Greaves Cotton Limited (501455) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Greaves Cotton Limited Investor and Analyst Conference Call. From the management, we have with us Mr. Nagesh Basavanhalli, Group CEO and MD and Mr. Dalpat Jain, Group CFO. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nagesh Basavanhalli, Group CEO and MD of Greaves Cotton Limited. Thank you, and over to you, sir.

Good morning, everybody. Hope you can hear me well. I'm also joined here today, and I'm very glad to report with Mr. Sanjay Behl, the incoming CEO -- new CEO of Greaves Electric Mobility. So welcome to him. Of course, Mr. Dalpat Jain is also on the call. Good morning, everybody. I hope everybody is doing well and staying safe. I welcome you all to this Greaves Cotton transaction update. We are extremely pleased to announce the strategic partnership with Abdul Latif Jameel. Under this partnership, Abdul Latif Jameel has committed a capital investment of up to USD 220 million. In the first tranche, it will invest $150 million for a stake of 35.8% on fully diluted basis in Greaves Electric Mobility. Greaves Electric Mobility has also an option of an additional USD 70 million that it can draw down over the next 12 months. The deal is subject to customary closing conditions, which we expect to close in due time. The proceeds from the investments are expected to be used for technology enhancement, product expansion, scaling the businesses both in Indian and global markets. While serving our B2B, B2C customers in the critical areas that we work on, which is 2-wheeler and 3-wheeler segments, while building the brand Ampere, which is going to be very important going forward. Abdul Latif Jameel, are independent family-owned diversified global investor has presence in over 30 countries, 6 continents. Employees over 11,000 people. It's got worldwide operations in automotive and other areas. They are one of the leading Toyota distributors globally, and have previously invested in global E-Mobility companies. They are the third largest shareholder in U.S. electric vehicle manufacturer, Rivian and also have invested in Joby Aviation, an aerospace company, which works on cutting-edge technology. As part of this transaction, we have received very encouraging response from various financial and strategic investors over the last several months. We're grateful for the interest shown. However, we chose our partner Abdul Latif Jameel because of their previous experience in electric vehicle technology and strengths in automotive. We feel they bring in the right balance of the old world automotive plus the new areas of technology, i.e., the electric vehicle experience. We expect to benefit from their expertise in this sector and help us tap wider international customer base. Overall, the strategic rationale of the deal is very compelling. Greaves Cotton, i.e., Greaves Electric Mobility and Abdul Latif Jameel have formed a formidable long-term strategic partnership to take us to the next phase of growth. We are committed to working towards making clean, sustainable, affordable mobility solutions, which is accessible to a much wider market. Greaves Electric Mobility is already profitable. And post this transaction, at the overall level, GEM will have INR 900 crores. net of existing debt. And this will serve as growth capital to be used for investments as we have elaborated earlier in products and technologies, et cetera. With this, Greaves Electric Mobility has its own capital to fund future growth opportunities. While at the group level, Greaves Cotton's cash reserves will be used to enhance opportunities at the group level as well. We are excited to close this transaction and create value for all of our shareholders. And thank you for taking the time, and I look forward to a Q&A session. Over to you. Thank you.

Rituja, we can open the floor for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ashutosh Tiwari from Equirus Securities.

Congrats on this new deal basically and even to Ampere. Just firstly, I mean, you highlighted it about how we're going to use the funds. But can you provide some more color on basically which areas [indiscernible] go into like technology enhancement or brand-leading model launches. If can just clarify or maybe give more details on that?

Yes, I'll start and maybe the CFO can add. Like we've said, I think the critical part of this is to continue to build the products that our customer wants. So definitely new products, and associated technologies, i.e., in some of the areas that will give us a competitive advantage, right, will be one of the area of focus. Scaling up of the business and expansion globally will be the second area of the business, both scaling up India and internationally, right, for both our B2B and B2C customers. Manufacturing CapEx will continue to increase. As we announced in the last time, we are already now at about 20,000 a month type of capacity. We'll continue to monitor that and we'll continue to take our capacity up to the desired 1 million units at Ranipet as and when the market demand picks up and ahead of the demand, we will be ready. Money will go there. Brand building of brand Ampere, we recognize that, that's an area that's very important as we bring in -- we want to build an aspirational Ampere brand going forward. That will be another critical area. So those will be the 4 major buckets. Dalpat, do you want to add?

Yes, Ashutosh in addition to what Nagesh mentioned, so major part will go into newer product development technology. I mean there will also be some part which will go for making inorganic partnerships to bring some of the tech capabilities and enhance the 2-wheeler and 3-wheeler products that we have.

Okay. And we also will look to make some of the outsource parts in-house. Will that also be the flow or that will not be the case?

