Greaves Cotton Limited (501455) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to Greaves Cotton Limited Q3 FY '22 Earnings Conference Call. From the management, we have with us today Mr. Nagesh Basavanhalli, Group CEO and Managing Director; and Mr. Dalpat Jain, Group Chief Financial Officer. [Operator Instructions]. Please note that this conference is being recorded. I now turn the conference over to Mr. Nagesh Basavanhalli, Group CEO and Managing Director of Greaves Cotton Limited. Thank you, and over to you, sir.

Thank you. Good morning, everybody. I hope you're all keeping well and staying safe. I welcome you all to the Greaves Cotton Q3 FY '22 earnings call. I will start off with an overview of the business and Mr. Jain, our CFO, will take you through the financials for the quarter. Our strategy to mitigate risks by building a diversified product portfolio and moving towards diversified portfolio is beginning to show results. This is evident in several areas, whether it is in the area of EV or retail or non-auto business. For example, some of the key highlights in the past quarter was clearly the roughly 22,000 sales for Q3 in the Electric Mobility business. Ampere good set on new benchmark. We were also very proud to inaugurate our EV manufacturing facility at Ranipet, up and running now. The Experience Center at Ranipet was also launched a couple of weeks ago. In the past quarter, the Magnus EX, which is 1 of our most popular 2-wheeler brand was launched and there is a good reception in the market. The team also completed the purchase of the 26% stake in Ele, right, so we have 100% of the e-rickshaw manufacturer now. We also subscribed to 26% equity stake in MLR auto, which gives us a presence to 3-wheeler auto business. Also, one of the highlights of the quarter was launching the AutoEVmart, which was a multi-brand experiential store which looks after the entire E-Mobility ecosystem. Coming to the auto and non-auto segment, we're on the recovery path, especially because we are seeing good public quality measures in the areas like agri, infra, et cetera. And we are seeing some of that early shoots come up in the area of PCPs, especially in the area of health care. With that broad overview, I request Mr. Dalpat Jain to give us a brief on the financial performance. Thank you.

Thank you, Nagesh. Good morning, everyone. If you look at quarter 3 financial results, at a consolidated level, the company reported a flattish revenue compared to last year's quarter 3 at INR 486 crores and on a sequential quarter basis, it was 30% higher. But what is the key highlight in the revenue breakup, if you look at E-Mobility, the business has now come close to $100 million of quarterly run rate and close to 100,000 units of quarterly run rate, which is a benchmark achieved during quarter 3. Despite the headwind faced by Auto Engines business unit, overall, the group revenue could sustain at the healthy levels. EBITDA, we had a INR 14 crores at consolidated level and INR 17 crores of stand-alone EBITDA. For the 9 months, the company reported a total revenue of INR 1,090 crores, which was 11% higher compared to last year's 9 months. As Nagesh already mentioned, we have completed the remaining 26% stake acquisition in Bestways and subscribed to 26% equity -- GEMPL subscribed to 26% equity in MLR Auto. And both of that required almost INR 32 crores of investment. During the quarter, company generated free cash flow of INR 46 crores and invested almost INR 55 crores as debt in the subsidiaries. The Pune land deal that was done in the last quarter is progressing well. The due diligence was completed by the buyer and land area was adjusted subsequent to the due diligence. The second installment of advance, which was 20% has been received before 31st of December. So total 30% of the consideration the company has received so far. With the non-auto and the retail business unit, they have come back to the pre-COVID level of revenues, and both of them continued its growth trajectory and reported growth of 8% for non-auto and more than 10% for retail business. Overall, the share of new businesses has grown to 54% in the company revenues, and that augurs well in terms of the diversification strategy that company had undertaken 3 years back. We are hopeful that the traction that is shown in the overall E-Mobility industry will continue with the push from all the sites and that's going to be benefiting the company in its consolidated revenue and profitability. With this, I will open the call for interactive questions and answers. Thank you, everyone, for joining us.

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

Congrats on very good volume ramp-up in this Electric Mobility space. Firstly, out of this INR 181 crores sales that we have shown in Electric Mobility, can you provide the share of 3-wheeler and 2-wheeler because there's a big jump in, I think realization that we believe is because of this whole mix towards high speed?

Correct, Ashutosh. So in the INR 181 crores, it's almost 70 -- sorry, 80-20, 80% is 2-wheeler, 20% is 3-wheeler.

Okay. Okay. So high speed share going up is relating to better realizations. Secondly, what is the volume outlook basically for the upcoming months in this 2-wheeler, 3-wheeler space? We already had, say, they did 18,000 units in the last quarter. And Ranipet facility, I think it came up in November. So how do you see the volume ramp up happening over the coming months?

