also there, but there's a shortage of time. Otherwise, you could have seen that plant also that was where we started our journey, which is there. So, of course, Aurangabad has many things, we make all our products here in this location. We have 3 R&D centers, brakes, transmission, and suspension. I think the suspension, you will see -- brakes you must have seen already. So 3 R&D centers, and we have a proven ground for test track, which has been designed by MIRA, it's a 29-acre track, which helps us to launch products faster because it's on our own test track, we don't depend on customer and other third-party test tracks and also try and achieve first-time-right products. So that was our intention of having -- we are the only Tier 1 to have it, and I think you are going after lunch. So it's a good place to visit because you can see many things what we are doing. So when we talked to you during our meetings, we tell you so many things, but now you can see it what we are talking. So that gives you a much, much, much better idea. So how should we take it forward, because they are quite aware of the company.

Absolutely, we can directly do Q&A.

So we can do Q&A, and you can start like that.

Yes. To begin with, can you throw some color on growth opportunities in domestic market, you've done pretty well in terms of diversifying beyond Bajaj. But in terms of incremental opportunities, particularly inside TVS, where do you see we stand? What other opportunities are there?

Sure, sure. So see, I will not talk about the industry growth now, okay? So that is a separate because that is an area which nobody knows who will do well, who will not do well, we don't know. I can only say the automotive industry will grow whether it's 2-wheeler, 3-wheelers or 4-wheelers, will grow because we are in an economy which is doing better. And these -- and all these sectors will grow, which will grow better, worst, we don't know. Because last year also, if you see the first 5 months, the 2-wheeler did really well. And then since September, it was 20% plus. Even last 2 months average, you see, April and May, it's 20% is a growth of 2-wheelers. So you never know what changes, why it changes, there are so many uncertainties. But I think the growth drivers for Endurance in India, there are 2 things. One is that we do not supply all our 4 product areas. I'm not counting now Maxwell, which is the electronic -- advanced electronic. That's a small, I would say, operation right now, [indiscernible] a bit. If you take our aluminum casting suspension, transmission and braking, barring Bajaj Auto and Royal Enfield, which supply all our 4 product verticals we are not supplying to everybody. Now if you see Honda also, the brakes, the fourth vertical will only start quarter 3, and we have a very good order from there. So that will start only in quarter 3. Also, with Honda, we have to get a higher share of business on clutch and brakes. If you see Hero MotoCorp, we are with them largely in suspension and in a small way in castings. Brakes, we have just started in April, which will take off, which we expect to do high volumes. So brakes, we just started third. Clutch is under approval, 100cc clutch is a mass volume clutch, which we hope to get clear in this financial year. So still, we are not there with them. And brakes have just started in April. So we have to really pick up. If you see with Yamaha, we are doing with them, I mean, front fork rear shock absorbers, but still not the highest share of business. We have to get that. But we started brakes where we are almost like a single source for scooters, which is doing well. We got a 400,000 order, which we just started, I think, in quarter 4 of the last financial year. This will be, I think, a peak year, full year. But we are still not in clutch assemblies and not into casting. The alloy wheels we are there. The alloy wheels we are a single source, but we are not there in castings. Also, you take Suzuki, there, we are doing suspension. But the real, I would say, order will start from quarter 3 of this year, where we have got 165 order for the front forks, for their scooters. And Suzuki has been doing very well in scooters if you see in the last 2 years. But we still have to get. The Japanese have a mindset and they've told that we'll go step by step. We'll do the suspension, then brakes. So I think it will take us 3 to 5 years to do all our 4-product verticals for all, because at the end of the day, we can come in for new opportunities, not the existing models, new models is where we come into play. And we will do that because ultimately, it's about technology and competitive pricing. And so one growth driver is supplying all our 4 product verticals to all. So that is one growth driver. Second is the product mix because right now what we are finding is and I'll give you an example of what is happening. Personally, the premiumization of products is happening quite fast. Today, if you see Bajaj Auto, their Pulsars. Let's talk about 160cc and above. They had a normal front fork. Now they launched last year, which is a 600,000 market between 160 to 250cc. They have launched, I mean, inverted front forks, for which both the R&Ds value engineer that product. So instead of a price which is 5x, we made it 3x. So then it became affordable to put on a Pulsar because customer acceptance was there. But this gave us a 3x price on a 600,000 which is not a small volume, and it's a high -- it's a high-cost product. Number two, we are seeing more and more of oil and gas-filled shock absorbers being used even in the lower cc. We are seeing larger brakes and then we have added brake hoses now, which is a value add for us. Brake hoses, we were not doing. In fact, we were importing it from Warner or buying it from Imperial, which is a known Indian company. We have started that. As we go forward on the brake systems, we are also working with KTM. As you know, we are working a big win on suspension for exports. We have -- with exports in India, Bajaj KTM, almost 250,000 sets of telescopic front fork and rear shock absorber we are supplying. This figure will go up because we set up for them as a backward integration in aluminum forging plant in collaboration with FGM. But this has been a game-changer because we used to import aluminum forging, axle clamps from an Austrian and an Italian company, which were, of course, more expensive. By putting up a plant, maybe even -- I don't know whether you're seeing it today, it's in collaboration with FGM in Italy. We have been able to reduce the price and also be self-sufficient and now it has opened up a bigger opportunity where we can double the export business in the next 3 to 4 years. And they have told us clearly, all the mid-segment, which is a very large segment, almost it's 90,000, I think, the bikes per year in a normal year. All that business can come to us. We are today doing at only 40,000.

This is for Bajaj?

This is for KTM exports. So what I'm saying is because even the rear shock absorber like you have axle clamps and forgings for the front -- inverted front fork. You have hydraulic preload adjuster, that's a technology for which you need aluminum forgings as a very important and critical part. And KTM has told us, this is a game-changer, and it's a win-win situation. They get a cheaper price and we get more business as a product. So we are also making efforts to see how to grow the business by backward integration into technology parts, which we have already said. Then as far as castings are concerned, we are going to machine castings. We are focusing more on growth on 4-wheeler castings. We are now going to non -- I mean, we're already doing nonautomotive casting like for 5G telecom and gensets supplying to Generac, we just started for exports. But talking about India, I think this premiumization also not clutch. We are launching -- now FCC is a leader. FCC is a Japanese company. They launched strategically last year, assist and slip clutch technology. So it's more expensive, but then it is better in terms of live performance as well as, what I would say, things like the clutch lever feel when you change gear, you just touch it and it changes. So this kind of a feel on bikes, which are 150cc and above, the customers are taking to it. So it's taken us time. We gave samples earlier this year to Bajaj and RE. And we hope to now clear this business, start this business in this year. So we can compete with FCC. So this is also a higher-end technology clutch, which is going to be added. So what I'm trying to say is that the premiumization of products is also helping our growth. So 2 areas where you'll see growth, and I'm not talking about other projects. So one is this in the 2-wheeler segment. I was only talking to you mainly on the 2-wheeler. When we go to 4-wheeler, we've already announced we want to go to 45% of our business by FY '30. This will be through acquisitions and it will being through organic growth. Okay, one more thing I forgot, in 2-wheeler, alloy wheels is going to see a huge expansion from our side. That's a very high-value listing product, and that will see increase, I forgot about that.

That would be focused on 2-wheelers only?

