Gabriel India Limited (505714) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Gabriel India Limited Q1 FY '22 Earnings Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on 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. Manoj Kolhatkar, Managing Director of Gabriel India Limited. Thank you, and over to you, sir.

Thank you, Mallika. Yes. Good morning, everybody. I hope you are able to see the presentation as well, as I speak. So welcome -- formal welcome to all of those who are even call, and I hope that all of you and your families and near and dear ones are in the best of health and safe in these times. Joining me today on the call is Rishi Luharuka, who is our CFO; Nilesh Jain, our Company Secretary; and our Investor Relations Advisors, SGA. I hope you've had time to go through the financial results and the presentations, as we had our Board meeting yesterday and also our AGM. So we did publish it yesterday itself. Firstly, I would like to update on our operations on the quarter. The first quarter, as you know, while it started well, I mean, the fourth quarter of last year was absolutely terrific. The momentum continued in April as well. But yes, we all know what happened in the month of March, April and also May, the second wave, which was really devastating because -- I mean, everything was really adverse, and we saw the worst of times as a country. And what was different in this time shutdown was that every state has it's -- had its own -- in fact, not only every state, every city, every municipal corporation had a different shutdown period or different restrictions, thereby what happened was, obviously, we were -- we had to operate the plants -- again, I'm talking not only as Gabriel, but even as industry. We had to operate plants at suboptimal level because some customers will open, some were closed and we still had to keep the show running. So that was a very unique challenge that we faced during the second wave. In fact, all of our plants were kept running, except Nashik plant because there was a mandate again from Nashik Municipal Corporation to keep the entire Nashik shut for 1 week. June production, however, was fairly good, fairly robust, almost back to 90% of levels, and OEMs continue that normal level of production even into this quarter. Now before we get into numbers, let me provide you an update on how the current environment is shaping up. August sales, as I said, has improved from July because all restrictions are eased, though not entirely. Clearly, we are still seeing -- like the city where I am, in Pune, we still have 7 p.m. to 4 p.m. business timings for shops and establishments and the weekend is closed. So again, we are seeing local restrictions being very different in each geography. But the demand is strong. We are seeing a very healthy pickup in all segments, except commercial vehicle, of course. Demand recovery is to accelerate in the coming months on the back of improved sentiments, faster rollout of vaccination. We are seeing that is improving very well. And economic activities are also gaining traction. Overall demand for passenger car is robust. We are seeing huge waiting periods for passenger cars even now, mainly led by preference for personal mobility. And also after all these lockdowns people -- there is a clear consumer sentiment to spend, that's a human nature. There is low inventory also in the system in the passenger car particularly. So that is also creating a robust -- I mean, definitely a robust demand as far as passenger car is concerned. Rural sentiments remain robust. Monsoon started well -- started a bit in between, but again, it's caught up very well. So I think that should be -- that should help very well for our economy in general. Two-wheeler was a little below the expectation, but again, we are seeing that demand also picking up in the month of July. Commercial Vehicle, which I mentioned, obviously, it is showing an improvement, but definitely, it's still, like, 2-wheeler and passenger car is almost back to normal days, CV is still quite far away from the normal production levels, particularly the M&HCV segment. This, as you know, in -- during the monsoon, the construction activity, et cetera, is put on hold. So there will be a little lull, but we expect the demand of CV to start picking up, let's say, from the month of September onwards. With COVID-19, we have been battling for the past more than 1.5 years and a broader spirit of resilience, adaptability and togetherness in each of us at Gabriel and at our group, we feel we are better prepared this time. While there are talks about the third wave, nobody really can predict. But yes, I mean, as going by the predictions, which we are aware of, in all likelihood towards the end of August or early September is what the third wave is expected to hit. The impact is not going to be as severe as they say. But yes, there are chances, again, of some disruption that may happen. We really don't know. It's anybody's guess. But as regardless, we are taking utmost care of all our employees and their families. We have ensured vaccination of all our team, I mean -- and in fact, families. We have done it at our cost for employees. So that goes on. We have finished 94% of employees who have done their first vaccination. The balance, of course, is due to those people who are recovering from COVID, so there's a waiting period for them before they get their vaccines. Now moving to the numbers. While I'm not