Endurance Technologies Limited (ENDURANCE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Endurance Technologies Limited Q4 and FY '25 Earnings Conference Call hosted by Axis Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nishit Jalan from Axis Capital. Thank you, and over to you, sir.

Thank you, Manav. Good morning, everyone. Welcome to Q4 FY '25 Post Results Conference Call of Endurance Technologies. We are pleased to host the management team. We have with us today Mr. Anurang Jain, Managing Director; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Rajendra Abhange, Director and COO; Mr. Raja Gopal Sastry, Group CFO; and Mr. Raj Mundra, Treasurer and Investor Relations. I'll hand over the call to Mr. Anurang for his opening remarks, post which we will have the Q&A. Over to you, Mr. Anurang.

Yes. Thanks a lot. So good morning to everyone. I would like to say that India's economic landscape remains strong in spite of tariff wars threatening global trade and the recent situation in the subcontinent. As we observe the broader economic environment, GDP growth for FY '25 estimated at 6.5%, lower than the 9.2% recorded in the previous fiscal. The index of industrial production grew at an estimated 4.1%. In FY '25, average inflation stood at 4.6%. Moderate inflation, coupled with higher capital expenditure proposal in the union budget this year is expected to spur consumption and investment. As per the recent Economic Times article dated 5th May 2025, 2-wheeler OEMs expect sales this year to test the pre-COVID peak, hoping that lower EMIs due to cut in interest rates, higher disposable income due to income tax reforms will encourage the middle class to spend on 2-wheelers. Also, as per the CM report, forecast of a favorable monsoon helping rural areas, strong replacement demand and government support for purchase of electric vehicles would be factors for growth of 2-wheelers in this financial year. The passenger vehicle sales from India during quarter 4 FY '25 grew by 4.1% year-on-year and commercial vehicles witnessed a 4.6% growth, while 3-wheelers grew 9.1% as compared to quarter 4 of the previous year. Two-wheeler sales reached 5.7 million units in quarter 4 FY '25, up 5.3% year-on-year, driven by scooters at 10.9% and motorcycles at 3.3% growth. In our stand-alone financials for the quarter, Endurance has seen a total income quarter 4 FY '25 year-on-year growth of 8.4%. In the European Union, new car sales saw a year-on-year drop of 1.9% in quarter 4 FY '25, while our Endurance Europe total income growth was significantly higher at 17%. In the quarter 4 FY '25 industry volumes, there was a 15.2% share for battery electric vehicles, 7.6% for plug-in hybrids and 35.5% for hybrids. While our India business is fairly insulated from U.S. markets, certain components made by our European plants do find their way into the U.S., particularly components for the higher segment cars. We await clarity on the U.S. duty structure, and it also remains to be seen if duty changes would drive consumer preference away from niche European models. Having spoken about the macros, I would now tell you about certain steps which we have taken at ETL. We are setting up a state-of-the-art lithium-ion battery pack manufacturing plant near Pune to address the rapidly growing market demand for electric vehicles and renewables energy storage systems. The new facility will leverage our in-house developed battery technology and also Maxwell's expertise in battery management system to make superior quality battery packs. Happy to inform you that in April '25, we have won an order of INR 3 billion per annum from a large OEM for the e-scooter. Our offering has the advantage of better thermal stability, improved lifespan and safety and caters to requirements for Indian climate and road conditions. We are beginning with a small investment. Our unit is modular and automated, thereby leading to an ease of capacity addition and better cost management. We are focused on not only 2-wheeler, 3-wheeler and 4-wheeler programs, but also for supplies of battery packs to high potential nonautomotive sectors such as telecom, battery energy storage systems and inverters. The SOP is planned in January 2026. Our 2022 agreement for the acquisition of Maxwell Energy had an upfront payment of 51% shares with a plan to buy balance 49% based on a consideration linked to the financial performance of Maxwell. As of 31st March 2025, the company had purchased a total of 61.5% of the shares in Maxwell. Based on the minority shareholders' request for an accelerated sale of the balance 38.5% stake, the company considered the strategic advantages of early total control and agreed to buy the same for a consideration of INR 75 million. As a result of this agreement, the company had to reverse the liability recorded in the books against the estimated price for the balance shares to the extent of INR 913 million in quarter 4 FY '25. Further, the independent Big 4 valuer retained by us to evaluate the goodwill pertaining to Maxwell Advisors a scenario where margins in new age automotive products may normalize in the long run, which the company accepted applying conservative accounting principles. This led to lowering the value of goodwill pertaining to Maxwell by INR 582 million. I would like to mention that our outlook on Maxwell's business and the overall electric and electronic business comprising battery packs, anti-lock braking systems, electronically controlled suspension systems and other assemblies on our surface-mounted technology lines is stronger than ever, auguring well for the profitable growth of the company. I informed you on last quarter about the acquisition of Stöferle entities in Germany. We required statutory approvals. We have completed the acquisition of the 60% stake and will acquire the remaining 40% over 5 years as per the share purchase agreement. The addition of these 2 Stöferle plants in Germany enhances our manufacturing capabilities and takes our total number of plants in Europe to 14. We have already begun to add new orders in this business. As mentioned earlier, from April 25 of this year, Stöferle financials will be consolidated in the Endurance financials. You may have noted our recent announcement of receiving the eligibility certificate for incentives totaling INR 6.06 billion under the Maharashtra PSI 2019 scheme. In earlier calls, we had mentioned that our eligibility amount would be significantly higher than under the 2013 scheme, where we had an eligibility of INR 4.46 billion. Under the 2013 scheme, INR 4.37 billion income has been accounted till FY '25 and INR 2.9 billion cash has been received. Our G45 Baloj R&D facility for 2-, 3- and 4-wheeler suspensions will be fully operational in the month, marking a significant milestone in our innovation journey. The state-of-the-art facility helps us to co-create advanced suspension solutions with OEMs, further solidifying our leadership 2-wheeler, 3-wheeler technology and supporting our growth in the 4-wheeler segment. You will recall that we have a technical assessment agreement with a leading Korean player, which will help us access 4-wheeler suspensions business. We have established promising contracts with leading Indian and global passenger car OEMs for this business. Faster growth in the 4-wheeler segment is our key focus. Through our internal process and product technology strengths, technical collaborations and merger and acquisitions, we aim