That's correct. Ashutosh as part of the manufacturing capacity enhancement, some of the critical components that we have talked about in the past, the capacity will be built in to bring them in-house, but we are not going to go for everything under 1 roof. Our approach will be building on strategic partnerships with the guys who have better capabilities on the component -- company ecosystem. Some of the critical ones, we will bring them in-house in our manufacturing capacity.

And, see, we mentioned that almost INR 900 crores is the net cash Greaves Electric Mobility after this, after paying off the debt. So that's a substantial amount from if you look at it for next 1 year or 2 years perspective, considering what we have spent so far in this business over the last 2, 3 years. So will you really need to raise that another $70 million that in the second phase in the next 1 year? Is that a positive -- or that option is open beyond 1 year as well?

So Ashutosh, Abdul Latif Jameel is very clear on supporting this business for long term. And as we have seen from their other investments, they are long-term partners who want to take business for a longer growth. Right now, what we have talked about is the $70 million, which is an option available to Greaves Electric Mobility, and there will be a pre-agreed valuation formula. Beyond that, it will be worked, which will be fair market valuation at that point in time. So from capital point of view, you are right, considering Greaves Electric Mobility is already profitable, the capital that is being raised and also the reserve pool that we have will be used for the next phase of expansion and the growth. And if there's a requirement beyond 1 year, it will be on the fair market valuation at that point in time. And all options will be opened at that time on table, which will be decided by the Board along with the investor in the company.

And lastly, obviously, they bring the money on the table. But apart from that, will they also have more like a role on the Board as well of the Greaves Electric Mobility? Or what other things that bring on table apart from the money, in terms of...

I'll take that Ashutosh, right? So clearly, yes, they will have -- as a partner, they will be present on the Board, right? And what they bring, obviously, is an experienced partner with diversified experience in geographies and in different sectors, right? They have been early-stage factors of companies like Rivian and others, right? So they've seen the cycle. They have access to technology startups, they have a very close association with MIT Labs, right? And they have a long association with Toyota motors. They have been distributors globally for over 65 years. And they have either distribution opportunities or contract manufacturing opportunities present in 30 different countries. 6 different continents. That is kind of where the synergies come in because they complement us in some of the other areas, non-India, and they can bring some of this technology enablers country -- international country access, right, the knowledge curve of scaling up an EV company.

So in future, if you want to explore overseas opportunities export, they could be helpful over there, right?

Yes, that's right Yes. They have deep expertise globally in about 30 countries.

The next question is from the line of Vimal Gohil from Union Asset Management.

And congratulations to team Greaves Electric on this deal. So my first question is, could you highlight the basis of the valuation on how exactly was this valuation decided in terms of the stake that we have parted, have we -- did we make any volume assumptions, et cetera, profitability? If you could give us some detail on that?

Vimal, the entire process was run through a well-reputed investment banker and a lot of interest was there, as Nagesh mentioned earlier. So the valuation was determined through the competitive process. And then when the Board decided, it took into account the other strategic factors and offers were evaluated. Investor did the valuation. This is their own business case stated by the company. And as you know, the company has been having a strong growth in FY '22, it grew by 197%. So that growth with recent profitability, all those factors were taken into on the [indiscernible] the Board decided. Now if you go by the valuation on revenue, it works out to more than 6.5x on a post-money valuation of the current ground that is $150 million -- on the trailing revenue.

Right, right. Sir, the second question would be, why Nagesh sir, did highlight on what exactly does the new investor bring in -- could you give a bit more -- give us more specifics in terms of technology as to what -- in terms of electric 2-wheelers, which technology are we actually looking for from this investor because at this point in time, our focus is really on city bikes. And will this transition help in technology? So is there -- would it be fair to assume that if you are talking of technology from an external investor, we are now moving towards more premium scooters or anything like that. So if you can be more specific in terms of technology aspect? I have 1 more question after that.

So let me just tell you, I think the relationship is just a couple of days old, right? So there are several opportunities, and that's what excites us. At the end of the day, the technology is moving globally at a very fast pace in this industry, right? I totally agree with you that we are in the 2-wheeler -- and by the way, we are also into the 3-wheeler. We are -- we move people and we move cargo, right? So when you look at technology, whether it is in the areas of battery, chemistry, battery management systems, controllers, software, I think lot of that is being developed globally and evolved at a very rapid rate. Access to universities, access to startups, access to these technologies is kind of what we're looking at. That is immaterial of whether it is a 4-wheeler, 3-wheeler or a 2 wheeler, right? And please give us some time as we evolve the partnership, I think you will see some of those benefits come out, right? But clearly a strong focus on technology modes will be 1 of the key strengths of this partnership and how to differentiate between this technology.