referring to the presentation as such, but I'll just -- since it is already uploaded -- I mean, with the onset of the second wave of COVID, auto industry faced a lot of challenges. Despite that, we reported a top line of INR 453 crores and EBITDA of INR 25 crores and PAT came in at INR 12 crores for the Q1 of '21-'22. Indian auto industry faced severe restrictions due to the second wave, as I already mentioned. We started seeing recurring demand from June onwards. So we'll hope that this continues. As I said, the only "if" is the third wave. Otherwise, we see really a very, very good demand going forward. We've recorded a 19.4% year-on-year growth in EBITDA to 25%. Margins stood at 5.5% for the quarter. As I said, May really offset all cancellations for all of us. Margins improved on account of the cost reduction measures that we have done despite this. And 1 big impact has been -- as you all have been witnessing, it's the commodity price increases that we are seeing in the market and these just go on unabated. I mean, just to mention the steel -- cold rolled steel, which we use or the hot rolled steel, which is the main ingredient for auto component industry or automotive OEMs, in March '20, when we had the first lockdown, it was about INR 45 per kilo. That has gone to almost INR 82 per kilo. And in fact, it's going further up in July, and we don't know when this is going to stop. So we are seeing a similar trend in forging steel. We are seeing a similar trend in aluminum, in rubber, in copper. I mean, every commodity that we have, we're seeing a similar unabated price escalation. So this, obviously, is putting a serious challenge to us in terms of the margins. We have a back-to-back with customers. Most of our commodities are indexed, and there is a lag depending on whether it's quarterly or 6 monthly. But yes, obviously, there is -- I mean, this has an impact on the overall profit percentage. Moving on to the balance sheet and cash flows. We continue to maintain a robust balance sheet position with a cash -- net cash of INR 203 crores. We have continued our thrust on collections and are working to reduce our inventories. However, we've also taken a conscious decision looking at what happened last year of holding some inventory to -- and being safe for the festive season. So that is a very calculated and logical decision that we have taken. In terms of CapEx. For the quarter, it stood at almost INR 19 crores, and the capital investment is mainly in the field of R&D, automation, line balancing, which is needed for the future. Coming to the segment-wise performance. In 2- and 3-wheeler we continue to see good traction. Two-wheeler segment, scooters improved significantly, even motorcycles improved around 60%, mopeds by 43% in this year. Talking about 2-wheelers, of course, what is the talk of the town is the EV, the EV 2- and 3-wheelers. So the trend is really catching up for mainly, I would say, 2 reasons. One is the government subsidies, which are announced in FAME I and now FAME II. And added to that, the fuel price increase, which is the petrol has gone beyond INR 107 also in some places. So this is really pushing the adoption of electric 2-wheelers and 3-wheelers faster than probably what we expected. And there are a lot of incentives that each government is offering. But as mentioned earlier, we have got good orders with all the key two-wheeler makers. We are -- we have got the order for Ola Electric, as you know. The launch is planned on August 15. We have with Okinawa, Ampere, Ather TVS Electric. And in 3-wheelers, we are with Bajaj, we have Mahindra, we have TI. We are coming out with a 3-wheeler, we are with Kinetic Green. So all this is already with [ a little bit ]. So we are well placed. I mean, basically that's the message that I'm trying to convey in terms of EV adoption in 2-wheelers and 3-wheelers. In passenger cars, the EV adoption is still slow. And our penetration also is not, honestly, strong in the EV as of now. We are with the Mahindra EVs, for sure. We are not on the Nexon EV, but the pace of adoption is a little slow, but our efforts are on to see if we can make inroads there as well. Coming to passenger cars. Of course, on the overall segment, we had -- as you know, we had lost out on this segment a bit due to some of our models going out of production like the WagonR and the Alto and also the Omni. So this definitely took some of our volumes away, but we've been working to build a business pipeline which I have been continuously updating you on every call. Now glad to share that our market share has increased from what had gone down to as low as 17% to now 21% in this quarter. And we have -- this is going to go even further up because we have got a lot of new models. And particularly with Maruti, just to mention, we have got the new Alto. So this will help us increase -- this launch is, of course, in '22, '23, not in this year. We've got the new Brezza, Brezza Vitara itself. So it's not incremental, but any new model comes with a higher sale, obviously. But 1 good new addition is the Maruti Jimny, which is completely new, I mean, in terms of volumes and model to us. So this is, again, with Gabriel. And we are also, of course, readying for the launch -- for the SUV of Mahindra XUV700. You're seeing a lot of advertisement on the TV on this -- for this particular model, very exciting model. And we are also offering our new technology on this product. So we are well -- I mean, well