Fiem Industries Limited (FIEMIND) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Fiem Industries Limited Q3 FY '22 Earnings Conference Call hosted by Monarch Networth Capital. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anubhav Rawat from Monarch Networth Capital. Thank you, and over to you, sir.

Thank you, Lizan. Good morning, everyone. On behalf of Monarch Networth Capital, I welcome you all to Q3 FY '22 Conference Call of Fiem Industries. We'll start the call with initial comments about the results and the future outlook and then let's take your questions. So without much delay, I now hand over the call to Mr. J.K. Jain, CMD of the company. Over to you, sir.

Thank you. Good morning, everyone. I welcome you to the Q3 FY '22 earnings call of your company. Along with me, I have on this call today, Mr. Rahul Jain, Director; Mr. Rajesh Sharma, Director; Mr. O.P. Gupta, CFO; Mr. Arvind Chauhan, Company Secretary and other members of the finance team. The results and the Investor Presentation has been uploaded on the stock exchange and the company website, which I am sure you all have gone through. The 2-wheeler industries continues to face headwinds driven by semiconductor issues and supply chain disruption. During Q3 FY '22, domestic 2-wheeler industry volume declined by 22.7% in to 4.5 million units on a year-on-year basis. Subsequently, sequently too, the volume has been lowered by 12.9%. This decline can be attributed to the semiconductor shortage globally and due to the COVID-related challenges. We expect some easing. However, this disruption may continue to play out of the next few quarters. The decline in industries impacted our key customers and some OEMs like HMSI saw volume declined by 23%. In spite of this tough environment due to our superior product mix and diversified customer base, we were able to outperform the industry and our sales grew 9% year-on-year basis. On this business side, I want to update you on our decision to exit from our joint venture company, Aisan Fiem Automotive India Private Limited. To give you a background, we had set up a JV in 2018 to manufacture fuel injection system and IC connector for 2- and 3-wheeler segments. The majority partners in the JV is Aisan Industry Japan with a 69% equity. Fiem holds 26% stake while 5% is being held by Toyota Tsusho. This joint venture has not been able to scale up as per our original business plan. And given the emerging trends in the EV sector space, we have decided to exit this by selling our 26% equity. The original equity based on the JV was INR 100 crores, and Fiem contribution in the same was INR 26 crores. As per the terms of the JV agreement, we have exercised our option to sell this stake to Aisan and expect to receive the full consideration of INR 26 crores with this exit. Now let me talk about the EV segment. As you are aware, government of India in its budget has increased the [indiscernible] to subsidiary to INR 3,000 crores from INR 800 crores. This can effectively fund 1.2 billion EV. While the current volumes on the EV continues to be low, we expect this to pick up in FY '23 onwards. We work with most of the leading players in EV segment. And in this current quarter, we saw a launch of [indiscernible] product wins from our customer Bounce 22 Motors. This momentum should gather pace over the next 12 months. To sum up, our outlook continues to be cautious, and we will be watching out for easing of semiconductor issues so that the industry can get back to growth. With this, I hand over to Mr. Gupta, our, CFO, and the financial team to update on the operational performance and detailed numbers. Thank you.

Thank you, sir. Good morning to all. Before I present the numbers for the quarter, let me highlight segment breakup. For quarter 3 FY '22, 99.4% of our sales have come from Auto segment, whereas 0.6% is from the LED Luminaries segments. Further, 96% of sales is from 2-wheeler segment while the balance sheet look to commercial vehicle and others. LED as a percentage of automotive lighting stands at 43% for the quarter. Our replacement market still stand at 7%. Now let me present the quarter 3 numbers for FY '22. The company registered a total sales of INR 385.68 crores against INR 355.39 crores, registering a growth of 8.52% on year-on-year basis. For the period of 9 months, total sales stand at INR 1,074.2 crores in comparison to INR 792.52 crores, registering a growth of 35.5%. Quarter 3 EBITDA was INR 47.19 crores, translating into an EBITDA margin of 12.24% as compared to an EBITDA of INR 42.84 crores. That is 12.05% in quarter 3 of previous financial year. In 9 months FY '22 period, EBITDA margin stand at 12.16% And in absolute terms, it is INR 130.67 crores in comparison to INR 77.27 crores in corresponding period of previous financial year. Our EBITDA margins are just now stable around 12%. PAT for the quarter is INR 24.04 crores in comparison to INR 20.6 crores which is 16.7% higher on year-on-year basis. If we look at the numbers for 9 months, company earned a PAT of INR 63.26 crores in comparison to INR 21.63 crore for 9 months FY '21. Further on balance sheet side, we continue to be a net-zero debt company. With this, I end the financial brief, and now the floor is open for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Ashutosh Tiwari from Equirus Securities.