Got it. Got it, sir. Sir, 1 more question that I had was in terms of the pivot that we'll take. I think 1 area where we have done really well is to sort of be prudent with our capital. Still grow and then also report and also take our good cognizance of profitability in a very tough environment. That is where I think Greaves has been very, very good at, especially with our Electric Mobility division. With so much of capital now at access, will the pivot really change? Will our priorities change significantly to market share as against profitability, if at all, do we have a market share number in mind now?

So I'm glad you asked this question. Like you said, Greaves has always been about profitable growth. So our mantra of how to grow the business, capturing the early mover advantage, we were 1 of the earliest movers into this sector in India. And building on and moving from point to point, right? That will not change. Focusing on profitable growth will not change. You're absolutely right. I think this addition of significant capital gives the team a lot of flexibility. When you look at in terms of products, technology, M&A opportunities, when you look at brand building and marketing. It gives us more. But please be assured that the team will be as frugal and that's 1 of the things that we really like about our partner too, we think alike in that aspect. So the idea is, we are going to be doing more of the same, but now with a lot more capital, which is going to be deployed in a lot of the other areas, like brand building, like technology, like M&A, which we probably were not able to do.

Would it be fair to say, sir, that I don't think you'll be taking your eye off your profitability targets?

Yes.

That remains unchanged? Fair enough. Fair enough, sir. I got your point. Thank you so much. I'll fall back to the queue and all the very best.

The next question is from the line of Chirag Shah from Edelweiss.

2 questions. Sir, first question is on the valuation that has been ascribed. Is it possible to indicate how yourself and the new group have viewed your various product offer with Ampere, with mostly 2-wheelers, with 3-wheelers, where we are seeing a potential growth opportunity more? And would it be right to assume that in the overall scheme of things, a large part of evaluations has tilted towards Ampere brand and slightly lower to the other brands. That would be the right way of looking at it?

So I'll start from a strategic aspect and the CFO can add any financial comments, right? So when you look at it, right, this is a strategic long-term play, right? And then when you look at the investor, they've always believed in long-term capital getting in early stage and moving it in terms of -- and the significant value creation, right? So that's kind of where the focus is. And when you look at the target opportunities for sustainable mobility in India and what we call the emerging markets or the Global South. There is a lot of opportunities that emerge in this segment, which is all about moving people, moving cargo, which is about B2B and B2C. I think we are one of the few companies that straddles both of this. We are no longer just a 2-wheeler brand. We are a 2-wheeler plus 3-wheeler. The potential is enormous, right? We are at the bottom of the pyramid in India with the E-Rickshaw market, which continues to grow. We are in the Ampere 2-wheeler, which is obviously the two-wheeler and the significant growth market, and the potential for future growth is significant. Then we're also into the 3-wheeler auto segment, right? So when you look at the overall opportunity of moving people and moving cargo plus, like the previous gentleman rightly pointed out, our mindset of not only growing the company, but also growing the company with the right profit or right profitable growth mindset, I think is very important, right? And also the long-term thinking in terms of how to grow this business, the alignment of the vision, I think all of these were very, very important as to how the teams got together and felt this was a very significant combination that could help. And each party complements the other. That's kind of how it was on a strategic rationale standpoint. I will ask Dalpat to comment if he has any additional comments.

Yes. So Chirag, in addition to what Nagesh said, if you look at our overall revenue size, 2-wheeler has a higher share today. So in the overall valuation, definitely 2-wheeler gets the higher weightage. But at the same time, the partner is equally excited about the 3-wheeler and the potential that 3-wheelers and the electric 3-wheelers, particularly in India and the global South, the opportunities which exist. So they took all those factors into consideration and that's how they arrive at their final offer and which were negotiated and then revised.

And the second question is also a follow-up on the earlier participant's question is that your -- between profitability and volume, volume ramp-up, why you are struggling towards [indiscernible]. Now especially with the kind of cash that you have generated or you have got because of the deal, why not try to move -- find a much better balance between volumes because it's an early bird game, especially if you have a good product. It's an early bird game, it helps you to create brand. So will there be some other some compromise between the 2 and you will be more -- moving towards more volumes as compared to the profitability that you generally had as a focus area?

Yes, you want me take that. Yes. So I think the thought process is very, very simple. At the end of the day, are we committed to growing the business as a leader in this field? I'm saying the answer is yes. Are we committed to doing the right way in terms of growing the business with the right level of financial prudence, right, which takes care of our stakeholders and service? Absolutely yes. So we are not going to leave the opportunity at the table. We are going to go after every opportunity. That's why I said 2-wheeler plus 3-wheeler, B2B and B2C, bringing in the products from time to time, bringing in newer products faster introduction to markets, right? All of that will continue to happen. And you're going to see us being aggressive in all of that aspect, right? And with the brand building activities that will happen under Sanjay's leadership, I think you're going to see that aspect also being taken care of, which probably in the past, we have not been able to do as much. So when you look at all of the above, I think we are -- again, this is a marathon. We are looking at it as a 5-day test match series and not a 20/20, and we want to make sure that we are putting in the fundamental lots of people. We have some of the best talent in the industry, manufacturing CapEx engineering technology, partnerships, supply chain, right? All of that, I think, is what we are working on, right, to kind of get to the point where we can get to our logical market share, right? So make no mistake about it. I think the focus will be on growth. The focus will also be on profits. So I think we will try to manage both.