to grow our presence in the 4-wheeler aluminum casting and aluminum forgings, 4-wheeler suspensions, 4-wheeler brakes, 4-wheeler alloy wheels, 4-wheeler drives shafts as well as embedded electronics for the 4-wheelers. It gives us great pleasure to also see the developments taking place at Chhatrapati Sambhajinagar, where our journey began. This includes the setting up of AURIC Bidkin and AURIC Shendra 10,000-acre industrial parks, the upcoming Ring Road, which will connect AURIC Shendra to AURIC Bidkin areas where one each of our new plant is being set up in quarter 2 of this financial year. AURIC expansion by acquisition of a further 8,000 acres of industrial park land is testimony to the excellent industrial progress prospects of the region. Chhatrapati Sambhajinagar is becoming an EV capital with investments from large companies, including Toyota, JSW and Ather, amongst others. At our AURIC Shendra 4-wheeler casting plant, the SOP is from September 2025. I mentioned to you about having one business from Valeo, where our products will be part of assemblies going into Mahindra EV platforms. Further, we have secured export business from 2 global U.S. and European OEMs, which I cannot name now. I would like to clarify that these are new OEMs not served by our European plants. These parts are for premium cars for EVs. Both these businesses will start in this financial year. The total order book for the AURIC Shendra plant stands at INR 2.75 billion per annum. The new alloy wheel -- the new 2-wheeler alloy wheel plant at AURIC Bidkin is gearing up for SOP in quarter 2 of this financial year '26. This plant will have a capacity of 3.6 million wheels per annum. We have firm requirements from multiple OEMs for the same. Let me now give you a gist of orders won during FY '25. Please note that the business value from these new orders are without including orders from Bajaj Auto. The overall orders won in FY '25 in the India business was INR 11.99 billion, of which INR 10.82 billion is new business and the remaining is replacement business. Key customers in this list of FY '25 orders are 2-wheeler OEMs such as Honda, Royal Enfield, Hero MotoCorp and Ather Energy. Among key 4-wheeler orders are Valeo, Yazaki, Tata Motors and the 2 large U.S. and European OEM orders, which we have got at AURIC Shendra. 34% of this FY '25 order booking or INR 4.11 billion of orders are for 4-wheeler end use and 37% of the FY '25 orders or INR 4.39 billion is for the electric vehicle segment. The cumulative India business orders for the electric vehicle segment since financial year '22 onwards stands at INR 8.35 billion. And if I have to include Bajaj Auto orders, this figure crosses INR 10 billion per annum. Out of the total orders worth INR 46.92 billion won since FY '21, INR 37.34 billion is new business and INR 9.58 billion is replacement business. Of this INR 37.34 billion new business, close to INR 14 billion has seen sales -- has seen SOP last year in financial year '25 and a further INR 10 billion is expected in this year. The rest of the business will be realized in financial years FY '27 and FY '28. In the stand-alone business, we're actively quoting and pursuing the request from quotation for an annual sale of INR 34 billion from various OEM clients other than Bajaj and across all our product segments. This also includes a significant percentage of electric 4-wheeler OEM customers. In our Europe business, we have booked orders worth EUR 40.2 million during the year. This includes a machining order of EUR 5.2 million from BMW in our Stöferle plants. Other large orders during the year are from Volkswagen and indirect business for Rolls-Royce and Jaguar Land Rover. Also, we have won non-auto business in the pumps and electric, electronic component space. In our subsidiary, Maxwell Energy, we have won orders to the extent of INR 2.5 billion. This value is after removing business from those customers who have seen headwinds such as a sharp fall in market share. Maxwell is pursuing bids at present of INR 2.6 billion. Now I will speak to you on our existing product segments in India. Starting with suspension, I just spoke about the new G45 suspension R&D and our 4-wheeler focus. Talks with leading OEMs are underway regarding shock absorber requirements and one leading OEM for LCVs and MCVs and we hope to conclude this order soon. In FY '25, we have won suspension orders to the tune of INR 2,351 million per annum of peak annual sales. These are from various OEMs and for the various platforms. While some of these orders will require capacity being added are debottlenecking, we are also seeing order intake, which would improve existing use of capacity and drive our goal of asset sweating. At our Narsapura plant in Karnataka, we have planned 80% year-on-year increase in sales in this year. with new business getting started with Honda, TVS, Ather and Ampere. New orders won in quarter 4 include Royal Enfield, Hero MotoCorp and Honda. The HMCL, the Hero MotoCorp order is for inverted front forks for the Harley-Davidson bikes with SOP planned this year in quarter 3 FY '26. And the SOP for the TVS inverted front forks has already started this year in April. We have got -- we have also won new orders for inverted front forks and mono shocks from a leading China-base 2-wheeler company with phased SOP planned in half 1 of this financial year. These parts have special features, including tension and rebound adjustments. Post the court monitored restructuring scheme, the KTM Austria entities have again given their firm order schedules to us. We expect to start supplies of inverted front forks and rear mono shocks in a small way from June of this year, which is next month. In the non-auto suspension space, we are in the final stages of developing solar dampers also for a Spanish client. In the braking segment, we have won INR 2,366 million per annum of new orders in FY '25 from multiple OEMs. In the previous quarter, I mentioned our brakes range is from 100cc to 800cc 2-wheeler platforms. We have now started development of brakes for 990cc motorcycle for a key OEM client. We've also won the much-awaited twin channel ABS orders from 2 OEMs. Trial lots have begun with SOP planned for quarter 2 of this financial year. We are assembling the electronic control units in-house at our ABS plant at Waluj. Further backward integration is possible, and we wish to manufacture the printed circuit boards for the electronic control units also on our surface-mounted technology line at Waluj. We are already the leader in 2-wheeler disc brake market share and plan to further expand for which a new building at our E-71 second brakes plant is close to completion. Braking 2 is an area where we wish to serve 4-wheeler OEMs, and we hope to conclude this business soon with a leading 4-wheeler OEM. Coming to transmission. In the previous quarter, I spoke of new clutch orders from Hero MotoCorp and Royal Enfield that have enabled us to increase the annual sales of 1 million more clutch assemblies and increase sales value by more than INR 1,000 million per annum. These orders will see SOP in May and July, respectively, and will peak in quarter 4 of this financial year. And for this, an FMC line expansion has already been completed. In driveshafts, we have won business from 3 3-wheeler OEMs and now from a leading 4-wheeler OEM. We are working with these OEMs as well as others for more business across passenger and goods segments. With current