Greaves Cotton Limited (501455) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Greaves Cotton Limited Q4 FY '20 Earnings Conference Call. From the management, we have with us Mr. Nagesh Basavanhalli, Managing Director and CEO; Mr. Amit Mittal, Chief Financial Officer; and Mr. Arun Srivastava, Head of Strategy. [Operator Instructions] I now hand the conference over to Mr. Nagesh Basavanhalli, Managing Director and CEO. Thank you, and over to you, sir.

Thank you. Good afternoon, everybody. I apologize for a delayed start due to some technical difficulties. First of all, thank you very much in these tough and challenging times to have joined the call. I'm hoping that everybody is doing well, following the right SOPs and doing well in these tough times. Goes without saying that fiscal year '20 has been a challenging period, especially the last couple of months, starting from March because of the pandemic. And to a certain extent, it reflects in some of the results and the discussions we're going to have. The good part also is when we look at our BS-VI engine supplies to the OEMs, which we have started in the fourth quarter of last year and our transition to cleantech mobility as required by the authorities, I think that's going well. We are very thankful to all of our customers, our OE partners and our channel partners who have stood with us during these times. So the BS-VI is doing well and ramping up every week as we speak. Our diversification strategy and the new growth levers I'm happy to report are on track and on schedule, and they're contributing 21% to our revenue. Our strategic focus of moving from diesel to diesel plus CNG, plus electric is on track. In addition, our focus of moving from a B2B to a B2B plus B2C is on track and B2C, especially in the area of non-auto engines, which recorded growth last year. Electric mobility space or the affordable mobility space, which recorded a growth last year. And to that end, we are ready with the new high-speed scooter, the Magnus, which will be hitting the market soon in June. With that, I would ask my colleagues, Arun Srivastava from Strategy; and Amit Mittal, CFO, to continue the discussions forward. Thank you.