Sir. Can we highlight some of the recent model wins that we have got from the OEMs?

Yes, of course, all, there are -- of course, this is ongoing process to get new business from our esteemed customers. So current situation, of course, Yamaha is one and Piaggio is also one. And of course, we -- as we informed in the last quarter also, we have already started on multiple projects of Hero also. And this is what all, as of now.

So you want to say that you've got Hero orders, sir, or you will be...

We got the Hero order. We are working on 5 projects as of now for the designing, and we have reached up to [ proto-stage ]. And further on, these all projects will be productionized 2023 and '24.

So this will be FY '23 or FY '24, you mean to say?

It's '24.

FY'24. Okay.

Yes.

So Hero was not a customer earlier. Now we've got Hero, okay?

Yes. We were the supplier to Hero also, but it was only 1 project. So -- but now we have taken multiple projects in the different segments.

Okay. So this is like the existing models for them or new models that they are launching?

This is very difficult because all strategic decisions have taken between both the companies. So we will definitely explore this...

And Piaggio, you said is for what exactly? Is it 2-wheelers or 3-wheeler...

Piaggio, of course, we were working for India, and that's for both. And recently, we have taken the business, this is for India -- this is under Australia -- Piaggio Australia, that will be suitable for both India as well as export market, U.S., Europe market.

So how big this could be, like say, maybe in '24 and all what kind of revenue you can get from Piaggio as a customer?

Of course, Piaggio is very high-end model wherein the segments cannot be defined in numbers. Our presence in the globe as well as in India, domestic market is most important with Piaggio.

Okay. And like the kind of ramp up that you've seen with Yamaha, obviously, that's very high, but can it be, like, say -- can it become 4%, 5% of your sales or not? That's my question, basically, Piaggio?

I think there is very, very, very aggressive to get that business and volume also.

And secondly, on Yamaha, we are constantly ramping up every quarter now. In this quarter, the revenue was around INR 78 crores, INR 79 crores. So where do you see this revenue going up to, say, next year or for '24?

Yes, of course, because of export business from Yamaha is increasing year-on-year. And we are getting -- we are ramped up with the overall volume with respect to the export business as well as domestic business. So of course, new year will also be good for us.

There will be growth from this quarter level as well into next year?

Yes, we can say like this.

And out of this revenue that we are doing through Yamaha, what would be export share roughly?

It is very difficult to identify because our sales are to Yamaha India and export is through India on -- Yamaha India only. So we cannot identify or specify the export sales side directly, but of course, around 50% plus is exports in south of each.

And in terms of the 2-wheeler OEMs schedules that we are looking at, say, over the next 2, 3 months, how do you see schedules? Are we seeing improvement in the production or it is similar to what they have done since January or December?

We expect, of course, the good numbers, but although the overall industry is facing a lot of issues because of semiconductors and supply chains. So we are very hopeful, but it is totally -- we depend on the company's overall planning and getting the input from different countries.

Okay. And just lastly, on the LED side, I mean, this quarter, I think, is around 28%, 29% of revenue from LED auto lighting, how do you see this number going into, say, '24 or '23?

Yes. Just next 3, 4 months, we are [indiscernible]. This 3, 4 years, we are definitely be expecting much more business what we are doing today in LED. So every new model is definitely be coming with LED only, and it will be, definitely grow from 43% to 60% in the next 2, 3 years.

60%?

Yes.

The next question is from the line of Anubhav Mukherjee from Prescient Capital.

Firstly, congrats to the management for a strong set of numbers in a difficult quarter. Sir, my first question is, was there any significant contribution from Ola in this quarter? And how do you see that business ramping up like in Q4 and beyond, yes?

Yes. Of course, we are very closely working with Ola and because of not many factors like semiconductors and supply issues, whatever requirement is being created by Ola, we are fulfilled from our side. And we are very closely working with them. So of course, the volume will be decided by the Ola, and we are very closely working. And next quarter, of course, we are taking good numbers from Ola Industries Group.