capacities and increased volumes, we would invest this year in augmenting our capacity to produce higher volumes of driveshafts for both 3-wheelers and 4-wheelers. In our aluminum castings business, we have won orders in FY '25 to the tune of INR 6.1 billion during the year. These orders are across 2-wheeler, 4-wheeler and non-automotive business and also for ICE as well as electric vehicle business. I've already spoken earlier about the INR 2.75 billion AURIC Shendra orders, which we have won. Non-auto orders include also the generator end use. Also, casting volumes from Ather Energy from our Vallam plant are expected to double in quarter 2 FY '26 and new machining assets are being installed for this purpose. For large 4-wheeler castings, our new investments, both in Shendra and Chakan include high level of automation. At Chakan, we have a fully automated machining line with no human intervention from start to end. Also, we have upgraded 4 die casting cells with full automation. At AURIC Shendra, we have used the services of our new European subsidiary, Ingenia, which we had acquired last year to assist on the automation. Coming to our aluminum forging business, we have added another forging press in quarter 4 FY '25, taking the total to 4 numbers. Because of increased volume and demand, more presses will be added next year. Therefore, we are in the process to move our existing aluminum forging plant to a more spacious location at Waluj and start, start of production in this new plant by quarter 4 of this financial year. The work has already started. In the new plant, we have aluminum forging orders from Royal Enfield and Hero MotoCorp. This is in addition to our own captive requirement for inverted front forks and also for our 4-wheeler export order from Jaguar Land Rover. At our subsidiary, Maxwell, we have redesigned the battery management system for Hero MotoCorp, helping us improve our product profitability and offer a cost advantage to the OEM. These steps demonstrate our progress in embedded electronics. Apart from the battery management system, we have booked business for motor controller units and in the Internet of Things segment and SOP is in October '25 and January 2026, respectively. Further, there are other products at an advanced stage of development. Our focus is to keep increasing our profitable sales at Maxwell. In the Indian aftermarket business, we continue to progress on execution of our domestic strategy, which would lead us to a strong growth. As informed in the previous call, we have begun to implement a 2-year strategy with a global consultancy firm where we have revamped our distributor policy, introduced new value-add products and enhanced our focus on expanding regional market share. During the year FY '25, we have achieved a 29% growth in the aftermarket exports. We have launched a new plan targeting additional markets with products yet not supplied to the Indian market. Our value-add products portfolio now contributes over 14% to our aftermarket sales. Coming to our financial performance. The information has already been uploaded at the stock exchanges last evening, along with our presentation explaining the numbers. I will, however, highlight some key numbers. During FY '25, the company recorded stand-alone total income of INR 89.1 billion, a growth of 12.5% over FY '25 -- '24. Consolidated total income was INR 116.8 billion, which is a growth of 13.1%. The company recorded a profit after tax of INR 6.79 billion and INR 8.36 billion in the stand-alone and consolidated books. It is important to note that the European companies have defied many odds to post an impressive year-on-year growth of 15.4% in FY '25 and a growth of 20.9% in financial year '25 EBITDA. During quarter 4 FY '25, the company turned in a total income of INR 22.7 billion for the stand-alone company and INR 29.98 billion for the consolidated company. This translates to a year-on-year growth of 8.4% and 10.6%, respectively. The company earned a profit after tax of INR 1.74 billion and INR 2.45 billion for the stand-alone and consolidated company. In quarter 4, our European business recorded a top line growth of 17% and an EBITDA growth of 21.2%. I would also like to mention specifically that our consolidated earnings per share has more than doubled from our IPO year, which was FY '17 to FY '25 from INR 23.48 to INR 59.46. At Endurance, our people remain central to our growth. We continue to drive strategic workforce planning with women now comprising 8% of our hiring, reflecting ongoing commitment to diversity with a target to take female population to 10% and 15% for our blue and white-collar employees by 2030. We have undertaken specific projects with a focus on enhancing employee experience and care and well-being of them at ETL, focusing on an inclusive work culture, focusing on best-in-class HR policies and building up talent by helping upgrading, focusing on skills and capabilities and leadership potential of our people. On the sustainability front, we continue to advance our commitment to sustainability and community impact. This year, we made significant progress towards our ambitious sustainability goals for financial year 2030. We achieved a 45% carbon-neutral percentage. We lowered specific electrical, thermal energy as well as specific water consumption, while water recycling and hazardous waste recycling stands at 96% each. We also enhanced our renewable power share from 23% in FY '24 to 25.2% in FY '25 through expanded rooftop solar and wind power agreements. We contributed 300,000 kiloliters of water through water augmentation projects. 6 of our plants completed zero waste to landfill assessments with platinum rating in third-party assessment. Education, health and sanitation, environment and livelihoods continue to be at the core of our CSR focus. Through our Sevak Trust, which is our CSR arm, we have transformed 54 schools with solar energy and hygiene-focused facilities, thereby enhancing attendance and outcomes, while training over 900 adolescent girls in health and skills. With sustainable agriculture training, our farmer empowerment program has helped over 4,000 people and our ECoVE vocational training center in Chhatrapati Sambhajinagar has imparted vocational training to 1,900 youth, securing over 75% employment. Our health work has reached 42 villages, serving 17,000 people, and we have built 2,300 toilets to improve sanitation. Our vet van program, too, has been successful in providing treatment to 40,000 animals in 47 villages. This year, we have started with one village by creating a green energy village by providing rooftop solar energy units to 100% of households promoting sustainable energy access. Endurance continues to earn accolades from its OEM customers as well as industry forums. Some of the key awards and recognitions in this financial year were making it to the 2024 DET Hurun India Manufacturing 400 list compiled by the Dubai Department of Economy and Tourism in partnership with Hurun India, winning the Innovation Award at the Mahindra Vendor Meet, ranking 32nd amongst Fortune India's future-ready workplaces, getting the Ford Q1 Certification for our casting and machining plant at Chakan, winning Platinum and Gold awards for our 2 brake plants at Waluj at the Bajaj Auto Vendor Meet. The CII Intellectual IP Award 2024 and the Assocham IP Excellence Award. With these opening remarks now, I would like to invite questions from all of you. Thank you.