Only 2-wheelers, right. See, 4-wheelers, we'll see the opportunity, what is it, because there are many players there. We are an established player. We have the experience in process technology, product technology. We had a tie-up with [ Benfei ] earlier. So we know the game. And there are many players there, I think the capacities also are there. So we'll have to see. But 2-wheeler, we are like a preferred choice. Now 3 customers talking to us, how much can you do for us? So the game is -- because they have a trust in us because of the past experience of now almost 11 to 12 years that we are doing this. So we have a 5.4 million capacity right now per year. This will increase. You'll see a lot of focus happening here. But apart from this, what I've got, we've already announced 4-wheeler. This will happen from inorganic growth, which we are looking at very actively today. And it will happen from organic, which could be aluminum casting, the forgings, though it was a backward integration. We have got an order from Jaguar Land Rover, which is starting in quarter 3 of this year. So it's becoming a lightweight opportunity because metals you can't go wrong. If it's used for EV, it's used for EV. So both forgings, aluminum and aluminum casting is becoming a preferred material for EVs in case it does that well. So we'll have to see how well it does, but we are a part of that journey now, which is there. And of course, we have the opportunity for 2-wheelers is on of BMS, where we have got orders from Royal Enfield starting next financial year. HMCL is now getting back, there was a slowdown for 6, 7 months. But now we're doing about 2,000, but I think they will now increase this. There's [ BMS ] per vehicle. This will increase. And as we speak, we are very focused. And we are, as Endurance, now slowly taking over the reins of that company in our own way to really focus on increasing the product range also, increasing the business. And first is also to make -- to be profitable because we made a loss last year on a INR 60-odd crore turnover. But now we will turn things around. There's a lot of focus on that, on cost as well as taking new business, but that's still a baby. We have to really grow that business, and you'll see now changes happening on that front, but it's still a very, very small part of the pie, but we have taken the right actions. I don't know whether you have seen the surface mounted technology line, which is BMS or you will see it, that line can also do ECUs for ABS. They can do a lot of other electronic products. And as now the business is coming in, we are self-sufficient. We don't have to depend on people like Bosch, who are expensive. There's also a cost saving like we did for forgings. Same thing we are doing also for ABS. We've already done the valves as well as the stainless steel braided hoses, which are both imports, already started last year. So we are also in-sourcing technology parts as an import substitution and to be self-sufficient and to be also cost competitive, which is very, very important to get new business. So this has been a strategy. And of course, the noncritical operations, we give out to our strong vendor base of almost 270, 290 suppliers are there, which is our strength. We call it as a part of Endurance Vendor Association. So we only focus on critical operations, you must have seen assembly, and we focus on R&D which is for new product introduction. So going forward, 4-wheeler will happen from aluminum castings and forgings. Proprietary, we are looking at brakes and suspension, already in touch with OEMs. It will happen with or without collaboration. We are looking at new products, but that will happen through acquisition only, no greenfield. So 4-wheeler is a major focus for us. We already announced aluminum die casting and machining plant at AURIC, which is next airport, 17 kilometers from there on towards Jalna, where we are going to start by the first quarter of next financial year. And these will be new customers like Jaguar Land Rover, we don't deal with. It could be Tier 1s like TACO Prestolite or could be Valeo, could be Marelli. We are in touch with everybody. So it will be a step-by-step approach, but this is a profitable business. This makes more money than we do today in that customer. Otherwise, we won't do this. And 4-wheelers is generally better, but we want to definitely make more money. So this is an effort towards that. And we have a very good team. I can say the earlier CI team is now with us, the 2 main people, the head and the marketing head. He knows everybody. So people asked me, they asked me during the investor, how are you so sure because these guys have dealt, they know the profitability because I see the RMC percentage to sales, you know what is your value add. So that's how we know that it's more profitable. So we are getting there, there are some resourcing projects coming from existing to us, because, as you know, we have our own toolroom, we have our own engineering center in Chakan. So we have our strengths. We can do lightweighting. We can make multi-cavity dies to give a better shot rate. We have also -- for Tata Motors, we have done cast iron and GDC parts with higher weight and almost 50% to 70% in weight and we didn't do high-pressure die casting. So we have capabilities there because that's the oldest business we are in since '85-'86. So we have a very strong engineering and toolroom, which is a big advantage in die casting for us. That's why getting into nonautomotive is not that difficult for us, we understand. Because some of the automotive parts are much more complicated than some of these parts. You've seen EV or of course, the battery housings are very, very important. Plus the growth driver for us also EV, as scooters, EV scooters come up because we believe from what I read, the low-speed vehicles, like scooters, 3-wheelers, buses, they will graduate to EV faster. I don't see motorcycles going really fast. I don't see traction. I don't get any RFQs, I'm in touch with everybody. Very low traction. Of course, you have company like Ultraviolette and Tork and there is the Revolt and these companies, we are in touch. But we don't see much of a traction on the motorcycle front, which is today 70% of [ steel India ] business. But fortunately, we are 94%, 95% is EV agnostic. So for the clutch, the clutch 80% is in motorcycles. So we're in a safe place right now even for the clutch as far as clutch is concerned. Only castings of different types. I mentioned that in the investor calls, instead of crankcases, covers, cylinder head, cylinder blocks. What you have is battery housings and then you have motor housings, you have transmission housings, it's different, but there is more aluminum used by lower weight and more value add. This is what we are finding till date now. With volumes increasing, maybe the customers will want similar pricing. I don't know. So we are going to push more extra, let's say. So we'll see how it goes. So 4-wheeler nonautomotive, and we're looking at even in nonautomotive, we're also looking at other than castings. But that is also inorganic. So there are a lot of opportunities out there. But definitely, we are looking at profitable business, which has scalability, which is EV-agnostic, and we are very focused because I know 2-wheeler will do well, but we cannot depend so much on 2-wheeler. We have to derisk without losing any business on 2-wheelers. That's why the inorganic becomes very, very important. So that's my...

Can I ask you on the first part, you said that supplying all products to all...

Yes, yes.

So let's say, HMSI or HMC, why are they coming to you? Because all these companies have a very established vendor base already with them. So why are they shifting from, let's say, Munjal Showa or somebody else to you?

See, I will tell you that one of the existing suppliers, I'll tell you about HMC here, doesn't want to do a business in a certain -- for a certain plant, certain area because we just came to know earlier -- I mean it was late last month. Now they've increased our share of business [indiscernible] from 56% to 79% immediately effective in July. The other guys don't want to do it, maybe they are not cost competitive, this is not interesting. But for us it's very interesting. So I'm just saying this one case line, which has just happened now. And I think it's more about pricing, of course. Pricing is a very important element. It could be derisking from 1 supplier or 2 supplies to a third supplier. And the third reason is our ability to give premium products or technology like what FCC did, like they launch the [indiscernible], you're also offering more premium products, but it is value engineered. Even a gas-filled shock absorber, a canister or these mono shocks, which are KTM Technology, new value engineer. So we are also offering those products which is helping them to switch over because premiumization is happening. And so I can only say it could be price because technology is same that everybody has. Quality, already they know because of the trust they have in your company over the years, you've supplied. So pricing is one reason. Second is lack of interest or third, the other supply may have quality problem also, why they want to switch. So these could be the reasons. And definitely, we are also very, very assertive on market environment. It is a relationship also, let's face it, which matters and that comfort to the customer. So we've been able to get this business, like the Suzuki, it's a 100% changeover at INR 165 crores. We ourselves are a bit surprised. We thought we'd be a second source, but we got this huge order, and it was a fantastic. I mean, Suzuki, which was a small player for us. There's 165 -- just 1 product is that much. So that's the way they work.