Okay. And sir, which are the key like electric vehicle OEMs that you are supplying to like -- that details will be helpful.

Yes, of course, if you see Ola is one out of that -- as our Chairman have already informed about Bounce and 22 motors because Bounce has taken over 22 Motors recently. So that business is also being with us. We are together already with Polarity, Revolt, Okinawa, Tork, Eicher as well as Hero Electric also.

And in most of these OEMs, would you be like the sole supplier? How is it like, which are the other players you would be competing against?

Yes, business is, of course, awarded to us, and the volumes are not much. So as such, we can say we are only the supplier as of now. But of course, it is totally be depend on the volume and customer's thought process.

Okay. And sir, a lot of like passenger vehicle and commercial vehicle OEMs like Tata Motors, Ashok Leyland, they are working on like EV launches in both cars and even in like commercial vehicle segment. So are we like working with them in some of the projects like from -- like, especially for passenger vehicle and commercial vehicle 2-wheelers -- sorry, EV, are we like working with some OEMs?

Yes. So we can say that we are not in passenger vehicle, but commercial vehicle tractors, wherever it is the opportunity, we are definitely working with them. We are already supplying to Tata Marcopolo, Tata Motors as well as Force Motors. So these are all our prime customers as of now.

Okay. But sir, in passenger vehicles, even with -- like even within the EV segment, you find it difficult to like penetrate that -- given like cars strong competency in LED auto lights. So even within the EV segment, is it difficult to penetrate?

We are already supplying small lamps and other parts like Mirror [indiscernible] in passenger vehicle, but we are not into the head lamp and tail lamp. So even passenger vehicle, we are supplying other lamps. Other than that, if you see Mahindra Reva, we are the single source for head lamp and tail lamp. And of course, there is opportunity, and we are already in the pipeline communication with customers, too, to get that business also.

Great, sir. And sir, within Yamaha, like how many international models would you be supplying currently, and are there any new projects for international models you are working on? Some details on that will be useful.

Yes. We are as of now supplying 5 to 7 different models for the launch in different countries as of now in the globe. And further on, there are 3, 4 projects on which we are as of now working to be launched in next financial year or next, next financial year.

Okay. And sir, the Harley-Davidson, also, you were working on some projects. Any update on that, like -- and will it be for the international models?

Yes. Harley-Davidson, of course, you know they have already discontinued their Indian manufacturing units. So we have all the business as of now for their Thailand as well as U.S. market, and we are exporting for 3 different models for all head lamp, tail lamp, blinkers and complete lighting sites from here to them.

Do you see like good ramp-up in that? Like what is the outlook for that business?

Their volumes are up. That company is not on volumes. But of course, as per market demand, it is very good -- seems to be good business for -- with Harley- Davidson.

Get that. And sir, finally, on this that you have received like new projects. So any qualitative feedback on how large can we expect this business to be given like it is a very large OEM. So any color on that?

Yes, of course, it is the beginning as of now on the projects wherein we are under designing right now. And volumes is also being predicted, but of course, very early to say once these volumes, these products will be launched in the market, we will definitely declare the overall business prospects, too.

We'll move on to the next question. That is from the line of Dhananjay Mishra from Sunidhi Securities & Finance Limited.

Just a follow-up on this EV segment.

I am sorry to interrupt, Mr. Dhananjay Mishra. We are not able to hear you clearly.

Yes. Can you hear me?

Yes. Slightly better.

So what is our contribution from this 2-wheeler EV segment in terms of revenue as of now? And how it has grown on a Q-on-Q basis?

So on the EV segment, I think you are all aware that the market right now is in the midst of growth. So I mean the last year number, I think we are at the start -- last year numbers are some 2.5 lakh EV vehicles in 2-wheelers, which is obviously very, very small as compared to what the total volume of the industry are. I think no meaningful percentage could be derived right now. All we could say is that, two parts. First, the industry should grow from here manifold, 5x, 6x, 7x. Those are the estimates which are there. We are well positioned because we are working with mostly all of the top 10 players. But to give a number, either monthly or a quarter will not be a accurate reflection.

And what is the range of it -- value that we are supplying to these OEMs? Like what is the range we are supplying?

Of course, once you talk about the overall product range with the one, it is always be varying from INR 2,000 to INR 4,000 per vehicle.