I will start with the numbers and then Nagesh can add on the overall business strategy part. So if you look at the Ranipet plant capacity, we started with 10,000 units per month, which we are going to ramp up as the demand picks up. On the volume pickup, we are seeing the traction continuing. And the quarterly run rate that was there of units in quarter 3, we are seeing that growing in the January and coming months also, and the share of high speed continues to grow in the overall revenue mix for Ampere. Similarly, in the 3-wheeler front also, we are seeing a good traction on the volumes and Ele has come in the top 10 brands within the 3-wheeler, including the entire ICE and electric vehicle space over there. So that is auguring well. And with the MLR now coming in as a portfolio company, which is an associate, the team -- the MLR team is also going to work on building up the revenue -- sorry, revenue and volumes for the L5 models.

Okay. So how quickly we can ramp up Ranipet, let's say, we already had maybe 6,000, 7,000 volumes in these 2 wheelers. If the demand surprises, how quickly we can ramp up this facility, Ranipet production unit capacity?

Nagesh?

Yes. So Ashutosh, thanks. As we have said, right, we have today about 120,000 capacity, which will go in -- early in the next fiscal year, in the next quarter to double that, right? We will expand that capacity to 250,000, we've already said that in the past, right? And when we look at it, assembly demand will not be an issue, right? Fortunately for us, the market demand is also looking solid like the CFO said. We are working with our local supply chain partners, and a lot of progress has been made over the last several quarters. We all know about the global chip shortage. So we are working with some of those challenges, but these challenges are being managed. And then the ramp-up, I think, is going to be appropriate. And enough to say that assembly capacity will not be a constraint. We are working with our supply chain partners ahead of the curve for the next 2, 3 quarters to see how quickly we can ramp up higher as the market demand continues.

Okay. So you're saying the 240,000 capacity will come up by Q1 next year, FY '23?

Again, like I said, I think that manufacturing capacity, we will be ready. We are working with our supply chain partners to make sure they're also ready, right, as we are ramping up. That's the only thing that I think we have worked through. We are quite confident just like last year. If you look at the December '21 number versus December '22 number, right, the 2,500 became close to 10,000, right? So have we demonstrated an ability to ramp up in-house and the supply chain? The answer is yes. Are we continuing to do that? I think the answer is yes. Do we have challenges? The answer is also yes, because the supply chain is not all at the same line. That's all I would say.

Okay. And lastly, because diesel 3-wheeler volume is also critical in terms of profit, so are we seeing improvement in that in this quarter versus the third quarter?

So Ashutosh, if you look at the traction in 3-wheeler volumes from FY '21, third quarter, it is almost more than doubled. And quarter-on-quarter also, there has been a 15% growth like you saw in our Slide 15...

No, no. I'm referring to diesel 3-wheeler volumes.

I'm -- you are talking about diesel 3-wheeler, okay. So in diesel 3-wheeler, at an industry level, the data that got published in the media for the month of December, it was around 45,000 overall as an industry. I'm talking about the 3-wheeler industry and January also continued on a similar kind of number. Now because of the overall industry growth, though the share of diesel at the overall level has come down from the 70% level, but still that number is going to be better than what we have seen in the last 2 quarters.

So we'll see some share of -- basically over there okay.

And the second factor what has also happened Ashutosh is the inventory which was there at the OEM and in the dealer network because of certain wave 2 lockdown that also with these higher volumes in the last quarter has got consumed through secondary sales.

The next question is from the line of Dhananjay Mishra from Sunidhi Securities & Finance Limited.

Congratulation on very strong show in the EV segment. So my question is with respect to this EV 2-wheeler, so I have visited a couple of your competitors as well as Ampere dealers and I find that our high speed bike is at about 50 kilometers. However, a competitor's bike they are giving high speed up to 70 kilometers and 80 kilometers. So what is the strategy going forward in terms of whether we are going to launch high speed? And was there any technology required to reach there? And so that is the first question.

Yes. So I think the question is over about product strategy. So when we first announced we were going to play in heart of the market, right? When you look at an average 2-wheeler typically, typical average 2-wheeler or so which is around like INR 75,000, INR 80,000, right? So we are kind of playing in the heart of the market in EV segment, right? And recently, in the last quarter, we have added the Magnus EX, which is our extended range. And we continue to work on 1 or 2 more products that we have already announced, which will go to the next level, right? Are we going to stick to the niche of the market or heart of the market in terms of pricing? I think the answer is yes. Our goal is to -- because when we look at our customers, when we look at Tier 1, Tier 2, Tier 3 counts, affordable last-mile mobility is kind of where we play on the 2-wheeler as well as 3 wheelers. And that's kind of, I think, where our strategy is. And we are also very clear as to what the consumer wants, the consumer needs and what the consumer is asking in terms of range, in terms of pricing, in terms of performance, right? I think there is a price balance at the end of the day, keep in mind, India is -- needs affordable last mile mobility for our customers, whether they customers are school going kids or housewives or office going people or the millennials, right? So I think that is our current strategy, and we are kind of playing to the heart of the market.

Okay. Because when I see Ather, so they are directly competing with this petrol variant like Activa and Jupiter. And in terms of pricing as well as performance and everything, and I think their scooter can be used for -- even for the intercity movement. However, our scooter is only for intracity. So I thought to get those markets here because where we are going to launch some better variant in terms of the speed. So that was my question.