Good morning. Hi. This is Arun Srivastava. I'll be running through some of the strategy related and overall big picture, and then I will hand it over to my colleague, Mr. Amit Mittal, for taking through the financial sector -- section. So overall, on the big picture, we communicated our strategy around moving from fuel-agnostic powertrain solutions, cleantech, focus on auto to non-auto as well as from B2B company to B2B plus B2C company. The good news is that we have been moving well. And in terms of the direction from FY '17 to '20, we have grown almost 12% on the top line side. On the bottom line, the performance has been good. NWC from 40-odd days in FY '17, we have come down to close to 29 days. Some of the revenue growth levers have started kicking in and accelerating now. So almost 21% of the business came from the new businesses in FY '20. We have also started developing a new unique positioning in the last mile mobility ecosystem from diesel 3-wheeler engine only and Greaves engine-related spare parts only business to a BS-VI launches, wherein we are in the diesel, maintaining our dominance, also growing onto the CNG side. In terms of the spare parts from Greaves-only spare parts to multi-brand spare parts, multi-brand service to Greaves Care as well as end vehicle play through our electric 2-wheeler business, Ampere, as well as the electric rickshaw business. Greaves Finance is a relatively new entity, and we hope that it will become an enabler to our last mile mobility businesses over the next few years. In all, we added close to INR 400 crores plus business since FY '17 through our strategic initiatives. So we are happy to also announce that our BS-VI engines are now in the market. And even though because of COVID the sales are yet to pick up and we are yet to gauge the true customer response, but the initial feedback about the engines has been fairly good. Our CREST 3-wheeler engine, which we have been working on, it's a fairly disruptive technology. And we are at a pre beta level and the vehicle -- the engine performance on vehicle on real driving conditions has been fairly good. And now as we start looking at lockdown being lifted, we expect more traction to come in on this engine. Non-auto has been a fairly good growth story for us, wherein we are leveraging the same infrastructure, same facility, same resources to do more on the non-auto side, and this business has delivered almost INR 150 crores top line to the company. We are also coming up with a new range of gensets, which are smarter connected gensets, which we call the Genius Series, and it is expected to be launched in the coming few months. On off the market side, which has been a major thrust area for the company, we have moved from Greaves-only spare parts to multi-brand spare part. Our distribution network has further been strengthened. This was always a strength for Greaves, but now from 3,000, we have reached 6,000-plus retail outlets, 10,000-plus mechanics with a very strong mechanic loyalty program. So it has been a good story. On the new mobility side, this is a front-end B2C initiative, which the company started around 2 years back. Today, we are doing almost INR 150 crores business in this area, and the new mobility business contributes almost 8% to our sales today. We have close to 385 new mobility outlets now, and touch almost 20,000 customers per month. If -- moving on to the vehicles side, like Nagesh mentioned that we are ready for launching our new high-speed scooter, which we call the Magnus, in June '20. But over a period of time, we have gradually strengthened our positioning. And today, we have a product at every customer price point from INR 35,000 to INR 80,000. Our focus is on the affordable last mile mobility, how do we convert the way India moves on 2-wheelers to electric, and we have products in every range today. On the e-rickshaw side, I'm also happy to announce that in the month of February, we launched our lithium ion e-rickshaw and cargo carrier, which is the e-loader. Now as we start looking at the markets opening up, I believe that these new products will help us gain further traction. Ampere, this year, in June, we celebrated 12th anniversary, and Ampere is gaining strength. We have over 200 Ampere dealerships now, range of products. It is also the -- one of the fastest-growing 2-wheeler brands. Last year, we grew fairly well and probably the fastest in the market. And as we look at the future ahead, we are also working significantly on our digital initiatives, virtual dealerships and we will seek Ampere moving from purely physical presence to a much stronger phygital presence. So last few months have been fairly challenging with the markets under complete lockdown. We have been working internally on various initiatives, which would help the company gain a much stronger presence as we emerge from the lockdown. We've been working on what we call the 3R framework, which is initiatives. The first level initiative is around responding immediately, which constitute about activating our business continuity plan, taking care of the employee well-being. The cash flow initiative is being taken care of by our finance team and -- as well as the business teams, the manufacturing and supply chain stabilization as well as remote operations enablement. And I think we have done fairly well in these areas. Now as the market starts coming back, we are activating our redouble initiatives around sharper working capital management, looking at costs in a fundamentally different way, enhancing our supply chain flexibility so that the manufacturing can come back much faster. We're also accelerating our channel expansion and customer acquisition plans, and we will be communicating about this more as we go ahead in the future quarters. We're also looking at how do we fundamentally relook at certain areas and reimagine our positioning as a physical to phygital company looking at further accelerating our new businesses. We have done a lot of hard work over the past few years, but we are looking at doing more in these areas and continue to build more partnerships and alliances to accelerate our growth. During the COVID time, we have also worked with the extended community at large, be it mask distributions or helping in sanitization work, through our sprayers, our engines have extensively been used for the various disinfection -- disinfectant spraying-related works, not just in India, but also in international markets. Our genset teams have been fairly active in terms of manufacturing gensets and installing them at the various quarantine facilities. We've also been looking at employee health and safety as employees start coming back into the offices and the factories. We are following all the guidelines. This period has also been fairly effective in terms of looking at employee trainings and engagement. We have also worked along with our channel partners in terms of accelerating connect with them. So in a nutshell, when we talk about just as a summary, when we say diesel to cleantech fuel solutions, auto to non-auto, we have the new generation BS-VI diesel engines launched, CREST program is progressing fairly well. Nonautomotive engines have been providing a strong growth momentum. From B2B, we are moving to a B2B plus B2C company. Ampere is today one of the market leaders with 21% share and the fastest growth in the market. Auto aftermarket retailers have increased almost 2x, and the share of new business has been increased to close to 21% of the portfolio. We have also worked on strong operational excellence initiatives. Net working capital has been brought down sharply. The fixed costs have been maintained within a strong narrow band. With this, I hand over to my colleague, Mr. Amit Mittal, for walking us through the financial section.