Okay. And compared to the traditional lighting is how much -- I mean, how...

Of course, because all EV vehicles are adopted LED lamps, so definitely, the volume, overall value will be 3x than the conventional lamp.

It may be depending upon the complexity of the product, the Lamp, that can be 3x or 4x depending upon the every individual lamp. But it will be definitely more than 2x from conventional.

And lastly, from Ola, have you built any revenue in December quarter for Ola?

Yes, of course...

It is not mentioned in presentation actually, where we are showing the overall Electric customer -- Electric [ to the ] customer, Ola name is not there.

We are supplying to Ola and we started, means as per their requirement, we are fulfilling the complete requirement.

No, no. revenue is there. It would there, last quarter also this quarter also. There is a revenue. It is under ramp-up condition right now. So because of semiconductors and all, there are two things which we are as of now taking care of.

Okay. So you are supplying for both the model and they are product -- [indiscernible] both the model?

Yes, exactly.

We'll move on to the next question. That is from the line of Akash Jain from [indiscernible].

Yes. My questions are answered. Thank you so much.

The next question is from the line of Nirvan, an individual investor.

I wanted to understand what your plans are regarding the LED luminary segment because we are not seeing a lot of growth there? But in the presentation, the product portfolio that you show is really diverse, like from street lamps to LED bulbs and even display systems for buses and train platform. So in this depressed auto industry environment, wouldn't that give us like a good diversification? And are we focusing on that area? And what -- how do you see that area growing?

So you're right, there was a lot of effort in terms of our development of product range that was done over the last couple of years in this segment. What we also saw was that this was either a government business or a B2C business, which kind of is something that we decided that we would rather focus on our traditional business of auto. So over the last 18 months, you've seen, we've gradually de-grown this business. It is now 0.4% of our revenue and going down. So essentially, we've said this is not our focus area, and we will not want to make this a focus business at all. So this will -- while you're right, it sounds like a good diversification, but this is not something we want to do. We want to focus on our core business of auto and where we see many, many opportunities, especially with EV coming along.

Okay. That's very clear. One aspect I wanted to touch upon. So you said B2C and government, but isn't B2B to like large establishments like the real estate sector is picking up. So isn't B2B procurement of, for example, LED lights or lighting systems, is that an area that was also not found to be within your competitive strength areas?

I mean it's a good debate one can have, and you're absolutely right. But I would just say that we decided that our energies are better spent on our core Automotive business, and there are a number of ancillary lines there as well, which we can pick on. So we've kind of right now decided that this is not going to be a focus area, and yes, there will be some opportunities that will come by, but we would rather give that at a pass.

Fair enough. So your answer leads me to the second part of my question, which is that, see, right now, we are heavily concentrated in 2-wheelers. And even in 2-wheelers, I think around 70% of our revenues are from lamps. So I wanted to ask 2 levers of diversification. One is, how difficult is it for us to transition to lighting systems for 4-wheeler passenger vehicles? Commercial vehicles, I know we are doing a little. But how difficult is it to scale that up for 4-wheelers plus are we looking at any other ancillary items apart from lighting systems or mirrors or plastic molded parts? Like are we looking to enter a new auto ancillary segment?

See, we are already in the Mirror business for 2-wheelers. We are already in plastic business for 2-wheeler. But of course, going forward to the passenger car, there are companies which are already working with some joint ventures, and we are also looking for. We are very optimistic to have a joint venture, and we are working on that to be part of 4-wheeler business also. Of course, about the CV, commercial vehicle and tractor, we are well established in our existing sales, and we are very hopeful to get more and more business in CV as of now in CV and our tractor business and offload vehicles too.

Okay. Are we close to any deal wins in passenger segment? And if not, I just wanted you to comment on why lighting systems for 4-wheelers is very different from, say, lighting systems for 2-wheelers? I just want to understand that aspect.

As of now, there is no communication with any of our customers. Of course, lighting business is [ same ], wherein the requirement is of course being derived with the government regulation, and those regulations are all good for 2-wheeler and 4-wheeler both. Facilities-wise, if you see the -- with respect to the facilities, of course, required a similar for 2-wheeler and 4-wheeler. So it is not be a challenge. But of course, the existing players, which are already be having joint ventures, almost all the companies are there, which are as of now having a good business opportunities with the 4-wheeler business. And it is -- as of now, we are expecting a 4-wheeler business to be grown, and our entry will be very easy to enter within this business too and years to come.