And that, let's say, Suzuki for that example, when you got the business, did the OEM get significant cost benefit or was it...

I don't know if was significant, but they got a cost benefit, for sure. I would not -- we don't like to lose our margin. But see, sometimes you have to be a bit strategic. Also, if you're getting a large business at a slightly lower margin, we have to work how to increase those margins. And we have that confidence that over a period of time, we will get back. But the business you have to take care because business will not come free. There has to be a value add for them and which is mainly a price and they have to shore up the quality, customer complaints and feel, that we make sure. Even see, we are very well-connected with other OEMs also, all these guys. So they know if Endurance is doing well for Honda, Hero, then Yamaha. So they are also damn smart, okay? So they also have their market intelligence. But I think 2 things for us. Having said this, which is very important, which is going to be my very big focus areas. See technology, of course, is there. But I think the market intelligence improvement is very important and the BOM improvement is very important. Because see, you may have suddenly a guy -- now what we saw with FCC. FCC was always much, much more expensive. But suddenly, they changed their strategy 3 years ago, and they become real competitive, Japanese company and they [ board the friction ], I don't know what they have done. I'm assuming that they are making good margins. So definitely, they have done something on value engineering, which we also benchmark their products, we find little changes. But maybe on the friction material, which is a hidden technology, where you cannot know because that's a formulation. So we are definitely working not only the market intelligence, but on the materials part, and that is something which is going to be more and more where you just -- we are working with our team, but we will be working with somebody from outside too in the near future. Because we need to -- and a person who can see a BOM and tell you, you are so much more expensive. I'll give you a supply for this, but today our team cannot do it. Because I feel this proactiveness will be very important for business growth. So we have to look at these. These are practical things which you are sometimes faced with. This guy came with a price so competitive and we also can't believe it. Then the customer definitely says, now for future we'll give you so much time. You also have to come down to that price. So these are the normal because you can't a retain a higher SOV with a price which is higher. So better to proactively keep working on this. So these two areas, I think, will be very important and market intelligence, what's happening on the pricing, definitely we'll improve it. We are good, but we are doing very good. That is also part of our business growth to put it that way.

And 4-wheeler acquisition, what are the target segments you are looking at? Which are the products you want to get into?

I think it will -- target segment will be definitely aluminum casting, aluminum forging and proprietary. Proprietary I've already mentioned to you, brakes and suspension. That makes more sense. We have a lot of people who understand this business, they're already with OEMs and their progress, let me put it that way, I'm not talking about investor or this thing. But 4-wheelers is going to be -- I mean, brake suspension, it will be a high focus. And new products, I can't tell you. We are looking at nonautomotive as well as automotive. But it's proprietary as far as acquisitions are concerned. But yes, if some casting acquisition comes, I don't see it coming, to be honest. We can see. But I think alloy wheels for 4-wheelers, there's casting and forging will be more organic. Proprietary will be inorganic. Maybe suspension and braking for some part of the technology we can do it ourselves. But as you go higher end then you need a collaboration. And as we speak, we are doing all that. So whatever I'm telling you, we already started, because I can't announce 45% without knowing that we can do it. So we're really focused.

And in terms of this acquisition you are talking about. So as I understand it is more to get access to technology than customer.

It is access to get -- it is everything. It is in the 4-wheeler space, it's customers, technology and a new product, which we're not doing. It is all.

And any size which you would have in mind?

It depends on the opportunity. But see, I am not one for very large acquisitions because there are too many uncertainties. Today is profitable, tomorrow business goes down. See, buying is an easy part, it is so managed. And Mr. Venuti knows the tough time we've had overseas. The buying was the easy part, but the management was difficult one, and to make this type of margin which we make. There's a lot of strategy involved, which I've told you with automation and focus on German customers and outsourcing, casting, smaller type. There's a lot of work done to reach where we are, but -- so I cannot give you a size. So I would be happy with the size of INR 1,000 crore acquisition [indiscernible]. See, one has to look at the -- it will be a profitable company. You got to look at EBITDA margin. Then you do the multiples of that. Then you have to see what their cost is. So we'll see on the opportunities. It may not be 1, we can take 2 at a time. So it depends on the opportunity, we'll take it. What I'm just saying we'll take it, but we will not take undue risks. After 2008 financial crisis, we are a bit wary of taking undue risk. We are very focused on our financials. So we -- so that is something which we cannot take risk on beyond a point.

In 2-wheelers, there's no thought process on acquisitions? Any big technology even which is missing from your...

If it comes, we will see it. But right now, it will happen more from technology, absorption, collaborations and greenfield because I think we can organically do that. Unless it's a new product, a new product which comes in, we can see.

A couple of these large products where you are still absent in 2-wheelers, where the technology curve is...

Which ones come to your mind, like which one...

No. I'm just asking, I mean I don't know.

Motors and batteries are commodities. Motors and battery are commodities. And the way the battery that -- you see motors, I have been seeing last 5 years, everybody is gearing for motors, some of my peers also. [Foreign Language]. I saw the May report of EVs, Ola is the leader with some 35,000 or something. That's somewhere 10,000. Okay, TVS a bit better 10,000, 9,000, 7,000, 6,000, because coming to EVs also we have to see. Ultimately, the players unless there's FAME III subsidy I'm hearing is coming. But what that subsidy will be, how much can they afford to give when you are doing millions of [indiscernible] we'll have to see. But ultimately, I think people have to live in a subsidy-free world and see how cost competitive they are. We know people like Greaves Electric, which are not really -- what we hear is they're not really expanding also or not even investing. Because electric is not only as a player anyhow which is number one up to 1, 1.5 years ago.

So I mean if you just fast forward 3 years down the line, EV will still become quite mainstream, by 2030, maybe 70% EV penetration for 2-wheelers. So as a...

I don't see that. Are you asking me?

Maybe it is 50%, but...

I'm saying it will happen in scooters.

2-wheeler scooters, I'm saying.

Not 2-wheelers, but motorcycle is 70, but scooters also will happen, but it really depend on the infrastructure.

Correct. But the point here is that the opportunity size will become much bigger. Now the question is, we are not there in motor. Why, is it because opportunity is too small right now or it is less profitable?

It is a commodity and will become less and less profitable. While we entered the BMS because it is a black box, which is a technology. We have today 70 or 80 people who write algorithms and software in Bangalore. And that is why the growth potential is very large if the EV does well. We haven't bought Maxwell on the hope that the EV does well. But unfortunately, after this large FAME II subsidy going out in July, the players who we have got large business from like Hero Electric and Ampere, are not there, hardly there, they were our top 3. And so we have to see the new, what I believe is Ola will do well, Ather will do very well, because they are very well financed. And all the original OEMs will do well. And you'll see that, they're all lying low. They have the capacity, but they're also looking at what can sell, what is the market? Maybe they are not seeing so much of a traction in the market. But they're all looking at the market. Honda is coming with the first scooter end of this year, second also next year. There was orders for both. So we'll see why they come in late, but they're also waiting and watching what's going to happen where they have their own product range in Southeast Asia, motorcycle, scooter, smaller bikes, they've got everything. They'll just come and launch it straight away. And so I think we have to be a part of the journey. We have already INR 872 crores of business in EVs. Let's see how it plays out. I mean we are quite hopeful we have got -- I mean, for the battery, for 2-wheeler for the battery and other parts. It's INR 100 crores business we have got. We'll structure the parts which were not there. The premium bikes, be it INR 100 crore order, parting the swing arms, structural fairings, subframes, profitable, high-value. So things are going the right way, question is to take opportunities and we at Endurance, I'm not going to lose on any opportunities which are there. We are connected with everybody including Ola. We still have hope with Ola. So their purchasing policy is a bit different. When we engage with them last year, we have a brake assembly supplier, master cylinder, caliper, disc, hose. They only wanted caliper. Now the issue is that is if there's an issue on the field, what do you blame? How do you find that what one guy supplies one thing, one guy supply, they do the assembly inside. So we don't work like that. Also, we will lose a large customer like that because there is a certain principle you have to work with. We are assembly complete solution provider. We don't do single, single component. I mean one can say, it's wrong, we're losing a big business. But we're okay with that because there's a lot of other business we can look at. And today, my hope is that other OEMs will catch up very fast. They have the financial strength. They have the technology and Honda, of all the people will never lose this big share of business. They are the biggest in scooters, why will any company, today HMSI is like a price, this thing of Honda. I'm sure they've thought about in their strategy meeting about all these things. And by the way, this was told to us by the Indian people only. They're not going anyway. They're going to do everything to keep that market share.