on our way to increase our market share as was planned, and you're seeing those in numbers as well now in terms of the percentage increasing. With the commissioning of a new tech center, which we have built in Chakan, an absolutely state-of-the-art tech center. We will be even in a better position to offer better value to our customers and increase our market share further. Moving to CVs sales. Sales have picked up, as I said. I mean, our dominant position continues. We only will have to wait for the industry to recover, but we are definitely seeing a better-than-expected recovery, I must say, in the month of July and going forward in the month of August, September as well. And from September onwards, this will definitely -- I think it will be even better. Aftermarket continues to be a strong story. We are leveraging the brand label by launching new product lines. All our new product lines like the break pad which we launched and the tire shop which we launched are doing extremely well in the market, very good reception market on this front. We had revenues of almost INR 65 crores and aftermarket now contributed to 14% of the total revenue. So this -- what used to be a 12%, 13% has gone to 14%. So we are taking a very vigorous push on the aftermarket, both in exports as well as domestic. Coming to exports, which is something that I want to share on a positive note with all of you. We are seeing very strong traction in the exports, and we are seeing our exports numbers, in fact, among the best that we have seen ever in the Q1, as you can see on the slide, which is being shown currently. Our Q1 '21/'22, our exports sales was almost INR 21 crores, which is the highest ever by a handsome margin. So -- and this is only increasing. We are in the production mode for the DAF of Netherlands for the commercial vehicles. And in fact, as we speak, just last week, they have added DAF Brazil also to our [ kitting ], and they have asked us to export DAF Brazil as well. And shortly, they would ask us to extend this to other continents as well based on the good performance of our product. So this is good news. Volkswagen Russia, volumes are very steady, and we are exporting almost 5 containers a month to Russia. So even that is going well. Even Yamaha exports that we do for the golf cart, this goes backs to Yamaha Japan, which we have been doing for several years, but even that has seen a small pickup, however, the volume is quite small. But yes, nevertheless, we are seeing a pickup even there also. Now coming to the next slide, which is, just a moment -- yes, can you just go back? Rishi, can you -- yes. Electric 2-wheelers, I already mentioned, so I want to suggest some figures for all of you, which are put up here. So we are seeing a good traction as regards Gabriel is concerned on this front. Yes, next slide. So we also did just a mapping up from 2014/'15 to 2020, I mean, 2021 or actually if you remove 2021 because it's a COVID year, and we tried to map as to what is our growth compared to the industry growth. And we're glad to see that our growth, we have consistently outstripped the market growth in terms of percentage. I mean, our growth has been better than how the market has grown in the 7-, 8-year period. So that is -- the only issue there was passenger cars, which I've already told you, we are well on track to reverse this trend as well. Next slide. So this is -- I've been sharing this Core 90 initiative, which is cost structure in 90 days. This has become a theme, a backbone for all of us with weekly reviews. Yes, there are challenges continuously coming in terms of particularly commodity price increase. So this is helping us offset to the best possible debt impact and remain in good health. Next slide, please. Yes. Yes. So this is, of course, the vision, which we have shared with you to be in the global top 5 based on these 4 pillars. I mean, exports, we are seeing good movement there. Domestic dominance, particularly in cars, we are now getting back covering our lockdown. Scanning for opportunities continues, as we speak. Tech center, I already did mention to you on the tax center part. So this is, in short, that what I had to share with all of you. Yes, we are seeing a lot of challenges in terms of, I mean, commodity apart. We are seeing challenges of the OEM itself in terms of semiconductor shortages. We -- yesterday morning, there was news about Suzuki Motor Gujarat having to shut for 3 days for chip shortage. Similarly, this is being faced by Tata Motors, by Mahindra and most of them. Though, this is much lesser than what is seen in terms of shortage globally, but even Indian automotive industry is being hit now by [ this ] certain shortage. And this will go on as, they say, for -- close to 1 year because it's a global shortage scenario mainly arising due to the rise of digital use of every person on the planet, which has caused this shift in supply-demand as regard with chips are concerned. But overall, I think the good part is all employees are safe and healthy, and we are all set to see and to cater to the increased demand because we still see the demand being robust and we are hopeful that we'll be able to outperform the industry in the coming quarters as well. So on that note, I come to the end of my opening remarks. I would request the moderator to begin the question-answer session, and we'll be glad to answer any queries that you have or take any suggestions that you have. Thank you so much.