[Operator Instructions] The next question is from the line of Priyadarshi Srivastava from Monarch Networth Capital.

Sir, as we are sitting on a net cash position now, so what will be your CapEx plan for the next financial year?

See, the CapEx -- next financial year and next 2, 3 years, we are planning INR 75 crores to INR 100 crores CapEx plan. And it all depends upon the new projects as well as new opportunities come. So we are well positioned for any kind of investment we require for growth of the business.

Okay. Okay. Okay, sir. And sir, leading from the previous participant's questions as we were talking about the passenger vehicles or the -- so currently, we are around 4%, 4.5% sort of revenue from [ that ] segment. So what is your estimate or what you think should be that percentage should increase in next 2 to 3 years?

See, as we explained the CVs and tractor segment and because these are also now more fascinating about the LED lamps, so we are aggressively working on that, and this will definitely it should increase in a smart way. This should be a good business from this segment also.

Okay. Okay. And sir, my last question for the J. K. Jain, sir, is that so what is this overall sense on the, like the 2 -- outlook on the 2-wheeler segment going ahead, sir, as we know, we have already faced sort of headwinds from and especially on the rural revival?

Yes. You know well, 2-wheeler business as of now is holding around business is holding around 1.16 million segment -- almost 16 million volume, and which is, of course, we're expecting with respect to the population of India. It will grow up to 2022. And of course, together with EVs too. So 2-wheeler business will definitely grow in the next 10 or 15 years [ simultaneously ] and continuously.

Okay. Sir, any views on the rural segment, like how the revival, you are seeing?

Yes. Depending upon the, I mean, when the rural economy will pick up, definitely, there we -- we are very bullish on this growth also.

The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

Sir, will we have a higher market share in the EV OEMs versus the conventional OEMs or let's say, the EV portfolio of vehicles versus the conventional portfolio vehicle?

Of course, if you see, EV is, now it started growing, and there are [ lot ] many players that are coming between this business, wherein conventional business is always hold by 7 players, these are 7 players. So we are very optimistic to have a good business from EV customers and top 10 customers are already with us. And further on, we are working from North to South and East to West. All the customers whosoever is present within this range, we are together with them.

Sir, so we will have a higher market share is my question. I understand the other part.

Yes, of course. Of course, we expect.

And my second question is, this year, which is the current year, which we are reporting the numbers for. Already, the vehicle production in India has declined substantially. It's mentioned in your opening comments also. And we are seeing a couple of years of production decline happening in the 2-wheeler space. Now despite that, we have grown our top line, obviously, to do with the export part and the order wins that we would have incremental. Is it fair to assume that next year, already with a low base on volumes and whatever client wins that you have talked about and also your higher share in EV, the situation or a case for substantially higher double-digit top line growth is already possible with our company. Is that conclusion fair enough?

I think if you look at our 10-year history, you will see that we have outperformed the industry always. So -- and this quarter also is something which is similar. And hence if your -- to your question, if the industry was to grow well, then we will still grow better. So yes, we do want to be in a position to outperform.

Any revenue estimate that you think you will be able to do next year?

I think given all the uncertainties, it is -- one wouldn't want to put a number there. We can only say that we'll do better than the industry.

Okay. And my last question is, sir, on the market share. So those 7 OEMs, the conventional ones. In the lighting side, what will be our market share, will it be 50%?

Yes. Our total market share is 30% more -- more than 30%.

30%?

Yes.

And versus this 30% in the EV 2-wheeler, you will be higher, right?

Correct. Yes.

We'll move on to the next question from the line of from Krishna Agarwal from [ Nischay ].

I have a question on the overall industry. So if we see there are many electric 2-wheelers coming in the segment, 25-kilometer and below, and as per our understanding, these are Chinese import SKDs or [ JKDs ]. So how the LED or head lamp space will [ be in ] the segment?

Yes. As you know, the Indian government has also considered Fiem, too, and they had given the subsidy of INR 800 crores to -- INR 800 crores to INR [ 6,000. ] And this is the lucrative scheme, which below 25-kilometer or below speed vehicle manufacturers are also thinking to be participate within this, and all these segments will also become within the EV, this electric or electronic head lamps and tail lamps. This is what we are thinking, and we are already working some of the customers as of now.