When is their EV expected?

It is in -- one is in November, December, and one is, I think, early next year or 2. I think they have said it -- but purposely, we asked them the same question last year, why are you so late and you are the major? We said, so they told me, it's a very well thought-of strategy. We know what we are doing. So if you want that, you can't say anything.

Two-wheeler on the traditional ICE side, I mean there's not many white spaces you see in terms of product. Is that a fair assumption?

See, for example, there are products, but these are products, whether we want to spend our time and money on where there's already plays there. While as we told about lighting, it's a high-value product. Okay, the question is the -- we don't see that kind of opportunity with so many players and struggle and to fight with these guys, rather get into EV new products, that's why Maxwell, we have done. And we premiumize, issue or supply all our 4 products. We are in quite a good space and castings is presenting us a very good opportunity with machining only, which is a very good value add, it is profitable, plus all these new types of casting, which we are not doing earlier, like structural castings, alloy wheel is going to be a good growth area for us in the future, which is high value. You know that alloy wheels are high value. So there's enough to do in the 2-wheeler service. We want to focus on 4-wheelers space. See, somebody is going to have your strategy also and spend money there also, but we keep spending on 2-wheelers then the 4-wheelers opportunity I lose.

If anybody has a question for the European operation, we have Mr. Venuti.

Sir, just wanted to understand, so when you look at the profitability of the European operations, given where other competitors are in Europe, and we see the numbers, it's fairly better than them, right? I think this year it was at 16% EBITDA margins. So just, I understand that, is it a function of the product mix and the work that we have done or generally because what we hear from different regions that every day, I mean lots of foundries are closing down in Europe, lots of players are, especially small and midsized ones, the large ones are taking a hit on the profitability. So the reason why we are doing well is because of our mix -- relatively better performance is because our mix like, I just wanted to understand.

So Massimo, could you understand the question? Massimo, are you on mute? Massimo, are you there?

Can you hear me?

Yes, I can hear you. So could you hear the question?

Yes, yes. Let me say there are many reasons, but for sure, the mix of product can make the difference compared to the competitor. But let me say at the end, I continue to say that the strategy of Endurance overseas to focus in high level of automation in high volume was correct. It continues to be correct. As you know, also in the last 2 years, we are implementing a lot of production capacity for the new challenge of the electrification process. We're implementing production capacity for the mild hybrid technologies, and also in this case, we are doing important investment. Please consider that the previous financial year, we closed with the EUR 58 million, the double compared to the average of the past and we are going in this direction with a 9 level of automation, on top on these consider that in the last few years, a lot of companies are going bankruptcy in Europe due to the financial situation. And in front of the customer, we continue to be very strong from the financial point of view, even if we are doing important investment with our cash profit. And so it's a question of reliability and we use to develop our product mix in collaboration with our OEM, for example, with Stellantis, we started 5 years ago with the development of this new clutch housing for the new mild hybrid transmission, and we start in production -- we started in production 6 months ago. You can imagine what does it mean. There are not a lot of company available to invest a huge quantity of money and to wait 2 years or 3 years of development before the start of production. And so we are going in this direction. We continue to believe that this is the correct strategy for the future grow in terms of turnover and also profitability, even if the European market, as you know, is not a market where you can grow without taking business to the competitor because unfortunately, the market is more or less stable. Even if we close with 10% of increase compared to the previous year, we are doing minus 13% compared to the pre-COVID situation. And so the only way to gain market share from our competitors every day, every day, the last period of time, we are receiving a request from our OEM to consider the possibility to buy specific plant of our competitor or to move production capacity from that competitor to our plants. But as you can imagine, it's not feasible because we are involving everybody in thousand and thousand new projects, we are implementing a production capacity and this have to be the focus. In order to improve the profitability for the future year, and please consider that we closed the previous financial year with 16.1% despite the energy, even if it's more convenient compared 2 years ago is affecting our EBITDA 2% because we are paying 3x energy and 2x the gas compared to the pre-COVID situation. The strategy was to buy this small company called Ingenia Automation, we bought 100% of share this company with a total turnover of EUR 13.5 million worked for Endurance with more or less 45% of the total turnover. We bought from them a lot of automation line in the last years. The idea is to implement this technology in our technical department, we bought this company, as I told you, 100%, but we bought 35 engineers specializing in the automation and in artificial intelligence for the movement inside of our plant. This is absolutely strategic in order to reinforce our state-of-the-art production capacity because this is the only way to be competitive. Few people in our plant because we have to be flexible because unfortunately, this is a market where you can have important reduction of volume and this is the most important thing that we can do for the future of our plants in Europe. On top of this, please consider the electrification process in this period of time is suffering a lot in terms of volume because after August and September 2023, all the OEMs are reducing the incentive and also the government and for this reason, there was an important reduction of volume in the last 6 months in this field. And as you know, we are in our product range more or less 15%, 20% of this product thanks to the acquisition that we have done in the past, above all with Porsche, Volkswagen and Mercedes. But I want to be optimist for the future because after the election from my point of view, the new government will go ahead with the same strategy to reinforce the infrastructure and to try to incentivate the electric car in order to give the possibility to the OEM to make economies of scale and to reduce price of the vehicle, because everybody wants to buy an electric car, but unfortunately, in this moment, the price is very high. And so in order to avoid attack from Chinese, Korean customer, the strategy to increase the volume and to incentivate in some way from the government, this policy. So as Endurance we are in both sides, we have the internal combustion engine technology, we have the new transmission and the new engine for the mild hybrid technology, and we are investing a lot for the electric process. We acquired in the last 5 years, EUR 250 million business, of which only EUR 50 million to replace existing product range and so EUR 200 million of which 38% completely electric and 48% completely mild hybrid. So I'm optimist, I'm pretty sure that the future months will be positive for us even if the market is not performing very well. But as you will see in the presentation of the first quarter, so in this financial year, we are performing better compared to the market.

So Massimo, are you seeing some of the Chinese auto component companies setting up shop in Europe?

Yes, there are a lot of companies that are suffering a lot. I can tell you that without make the names, a lot of these Chinese competitors are stopping the production. So it means that a lot of our companies are in bankruptcy procedures, and we are discussing in this moment with 2 our major customers to support them. And today, I have a conference at 11:00 with the Volkswagen Group to understand what we can do to give them support because -- but the problem is that they bought in the past, important product in East Europe, where there are thousand and thousand people. If you have the production capacity stand-alone, it means that you are not flexible. And when there is a reduction of volume as we had in the 5 years, you wish to pay a lot of money for restructuring costs, and so unfortunately, this is the situation, unfortunately, let me say.