Good afternoon, everybody. So I'll refer to -- be covering the slide decks, Slide #14 onwards till 22. The -- as you can see, the revenue for the quarter has dipped from INR 528 crores to INR 360 crores, and for the year -- on a stand-alone basis and for the year from INR 1,988 crores to INR 1,821 crores. The Q4 EBITDA was at 8.5% versus 13.3% last year. Absolute numbers, INR 70 crores to INR 31 crores. And for the full year, EBITDA was -- margins were 12.5% versus 13.8% last year. The EBITDA absolute numbers for the full year dropped down to -- marginal drop to INR 228 crores from INR 275 crores. The PAT was for the quarter at INR 10 crores versus INR 37 crores last year, and for the full year at INR 148 crores versus INR 169 crores in the last year. Slide 15 shows you the quarterly average revenue trends. As you can see, there is generally a slight spike in March of every year for us. And our quarterly trends were quite in line with the previous years. However, March took a beating because of the lockdowns which took place. And India anyway had been in a general economic slowdown, and it's not that we were insulated from it. So those are reflecting to some extent in our numbers. The next slide shows you the share of our businesses, which is the segment reporting, engines, aftermarket, e-mobility and the share of e-mobility, the new businesses are growing. If I look at the volumes by business on the next slide, Slide 17, you can see others, which is basically the aftermarket multi-brand business. Full year, we have grown significantly over there, and the EMB market has grown both on a quarter and full year basis. The others businesses did take a hit, especially in Q4. I've already covered the financial results for the quarter in this summary. These are the slightly detailed P&L, which is shared with you, both for the quarter and for the next year. We have opted for a -- the new tax regime and opted for a fixed tax rate on the -- this thing. That's why our effective tax rate has actually come down from 30.1% to 25.2%, and similar numbers for the full year. Our net working capital has remained largely stagnant at 24 days compared to March '19, from 24 days, it's at 26 days, but it significantly improved from what -- where we were in December '19 at 33 days. Fixed asset turns has gone down from 6 to 4.9, but that's a result of the turnover. ROCE has taken a marginal dip to 21% from 27% in the same March '19. EPS is at 6.2 compared to 6.9 in March '19, up from 5.7 in December. This is Slide 21, shows you the Ampere's full year results. These are full year. And we've done INR 90 crores turnover top line, and we've had a loss of 20.4% on the -- INR 20.4 crores on the bottom line. We're expecting to still grow significantly during the coming years. And especially with the COVID impact, we're expecting some positive effects. GCL financial performance on Slide 22, the stand-alone numbers are there and as also the consolidated numbers. Consolidated, our revenue top line was INR 1,911 crores versus INR 2,015 crores in FY '19. For the quarter, it's INR 386 crores versus INR 541 crores. The PAT in the quarter of INR 1 crore versus INR 32 crores last year. FY '20, the consolidated PAT is INR 127 crores versus INR 163 crores last year. Now I hand over to Nagesh, please.

Yes. Yes. So we can -- this is the presentation. We can take the questions and answers now.

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

Firstly, I want to understand that in BS-VI diesel engine, what kind of price increase you're seeing roughly compared to the BS-IV?

For the BS-VI price increase, let me just start off with where we are with BS-VI. I think at the end of the quarter, we were trying to get all of our OEs. The product is ready. We've had ARAI certifications. Most of our OEs are going, getting into the queue. We were ramping up supply, right, and OE by OE, we were launching it. So I think by -- some of our bigger OEs have already launched, and the initial feedback is positive. Some of the smaller OEs are launching as we speak this month. Regarding the price, yes, there was a price increase. The exact number, I'll let my team address it.

So in terms of the price increase, we are still at a early stage where the product is being launched and stabilized with some of the OEs. So prices have gone up, but they will firm up over a period of time. So I think it is still slightly early days, but probably sometime in the Q1, we will have a better clarity that where the prices are stabilizing in the market.

And just to add to that, Ashutosh. The other reason is as we go OE by OE, we are signing up the PO agreement. We are signing up the long-term agreements, right. So it depends on OEM by OEM. But enough to suffice that what we had on BS-III to BS-IV transition, you'll see the same thing. You will see a drop -- a slight drop in margin, which over a period of time will be covered by Propel and other efficiency actions, right? And clearly, we are going through OE by OE. I think we'll have a better handle in terms of the overall pricing strategy, but the intent is obviously to preserve margin for the Greaves Group. That's the intent here.