Yes. We've kind of like I said, I will speak still speak to the heart of the market, what we have announced in the past is, we have said we will work on -- we are working on 1 more variant, which will obviously take us to the next level of speed, it will be lithium, right, but it will still be playing in the heart of the market. Our intention is not to disturb that.

And second question with respect to this EBITDA. So at this point in time, we are doing about, I think, minus INR 3 crores in this EV segment. So at what volume or what sales you consider that you will reach at least 4%, 5% kind of EBITDA margin?

So Dhananjay, as you rightly observed, the EBITDA is at close to INR 3 crores with the kind of quarterly revenue that we have seen. And if I can further talk with the kind of volume growth we have seen in the -- towards the end of this quarter, the company had positive EBITDA margin and even positive PBT. So we are nearing that benchmark and the quarter's numbers are indicative of what is the breakeven required for the E-Mobility business.

Okay. And sir, after relocation from Pune and Coimbatore to Aurangabad, the INR 45 crore annual benefit we were talking about. So that is already reflecting in Q3 number? Or some more benefit is still left to be reflected in upcoming quarters?

So if you look at the 9-month results, the quarterly run rate has already crossed -- sorry, the yearly run rate has already crossed INR 45 crores of savings that we had targeted with closure of Ranipet and some part of Pune has already achieved. There is a little bit of more which will come in quarter 4 and the next financial year, with the due consolidation that we had undertaken in quarter 2 and in the quarter 3. So there will be a bit more of savings which will be coming in and maybe this number will be crossed in the next financial year.

And what is the kind of investments we needed to double our capacity from 1.2% to 2.4% additional investment needed?

So if -- I'll start from the numbers, so if you look at the overall infrastructure at Ranipet plant, the land, the brick-and-mortar that is constructed to have a overall targeted capacity of 1 million. Now the growth from 120,000 to 240,000 is about having the assembly line and other infrastructure, which is required, and that will need a proportionate increase in the fixed assets. So if you look at our numbers between March 31 and 31st of December, the total fixed assets have grown by more than INR 50 crores.

Yes. And I can, Dalpat, if I can just add just a few comments on that, additional comments. Regarding the question on profitability, the CFO has already answered, but I would just like to add that keep in mind, we're also in the investment phase. We are focused on satisfying the customers right now and making sure that we are delivering the right products and gaining market share, right? So we are also doing that fine balance of investment -- investing into the company, investing into the future, right? The second thing in terms of the plant itself, keep in mind, our thought process being a seasoned manufacturing supply chain player, right, is also to do this in modular steps so that the plant capacity, again, I repeat from my first point, will not be an issue. The plant capacity will be there ahead of the demand.

And sir, lastly, 1 more question about the volume number. How has been the volume, like November, December or even in January, how it has increased in terms of volume?

So the public number that we have already talked about, quarter 3 was close to 22,000 overall as a quarter. For the month of December, overall E-Mobility was close to 10,000 units. And that quarter -- the monthly run rate, which was there in quarter 3 -- the monthly average, which was there in quarter 3 has been continuing or getting better as we are moving into quarter 4.

So we are lower than December number in January or...

I will not be able to comment on this. Like I mentioned, the overall quarterly average, we are maintaining or are better than that.

[Operator Instructions] The next question is from the line of Vimal Gohil from Union Asset Management.

Just wanted your comments, firstly, on the Electric Vehicle business. I have 3 questions. 1 is on the 3-wheeler EV market. This market is a very fragmented market, as you said, the e-rickshaw market that we are catering to, on the passenger side, that is. So just wanted to get a sense on what has been the industry growth, like, if you could just give us some numbers on the industry for the 9 months ended FY '22 versus what -- I mean we have got volumes, so will we be able to calculate the market share there? That's on 3-wheelers. The second question is on the realization for 2-wheelers. So if I were to observe that number on 2-wheelers, we have reached almost INR 80,000 of realization from an average of INR 65,000. So how should we look at that number going forward? And same goes with even 3-wheelers. So even 3-wheelers realizations have touched close to INR 1 lakh. So if you could just comment on your realization for the entire Electric Vehicle business? And lastly, if you can just update on the strategic investor for NPS, any progress there, any updates there if possible?

Thanks, Vimal. To start with the first part, where in the 3-wheeler business in LE, our market share has grown, and it is close to now 9% of the overall industry. And that growth has been mainly driven by move from unorganized sectors to organized sectors. So at one point, unorganized sector used to have almost 90% of the 3-wheeler e-rickshaw market, and that has now come down to close to 60%, 40% is taken by the organized one. The second part, the realization. The realization is a factor of 2 things in the 2-wheeler. One, the share of high speed, as we have disclosed in our Slide 10 of the presentation, has increased now to 71%, which at some point, like in the similar quarter last year was 30% or so. So the increase -- in the mix of high speed has led to increase in the realization and company has also -- with the higher-end products that have launched -- that has got launched, the price commanded is also higher in those models. In terms of e-rickshaw, similarly, we have launched the newer models in the last 9 months and that has helped in the overall realization increase. The price increase per unit has also been there in e-rickshaw product, but that has been a smaller contribution in the overall realization increase that you have observed.