Yes. My question is that are you seeing a situation that in the next 3 to 5 years, Chinese OEM they garner a meaningful share in Europe in EVs and they get their own ecosystem with them [indiscernible].

Absolutely clear, and this is one of the argument of the newspaper in the last period of time. I explained to you. So first of all, the European government decide to implement the new duty from China, till 38%. And this is from our point of view, absolutely not positive, also because the Chinese are doing the same with the import from Europe. And please consider that a company as Porsche that produced 300,000 car per year export in China, only in China, 95,000 cars. A company as Volkswagen with the brand Audi, that produced 1.7 million of car per year, export in China, 670,000 cars per year. You can imagine what does it mean. You can imagine, as is strategic, the Chinese market for the European OEM. And so from my point of view, they have to find a solution. The solution is 1 from a point of view. And we are going in this direction. A lot of Chinese OEM are, in this moment, evaluating the possibility to implement production capacity in Europe, not to produce, let me say, transmission battery and powertrain battery to assemble the car. And this will be, from my point of view, the way to convince the European government to reduce this duty. And so a lot of them will come in Europe also because, unfortunately, as you know, they have the technology, they are ready with the competitive price and so, but I think that this to be the correct strategy because if we close the market in Europe, and they will do the same in China, it will be a disaster for the automotive sector from my personal point of view.

The 38% duty is relatively lower than what was feared. After paying 38% duty, Chinese companies are making better margin as what we make in China. So it is a welcome move from Chinese OEM perspective. So my question here is that are we engaging with some of the Chinese OEMs to start supplying them to in Europe?

Could you repeat how?

So what are we saying that this 38% duty for PYD, the welcome move, because they were expecting 100%. Now even after paying 38%, they are making better margin by selling into Europe versus what they make in China.

Yes. No, I agree with you, but please consider that the duty is not only, for example, the French government, the Macron government, decide from the 1st of December 2023 to consider the duty -- in relation to the percentage of production that you are doing in France, in European territory. And certainly, that the 38% is on top use that each government is implementing. For example, in Italy and France, we are doing this. If you don't produce minimum 45% of the vehicle considering also the powertrain. In the territory, you have to pay -- you -- first of all, you don't receive incentive. And please consider that in this moment, the incentive can reach EUR 10,000 means so it means 1/4 the total value of the car. On top of this, you have to consider other 38%. And so even if they are really cheap in this moment for them is not convenient to move the production capacity, believe me. In fact, there are a lot of electric car in the -- without possibility to enter in the dealer network. This is the situation at this moment.

Yes, that answers your question?

One question on the industrial part. You've shared with us what are the areas that, for nonautomotive, again, focus -- can you draw some boundary lines for us what are the areas of focus? What are the areas that?

Right now, the areas for nonautomotive industry like 5G telecom, gensets, compressors, electronics, ATBs, MTBs. And this is the 5 areas we are looking at with customers at this stage. But there will be others. I mean I don't know. Right now, it's this [indiscernible].

Aluminum?

No. This is aluminum casting. This is the end user industries. We are talking to them.

So can you just help me that what has changed like a lot of player like, they are not like us, sort of other players also the ones who really have the comparable capabilities also focusing on nonauto parts of the side. For example, a genset opportunity is going to discuss the other player also. So I mean, what has changed on the industry side, I mean the macro set outside India that this sort of business is now coming on the die casting side to India already supposed to find...

What I believe is this was always there. So to be honest, there was a lack of awareness or there was I think it was more for people at Endurance, there was no lack of awareness to focus on that area. But last year, when I met this team from CIE and they do quite a bit of business with them. It changed my thinking when I saw the -- the margins I saw, I said is it really happening like that. And the [indiscernible] is easily doable, the making the dies or making the -- this is why we moved very fast. I mean, this is a quarter from quarter 2 of last year, we have announced this new project because by taking this team who are -- who know all these customers, we just concluded a INR 20 crore resourcing this last week with tooling costs, everything. So we are way ahead, but we need at least, I think, INR 100 crore order to get started, which is happening with all the customers. So we just -- so question is we are -- we don't want to miss out on all this opportunity because hand tool is brake. I'll find out for myself. And anyway, it is big enough to take a risk. But I don't see that as a risk because these are businesses [indiscernible] Risk can only be volume, which is also in the auto industry. Volumes keep went up. So -- but we have to be present there, especially in die casting and machining, which we understand, that's our core activity.

Sir how much are we investing right now?

We have talked about some INR 60 crores, but we'll see how it goes up there. But we're going step by step, and these are larger [indiscernible] I mean.

These are more, I think, 1,100 to right now, immediately, which we have got is 1,100 to 1,350-tonne machines, what do you think [indiscernible] as we go along 1,650, 2,500 is going to happen. Earnings I think for 2,500 tonnes also, but that we may do in the existing plot. So we are doing that because some people want to start immediately this year. This is resourcing. So I'm going to do in my existing plans, that should, yes, next year.

The customer wants immediately, is it because he's not getting a quality supplier or is it?

So, it's mainly quality. I think not only quality, it's not supply -- is not able to supply in time. There are 2 issues happening, quality an supply.

Supply issue is because of what reason?

Supply, they are not able to give the volume quantities.

They don't have the capacity or?

Maybe it could be inefficiency. The capacity is always [indiscernible] by the customer. But then what happens is, can you [indiscernible] make them supply. See the pain of risk, QCD, quality, cost and delivery, but cost to earning is not upfront. But quality and delivery [indiscernible] delivery, where the line stops is the biggest -- that and quality of the business cost, which is really bad. It's like a crying future of the line production. [indiscernible] issues for this resource.

Doubt about India castings business. So we know to be there, your ROIC is quite healthy. The machining share is high. If you look at some of the competitors, so Craftsman used to be low margin, low ROIC for their aluminum die casting business till 2, 3 years ago. But now their margin and ROIC for the core business have improved. Then [indiscernible] which acquired EBITDA margin is quite healthy, 18%. So I have the dynamics in 4-wheeler casting change and also maybe because they have higher share of fully machine castings, is that the reason for the high market?

So I think they are definitely going fully machined only from what I believe, list some of the acquired companies at raw casting, which I don't know. But definitely, 4-wheeler depends on the casting, but generally, it's better in terms of profitability. It depends on the type of casting also which you're making. It depends where we put transmission, our sales. It depends on the type of casting and the ability to make money because see -- but to answer your question, I think 4-wheeler generally is better than 2-wheeler with the machine.

The question is margin gap between Craftsman and Endurance?

So they work more of 4-wheeler more...

Can we bridge that gap and our nonautomotive aspirations would give similar margin...