But any minimum number that you have in mind because you already started supplying the Piaggio when you spoke last in Q3 con call. At least you must have some color on pricing that probably will happen.

Yes. So we are -- we have started off with the overall pricing kind of where we are to preserve our margins, right? That's kind of where we have started. Obviously, as the volume is picking up month-on-month, the negotiations and the long-term contracts are getting signed. Some of those are not signed, Ashutosh. That's what I was trying to say. So the final pricing in a lot of our OEs is getting determined as we speak. So I think between -- and as you know, not all the OEs are completely launched yet, thanks to the COVID scenario where we were -- abruptly had to stop in March. So the -- I would say probably in a month's time, we'll probably be in better position to answer the exact overall thing. But enough to suffice that Greaves is focused on profitable growth and Greaves as a company always works on preserving margin and a very profitable growth. And so we will focus on that. That is the intent of all of our idea of bringing in technology and getting a very superior product in the marketplace. In fact, we have over 10,000 engines and -- in the marketplace right now and the initial impression has been very positive.

[Operator Instructions] Next question is from the line of Jayashankar Nair from India Infoline Asset Management.

Hope all is well at your end also. Sir, my -- generally, when you look -- I mean, when you look at the environment, I mean it is generally felt that the rural economy is less impacted. And there is -- I mean, there is a general feeling that, I mean, even the aftermarket as a segment should not have been significantly impacted during this time. But when we look at your numbers, I mean, it is the rural power tillers as well as aftermarket, which has taken a significant [Audio Gap]

Okay. So thank you. First of all, thank you, and I hope you're also doing well. I'll just address overall. Yes, when you look at it, right, overall, the trend pre-COVID as well as right now, we are seeing some of the agri and some of the other rural areas like agri genset aftermarket start coming back, right? In terms of why power tiller and some of those, that was a conscious call. If you recall for the last 3, 4 analyst calls, we've been talking about it saying, liquidity is getting harder. Financing is getting harder in the marketplace. Recovery of the money is very, very critical. So one of the focus that we had was getting more and more to cash and carry, getting more and more to securitized business. And hence, in some cases, especially in the case of agri, where the cash cycles are way too long, we made a conscious call of getting to securitized sales and not just driving the top line for the sake of top line. So I think it was a very, very conscious call that we started back from Diwali of last year, which actually is helping us out right now. In fact, that's one of the reason why the team was talking about where the net working capital is managed or continues to be managed, right? If my colleagues have to add anything else, I think they can add, but I think that should address your question.

But overall, you're right. I think Greaves as a company, rural, we believe that is a sector that will do well along with affordable mobility and rural coming up first. And hence we should -- and also our engines where a lot of the Tier 2, Tier 3 cities. So in general, we are also cautiously optimistic going forward.

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

Sir, in terms of aftermarket, how they are seeing a trend now, let's say, in the last month? Obviously, if we look at aftermarket sales for us over FY '19 to '20 -- over '20, basically, it has remained flat over last year, FY '18 to '20. We saw some good growth in the first half of FY '20 -- FY '19, and then it started falling off. So how do you see the trend right now? And what's our game plan to improve it going ahead?

Yes. So aftermarket, it's a very important segment for us. And what we've started doing was that we've started working on Greaves spares to multi-brand spares. However, as the industry started slowing down, we started seeing inventory buildup and also certain stress on the working capital side because of which we did a conscious slowdown on the segment. However, as you would have seen in our results that the working capital numbers are starting to come under control, and a lot of our dealerships are in the Tier 2, Tier 3 markets, which are likely to open up faster. We believe that the aftermarket segment will start improving and coming back over the next -- over the remainder part of the year.

Okay. So the debtor issues are now behind you mean to say?