[Operator Instructions] The first question is from the line of Viraj Kacharia from Securities Investment Management.

First of all, congratulations for a decent set of numbers in such a challenging environment. I just have 3 questions. First is on the margin front. So even before the COVID, you have been making cost initiatives. And in last 1 year, we took -- we accelerated several cost programs as well. So I understand right now we are facing a lot of commodity pressure. But how should we understand the margin -- sustainable margin profile for us, [ firstly, the outlook ]? Efforts, were being taken towards cost and other measures. And in relation to the kind of efforts you're also taking in moving to a higher tech products. So in the long term, if we look at the next 2, 3 years or 5 years, what are the kind of substantive margin one should be expecting in the business? That is one. Second is in the EV part of the business, especially for 2-wheelers, 3-wheelers. Compared to ICE then, how would the high market share be? So in ICE, we see certain large players catering to in-house group companies. But in an EV world, how does our competition and market share is -- based on existing pipeline be? So these are the questions. Third, I have on export, I will just ask after the first two.

Okay. Yes. So yes, on the margins part. Firstly, we were also well on our track last year. We said we will -- our continuous aim has been to get to double digits. I mean, I'm talking about EBITDA, that has been our continuous aim actually. So were getting there, but this commodity is really -- we -- I mean, again, it's not only Gabriel. We -- I mean, the industry, we thought that this will start easing off from April onwards. But this just doesn't seem to be easing off. And what happens is that even if we get a complete recovery from customers, it has, in terms of the percentages, it definitely offsets the percentage. So again, these cycles will happen, again, as it has to come down. Maybe for the quarter or 2 quarters, this has to come down, when you would start seeing the margins get back to healthier levels in terms of inching closer to double digits. So long term, if you ask me, if I discount these short-term aberrations that happen, I mean our aim continues to remain double digit. It is a challenge, but we clearly, with -- and now with exports aftermarket picking up, also passenger car improving, we hope that we'll be able to see better utilizations also. That is also very, very important for a company like Gabriel where we had installed -- we have built for volumes. So we need these volumes to help us. So I think we should definitely get there. Short -- I mean, short term, yes, it may not -- definitely not be double digits. And I think a margin around 8% will be good enough. And again, as I said it's anybody guess...

Just to follow up on that. When we say we have an aspiration of double-digit EBITDA margins, is it largely dependent on volume recovery? So is it a function of operating leverage? Or is it purely -- is it also led by elements like product mix, either led by EV or higher share of exports, aftermarkets? So can you kind of give some color on the margin prices?

Yes. Obviously, the margin improvement -- I mean, we have made a plan distributed across various levers. I mean, 1 lever, of course, very clearly is improving our exposure in aftermarket, which I mentioned all along. Product mix in terms of our own commercial vehicle, if that segment improves, naturally, it'd be better. Railways is 1 segment which did extremely well in the year '19/'20. But after COVID, it has reduced to less than half. So that has also -- so if that also happens, because it's bound to happen. Again, I'm not trying to throw a kite here. Railways is bound -- is surely going to recover. It's only a question of when. So when these things happen, improvement of CV, improvement of railways, we'll definitely see improvement in margins as well. So that's why I said I think it's a temporary setback. What is important now is to lock the numbers, is to ensure safety of everybody and to ensure that we continuously focus on improving market share. That's what is our plan as of now. Coming your second question is IC units -- I mean, the market share in CVs. As I said, we are focusing on 2-wheeler, 3-wheeler because that's where the action is happening. So as of now, yes, we are well positioned to improve market share, but we don't know how the market is going to move because now Ola has announced INR 2 million per year. Whether that will happen or not happen is anybody's guess. So it's really difficult for us to say how much of this will translate into actual volumes and thereby our market share. But the good part is we have just hedged our bets by ensuring that we are there with all the key players.