See, when I -- I see -- what are the 2 efforts we have made. Yes, we do efforts to improve the profitability. Would be by way of light waiting, [indiscernible] multiparities dies could be [indiscernible] machining, getting better yields so you are [indiscernible] loss is less. There are many ways. There are many focus areas which we are doing right now. But having said that, we still have large 2-wheeler customers like Bajaj, like Honda and Royal Enfield. Royal Enfield, that was across, we done it. They were our competition, but I don't see them much now. Maybe they left because it was mainly raw casting because they were doing a little bit of machine. So that's a strategy. But see for us, these customers, not only about casting, is about proprietary large businesses. So sometimes, you may have to do certain raw casting, which Bajaj is, of course, going to do 100%, but there are some customers like Royal Enfield, not going into with machining. So you have to do some things to get the larger part of business. So you may have to take a less profitable part with more profitable part and a big focus on business growth. So this is where we land up. So I think the question will come, how do you scale up to get INR 10,000 crores? How many companies are like that? Can you scale up from INR 2,500 crores, INR 3,000 crores to INR 10,000 crores with the same margin is the key question to ask. Because you have to get the bad with the good. Now bad is what, what I mean less process. The question is the scalability. And I know in the business, you have to take some of these weaker things with a better thing. This is my experience. Yes, I can't have the good use all the time. You will not get it. Shock absorber, you're looking still have to do hydraulic with a good gas-filled mono shocks, you have to do the whole range. This is what -- my question is your ability to [indiscernible] under control and keep improving on it. That is why I said two things. The market intelligence and the block to be proactive now. We don't know where the surprises can come from. A guy may come in guest to take business. He doesn't mind making a loss or making less money. We have to deal with that. So how to take your money and still be valuing looking -- value looking product is a key now for future.

4-wheeler die casting just wanted to reconfirm. I think until 4, 5 years ago, it was not as attractive as 2-wheeler in terms of ROIC. Has anything changed in the...

No, it was always attractive. Question is that -- maybe we didn't take the opportunities, but 4-wheeler was always [indiscernible] because we were mainly 4-wheelers, Tata Motors and Mahindra [indiscernible], the Hyundai and Kia in from 10 years ago, 11 years ago. But of course, Hyundai is a tough customers. There, but trust me, we are doing quite well. 4-wheeler is better. [indiscernible] to that. It is better. But that doesn't mean there could be certain parts of 2-wheelers also which are as good. But like I said, I have to do a few which are not as good, including the raw. It's a part of the game.

Does that happen in 4-wheeler also that as you either I have to -- you can pick and choose?

4-wheeler, I don't see it happening. Of course 4-wheeler, there could be products which are low profitability and high profitability, that will happen. But only doing die casting and not machining, I have not seen it in 4-wheeler.

One formal question is that how should we look at the margin trajectory of India business now and 3 to 4 years down the line? What are the drivers of margin expansion.

The drivers is the product mix improving. It is [indiscernible] 4-wheelers now, [indiscernible] into nonautomotive and 1 more thing I forgot is aftermarket growth, which we have already said from 6% of India sales to 10% of India sales [indiscernible]. These are the margin drivers. And of course, as we are talking 4-wheelers, I already said, it is about acquisition. It has got organic. But generally, the profitability is better than 4-wheelers. So that's why the focus is also coming in. So premiumization in 2-wheelers or high-value alloy wheels, inverted front folks, brakes, ABS, these are all higher value. CAT growing more and more. And 4-wheeler nonautomotive [indiscernible]. These are going to be a rule breakers.

No product mix -- largely product mix. And do you expect some cost-saving initiative [indiscernible] to...

[indiscernible] We are doing -- on cost, we are doing, certain costs like energy cost will be fine, but we are going into solar and wind third-party generation to mitigate a little part of that cost. It was INR 8, can I go down to INR 6.50, specific cost. So almost, I think -- I don't know what is the percentage of wind power and this thing compared to total requirement?

35% is renewable energy.

I think that -- we'll check it. That is [indiscernible] exact percent. No, that's a continuous effort to look at windmill and solar.

That number in your mind that in the next 4, 5 years, this margin of 14%, 15% and become 16%, 17% [indiscernible]

See, I know there will be an improvement, I keep say. Because as we speak, we are also looking at conversion cost increases. Quarter 4, you saw also had some conversion cost increases, but it also had onetime [indiscernible] of INR 20 crores. So wherever we can, we do the conversion cost increases, which happens once in a while. We are now also becoming very tough on some of these things. But that is one part, which is an important part. But I would also say, look at -- when you look at margins, look at RMC percentage to sale, when we did 15.6% in FY 22, and I think '21 and '22, the RMC was 62% to 63%. Now when we have gone, we went down some 13.3%, it's at 65.6%. One has to look at our amount of profit, and you have to look at it then [indiscernible] 84% of our total purchases goes up. Whatever is going on, I don't earn profit on that. That's a non-value add sale. So the actual sale is not that, If you a little diluted by that percentage and then see my margin. That's not in my control towards a pass-through, quarterly is pass through to the customer. But definitely we have to now make a lot of effort in value engineering, [indiscernible] to be able to make more money and of course price increases from customs and of course, product mix change 4-wheeler nonautomotive, aftermarket -- this is what is going to grow the margin, but if you ask me for a figure, very difficult to say a figure, can you catch [indiscernible].

Sir, I have a very broad question on our EU business. So what is your vision for this business? I'm not saying next 1 year. So, 3 to 5 years, how would it look like? How would it be in terms of capital allocation?

Both of the same view. Massimo, could you hear that question?

Yes.

Vision for the EU business in future? Maybe FY '30 next 5 years.

3 To 5 years.

3 to 5 years.

We want to grow. This is the target. We want to grow. We want to maintain a good profitability. Please consider when I told you that we closed the previous financial year with 16.1% with 2% of reduction due to the energy cost. Also in Europe, we have the same impact of the raw material, and so it means that if I compare the profitability of the last 2 years, compare 2018, 2019, when, as you know, we did 20% of EBITDA, we are at the same level due to the fact that we -- now we are buying 1 kilo of aluminum for EUR 2.2 compared EUR 1.8 of the past. But the strategy is, for sure, to improve our turnover to improve our business, generally speaking, with our major customer, why not considering also a possibility to enter with a new customer, but with an acquisition. Because we need people to reinforce the team because we are growing in an important way from greenfield and we can continue only in this way. And so the target is to -- we are doing a lot of market test with a potential company that we can implement in our organization. But as you know, the strategy was in the past to buy a small company, not to be a company in order to integrate and to make economic of scale with our organization. To increase the turnover as it means to gain market share from our competitor and to try to improve our profitability, making -- continuous to making synergy. In our production, in our technical department. And so the target is to grow also because today, we are more or less 25% of the total group, and we want to try to maintain this percentage. And considering that India will grow an important way from a point of view in the future year, the target is to remain at the same level and speaking about the general situation. If you want to enter in the product range, the strategy is, for sure, to develop the electric technology and to maintain an important know-how in the [indiscernible] because today, the [indiscernible] technology until 2035 will be official, let me say, is more or less 70% of the total market. And please consider that only in Europe starting from 2035, we will stop the production of internal combustion engine technology. But as you know, we are a sole supplier of our customer in 80% of our product range. And as you know, company as Mercedes, company as Stellantis, company as Volkswagen, they produce more or less 100% of the powertrain in Europe, and they export the technology, the vehicle around the world. And so it means that also after 2035, we will continue to produce internal combustion engine. And we want to maintain the profitability online compared to the past. This is the target.

And see, today, I think he did mention it. We are amongst the 5 suppliers who the RF teams request for Volkswagen [indiscernible] not doing well or they have stopped -- whatever the reason, which is also an important thing. And then customers who trust us with 80% at a single source supply means that there were a lot of trust and dependence also.

And please consider that this sorry -- will be more complicated in the future because, as you know, in the past, we had the several segments of powertrain due to the diesel gasoline 150, 180, 200, 6 cylinder, 8 cylinder, 11 cylinder, so was more easy to have 100% of the product range. Now, in electric, with the segment and volume that starts from 1 million to 1.8 million is very difficult. But also in this case, in this moment, we are sole supplier of our customers. So it means that there is a lot of reliability from the customer to Endurance.