Yes. So it was -- yes, so it was -- one was the securitized kind of business. That was one. And then the other aspect, because starting from Diwali of '18, if you recall the overall slowdown, we were watching this very, very closely. Having said that though if you look at our diversification strategy on aftermarket, which we said going from Indian spares, i.e., a diesel engine spares to other engine spares to 3-wheeler multi-brand to even 2-wheeler, right, that is kind of going strong. That's kind of where the multi-brand business actually has grown for us. And our outlets and our infrastructure has grown, like Arun said earlier, when you look at 3,000 outlets a couple of years ago to 6,000-plus outlets, right? So I think some of the infrastructure building aspect is done. Some of the cleansing and then the tightness in the lending has come. And we are hopeful that as the business comes back on, in fact, we are already seeing, as of, I think, about 70-plus percent, 70% to 80-plus percent of our dealers are now beginning to come back online post COVID. So I think the business should come back as and when the economy starts to improve.

And the 3-wheelers have come back on the road.

And the 3-wheelers and other business are coming back, yes.

But there's also a thought process that because of COVID, there will be a drop in the shared mobility in the -- at least over next few months. Will that mean that the spares demand will be lower than probably what it was last year, you got that factored also?

So it is something which has to see how it plays out. In fact, there is also a school of thought that there may be a build of fear psychosis of traveling on public transport, so which may actually help the 3-wheeler and 2-wheeler segments, which are, in some ways more personalized modes of transport, and that should be beneficial. Yes. And the second part is, this is on the passenger side. 3-wheelers, there is also a heavy usage on the cargo side. And as more and more people start using e-commerce deliveries and everything, the cargo segment, we expect to grow and come back faster.

[Operator Instructions] Next question is from the line of Bharat Gianani from Sharekhan.

Sir, I have 2 questions. Firstly, on the 3-wheeler business, what is our split between the diesel engine business, what's the split between passenger and diesel currently for us?

So in terms of our business split, still a large part of the business is on the diesel side. CNG, we have started growing the large body CNG engines where probably we are the only players with engine in that segment. On the CNG side, which is the city CNG, we have been working on the CREST engine. And there have been slight extension in time lines because of BS-VI launch as well as COVID, but we have a very, very strong customer interest from few leading OEMs. And in the next couple of quarters, I think we should be in a position to come back with a greater feedback on the CNG side. But yes, so that's -- CREST will help us in driving the CNG growth platform. Today, diesel is the primary part of the portfolio.

No, sir, in diesel, I was trying to understand between 3-wheeler passenger and 3-wheeler cargo, what will be the split currently?

So cargo would be roughly, I would say, almost equal split.

We'll get back.

We'll get back with that one. But it's a fairly significant part of the portfolio. I'll get back with the exact numbers.

Okay. And sir, last question from my side is that the performance for the Ampere, we have posted a significant loss this year. So what's the revised time line for the breakeven? I mean what are we thinking in terms of breaking even this business? Any time line you could provide would be helpful on that.

If you look at Ampere, in terms of the sales performance, the company has been growing fairly well, and the market share has now expanded to close to 21%. If you also look at -- in terms of the RMC percentage, the company has actually improved the gross margin positioning. We have done a significant amount of work in terms of strengthening the team, in terms of building the brand wherein lot of investment has gone in. And this is actually helping the business. And we expect that profitability will start improving for the company as we go ahead. We are also working on few other initiatives which should help. One is on the localization side, greater supply chain control. And also, we are extending our cost reduction program, which we run in Greaves, which is called Propel into Ampere as well. And these should help in improving the profitability as we go ahead.

Sir, would you like to provide any time line as to by what time are you planning to get a breakeven of that?

So we won't be able to give time lines to this. But I would say, if you look at Greaves, Greaves is a profit-focused company, and we would extend the same philosophy to Ampere as well.

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

Sir, are we seeing any traction in the pump sets business right now because -- I mean, the rains were good and I think crop also was good in the last season. So are you seeing any traction over there in rural markets on the pump set safety? What is the decline in FY '20 per se?

So in FY '20, the pump set market did come under stress. The market fell by more than 30% -- 30%, 40%. So there was stress and a lot of it was also due to the subsidy-related issues. But what we are seeing is this year, the expectation is that with good monsoon, the farm sector is forecasted to do well, and then we would hope to capitalize on that improvement in the farm economy.