So what you're seeing is in the e-rickshaw segment, it is, again, the mix which has affected the -- has positively affected the realization?

That's correct. Mix has affected. And plus the company has also taken a price increase wherever it was demanded, but higher growth is because of the mix improvement.

So when you say mix, Dalpat, within e-rickshaw, do we have certain variants which some of the variants are slightly more costlier, is that the case?

That's correct. So some of the variants are more higher capacity and also lead acid versus lithium ion batteries. So those mix are there in case of e-rickshaws also.

So for both these segments, we can now assume -- we can assume certain -- the current level of realizations are expected to sustain going forward?

That will sustain. And as Nagesh mentioned, we will continue to launch improved models. And whenever they get launched, there will also be another step-up jump in the realization. In the meantime, the realization will continue to grow in line with the mix improvement and some sort of price increase that both the businesses have taken in line with the overall product cost.

Got it. And lastly, sir, in the non-auto business, if you can just comment while the auto engine business is understandable, diesel is under pressure. But non-auto business, how should we look at it because over there, there has been some weakness. So how should we look at that business in the medium term -- in terms of volume?

Yes. I will talk about the numbers of the quarter and then maybe Nagesh can talk about the supply chain issues, which were there in that view -- which were temporary during quarter 3. So overall, if you look at the non-auto business growth, we have seen the overall Genset and the industrial engine BUs doing a very well volume as well as revenue growth and that was led by the product, which is being launched by the businesses. Now talking about the volume degrowth that you saw in the equipment part that was led by the Farm Equipment unit of the business. And in the Farm Equipment last year, there were some of the models which are China imported and were eligible for the subsidiary in India. With the recent changes in the government regulations, those products were not eligible. And accordingly, we discontinued those products and are replacing with the domestic manufacturers. It took a little bit of time in getting the right manufacturing partners for the domestic models of the same, and that is where we saw the volume degrowth in Farm Equipment. But overall, at the business unit level, the business has grown at a healthy pace during the quarter also.

Next question is from the line of Pramod Amthe from InCred Capital.

Two questions. One is with regard to this EV allied services, where literally we are seeing you entering a new area of business on every quarter basis. The last one seems to be on EV financing. Can you give a rationale in terms of what is driving you to add these ones not basically diversified areas? And how you plan to develop competencies in these areas? And what's the capital allocation required for these new areas in the next 2 to 3 years period?

Nagesh?

Yes. So I think the question is capital allocation in different areas as well as the diversification into others. So when you look at our business, between Greaves engines our traditional business, which is diversified into auto and non-auto, right? And is giving us a roadmap for the [indiscernible] portfolio, Greaves Retail and then Greaves Electric Mobility. Those are the primary businesses, then we have 2 enabler businesses, and I'll talk about that in a moment. The capital allocation in the last 3 years when you look at it has been in the Alti engines business when we went to BS-VI and also the CPC before, all regulation driven, right? What it took to be very, very competitive in the market. Parallelly, on the Electric Mobility business, we saw that trend early, we invested in the last mile mobility. Today, we are a player in 80-plus percent of the electric last-mile mobility business, right? So that's kind of where the significant capital has gone in. So when I look at it roughly and [indiscernible], roughly INR 300-plus crores has gone into the traditional businesses, Greaves core, and another INR 300-plus crores, exact number, still slippage is there, has been invested in the Greaves Electric Mobility. Now what we have done in parallel, we have the enabler business, right? The Greaves Finance being an enabler business, but it's an enabler, one year ago, we had a challenge with people wanting to finance electric vehicles, or 18 months ago. Obviously that situation has improved a lot. Now we have a lot of partners who are partnering with us. So this is more like a catalyst or an enabler to our primary business of selling electric vehicles, right? So that it is an enabler business. Similarly, with the engineering services with the latest technology. So in terms of capital allocation, the 2 core areas are where we spend the money, Greaves Electric Mobility being the strongest, right? And investing in not just plant capacity, but also technology moves in terms of people. And the traditional business is where we have done in the last couple of years, right? And the Greaves Retail, traditionally, we have gone in with an asset-light model. So either our AutoEVmart or Greaves Retail have been franchisee-owned, franchisee-operated. We did not go in with a COCO model. So it's a strategic blend in terms of capital allocation, where we are putting money where we believe we have a technology move or long-term sustainability. In other areas, we are cleverly leveraged asset-light models were appropriate. That's the big picture. Happy to clarify...