Okay. Just last question is on the exports part. So if I look at our journey, we kind of have been trying to into major export market for quite some time. And last 1 year, we seem to -- caught a couple of breakthroughs. So if I'm to understand this better, you talked about DAF having a possibility of taking the more wider plant. So how is the scope of exports moved for us, not just for DAF or other customers? How is the pipeline looking like? Any color you can share on that? And within DAF, what is the kind of opportunity one can look at, if one was to look at that?

Yes. Okay. So exports is -- actually it's in 2 parts. One is aftermarket, one is OE. So OE was not really very good. So that's where we're focusing on. It took, as I said, 5, 6 years for us to breakthrough. But if you remember, I had always told that once we unlock 1 good monthly customer, it will open up doors for the rest. And that's exactly what is happening. I'm happy with the way it's moving. We unlock DAF Netherlands. DAF Netherlands has unlocked Brazil, now probably Australia is going to come through and some other continents as well. And within DAF world, now we have already got some other RFQs that we're working on. Similarly, now that we have DAF, we are able to tell other customers that we are supplying to a marquee customer like that. So Volvo is showing some interest. So we are in an advantage with Volvo as well for global RFQ. We are in touch for Leyland global RFQ. So we see this happening. Yes, it is a little slow process, but this will definitely happen. Similarly, in passenger cars, Volkswagen, we started with just our first order. I remember of -- it was just to meet their -- some issue that they had online with other suppliers. We had just an order of about 10,000. Now that 10,000 has converted into few lakhs of pieces, almost 3 lakhs per year. And this, we see, again, opening up doors within Volkswagen. So that's how it goes. I think we'll have -- so the good part is, it's definitely going as per plan. In terms of visibility, it's difficult to give you right now. But yes, we are in advanced stage, working with 2 global customers for commercial vehicles, for sure, and 1 big passenger car manufacturer as well.

They are?

Sorry.

You talked about 2 global OEs for CV and 1 for passenger vehicle.

One for passenger vehicle.

Are these additions to customers we're already catering?

Yes, yes, yes. These are totally in addition to whatever we are talking of. So I'm sure 1 of them will definitely come through. And I'm not even talking of other customers where we have got the RFQ. I'm talking of the ones where we are in advanced stage of discussions.

[Operator Instructions] The next question is from the line of Amar Kant Gaur from PhillipCapital.

Am I audible?

Yes.

Sir, what I wanted to understand was on the gross margin side, what is the mechanism of passing through the cost increases? I mean what kind of contracts do you have with the OEMs and how often those contracts are renegotiated as far as pricing is concerned?

Okay. So like I mentioned, Amar, I mean, we have a back-to-back arrangement with all -- almost all -- I mean, actually, all the customers, not almost all, all the customers for pass-through. The only thing is the period. I mean, there is somewhere it is quarterly, somewhere it is half yearly and somewhere, in some cases it is also on a yearly basis. Otherwise, let's say, steel increases of INR 10 in the market, we get the entire INR 10 back. It's not that we don't get it, but we get it with a 1 quarter delay. And then having said that, we are also -- as you know, we are also a proprietary item supplier, so there are some parts, some commodities which are not covered back to back, because we also want to keep it as a black box. So some are not indexed entirely, but those are very small numbers. The large ones, which are steel, aluminum, oil and rubber, these are covered back to metal suppliers, the OEMs.

Sir, would it be fair to assume that whenever the commodity prices turn the other way, the benefit will -- that will flow to what would be much greater in terms of what we have yet to collect from the OEMs versus at hand and what we will benefit from the costs going down. Would it -- would that be a fair statement to make?

Could you repeat that?

Sir, so we -- if -- let us assume that there is a 1 quarter of lag in terms of recovery, when the costs do start to go down, then is it fair to assume that you will have a double benefit off it with prices going down and greater recoveries owing to a quarter lag?