But are we seeing takers right now in the market or not yet?

The dealerships have just started opening up. So it is still early days, but there is some amount of positivity in the farm segment.

And on this CREST CNG engine, so already all the OEMs who had to migrate to BS-VI have migrated through whatever CNG or CNG [ basically ] for them. So don't you feel that actually, we have kind of missed the bus over here, or the OEMs who had to -- the larger OEMs that would shift to BS-VI had already migrated. So will we get any bigger OEM or maybe we'll get some OEM but that will be very smaller volumes for us?

So one of the primary reasons for the CREST engine was in terms of the disruptive performance, which can help the OEMs in expanding their market share in that segment. So from that perspective, when we talk to the OEMs and discussions around the value proposition of the engine, it continues to be very strong. And the engine is at a level where it has cleared the pre beta performance and delivering performance on the ground. So I am seeing a lot of interest coming in from OEMs and not just the smaller OEMs, but also the bigger OEMs. So we expect that as market starts opening up post-COVID, as people start coming back to offices, hopefully, this should also start accelerating faster.

Okay. And on the 4-wheeler engine side, will that volume go to 0 this year because I think most of the OEMs on smaller SUVs have not rolled over to BS-VI?

Yes. So 4-wheelers, like we communicated in the past also that the cost of meeting BS-VI diesel on a 4-wheeler was significantly higher. So that may -- that will go down. But we expect a large part of that volume to shift to 3-wheeler cargo. So that should help the 3-wheeler segment, and it should also work to our advantage in that area.

And we've done very well in the non-automotive engine. Can you throw some more light? I mean which areas we are doing well and what is the potential over there for further improvement over next 2, 3 years?

So non-auto segment, it covers everything from marine engines, genset engines, firefighting, farm machinery, construction machinery, both on the heavier side as well as light machinery. And we are seeing very, very strong traction on the both areas, especially on the lighter machinery side where because of increasing cost of labor and availability of labor, we are seeing mechanization happening. And -- so that is driving the portfolio. And it is a critical segment for us. And also, when I look at the non-auto engines, since it is extending the similar capabilities, the segment is also fairly profitable.

[Operator Instructions] Next question is from the line of Bharat Gianani from Sharekhan.

Just wanted to ask what would be roughly our revenue mix as to what would be 3-wheelers, 4-wheelers and aftermarket Ampere, gensets, if you can just provide the numbers?

The [Audio Gap] presentation. So if you refer to Slide #16, that gives the mix. So engines is around at a consolidated level, around 54% of our revenue, aftermarket is 21%, electric mobility is close to 19%.

So electric mobility, in the sense, that would be majorly Ampere?

Yes, my mistake, small correction, electric mobility is 7% of the portfolio. I got the data point wrong.

Okay. And so sir, what would be the rest of it? Engine is 54%, aftermarket is 21%, e-mobility is 7%. So what will be the rest?

Remaining 19% would be our other businesses around genset, agri, et cetera.

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

Sir, do we have any BS-IV inventory of 3-wheeler diesel or completely exhausted?

No, we have managed that fairly well. So we are not struggling with BS-IV inventory.

Okay. And gensets, we were supposed to launch that 500 kVA plus last year. So how is the traction over there? And also, how do you see genset market because actually the power already has improved across the country and also construction was one major area of growth maybe 3 years back, is not doing so well right now.

Yes. So genset industry, per se, last year was down because of various slowdown in some of the end use segments. So there we did face an impact. And on the greater than 500 kVA, which we call as our Mega Series, I think it has been growing fairly well, and gradually, we are getting traction on that.

Sir, what kind of volumes we did of 500 kVA plus last year?

I don't have the exact volumes, but the business share has been growing. So we have been gradually expanding on that because it's also a project sales, so -- which we have been expanding and building capability. So I expect that, that business should do well. And overall, genset also, I think, while the industry was slightly weak last year, we did gain market share in the genset segment.