Just wanted to dwell upon if you -- when you look at the next 3-year plan, and if you're allocating INR 100 per se, where you expect how much to go for manufacturing and how much for these -- because financing is a very tricky business, right? It can develop a decent capital and we're trying to partner there. How to manage the NPAs and all considering it's a new area and 2-wheelers are relatively tricky. That's one. Second, are there more areas, wide spaces you feel you need to cover in the coming quarters, if you can give a color on this?

So at a broad range, the future -- bigger part of the future allocation for the next fiscal year will obviously be on the Electric Mobility 2-wheeler, 3-wheeler, right? And building in additional capability, additional products that will be where the focus will be, right? In terms of refinance, like I said, it's an enabler. That will be an enabler business. I don't expect that to be a predominant usage of the capital right now. Dalpat, please feel free to add.

Yes. So I'll just add a couple of points on this. Greaves Finance is not -- we are not having the plan to make that like a full-scale NBFC order bank. It will continue to remain in an NBFC and having required allocation of capital, but mostly the business is being done through the partnership model. In terms of the capital allocation, like Nagesh mentioned, the money will be going more on the overall E-Mobility and also developing the E-Mobility ecosystem. So now we have made our presence in the ultimate vehicle side, but we will also work on developing the ecosystem and that's where the investments will go.

One more question I have is with regard to PLI, considering that at your top line, you look like you may qualify for a PLI. Did you find it attractive, did you apply for PLI on the auto side, one? Second is, how do you see the ATT PLI, does it give you confidence that you'll be able to source the lithium ion cells locally at a much cheaper price, might be 2 or 3 years down the line?

Yes. So with the increasing volumes overall, the domestic market and suppliers are also scaling up their operations, and that is helping in procuring the products at the competitive pricing, and that is what Nagesh was talking in the beginning. On the second part, in terms of PLI, yes, company has made requisite applications wherever we are eligible, so that we can work on those areas. And PLI is attractive. You know the numbers are fairly good from the government side, and government is doing a lot of efforts on improving the overall ecosystem for progress of business.

[Operator Instructions] Our next question is from the line of Amyn Pirani from JPMorgan.

Firstly, some clarifications on your Ele 3-wheeler business. So right now, you have the Ele, which is basically the brand of Bestway, right? Is that correct?

That's correct. Ele is into e-rickshaw and that's brand of Bestway.

And that is e-rickshaw. And then the investment in MLR that -- is that the Teja brand?

That's correct. So MLR currently has Teja brand, and they have diesel CNG and electric, all the L5 vehicles, which is the higher end within the 3-wheelers.

Okay. So through Ele, you're doing e-rickshaws and through MLR, you are doing e-auto in addition to the other 3 wheelers. And is there any other e-3-wheeler that you have right now, e-auto?

No, I think within these 2 categories -- maybe Nagesh, you can come in here. Within these 2 categories, the entire pace of 3-wheeler gets covered.

Yes. I'll take that. So no, I think that when you look at the branding, right, you're right, Ele is a short for electric Ele, right, is our 3-wheeler brand. And out of the erstwhile Bestway acquisition, right? And as Dalpat was saying when we look at the total 3-wheeler sales, then recent data has pointed out that Ele has made it into the top 1, so point number 1. So that's on the e-rickshaw, bottom of the pyramid, its own network and its own brand, Ele, right? Then, Teja -- MLR, for our strategic stake, sells under the Teja brand. And like we have told before, we will be getting an L5 product ready that will be launched also from the MLR's table. And that probably will come -- when it comes out, it would have a slightly different branding. But make no mistake about it, Ele for the e-rickshaw and Teja/L5 model is kind of the branding for the 3-wheeler. Ampere will be our 2-wheeler brand only. That's kind of how the branding is. And since you're talking branding, Ampere will have it's own dedicated distribution, right? Ele has its own distribution and so will Teja. Obviously, Greaves share, Greaves Retail, when they are selling in certain markets, especially the Tier 2, Tier 3, they have synergies and they sell some of the products together, right? For example, they may sell L3, which is e-rickshaw in an L5. So the distribution synergies are leveraged. But the brand and the consumer touch points are unique, but the back end is all commonized when you look at supply chain, when you look at manufacturing synergies, when you look at HR, supply, finance, et cetera, right, all of the back-end synergies we are trying to drive common, but front end customer touch point is possibly keeping it unique partly because these are 3 unique segments, 3 unique customers; 2-wheeler, e-rickshaw and 3-wheeler.

Understood. So on the e-auto side, right now there is -- I mean you -- after the launch of the L5 product is when you will be making a significant headway. Right now, the presence is extremely limited, right? Is that correct? On the e-auto side, e-rickshaw is quite big, but e-auto is very limited right now.

Correct. And keep in mind, we have only once...

Of course, yes. No, no, that's very much appreciated. And on the EV 2-wheeler side...

Mr. Amyn, sorry to interrupt. May I request could you join the queue for your follow-up questions, please?

Okay, sure.

The next question is from the line of Bajrang Bafna from Sunidhi Securities.