See, but from my side to answer this question is Europe is a real strength. We make a lot of money. As we have derisked Bajaj, we have derisked India. One has to rethink that in mind while going to a different geography, as a company. So actually kept in mind and that was the reason also why we started acquiring companies in 2006.

Also while models of European OEMs have not done very well in India until now, but it can be expected that as more and more EVs come into India, then Volkswagen and other manufacturers [indiscernible]...

It's a very important point, because when we acquired in 2007 [indiscernible], Italian company, initially, we all got a INR 40 crore order from Tata Fiat joint venture. Unfortunately, the major customers there are not selling so many vehicles that they make their own powertrain here. In fact, they are importing. So there's a requirement for like die casting, the other parts, because they are importing it from their works abroad, the companies are broad. But when the volumes increase for the Volkswagen Group or for Mercedes-Benz or the BMW, then the whole technology of castings is available for us to be the first choice supplier where they're supplying to these guys, what happened with Tata Fiat JV. They just came to [indiscernible] check, the pricing of everything eying was done so fast. So that has not happened, unfortunately, since we started our journey in 2006. If that happens, except Tata Fiat, if that happens, that's a big game for the future. And sometimes it has to -- I mean, if you are saying the cars will do 10 billion and all, then it has to happen. [indiscernible] Maruti doing it. These players have to come up. Then we'll get a huge advantage. That's a very valid point.

Also in Europe, we have gradually grown our presence in the aftermarket by acquiring three companies. [indiscernible]...

It was a profitable space, good profitable space. And we're using large part of our vendor base from here to supply. So it becomes cost effective. But that's about 6% of our business. 6%, 94% is cost.

You see some traction with the multinational companies who plan to set up shops in India for EV manufacturing?

Meaning you're saying for 2-wheelers or 4-wheelers? Maybe MG Motors was 1 which I heard about...

Any discussions with Endurance?

MG Motors, yes. Jaguar, Land Rover, I don't know about, they're only up to Made in Tata only I think Jaguar Land Rover.

So they are also exploring Chennai.

So we are in touch there. We are in touch.

And Tesla is doing their initial vendors counting.

Jaguar, Land Rover, I know MG, [indiscernible] EV right? These two come to my mind. Tesla is discussion is happening. We have had 1 retail. I'll just leave it to that.

Yes. What about [indiscernible] ?

Yes, happened. That meeting also happened. They all in touch business. The [indiscernible] manufacturers, BMW's [indiscernible] right?

Yes.

We were in touch with all these companies and let's see if the opportunities are there, we will take it.

Sir, how much is the capital invested in the European operations by far, like since we started?

So Massimo, what's the question? You can just add.

Yes. So how much has been the total capital invested in the European operations [indiscernible] since we started [indiscernible]?

Our books is around EUR 260 million. That is including cash. So net of cash is EUR 170 million. Yes. So largely, the growth.

That is not the gross block. Is it a gross block?

That would be the net block.

The gross block you have to look at.

That I will have to check.

No worries, but we can ask Massimo, if you know, this also requires companies acquired in many acquisitions [indiscernible] look at that.

Could you repeat the question, please?

Yes. So just what is the total capital invested in the European business we started.

The total CapEx done since the beginning is the question.

The total investment?

Yes, yes.

I presume we did a EUR 300 million of investment.

In the last 5 years, I have the number, it aggregates to 190. So what -- and sir, on the 2-wheeler die casting side, sir, I mean what we do expect like assuming similar metal prices and like volume price, what do you would expect. Let's say, from a next 3 to 5 years, what do you expect for [indiscernible] die casting? You're seeing growth?

Yes. See, 2-wheeler growth will come, if you ask me, is from machine castings and come for EV castings like [indiscernible] about, which are higher value. In fact, I don't know if you are timing this, if you see a setup, it's INR 100 crores for the business. It started in [indiscernible] time. [indiscernible] we may be doing. That's only for battery housings. So that's a new product structure casting, I told you swing [indiscernible] that's a new product. Alloy wheels, better huge growth. Casting is for 2-wheeler these areas are right? Machining, [indiscernible] electronics.

SMT would be for BMS.

SMT to BMS buses [indiscernible] housing -- do we have it here? Yes. Yes.

You cannot go into that plant. We are not going to the casting plant.

Okay. Okay. I don't know if time schedule we can see complete machining happening of castings. The casting we do in the other plant, is that the transmission plant, there we have die castings, they'll do it. For the whole machining, you can see there, that share. But anyway, I don't know the time.

Factory housing we are supplying to Tata?

Right now, we do for a Aptiv [indiscernible].

What would be our share of business?

The whole 100% of that. I don't know so whatever [indiscernible] they are makers on 5,000 cars. I don't have exact volume.

Any other OEM, we are discussing from battery housing?

So the market are better equipment [indiscernible], I don't know...

The 2-wheeler OEMs, yes?

This is about 4-wheelers. He is talking about 4-wheelers. I don't know, like Hyundai or Kia or Mahindra. I have to check that. Yes, because SUV 400 getting manufactured in Chakan only, which one?

XUV 400, Mahindra.

[indiscernible] Supply the casting, but that's an interesting thought, you should tell our marketing, focus on that, at this trend. But on 4-wheeler, we're creating a small organization. We have said just 45%, not like that. R&D, marketing, small organization formed, people being taken. Because see, 4-wheeler requires a 4-wheeler mentality. You know what I'm saying. To get business, to do the development, so that we are a bit aware of. So that will happen.

It is slightly much different like you were speaking about why higher margins for them cost of a dry line is much more than a cost of a [indiscernible] to be. So they will look at reliability. For us also [indiscernible] drive shaft, but they're getting some very good people for this year [indiscernible] getting -- it's like a 4-wheeler, a small organization. Small team to start with and then we build it up.

For 2-wheeler, I had a question. So if I look at content per bite, right? In RE, it seems that we have flattened in the last 4, 5 years, the growth hasn't been there? What has happened?

You're right? It's mainly happened, because when FCC launched is [indiscernible] clutch, we went out. We were able to get back in with a 50% share.

A similar thing happened with now dual-channel ABS. We never started only.

No. But the customer started. So the thing is we had a plant like Jan, July, but the customer wanted [indiscernible] but there was a...

Ideally, what happened there, the customer went in for -- that's not a dual channel, but dual channel with the right mode and traction control. Right now, it's right move. So that software and collaboration spent a lot of time. So it was on as it is. In 6 months, they went into this right mode and then one more thing, which -- and this motorcycle traction control. These two things, so ride mode is immediately required. So that pushed us back. But we'll start next quarter, we will start. Next quarter, with the ride mode, we will start. And then the traction control also will be. So we, in target, will see -- this takes time as customers also [indiscernible] a lot of -- all these new additions take time. But to get that, this has been, again, initially by, we came to know only earlier this year, but initially by Bosch. [indiscernible] it's very important to be like technology leader. You talk even it is going expensive, how it is good for you, a little? It is good. These are all good things. The customer gets excited. When they launch it, then you don't have it look at it. You don't have [indiscernible] like that.

Just like we did for the Pulsar inverted front..

All the oil and gas [indiscernible] larger ports, we also changed the market. That is not even there in the market, all these products, but they are doing the same. From a technology, we're going to be very, very alert now. But we are looking at 2 new ones that we want to not try it. Just mentioned, but when time comes, I will tell you.