[Operator Instructions] We have our first question from the line of Aditya Jhawar from Investec.

Congrats on a good set of numbers. My first question is on our lithium-ion battery pack assembly. Can you throw some more light on it in terms of any commitment from any OEMs? Sir, did you mention about a INR 3 billion order win for e-scooter pack?

Yes, yes.

Okay. Can you just throw some light on the margin profile of this business as compared to the main business? And do you expect that the ramp-up in Maxwell could accelerate because we are providing more value-added service? Can you throw some more light on it?

Yes. See, I will not be able to talk about the margin as this is sensitive information. But yes, we have won a INR 3 billion order from a leading 2-wheeler EV OEM. This was in April. And definitely, this is going to be a huge growth opportunity not only for 2-, 3- and 4-wheelers, but for other industries like telecom, inverters, battery energy storage systems. And we are very excited. This will help us to -- this will help also to -- it's a forward integration from Maxwell because as you know, the battery management system is the heart of a battery pack, and we have done forward integration with our own technology. I would also request [ Mr. Pranit Parekar ] who is from our senior management team and the key person for our battery pack plant to explain further on this. Pranit, are you there? You can throw light on what we are doing at the battery pack plant. Yes, please.

Yes. So we are right now setting up a plant 1 with 2 different lines, which are fully automated. One line will be used for cylindrical types of cells, which will be starting from 18650 to it can accommodate up to 46120 or even 46133 and the second line will be making packs on the prismatic cell which will be starting from 50Ah prismatic cells to 675Ah prismatic cells. It is also designed for making packs for 2-wheeler, 3-wheeler, 4-wheeler as well as battery energy storage systems, UPS and telecom battery packs. The line is already getting installed with AGVs and it is capable of handling low voltage as well as high-voltage battery packs. The technology is being used. It's basically an IP-led technology. A battery is designed, developed by completely Endurance in-house.