And lastly, on Ampere, I mean because generally the -- or the major -- of your dealership chain, the dealers who probably were added over last say 1.5 years, there probably are quite a few. They still have to spend a lot of money on real estate and the rental cost and all. So how are they faring over last 2 months when there was no sales, and again maybe over next 2, 3 months also sales will be quite lower? So are they need -- do they need support from us as well in this period? Or just some color on that.

So for the Ampere dealerships, when we were developing the dealerships, we had kept that as a fairly asset-light model for the dealers to take care of the viability issues. Because of the lockdown, like the entire industry, the dealerships have also come under stress. But what we are seeing is, as the dealership starts opening up, the numbers are coming back. So that should head the dealerships. And selectively for some dealers, whatever support they require, we have been working with them very closely in terms of helping and supporting our channels.

Yes. So -- and just to summarize, I think in general, like Arun said, we have believed in getting a good product, good consumer experience and let the product and the technology do the talking, right? Unlike a lot of other competitors, we have not given extra margin or extra support at this stage. Having said that, what we have done is we have worked with our dealer partners and we have generated new marketing schemes, right? So Ampere, for example, just using Ampere as an example, we ran 1 in the last couple of weeks, lot focused on digital, lot focused on getting straight to the consumer via dealers, of course, dealer does the test drive. And we are seeing significant traffic. So the numbers have gone back to pre COVID levels plus-plus in terms of daily retails. So I think that again shows making sure that the right product technology and the right consumer experience along with marketing schemes, dedicated targeted marketing schemes, but we are not giving any support to the dealers as such.

[Operator Instructions] Next question is from the line of [ Jay Daniel from Entropy Advisors ].

Yes. Sir, 2 months of the current quarter is behind us. So how is the current quarter shaping up? And what kind of degrowth do you expect for the current year? I mean considering it's a very challenging period, over 2020, what kind of degrowth do you think Greaves will post for the current year?

So isn't that the million-dollar question that everybody is facing, right? So at the end of the day, I think everybody is aware of what happened in April, what happened in significant portions of May, right? So we are not immune to this pandemic. Having said that, though, let us tell you what we did. As soon as we got plant permission, even with limited capacity, we started ramping up. We started selling our inventory as soon as our dealers were coming back on board, right? So obviously, May was better than April, albeit as soon as -- it was a limited month, very limited month. June obviously will be a lot better. And we expect on a month-to-month run rate to improve. And so all I would say is I'm not going to give a forecast right now because it's -- the situation is so liquid. But enough to suffice that I think what we are seeing out there whether it is on the non-auto engine side, the OEM demand on the engine side, where right now, we are facing -- I mean, supply is coming back up to speed, and we are ramping up significantly. Agri side where we are seeing traction; affordable mobility, we are seeing action. So I would say I'm encouraged given the current scenario. But clearly, it's once at a time, and that's kind of how we're looking at it. And internally, in general, the things we control, cost, cash flow, net working capital, et cetera, et cetera, all the things that are within our hands, I think we have done more than -- we are doing as much or even more than needed. So rest assured that I think we are taking this very, very seriously to manage our monthly kind of expansion. And month-on-month, we are going to see as the industry bounces back.

Okay. Sir, and this CREST technology, how disruptive will it be? And when do you expect it to hit the roads? And will it be at a premium to your current engine portfolio in terms of pricing?

Yes. I think the simple answer is yes. Why? Because this is a technology that's -- we've always maintained this. It's a leapfrog technology offering a minimum of 30% fuel efficiency. What we have demonstrated from talking about it on design, going through the design development, going through Indian suppliers and localization, now going to beta phase and beta production phase, with 3 auto OEMs, we are able to demonstrate putting that product in their vehicle and demonstrating this 30% fuel efficiency. This business is all about total cost of ownership, all about unit economics. The numbers are significant enough that the value proposition is significant. Given the BS-VI workload that all the automakers were facing, everybody wanted us to defer this a little bit. And this development also -- to get this technology for the first time in this part of the world took a little bit longer to this level of refinement, but I think I'm very encouraged. And definitely, there will be premium pricing for this because the value proposition is higher. But as and when there are OEM signoffs going to the production level, we will be announcing that.