So as we are Chinese import, is there a percentage that has to be report from India?

No, we are actually talking of our business. So the people who are sourcing from China, we are not concerned. We cannot comment on that. But we are actually more focused on the big players as well as the serious players. So anybody who wants to be serious and who want to be big, he will definitely come for the India sources.

And I have one, in one of the previous calls, you have mentioned that from HMSI, you have 39% shares in head lamp, and in tail lamps, you have 90% share around. So why is such a difference in head lamps and tail lamps?

No. It all depends on the, I mean, this is a very good -- first of all, please understand having 40% of the head lamp and this 90% kind of share is a very good shape. So this all depends on the OEM choice, how he is maintaining the share with the vendors, business shares. Yes.

And on the Hero side, so are we working on the EV segment or if, I see, 2-wheeler?

This is, of course, right now, as I see we are still under their consideration, and we will definitely be very closely monitoring those things also.

The next question is from the line of Ashutosh Tiwari from Equirus Securities.

If I look at the rearview mirror sales in this quarter is almost INR 48 crores versus INR 40 crores in second quarter. So there is a very sharp jump quarter-on-quarter. So any reason behind that? Is there any new order win or there's some mistake over there?

Rearview mirror, you are saying?

Yes, and the PPT, this quarter, it's around 12.4% of sales. In previous quarter, it was around 9.6% of sales. If we derive the numbers, there appears to be big growth quarter-on-quarter, while the industry volumes have declined. So if there's a mistake, it's okay. Otherwise, what reason?

No, no, this is increase in the business.

So I mean, what is driving this growth?

Yes.

What is driving this growth?

Sorry?

I mean, why is this growth? I mean, when industry volumes are down, what is...

It has to be product mix. There are some customers which have de-grown. Some customers have grown. I think there is a confusion, we can clear offline.

Okay. Okay. Got it. And secondly, Obviously, there's some bit of gross margin improvement which has happened in this quarter versus the second quarter. But have we got the full kind of RM pass-through from customers? Or this is something still remaining?

No, it means there is some -- already we got it. And then, as you know, I mean, it takes 1 quarter to 2 quarter. This is a rolling on kind of arrangement.

So you want to say that there's still some parts which is remaining should come through in the subsequent quarters.

Yes.

I mean, we have managed the margin pretty well. So there is a good possibility of margin going beyond this [indiscernible] as well, right?

Sir, you can understand, this is an industry phenomena of rolling on of this [ pass on ], so it will remain. But the fine part is that we are getting it. That is the...

So no, no. My point is that if the full pass-through has not happened and this quarter was lower in terms of volumes as well, then also, we have delivered 12.1% margin. So when this full pass-through happens, and we see growth also coming back. In that case, margin should go beyond this range, right?

I don't think this is a onetime event. And so if the previous quarter has come this quarter will come on a rolling basis, and we think the margin will be around this range only, flattish between but we always guide around 12% odd.

The next question is from the line of Ritesh Poladia from Girik Capital.

Thanks for the opportunity, sir...

Sir, there is a lot of disturbance from your line.

Just a moment.

Thank you.

Is this better?

Much better.

Sir, what would be the asset turnover on gross block basis, at your peak capacity utilization?

Yes, it remains in the range of 2 is to -- yes, 1:2..

I believe in 2017, '18, you reached till 1.7%, 1.8%. That was the highest. So it would be the benchmark at the peak utilization or...

You can say 2%, 1:2 is the good ratio for this industry.

1:2. Okay. In [indiscernible] about 3 years back, we used to have about 45, 50s kind of a receivable cycle. Now it's on to about 25, 30. So what has led to this change? Or have you resorted to the bill discounting?

See, this means this is all from the OEM side, all support we are getting. So now this is improved.

Okay. But. You haven't gone for any bill discounting. So this is a gross receivables only?

It all depends upon the -- how the first -- we are settling with the customer. It is not that it is fit for all. It depends on the customer and our choice how we are in it.

Okay. So there can be an element of bill discounting with your customer only?

Yes, sometimes you [indiscernible].

[Operator Instructions] The next question is from the line of Preeti Panchal, an individual investor.

I just wanted to now the current order book with the company?