So is the entire flat light -- I mean, the flattish growth has been because of the loss of transmission?

Mainly it's the transmission and delay in brakes. Brakes were started.

We started with single channel, right? But now we are supplying these...

We started Bullet. Now Bullet stopped.

Bullet Classic.

We stopped Bullet Classic. [indiscernible] even the old Classic bullet only. No. So it was bullet. That has stopped. Now, we're starting with [indiscernible] we started this.

In fact, net net, do we have growth?

There has been these with setbacks, but we are back there. They want us badly. You should talk to Mr. Agarwal?

With alloy wheels, we'll be ahead of what we were 2 years ago? We didn't have alloy wheels...

Yes. So alloy wheel, we have just started very excessive. So we'll see a lot of traction on that going forward.

So what is the line of site you have right now in terms of ramping up our production for both the client and [indiscernible].

I can't answer that question because an investment [indiscernible] I can't speak these things because somebody from the customers is also in on that call, which you should find out this. But I've been very careful, but see, to be honest, that excitement, which was there last year, is not there. I'll leave it that there. I don't know how much it is [indiscernible] something, right? More than that. So that excitement, which was there I don't see it happening. Similarly with Hero MotoCorp also, on the Harley Davidson, that excitement, which is -- so we'll have to wait and watch how these evolve, which is the -- we are there [indiscernible] modules, we'll do it.

But from our side, there is no like suspensions, particularly that is one of the -- what we understand is both the bottleneck to ramp up production. So, from our side, we are ready that 3,000 becomes 10,000...

Suspension, whatever they do, we are ready. In fact, brakes, I think this year, we'll cross our 6.2 million brake capacity. I think due to the plant and the 8.2 million disk, we'll cross it. So now past new has come in last month and totally we have to [indiscernible].

Yes, we have space, we just discussed.

New building will come up in the next 6, 7 months, because of orders touch wood are just coming in, in a big way, larger SOPs. So brakes is like our fastest-growing business.

And all this business which involves CapEx in the [indiscernible] region, we evaluate this CapEx on an as-is basis without looking at incentives. But it's a fact that we do get a 100% return of CapEx because we are investing in this [indiscernible].

[indiscernible] 2013 scheme, we have -- we had an eligibility certificate for INR 446 crores. That was a quantum of eligible CapEx. And out of INR 446 crores up till FY '24, we have booked an income statement, INR 403 crores. Mostly in this year, we will book the remaining INR 43 crores. And we have also collected cash from the government against INR 446 crores, we've collected INR 278 crores. So in the next 2 years, we will be collecting INR 168 crores. This is all under the 2013 scheme. The government also has a similar 2019 scheme. So we've tabulated the CapEx that we have done, the eligible CapEx, which comes to around INR 650 crores. And so that, again, we will be booking of 650 crores. But we don't have the eligibility certificate yet.

So were waiting what is the maximum to apply because you should apply for the maximum, you could have applied last year also because we have crossed the threshold of 350, 2.5 years ago actually. But now we are going to apply next month. We should get eligibility in the third quarter of this year. Then we start to book it [indiscernible] because it is not only the incentive is also based on the fact that you should have a large business in the state of Maharastra, I mean, as a customer. So the Bajaj Auto -- Tata [indiscernible] Bajaj Auto 2 large plants in Pune, in Aurangabad, we easily meet it. We easily get the state GST. So you're going to have that also. It's not only that 650, we should be able to get that INR 650 crores back by just want to say GST. So fortunately, being in a backward area is a good thing for us.

Any additional benefit because of the [indiscernible].

[indiscernible] also have the same benefit. But there, we'll have to see, what is the India versus exporter? That's a large part of imports and it is maybe non margin. So there, we are looking at the strength of the profitability of the business. But we'll try and say we can do some Bajaj [indiscernible] something we will see to get the sector. But that plant is mainly 4-wheeler. I mean it's only 4-wheeler. I don't want to mix up Bajaj and Auto to be honest. So there, it will be more strength on the profitability of the products.

And sir, alloy wheels, pardon on my understanding, but a lot of peers are adding capacity on alloy wheels, and what I understand is that this -- so 3 years back, maybe 3.5 years back, there was a big room to do import tradition because the Chinese share was high, 60%, 65% was there. Today, I mean, there -- I don't know there are any provisions, 20% or 25% on Chinese supply, this is all covered by what capacity can be correct. So then, I mean, then this product actually let's say, not today, but let's say, 3 to 5 years down the line, will this product actually maybe get commoditized.

I would say it has already become -- it is a commodity. When the Chinese came in, it became a commodity. It's a technology product. It is a commodity for the last [indiscernible] not now. Question is your ability to make money? Like I mentioned. We will make money, it is good. So do we make money? That's why we are growing. It is a commodity, let me tell you, even today. And where the growth is also coming from is that many of the vehicles, let's say, Honda scooters, many, don't have a loyalty. They have the [indiscernible] there are many other -- that is going -- everything is going into alloy wheel. So your market of $3.5 million or $4 million or whatever the figure is, per month, which is, going to have only alloy wheels. But that is a demand of the customer to have alloy wheels. So the growth is not only coming from the growth in the business. It's coming from non-alloy wheel 2-wheelers to alloy wheel 2-wheelers.

Like, let's say, even -- because we're doing brownfield -- alloy wheel expansion is brownfield, let's say when if you were to do a greenfield allow wheel expansion like that our sizable at 3 million, 4 million units. So then, I mean, is it -- like does it give you the company level return on capital for those sorts of projects?

It's a very good project. But see, one should not only look at our ROCE immediately. One should look at that you are making, you are growing your sales that you're making money. ROCE instead of [indiscernible] 5 years for [indiscernible] products [indiscernible] 6 years, it's sort by controlled volumes, people happened up. But look, cannot lose growth opportunities when you make money. Maybe ROCE may be less for that project. But I have to look at business. No, no. Yes. So I look at it from that angle also. It's a balancing act always through ROCE and PBT is an important part where people are paid the variable pay based on that, is that important. So we are very financially focused company. But, I cannot do projects only on ROCE being 20% plus I cannot do. I have to grow this company profitably.

Okay. It is news flow coming to Aurangabad almost 1 million capacity. So do we see a material increase in traction. So far, we are supplying to, [indiscernible] but are we also supplying to the new [indiscernible] price point, is this?

We have a INR 250 crore order from [indiscernible] suspension, braking and [indiscernible].

This is for which model, than even the lower price?

So I think it's for [indiscernible]. I don't know which module.

Is that could be a big volume churn?

I will try this check. I need to be excused at 130, I have reviewed with my customer Yahama, [indiscernible] engage, but I'll check that out. I will let you know.

So if there are any last questions we can take those.

But I don't know whether that's 100% final or not. I don't know yet. [indiscernible] is almost final, but we don't know what's [indiscernible].

We have not heard, but what logic we are putting on table makes sense. In the sense that relatively lower cost plus catering to Western and Northern markets from Europe instead of having another facility to Karnataka?

Western market, including Maharashtra, they will get the mega project also.

You are correct. That could be the reason.

That could be the big opportunity for us, 1 million bikes only from this facility. That happens a little bit fantastic. We'll able to do everything.

Thank you all. Thanks for attending the meeting here. I'm joining for lunch also. I think you will also have to. In programs, no, you're going to run at [indiscernible], there's no time for lunch? Suspension R&D is at 1:15. We were running I think 15 minutes late.

So you would have to have lunch and then go, you would tell them.