Yes. Obviously, that lag effect will be there, both ways, yes. Both ways, I mean, when it goes down, there's a benefit when it goes up. And then in a continuously improving scenario, it obviously is more reduced.

So again, sorry, I'm pressing on it a little bit. So if the costs even stay at these levels, our margins should improve, given the fact that the costs that we have yet to recover from the OEMs will start coming in a quarter later?

Yes, yes, yes.

Okay. And the second thing is, in the last call, we had discussed about some premium OEMs, I mean, products being tested by premium OEMs like Audi, you had talked about. Is there any development on that side? Or maybe any other OEM for that matter?

As I said, Audi, we have got, I mean, an RFQ from them. I mean, of course, we could not make it -- in terms of converting the business, we keep getting -- see, the point is Volkswagen has now identified us as a global supplier. So we keep getting opportunities even from Audi. That's the point that I have made. But let's say, talk about commercial vehicles, DAF Netherlands is like amongst -- it's like an Audi of commercial vehicles. That's where we have broken through. Volvo, similarly, which we are in advanced stage of discussion. It's something that we are -- we're supplying to Volvo Eicher, not Volvo exactly, Volvo Eicher. But Volvo is, again, a very good plan. In passenger cars, we have got RFQs from, I would say, only Audi because Volkswagen is what is open to us, but we've not been able to convert them into business as of now.

[Operator Instructions] The next question is from the line of from [ Srinivan ] from Unifi Capital.

The first one is, I would like to know your comment on the margin profile towards the supply in the EV segment. How would that compare with the existing 2-wheeler customers, especially the supplies that we are going to do to Ola?

Rishi, do you want to take that?

Yes, sure. Thanks for asking the question. So while we've said that in the previous call also, that Ola is -- as far as the product is there, it's different. But as far as the pricing is concerned, it's fairly competitive to the 2-wheelers space. Given that we can't share details of exactly how it is, but it's fairly competitive.

Yes. But on the margin front, the profile would be similar, like, well, the pricing is similar?

Yes. It is similar, maybe even a tad better.

Okay. Got it. And has the deliveries started to the Ola Electric because they are looking to commission in the next few months?

No, it's still in the development phase. I mean the mass production is planned -- I mean, not in the month of August. It's just the launch, the price launch that they're planning. The formal SOP is still yet to happen.

Got it. Sir, second question was on exports. Given that we have taken 5, 6 years to breakeven in the initial OE customers in the export market. For the new customers that we are looking to service, what should be the time frame we should look to start getting to these customers? How much it should reduce now?

In terms of export customers?

Yes, yes. So for example, if you're -- you said you're looking for -- you have 2 global CV and 1 passenger car customers you're in talks with. What should be the time frame we should look to start getting to these customers? I understand the initial customer, the first customer took about 5 to 6 years to break through in the export market. But going forward, what should be that time frame?

Okay. Well, I mean, like I mentioned, DAF, we had started with only 1 part that led to 2 other parts. So that has happened very quickly. So similarly, within the DAF world now -- DAF is part of the car group. You have DAF, you have British Leyland, you have those kinds of trucks in U.S. and PW Trucks. So all of those are part of their profile. So obviously, that time will be much lesser, breaking into that family of trucks. So it -- I mean, it would definitely be much lesser. Similarly, even for Volkswagen, the time would be lesser within the Volkswagen world, but let's say I have to approach a completely new customer, not Volkswagen, then that time will still be 3 to 4 years.

The next question is from the line of Priya Ranjan from HDFC Mutual Funds.

My question is on the 2-wheeler mix or 2-wheeler, 3-wheeler, what we say. Is it roughly around 65% that is the annualized number or, I mean, broadly in our top line. So what will be the broader split between, say, motorcycles, scooter and 3-wheelers, if you can help with that?