Congratulations for the good pickup on the E-Mobility side. Sir, my first question pertains to our market share. Right now, if we see there are 3 or 4 players, which are predominantly existing on the 2-wheeler side in the market and you are a very strong player there. So in terms of maintaining the market share once the chip availability situation normalizes, how do you see your market share and how the strategy is going to be from that perspective? And my second question pertains to what sort of capability that the company is developing in terms of post-sale service or distribution capability across the length and breadth of the country?

Okay. So when you look at it, right, we saw the trend early, whether it was 2-wheeler or even if an e-rickshaw. We bought into that, and we said, what is -- how do we move India? How do we move last-mile mobility? That's kind of how we started with the 3-wheeler, starting from the ASP increases, lead acid going to lithium, going to slow speed and high speed, our transition has happened. So I think we -- and the market share is out there in the Vahan database in the high speed technicals, right, and the CFO spoke on that as well. So going forward, we believe in the 2-wheelers, the market size is big. The transition is happening. The disruption is there for everybody to see because of the unit economics. And we believe we will continue to invest in the right products, seeing the trends early, drive capacity, partnering of the supply chain and bringing the right customer needs for the market. So you will see that. And so our focus on market share gains and focus on the group in that sector will be laser focused, right? So we will continue to focus on that. In the 3-wheeler, the same thing, e-rickshaw, we are beginning to make inroads, e-auto, we just talked about as you know. So while I'm not going to give you a guidance on the future market share thing, obviously, you look at our track record, you look at our market share over the last 4 to 8 quarters, and you look at the trends that were caught and the trends we have worked on, and I think it will give you probably an indication in the future.

Okay. And on the second question, sir?

Can you just repeat the second question, please?

So what -- since we are not an maybe 10, 20 years player, we have entered in this space in maybe last 3, 4 years. So in terms of distribution capability, what sort of steps that we have taken and how we are going to move in terms of that and post sale service also, sir, on our products?

Absolutely. So clearly, you're right. We were a company in transition, and we were transitioning. But what we have today is Ampere is spread over 400-plus times entities and growing every quarter, point #1. So the advantage is Tier 1, Tier 2 towns Ampere 2-wheeler network is across 400-plus towns and growing, right? And these are typically the both the sales and the service centers in most of the cases. Ele has its own distribution, predominantly in the North and the East, by the way, Ampere is now pan-India. In fact, I think the states in the West and in the South equally contribute to Ampere success now, and the North side of the -- so these are our strong markets, right? So Ele has a predominant presence in the North and the East partly because that's where the product is needed. MLR is the newest addition. And clearly, we are improving the distribution there, right? And so you're going to see distribution strategy laid out. In addition to this, in addition to the 3 brands having their own distribution, what we also had is Greaves Retail, which is roughly the 200-odd Greaves Care plus Retail, right, which is the service center plus the retail, right? So that is pan-India. In addition to that, we have access to 12,000 mechanics, who are Greaves certified, right? In addition to that, we have access to 7,000 retailers through the Greaves Retail network, which sells best, both 3-wheeler and 2-wheeler. So when you look at the network effects, Ampere plus Ele plus -- in the future, MLR distribution, that's one therein, plus the Greaves Care, plus the Greaves Retail, plus the mechanics and plus the retailers pan-India, I would say that in a very short time, we have been able to build a substantial portfolio. Last but not the least, especially in the case of 2-wheeler what is realizing is, people, especially the Gen Z and the millennials look go a high-grade approach. Almost 50%, 60% of the research customer buying experience happens online. And then they come in for the final maybe 30%, 40% or something, right. And some of our stores are converted -- the pleasing point is AutoEVmart, one of the India's first multi-branded EV retail mart, is a Care touch point. Same thing with Ampere Experience Center, that's going to have both the digital and then the physical store. So you're going to see us probably a combination of physical stores and access online. And a combination of 2-wheeler, e-rickshaw, 3-wheeler combined with the network effects. Dalpat?

I think we could not -- I could not hear the last part, Nagesh. So Bajrang, I think this answers your question. Maybe we can take the next question.

The next question is from the line of Bharat Jain, an investor.

I've been following Greaves for the past 2 years, especially on the EV segment as the things are improving and gaining traction. I would like to understand what is the kind of number we look for the coming year '22, '23 where presently, we have almost reached a number of 10,000 per month. Do we see scaling up to 20,000, 30,000 per month kind of number in the coming year forward? That is on the numbers. And also on the capacity -- battery capacity or onetime charge capacity, which is presently 100 kilometer, do we see something coming up to 200 kilometers, 250 kilometers because that is a key demand where the traction on EV will pick up as that is go ahead.