Okay. That's quite helpful. My second question is that you mentioned Anurang, about a INR 300 crore order win on e-4-wheeler application from international customers. So Valeo and Yazaki, you called out specifically. Can you talk a little bit about what are the products that we are doing for all 4 of them and which market we plan to supply? And a little bit more color on the new U.S. and EU OEM, whatever you can share?

See, 3 of the customers, which are Valeo and the 2 other OEMs, which I cannot name, but they are leading global OEMs, I mean, in the world, I would say. These are products mainly for EVs. And these are castings like your end caps and there are -- okay, I mean, I cannot mention all these names. But these are castings required for EVs.

Very critical parts.

Very key parts, very -- and I think when the plant is ready to start in September, you all can come and see the plant in AURIC Shendra at Chhatrapati Sambhajinagar. But you can say that most of these orders are for EV platform, the 2 global OEMs in U.S. and Europe and Valeo. Valeo -- I mean, I mentioned this is for Mahindra.

Functionally, extremely critical.

And functionally, extremely important, extremely important.

And which market would you be supplying?

And let me just tell you, the margins here, I will say, are much higher, much higher. I want to just put this on record.

So these would be exported to U.S. and Europe, right?

Well, some would be for India, like I said, Mahindra, yes, but the other 2 will be exported. And these customers are not those customers which our European operations are supplying to.

Okay. Fair enough. Then if you can give us a little bit of an update on the 4-wheeler suspension or technical tie-up that we have done that how has been the customer engagement? Any time line of commercialization? Any indication on what kind of customers we are talking to? Any further update on it?

Yes. I mean, I'll start, and I'll ask Mr. Rajendra Abhange, our Director and CEO, to speak further. These are all the leading OEMs in India. Also, I would just say that for the time being. Very closely engaged with them. Already as we speak, there have already been plant audits happened. So we are at a very advanced stage, but I'll request Mr. Abhange to speak on this -- only suspension right now. Only suspension.

Yes. Okay. So thanks for the question. The suspension, as you know, is one of the most critical parts for vehicle dynamics and also for the safety of passenger vehicle. So our tie-up with this company, which is already explained, is one of the leading players of suspension manufacturing who has delivered over 10 crore shock absorbers all over the world and highly experienced company. And we joined hands with them sometime January this year. And when we approached the OEMs, all of them are completely excited about our association with this company, looking into their profile and looking into their product lines. This space in India is a little bit empty. There are not too many players because its products are not easy to handle by the Tier 1 companies. And therefore, there is a huge traction from most of the OEMs. Wherever we have gone, they have welcomed us and they have actually told us to speed up the development process of these products. So as you know, this suspension development takes a long time. It has to undergo a lot of vehicle test. It has to undergo a lot of durability tests. So currently, we have 3 programs on our -- in discussion. And most of them are going to be very serious projects. The development time, as you asked the question, could be anywhere between 8 months to 12 months. And during this time, we'll also decide the location of the plant. It will require a greenfield facility. So all those things will be decided in the next 3 to 6 months' time.

Yes. That's quite helpful. And final question is for Massimo. A fantastic delivery in FY '25 considering the backdrop of Europe. If you can give us some sense then how should we expect overall industry in FY '26? And what are the big order wins that might come for execution? And what is the growth expected of Endurance European business in FY '26?

So Massimo, are you there? Because he had landed in Munich in the morning. Yes, we can hear you.

[indiscernible]

We have our next question from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities.

Congrats on a good set of numbers. Sir, firstly, on the suspension side, you mentioned about the first order for solar damper assembly. I just want to understand the size of the order, the opportunity in this space and what is driving the opportunity in this space, sir?

This is the Spanish client, the order for solar dampers.

Yes.

What is the opportunity and what is driving this?

Okay. So a good question. Thank you very much. As you know, we always aspire to divest our business out of 2-wheeler. One of the area is 4-wheeler definitely, which we already spoke about. But we also are exploring areas which are non-auto. And one of the success story is that we are getting into the racking system for the solar panels, which is a very high-tech kind of a system that requires to maneuver the solar panels during course of the day, and it has to work according to the direction of the sun. So this entire racking system, we are going to produce. The technology that we have applied is from our knowledge of the automotive engineering. It is an extension of what we already know. So it's not very difficult for us. So no collaboration, nothing is needed. So the company that approached us is a Spanish company, who is the world's third largest solar panel system supplier. It's a global company and all the audits and everything has happened, and we're expecting the commercial production to start in the next quarter from one of our plants for supplying to India, Saudi Arabia and to the United States. So these 3 areas we'll be supplying. So the question about the technology when you speak about what is different than the automotive is that these products are from the size perspective, they are very big, very long ones, they're more than the height of the human. And it has to operate in the field for nearly 25 years without any substantial maintenance. So we have validated our products in our lab with all kinds of tests according to the customer specifications. All the machinery is getting into place and the commercial supplies will start now within next 2 to 3 months' time. So the first supplies, I think the order has already come. The -- if you ask about the potential, the potential is enormous. But we are going to start in a small way, I would say, in a range of anywhere between INR 25 crores to INR 50 crores in this year. But the goal is to get to about INR 500 crores to INR 1,000 crores business in the next 2 to 3 years' time.