See, the split there, I mean, will be mainly tilted towards 2-wheelers only. As you know, 2-wheelers is what is selling currently, if you see the numbers as well, let's say, for -- even if you take 2021, I mean, it was a shorter year, but a total of about 2,40,000 EVs got sold. Out of 2,40,000, 2-wheelers itself was about 160,000. And so the bulk is 2-wheelers and 3-wheelers, of course, is also good. Out of the 2,40,000 -- and, cars is practically nothing. So it's 160,000 of 2-wheelers and about 70,000 of 3-wheelers. So that's the split, and as we continue -- also, I'm not counting those, what you call, 3-wheeler contractions that you see in the cities -- in Gurgaon, et cetera. That -- they buy completely -- I mean, complete kits from China or pickup from the spare parts or whatever. So I'm not counting those. I'm counting the ones which are reported in terms of 3-wheelers.

But what I'm saying is it between us, I mean, for our revenue. So what will be coming from, say, scooter within that?

I think most of it will be scooters. So if you see our own spread of customers. So Ather Energy, we are in scooters, tremendous growth being seen. Ola Electric scooters, Okinawa scooters, TVS, again, scooters, Ampere is scooters. So all this is scooters. The only motorcycle development that we are seeing is maybe, to some extent, Renault, where we are not a source, but we are in discussions with them. That is the only motorbike. But I see motorcycles may not catch up because motor vehicles are more commuter or rural usage or pleasure biking. So EV may not be a right fit there. Scooters, definitely, it's more of an intra-city unisex kind of model. Three-wheelers, of course, we see a lot of traction. The 3-wheelers, again, I've already mentioned Mahindra Electric, Kinetic Green, Kia cycles, all are with us, TVS also, Bajaj also.

Okay. Understood. And then sir, ICE, in the ICE side, I mean the ICE 2-wheeler side, what would be our broad breakup between, say, motorcycle and scooter for our...

Rishi, you have that?

So give me a minute. I will just -- I will then let you know. We move forward to the other question. I'll let you know.

Okay. Yes. 1Okay. And sir, in terms of, say, we have done 1 last thing on the cost front. I mean, you have been talking about a lot of localization for last many quarters. So when we think we'll start hitting some of those localization in our numbers?

We'll see that happening towards the end of this quarter.

Okay. Okay. That's all from my side, I think. Whenever you can comfortably, the 2-wheelers split.

Yes. Yes.

The next question is from the line of Nishant Vass from ICICI Securities.

Sir, my first question is more of a clarification in terms of your product level share of business. I mean, because you're obviously working a lot with the EV guys, specifically Ola, for example. How does that compare in terms of with your existing ICE, OEMs, you had mentioned the tire or similar parts? Is the share of business with these customers higher or similar? Because it's competitive, to just get a sense of competitive intensity. And the part association question is that how are the product level specifications in terms of the product development on these parts that you are building for EV guys? Are they very different in terms of technology requirement or specifications, the tolerances, complexity of parts? So can you share some thoughts on this?

Sure. Yes. Yes, Nishant. So firstly, on the share of business, Ola, we are 100%. It is far better than what is -- what we were -- what it began in HMSI. Because HMSI, we share the business with our competition, Endurance. So that is the first part. And you said on the second part on the EV product specifications, largely, they are the same. In 2-wheelers, particularly, there is not much difference. But we are working on any innovative things that we can do for them, particularly for 2-wheelers, that is still under concept stage. But no -- I mean, it's the same shocks and front fork. But for Ola, of course, we're giving a new technology front fork as well as rear shocks. Yes, the new technology is applicable equally to IC engine. So it's not anything specifically developed for Ola, but we can give it to anybody. So to answer your question, there is no difference in the product as such as of now. But in the cars, again, if you see the products that we are giving for Mahindra Electric, I mean in terms of their [indiscernible]. We are suppliers to them for both the platforms, very small numbers, but the shocks are the same. Just -- we had to do some minor retuning, but essentially, the shocks and the struts are the same. But for a -- but going forward, for a, as they call a pure, clean sheet EV or a bond EV, as they say. For that, in the passenger cars, there might be requirements where the noise levels have to be even better because it's a silent car. The internal noise is -- if you've driven an electric passenger car, it's -- you suddenly stop hearing the noise of the vehicle, which you otherwise hear in a normal car. So the sound inside the car will become very critical. So to that extent, the noise might play a part. Again, there we have some solutions.