Yes. Let me take that. So I think the first part is how has been -- what is the future projection, right? While I'm not going to give you a future projection but I think if you look at our trend, right? So for example, in Q2, we sold 13,000 units. In Q3, we sold 22,000 units almost, right. And then FY '21, Q3 was about 8,300 units. Now we are about 22,000, right, so 3 lakhs, when you look at FY '21 Q3 versus '22. So the past trends probably will give you an indication. From our side, are we going to be ready with the product? Answer is yes. Are we going to be ready with the manufacturing capacity? The answer is yes, we are going to be ready. Like I've briefly mentioned earlier, the supply chain and the global chip shortage is something that everybody is referencing. But that's -- we are watching, we are taking mitigation steps. We are planning ahead and that's the kind of -- we don't conclude 100%, right? In terms of -- so all in all, I think you can look at it as the demand to our products and our product acceptance is good. So we expect different line to continue, right, but I will not be able to give you exact number or guidance. Now coming back to the range, yes, there are 2 types of customers, B2B and B2C. We are working with a lot of traditional B2B players who have application specific needs. And for them, the range will be different or the range requirement may be different or they may need a specific solution, right, including a bucket stopping or extended rain solution. And we are working with some customers to provide that exactly. For the retail consumer, what we have said is with a lot of data, and we are fortunate also to have more than 130,000 customers now. And what we are hearing is, the average consumer in the city roughly usage is in the 65, 75 kilometer range, right? So right now, where we are, the 100 plus, I think that we end up closely. Again, can it be added more range? Absolutely, the technology can be done. It's only going to be a function of cost and wage. And that does mean that we are very sensitive. We are watching the market. We are showing what's an -- India and the Indian consumer, what does he or she want and how can we give the consumer what they want, right? At the end of the day, if the retail consumer changes and wants a higher one, I think we will move that. So I think we have the capability to move that in-house.

Okay. That's great. And 1 final question is like as we have come across media articles and also your commentary on few media channels that we are looking for partners for Ampere. And what kind of valuations or any numbers we could see for this? And any time line we have at a partner and investor for this business?

I'll start and Dalpat should add. As you guys are experts, you guys are the pandits. So in terms of valuation discussion, I'll leave that to you, the pandits in the industry, right? In terms of time line, I think we've already said our -- it will take some time, and it will probably be the first half of next fiscal year. Dalpat, do you want to add?

Yes. So Bharat, basically, the process is on -- as we have spoken earlier, and time lines would be like the first half of next financial.

Okay. And also, are we looking for something as an IPO for the Ampere business?

So too early to talk on these things. These are subjects which the Board will discuss at an appropriate time. Again, the size and the business has to reach a particular level before the right capital decisions are taken for the company.

Next question is from the line of Nikhil Chandak from JM Financial Family Office.

Mr. Nagesh, what I wanted to understand is basically 2 things. One is on the industry overall, the traditional industry obviously had [ 5 to 6 ] players, now in the electric 2-wheeler industry, the number of players are maybe double or triple of that number. So going ahead, how do you see the landscape clearly changing? Do you think the traditional companies are having some kind of an advantage or disadvantage which will either help them gain the biggest chunk in the market share? It's not happened so far, but I'm saying over the next few years. Or do you think the companies which are having a strong standing in the industry, they only continue leading the industry because it's a very evolving field and the old companies obviously have won a lot of resources. Second, the distribution reach. So how do you see the landscape between the old and the new players over the next few years? And the second one, very quickly on the investment raise in the subsidiary, in the electric business. Are you looking for a strategic partner or a financial partner like are you just looking for funds? Or are you looking for somebody who also helps you out big time with the technology, et cetera, given the way the space keeps evolving, wouldn't a strategic partner who has more domain knowledge help out in the longer run?

Okay. Thank you. First of all, let me start with the competition, right? So I must tell you at the outset that we respect all of our competition, whether it's the new age players who come in with some good ideas or the traditional people who served India very well and are very strong players in the 2-wheeler. We believe, to answer the question, longer term, I think the market size is big, the transition from a traditional ICE to electric is going to happen sooner than we all realize. And the unit economics are there, petrol prices are going up. It's here and now. So infrastructure of charging is not such a critical thing for 2-wheeler and this is probably for a 4-wheeler. So we believe that the market will transition and there will be room for improvement. And in the long term, we see that traditional 2-wheelers plus a couple of new players, both who existed [indiscernible] and the market price is going to be big enough for both. I will also leave you with 2, 3 other data points to think through. The electric mobility industry is slightly different. It relies a lot on software, lot on data. It's a tablet on the wheel. The distribution outlets don't need to be as extended as a traditional. And then you also look at some of the countries like China, where there are more than 35 million plus electric 4-wheelers. And the winners are all, you have all sort of winners in between a lot of new players. So hence, when you look at this, when this option happens, I think there is an opportunity. And the opportunity will probably give way to winners, both the traditional and the new age players. And that's kind of how we see. We have our own game. We saw this game early. We're not talking about this today. We were talking about those 4 years ago. We were 1 of the first entrants relating to those in India. And we understand India, we understand last mile mobility in terms of unit economics and that's what we are focusing on. And that will be our value proposition. How can we give the customer the right value proposition. Maybe it works for India, the technology works for India. In terms of second question, the investment wise, obviously, Dalpat has touched up on it, I think we'll see how the process plays itself out. But at this stage, we are looking for a minority investor who could be both financial and strategic, but let's see how the processes turns out.