That would be a huge number, sir, right, sir. Fine sir. That kind of a big scale for the non-auto business, sir?

Yes.

Got it, sir. Sir, on the AURIC plant, I just want to understand how will this ramp-up of INR 275 crore order would happen, sir, with the second half the plant is starting, sir? So over the next 2 years, what kind of revenue we can expect, sir?

See, the peak of this INR 275 crores will reach in FY '27 is what our target is. But as we speak, we are also in touch with other customers to take more orders. So -- and the customers are also in a real hurry to get the supply started. In fact, one of the customers was there last evening at AURIC Shendra last actually 2 days, and they've done the audit and quite happy. So in fact, the trial lots already have started, just to let you know. It's only that mass production is in September. Already, we are supplying smaller lots. And as you know that this has a special process also, which is, I think, first time in India. It's a surface treatment process. So the potential is enormous, is enormous. But we are going to go step by step. But we are very excited about this actually. And maybe after September '25, we can invite all of you to come and see the plant.

Yes, that would be great, sir. Sir, thirdly, on the alloy wheel business, this space is seeing very strong growth led by import substitution. Also, we are seeing that increasing number of players who are entering this space. I just want to understand how this business margins or the ROCE stands versus how company currently does, sir?

No. The way I would put it is our focus is to see that the margins are in line with the company. That's our target. And we've made a lot of efforts based on the product mix and the operational efficiency to see that we are able to do it. We have gone in for more automation, which requires less, I would say, dependence on people, which you will see once the plant will start. So we are making a full efforts. We have learned from the past, our experience and seeing that the margins are in line with what we make in the company. And as far as the space is concerned, we are aware of the competition. So when we take new orders for these alloy wheels, we are definitely in -- we have full clarity from customers who is the competition and what is the share of business. So there is no doubt about that. So there may be a number of players, I mean, agree with you. But as far as we are concerned, we have a clear cut sight of our share of business and volumes, what we will get, subject to, of course, the customers doing those volumes. So if they do more, we get a higher volume; if they do lower, lower. But it's very clear the share of business. We are not concerned about that this thing at all.

So no major margin pressure, it would be fair to say, sir?

Yes, I've always said in the past also, price, of course, is very important. It's dictated by the competition. But it's also important about your operational strategy to make that money, whether it's your raw material purchases, whether it's your operational efficiencies in the plant, your manpower cost, look at means on -- so it's up to you, what is the kind of model which you run. And that's what Endurance has done for the last 30 years. So the price, of course, is very important, but just not the price. It is a strategy which we have followed both in Europe and India, which makes us a bit different, I mean, without sounding this thing, but a bit different from others, from most others.

Got it, sir. And sir, finally, on the state incentives, sir. Sir, the annual number should be around INR 870 million. And sir, I just want to check this INR 380 million for this quarter, did it include any earlier quarter number as the scheme started from second half, sir? And just will that INR 870 million annual number will be going ahead, it will be uniformly spread across the quarters or there would be a bunch up in the few quarters, sir?

So, Raja Sastry, our Group CFO, will answer this.

So we did book a total of INR 38 crores in Q4. And this -- because the scheme, we got the eligibility certificate effective 1st of October, the number is slightly more than the average. We are expecting based on -- so the total eligibility certificate received by us was INR 606 crores and we are expecting that in the year, it should be anywhere in the range of INR 65 crores to INR 70 crores, we should be able to book, maybe INR 75 crores also. So generally, this is a function of the quantum of state GST, which we are paying. And given the current run rate of how we are paying the state GST, we do expect that in the first 2 quarters and a little bit in the third quarter, we should be booking that in the year.

We have our next question from the line of Pramod Amthe from InCred Equities.

So this is with regard to the battery pack. Just wanted to understand what is the value-add proportion you are planning in terms of the sales value? And what are these items, one? Second, what is it you are bringing on to the table in terms of designing battery pack as compared to established players in the system?

Okay. So I will request Mr. Pranit Parekar to answer this. Pranit, can you answer this?

Yes, yes, yes. So there are a lot of technologies that we are bringing on table from Endurance side. So the uniqueness of a temperature monitoring system, which we -- so there are multiple patents which are going to be filed or even some of them are getting applied also. So basically, CCS, which actually does a cell-to-cell contact system, which is a very unique technology, which allows the connections to happen more proper with the registry mapping algorithm and also allows a very high rate of thermal discharge from the cell to get it from the cell to the enclosure. And believe me, these battery packs are very uniquely designed and a specific technology, which makes it a wire-free battery pack. We do not use wires to connect the cells or even voltage sensing lines or temperature sensing lines. Everything is wireless, done through a very unique IP-led technology. And the enclosure design is also unique in such a way that it allows the thermal propagation or the thermal transfer at more than 5 watt per meter kelvin. So I know the industry have more players like bigger players in battery industry, but this lithium-ion technology is very -- so the large unmet need of high-quality, robustly engineered battery systems is basically encouraging Endurance to bring in-housely developed IP-led battery design. And that's what I can say that there is a huge demand for high-quality, robustly designed battery packs. These batteries, which Endurance is making, we are making it so that these batteries will work for more than 10 years without having a maintenance to it and keeping the R&D on continuous path for making it ready for making next-generation battery packs.