See, this current order book is, we are already working on the next 2, 3 years projects of our old customers. So we are -- I mean working very strongly, and we are having more than 50 projects under development. So it is in the numbers, actually, yes.

[Operator Instructions] The next question is from the line of Saurabh Datta from [indiscernible].

Just wanted to understand how do you see the chip shortage playing out? And how long do you expect it to continue for OEMs?

Yes. Chip shortage, of course, you know as well, overall growth is suffering as of now. And as per the feedback and prediction, which is being received from worldwide, it may continue for another 2 years, 1, 1.5 and 2 years more.

The next question is from the line of Anand from B&K Securities (sic) [ Emkay Global Financial ].

I just wanted to know how much capacity we have put in for the EV 2-wheelers? Has there been any agreed capacity that we have agreed to put out for the next, say, 2 years or something? And how fungible are these capacities with the existing products, can we use the same thing across products? Or how does this work?

We are well equipped. As of now, if you see, we are working on 50% or 60% of capacity with respect to the overall volume of market wherein specifically for the EV, we need to have an electronic setup, which is being well set up, and we are -- definitely we have committed to have another 5-year setup as of now available with us, with the SMT lines and set up required, especially for the EV segment. So we are well equipped with us for next 5 years volume...

Any volume numbers you can indicate?

It is very difficult to identify the numbers. Of course, we have 9 SMT lines as of now. 9 SMT lines means we can fulfill current condition, we are running only the 3 SMT lines. and another 6 lines are empty. So we can say, yes, another 5 years' volumes, we can easily accommodate within this set up available with us. And the setup, which is additional machines, which is required only the injection machines or supportive assembly lines. So those will be developed based on the product mix only as per the design of the individual products. So every product is having different aesthetic and different styles. And accordingly, we developed the design and assembly, which is required to assemble the overall part.

And any rough number on what is the cost to set up 1 SMT line?

It is a fungible for every product. Please understand only the assembly line is set up for a single product. Otherwise, [ all ] setup is fungible. And this is the whole company setup, which is required for every product.

Ladies and gentlemen, we'll be taking the last question. That is from the line of Anubhav Mukherjee from Prescient Capital.

Is the company like taking initiatives to increase the aftermarket sales in terms of like widening the distribution or like new product development, specifically for the aftermarket?

Yes. We are optimistic about the aftermarket. Of course, there are a few agreements with respect to the OEM customers. We cannot sell those products to the aftermarket, but of course, we are developing our own products which will be suitable for the aftermarket and hopeful to have a very good business in years to come. We are working on that.

And is that distribution network like in place across India? Or like are we doing anything to increase that?

We are already having depots in more than 10 cities and this is pretty old setup. Rest of the cities or rest of the markets are being served by the dealer network. So the point is that we are now working how we can achieve more, we are now more focused on replacement market as well.

Got that. And sir, our products in the aftermarket, what will be the [indiscernible]? Like will be -- will the pricing be at a discount to maybe -- so you won't compete with any OEM products? Or would you like be competing and selling at a discount? How is that?

No. Actually, it is all -- mix of all things, not discount or not about the competing with the OEM products. But there is, it is not -- that CM is a very established name. Everybody knows it in the market, so the only thing that we are now more focused working on the replacement market. So definitely, we are hopeful for getting better share of the business from the replacement market as well.

Sir, my question was just to understand who would be you competing against? Because like you said, for the OEMs for like whatever supplies you do for the like models, you won't be competing even in the aftermarket for those products is my guess. So who is your competition in the aftermarket then for whatever product range you sell, will it be like the unorganized or like who would be your competition?

This is all unorganized sector, a lot like unorganized sector people are working within this. So it is very difficult to say. But of course, the branding is most important, which is already we have with Fiem. And branding is always we chase in the market. So we are -- we will encash our branding in the near future, and we hope we'll be having good margin and good share of business within this market too.

Ladies and Gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.

Chairman sir, would you be giving closing comments?

Okay. So Mr. Jain is, I think, in remote, and it will be difficult to have a connection with them. So on behalf of Mr. Jain, I'll be giving the closing comments. So thank you, everyone, for participating in the phone call. I do hope we have been able to reply all your queries adequately. We are available for any additional questions you may have. Thank you, and good day. Thank you very much.

Thank you. Ladies and gentlemen, on behalf of Fiem Industries and Monarch Networth Capital, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.