And next question is from Omkar Kamtekar from Aamara Capital.

I have a small question with regards to the EV ecosystem that we are building. So it is regarding the charger socket and the charger head. So this was a similar issue faced in EU and there was a legislation passed to standardize the charger head and charger socket. So is there an interoperability that can happen in the charger head and charger socket in our vehicles and other vehicles?

I think your question is relating to long-term standardization, right? I think the industry is still evolving. There is a lot of discussion happening at the SIAM or the SMEV or the fuel committees in India, right? There's a lot of discussion that's happening. Ultimately, I think we'll get there. Right now, it's still way towards that. So I think we'll get there over a period of time. The industry is in early stage right now.

Okay. Okay. So you -- so standardization, how long do you see that the standardization could come within 1 or 2 years? Or is it further ahead?

I think it will come in the medium term, whether I'm not going to give a time line, but yes. I think it will come. What is important here is to make sure that we do this, what is right for India, what is right for the consumer. It shouldn't be because it's the right thing in a particular country, and we brought that to India, right? It is -- what is the right thing for the Indian consumer and India. So I think that's the debate that needs to happen, and hopefully in the short to medium term that will get sorted out.

The next question is from the line of Karthikeyan, Suyash Advisors.

Very interesting numbers. So a couple of questions in terms of momentum and supply chain security. So from a battery pack point of view, can you give us some indication more quantitative rather than qualitative, in terms of what is the minimum number of batteries that your supplier has committed to supply? And I'm asking you this for the obvious reasons. So when you say the momentum will be sustained, I'm just trying to understand whether there is some commitment available from the battery pack suppliers. And that would be question number one.

Understood. I understood your question regarding the supply chain and the challenges, right? So what we are doing is obviously working with Indian battery pack suppliers as well as we are working with the global partners, including at the chip level, right? So not only you look at 1 quarter, but maybe look a couple of quarters ahead, right and see what we can do. And obviously, we're looking at our internal projections and seeing a new product for us, right? So those conversations are on and clearly, the supply chain is also ramping up. That to me is the biggest challenge we have today. The supply chain ramping up to the level that the industry needs, right? It's getting better every quarter. And I'm very hopeful that together we will be able to work through and still keep the industry growing at the pace that India deservers. So I'm not going to give you an exact commitment because those conversations are going on, not with 1 but multiple suppliers. But enough to say that like this reports side, when you look at the Q3 to Q4, the trend line and what we've shown year-over-year, the trend lines, right, we are confident that we should be able to stay ahead of the curve.

That's helpful. As long as you stay ahead. And there are no surprises down the light. So just trying to confirm that. The second question I had was related to your traditional 3-wheeler diesel engine business. Currently, what percentage of -- I know this is a specific question, but please, answer. What percentage of Piaggio's requirements would you be meeting? And how do you see that scenario evolving given the fact that they are also becoming more and more captive in their sourcing strategy? So can you clarify that, please?

Yes, I mean, I don't think I can give you the exact numbers. Piaggio is a very important customer for us, and so are a lot of other automotive OEMs in our B2B business and that relationship continues. What we -- and along with the customer is watching obviously the diesel engine demand in the 3-wheeler and then the CNG engine demand, how that's all evolving, right? That's the part that I think is the question mark. But otherwise, our relationship with some of these traditional partners continues and is very strong.

Correct. Can I be more specific? Would you be still meeting more than 50% of Piaggio's requirement or lesser? Because this has been the big overhang from a dependence point of view, therefore, I'm being particular about this point.

Are you talking about diesel engines now? Or are you talking about...

Yes, I'm talking only about the diesel engine side, the 3-wheeler diesel engine side.

Yes. So diesel engine, whatever Piaggio and our customers, other customers, TVS and Mahindra and others are asking, we are giving this to them. Obviously, we have the capacity and we will it to the them, yes.

My question is how much are they taking from you. Obviously, you've been supplying for a very long time, so I'm sure you would be able to supply. So last question from my side. In terms of cost pressures on the Electric Vehicle side, particularly on the battery pack versus the price actions that you have taken? What would have been the cost increase is like?

Dalpat, do you want to take?

So if you're talking about the overall product pricing versus the raw material cost pricing, so at the product level, we are able to manage the cost thing because some raw materials might have gone up, some raw materials might have gone down. So overall, the price increase that we have taken is more than compensating the cost increase. Maybe Jay, we will stop now and maybe we can conclude this call.

Participants, due to time constraints, this was our last question for today. I now hand the conference over to Mr. Basavanhalli for closing remarks. Over to you, sir.

Yes. Thank you all for the very integrating session, deep questions and your interest in our company. Thank you very much. I look forward to continued interactions.

Thank you very much members of management. Ladies and gentlemen, on behalf of Greaves Cotton, we thank you once again. Stay safe. With this we conclude this investor call. Thank you for joining us, and you may now disconnect your lines.