Okay. And can you give some color in terms of what's the value add as a proportion of the sales value because there's a lot of bought out in terms of cells and all, right?

So value add, we cannot tell you, but we can give you what is the general price range, which is there, which can go, I think, from INR 25,000 to INR 45,000. I think let Pranit answer that. What is the normal range for 2-wheelers?

Correct. So for 2-wheeler battery packs, it starts from, let's say, INR 15,000 a kilowatt, and it goes up to INR 45,000, INR 50,000 for packs, which are like 4, 5, 6 kilowatts worth. And for 3 kilowatts, the major Indian market is on 5 kilowatt to 15 kilowatt, which starts from INR 30,000 to INR 1 lakh per battery pack. And if you ask me about the value add, it's basically the quality and supply chain, a strategically developed supply chain with the good partners for cell supplies as well as keeping it on a very high-level negotiations on the cell values and proposition for OEMs so that the volumes which are increasing in India will be supported by Endurance.

Sure. And these cells will be -- you will be procuring them or the OEM will approve it and you will be just procuring from those sources? How does it?

No. So Endurance believes that we will be designing the pack. So there are 2 ways to do the battery pack. One is basically build to brain. And second is basically build to specs. So the orders which we are right now getting is build to spec so that the design and the cell selection as well as our proprietary BMS is basically selected by Endurance only. And we have a very strategical tie-ups with cell manufacturers throughout from China, South Korea, Japan as well as we are also talking to the companies which will be making cells in India. So we are actually very aggressive in having the supply chain managed such a way that we should give a very big advantage in terms of costing to our OEM partners.

Sure. And the second question is with regard to KTM supplies. Considering that KTM itself is going through a restructuring, you have any direct exposure there? And how do you look -- do you have to make a provision there per se or not exposure?

In fact, we have already made a provision of INR 5.3 crores in quarter 4 FY '25. The provision was already made of INR 5.3 crores, which is -- which was made in quarter 4 of FY '25. Going forward, we have -- we are not worried because see, as far as the assets are concerned, if something goes wrong, they are very flexible. They can be used for other existing OEMs, we are not worried. Inventories also, it is not such a figure that we are missing alarmed about. But having received this first set of firm orders, we are quite confident that some good things will happen. So I think we'll be knowing this after 23rd of May when the last court hearing is there.

Sure. And sir, the last one is with regard to the EV castings. As you disclosed the name of Valeo, which seems to be in the e-axles or transmissions of the EVs. Are the 2 clients -- so you're making more inroads into EV axles? Is that the fair understanding on castings?

It's not only axles. It is also other casting products because for the other 2 customers, it is other castings. It is not for e-axles. It is others. I mean there's a huge range. And -- this is really a very, very -- I can only say a very, very exciting opportunity. It's a new world we are entering. But castings, we are very strong on castings, as you know, engineering, our own tool room, we are very strong there.

So it's not just the drive tent trucks. It's also the other parts of the vehicle because in EV, aluminum content is very high. Because it's a lightweighting material that already I have spoken in the past.

Okay, sure. And sir, last question, if I can ask. When I look at your key customer profile for FY '25, the big jump seems to be the VW Group per se, moving to almost like to emerge as the second largest for you. What has gone right for you to win there? And what's the headroom you expect there? Because it's a big entity to approach and there's a lot of headroom for you to grow there. So how are you looking at it as an opportunity?

Okay. So this question can be better answered by Massimo. Massimo, are you there? Okay. Yes, we can hear you.

Yes. We can hear you.

Okay. Now when we speak about Volkswagen Group, it doesn't mean only the brand Volkswagen, you can imagine because you have to consider that more or less 25% of our total turnover, we have 5% of Audi and 9% of Porsche and the difference is Volkswagen Group because as you know, we produce internal combustion engine, transmission components and electric components for all the brand of Volkswagen, including Skoda Slavia. So speaking, we are not worried about the situation for the future also because we are speaking about brand very strong in European market. For sure, in this moment, we are suffering -- some brands are suffering for China situation as Porsche, Audi and also for duty in the United States. But despite the reduction, I repeat -- despite the reduction of registration compared to the previous year, we grew with Volkswagen Group -- 16% duty there, new start of production of the business in electric field that we acquired last year. And we started in March, September and December of the previous financial year with this new business, the total amount is EUR 70 million. So our expectation is to grow -- it continues to grow also in the next financial year.

[Operator Instructions] We have our next question from the line of Arvind Sharma from Citigroup.

Sir, the first question would be on the India business. What are your CapEx plans for FY '26? And also given that there is so much CapEx Endurance is doing on 4-wheelers and non-autos, what would be the broad direction impact on returns and margins? That's the first question, sir.

Okay. I'll request Raja Sastry to answer this.