Next question is from the line of Anish Jobalia from Banyan Capital.

I wanted to understand the -- our diesel 3-wheeler engine business. So if you can give some color around the industry in terms of between pre-COVID and now how much has the industry numbers gone down? And when do you expect those numbers to come back to normal levels? So I mean, putting that in context of the entire industry, so what's your reading around our cargo segment? If you can give some color on this.

Sure, sure. So it's been a -- for the automotive segment, the story from slowdown to lockdown. So the industry, as such, was slowing down last year. And on a full year basis, the 3-wheeler segment declined around 10%. In quarter 4, the decline was much steeper at close to 30%. And please bear in mind that March end quarter typically becomes a very high sales season, and that got impacted, which impacted our sales as well. In terms of coming back, I would say that it's a very difficult question. But since the diesel 3-wheelers are primarily used in the Tier 3, Tier 4 markets, I expect it to come back much faster. But to what extent, I think it is still quite liquid to answer that with any sort of definitiveness. Your other question, I think I mentioned it before as well. Between passenger and cargo, the cargo segment, we are already seeing signs of recovery. And cargo should come back much faster, be it in the Tier 1, Tier 2, Tier 3, Tier 4 cities, wherever it is.

[Operator Instructions] Next question is from the line of Jayashankar Nair from India Infoline Asset Management.

Yes. Sorry, sir. Last time I got disconnected, but I broadly got the answers. But my next question is, sir, primarily, last time, we saw sales of below 400 was probably in Q4 of FY '17. And we had still maintained a margin of somewhere around 13% to 14%. This time around margins seems to have taken a significant beating. So how do you explain that, sir? I mean is it that we had a significant raw materials procured and the offtake was lower? And what could be the reason as such why the margins have taken such a beating?

Jayashankar, so there has been a transition from BS-IV to BS-VI, which there has been a on cost and not all of it has been -- we have been able to pass on, which we are working on in part of our transition program. So we are working on various cost optimization initiatives, which I think Nagesh spoke about earlier. So we do have a glide path in terms of coming down to a target cost and improving our margins over time. All the cost increases immediately could not be passed on to the OEM, so that's why you're seeing a slight dip in the month.

But over a period, we would be targeting that 13%, 14%? Or what is the -- I mean, from an organizational point of view or from an internal point view, what is the assessment on a medium to longer-term trajectory for the margin?

Can you just repeat that, please?

On a medium to longer term, what would be the trajectory? What is it -- would it be a similar kind of margin what we have in mind, what we used to have earlier? Or you think there would be a significant dip?

So since you mentioned 2017 odd, so when you look at that period, when we did a transition from BS-III to BS-IV, there was a slight different margin, which happens with all early stage products. But then over the period of time, the teams worked and brought the margin back in -- back to the historical levels. And that is what we expect this time around as well. The teams have already been working since BS-VI got launched, and we hope the margins will come back to the historical levels.

Okay. Just 1 more, just if you can please 1 more. Within the engine business, what would be the current composition of 3-wheeler and other engine? I mean the [ override ] and the lightweight engines or whatever it is? And so...

It is primarily the 3-wheeler engine. The 4-wheeler is...

Auto and non-auto.

Auto and non.

Yes. So the non-auto portfolio has been growing fairly well. And even in the last year also the non-auto portfolio grew by almost 50% plus. So that business is seeing fairly good growth, and it's a fairly -- it's a very profitable segment for us.

So within the 56% of stand-alone, what would be the current auto and non-auto kind of breakup if you can give?

So typically, we don't give that breakup, so I would not want to do that.

Ladies and gentlemen, that would be the last question for today. I will now hand the conference over to Mr. Nagesh for closing comments.

Thank you. Thank you, all. Thank you very much for joining us during these trying times. Again, we apologize for starting a little bit late due to the technical difficulties in Mumbai. Thank you again and have a good day. Thank you very much.

Thank you very much. On behalf of Greaves Cotton Limited, this concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.