So if you see what we have uploaded in our presentation, we have invested close to INR 611 crores in FY '25. And quite a few of them are the growth and strategic projects, which are still in their gestation period. So there will be investments in FY '26 also to complete those projects, which is our AURIC Shendra, AURIC Bidkin and also certain investments for the battery pack, which we have announced. And this is -- while I will not be able to give you the exact number, but it is going to be a significant number of CapEx even in FY '26. Now as we -- as the Managing Director mentioned, quite a few of these projects are starting their start of production in the second half and also the third -- fourth quarter of this year. And that would mean better revenues as we go forward. And also -- given that quite a few order wins of about INR 3,500 crores of the past has seen the SOPs in FY '25 and also another 30% are seeing the start of production in FY '26. All these augur well for our revenues and also the bottom line in the coming year. All the investments we are making in the past are -- we will see some effect in FY '26, but definitely much bigger effect in FY '27 and going forward.

I will just say that the product mix is improving. The product mix is improving.

Sure, sir. Sir, second question would be on Europe. Sorry, I might have missed it. But if you could just share the revenue and EBITDA in euro terms as well as the broad outlook for the European market, including the SFL acquisition?

So Massimo still there?

Yes. So we closed the previous quarter with EUR 80 million turnover compared to EUR 68.3 million of the previous financial year with an increase of EUR 11.7 million, means 17.1% of [indiscernible] EUR 14.7 million which means 18.4% compared to EUR 12.2 million of the previous financial year with an increase of 21.1%. In terms net results, we closed the year with [indiscernible] 5.9% with an increase of 19.5% compared to the previous year. Speaking about the total financial year, the company closed for the first time with EUR 304 million, it's an increase of 16.5% compared to this year. [indiscernible] 51.5%, it means 16.8% for total financial year more than 20% compared to the previous year. On the net results, more than EUR 16.3 million which means 5.4% with an increase of 16.3% compared to the previous financial year. This quarter was [indiscernible] and loss in terms of profitability because [indiscernible] energy cost and both will increase [indiscernible] that will be more or less 19.5% [indiscernible] is a very good performance and the expectation for the future analysis is to, to try to maintain this performance in the total year, also with the improvement [indiscernible] EUR 80 million turnover and with a leverage of 16%, 16.5%, we are optimistic that we can maintain the profitability we have in the previous financial year and for sure improve the situation.

We have our next question from the line of Anirudh [indiscernible] from Standard Chartered Bank.

Congratulations on a good set of numbers. I had just one question to understand. Basically, at a consolidated level, what sort of revenues would be driven from the U.S. markets, which might get affected because of possible tariff implications?

Well, in India, we don't see anything. But Europe, I can request Mr. Massimo Venuti to speak because like I mentioned in my opening remarks, there could be some of our products going into premium cars, which may be exported to the U.S. So I think he's a better person to answer that.

I'm not speaking about a big issue for Europe because the total turnover could be something like EUR 25 million because as you know, we produce a lot of components for small engines that are not so in the European market. But please consider also that our customer has Mercedes and BMW are producing specific model, the G3 and also the series of Mercedes and BMW in the United States. And so this is positive because it means that they produce in the United States and they export to Europe. And so we can try to compensate the impact of the duty for this EUR 20 million. But I repeat, you're asking about [indiscernible] The only customer that can be affected for sure in the United States and also for the situation in China, unfortunately, is Porsche and [indiscernible] that they lost 30% of the market share in the previous financial year. But it is included in this EUR 25 million.

We have our next question from the line of [ Neil Parekh ] from Olga Capital Advisors.

Congratulations on fantastic set of results. I have 2 questions both on the [indiscernible] for the last 3 years based on calculations, we were growing Europe geography sales at around 8%, 10%. With this acquisition and cross-sell opportunity for the next 3 to 5-year period of the combined business, do you foresee a better hike of mid-teen level of growth?

Massimo?

Can't understand very well, but I'll try to answer. So the acquisition of Stöferle as I told you is more or less EUR 8 million. We closed this financial year with EUR 300 million. And so our target for the next financial year is to try to reach more than EUR 400 million. But in this moment, it's very difficult to [indiscernible] situation into the market. I can tell you that the first month April and also the -- forecast for the future months, we are talking about May, June and July are absolutely positive compared to the previous financial year in terms of turnover and also in terms of profitability considering 16.8%, that was the leverage of the previous financial year in terms of this.

Got it. Another question which I had was in the European geography are we in talks with any of the Chinese OEMs, and have they received any SOP.

Chinese OEM.

Massimo, he is asking, have we received anything from Chinese OEMs?

Have you got any orders from a Chinese OEM?

Sir, his line is dropped. I'll connect him back. Massimo sir?

Could you repeat, the first question please?

Sure, I was asking...

You asked about progress with Chinese OEMs. Any progress with Chinese OEM...

We have Massimo sir disconnected again.

So, right now, we do not have orders from Chinese OEMs. But yes, there are some Chinese OEMs which -- with whom we are in discussions.

As there are no further questions, I now hand the conference over to the management for closing comments. Over to you, sir.

No, no. Thank you. I just want to -- I've said everything in the opening remarks, but as you know, Endurance, we are very, very optimistic about the future and the opportunities are there. We are really excited about the same. So I'll just leave it at that. But thank you, everybody, for your time and coming for this call. Thank you.

Thank you. On behalf of Axis Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.