Sir, if I can ask it slightly the other way, if I had to take a 2- to 3-year view or a 3- to 4-year view, out of the INR 100, where would you think -- how the allocation would be spread for Greaves' Mobility business in terms of product developers, in terms of brand building, in terms of investing to scale up volumes. So if -- and any other parameters that you think that -- of the INR 100 wallet if you have, how do you think the allocation would play out for us? If you can share some light, it would be helpful if you can give an insight on how you think about the business today over the next 3 to 5 years?

So Chirag, let me start on this. So like Nagesh mentioned in the opening remarks, and those purposes were also in the order of priority. The largest part of this wallet will go for new technologies, newer product development and enhancing the current product experience for our customers. The second part will go in increasing the manufacturing capacities, bringing in some of the critical components in-house, and third component, which is part of our subset of the first 2, to also get into some of the strategic tie-ups right? Look at some of the organic opportunities. So these are going to be the top 3 buckets and then followed by the distribution and brand building side to increase the brand awareness of Ampere, ELE and other brands that GEMPL Group is going to have for future. That's going to be the order in the utilization of capital for the company.

The next question is from the line of Jain from Sri [indiscernible] Intelligent Assets.

Good morning, everyone, and congratulations to the Greaves team. So my question is that we have got the investments which was discussed in the previous connects and the company has always guided on the future prospectus. So I would like to understand what could be the reason we have for next 2, 3 years on the business model? And what kind of new products -- product launches, we are looking at because if I see 2-wheeler and 3-wheeler is 1 market then similarly we can also look at market of having products which are to be used within a society, like you can say, Polo Cab or something like that. So any new developments on these lines are also available? Please let us know.

So thank you. As you know, over the next 3 to 5 years, we have an internal business plan and we are working towards that, which is to build significant leadership in the sector. And like you rightfully said, both in the 2-wheeler and 3-wheeler, B2B and B2C. I keep on stressing this because I think 1 of the strengths that we have is to look at application-specific engineered vehicles. For B2B applications, right? So you're going to see us focus on both B2B and B2C customers, the retail consumer, right? And when you talk about products, you are going to see us focused on bringing out a couple of new products in terms of the ones that get into the higher speed, higher performance on the 2-wheeler side, right? As well as newer designs. The details, I will announce it as we get closer to it. But rest assured, I think the team is focused on working on new products for the 2-wheeler and obviously, the electric 3-wheeler, right? So those are the areas of focus. And in addition to that, bringing in the right technology and the right quality and the right partners -- supply chain partners globally, right? So that's kind of where our focus will be. As we get closer to the product launches, I mean, as you have seen, hopefully, over the last 3 years, we have introduced multiple products at the right time. I think this is an industry that's going to be led by products. And you're going to see us focus more on the products. While I think a fundamental mantra was very clear. When we went into this, we said heart to the market where the customer is. The belly of the market is at INR 80,000, INR 85,000, right? So fundamentally, you'll see us, that's where our focus will be. Obviously, to premium models or higher speed and higher version, will there be a little more enhancements in terms of features and products? The answer is going to be yes, it's under investigation. But focusing on truly understanding the Indian consumer, delivering the Indian consumer what they want. And over a period of time, getting to global consumers will be the high-level vision. Thank you.

The next question is from the line of Sonal Gupta from L&T Mutual Fund.

And congratulations on the deal. Just wanted to understand, right? Like I mean, till now, your approach has been extremely frugal and it's commendable to what level you've reached taking that approach. So just given this -- the quantum of the capital raise and the significant dilution, I mean, like potentially, if you -- I would guess that if you take the other $70 million as well, you will -- your share -- I mean at least Greaves Cotton shareholding in the subsidiary would sort of come closer to 50%, 51%. So just trying to understand that the -- just the quantum of the capital raise, I mean could you sort of -- I mean, I know you've talked about the areas where you're looking to spend. And -- but I mean like -- could you just talk about, I mean, why this level of a capital raise? I mean, like...

So I'll start. I think at the end of the day, keep in mind, the opportunity pie, let me start with the opportunity pie, right? India, even pre-COVID was obviously at 20 million 2-wheeler market, post-covid obviously, has gone down significantly, right? But moving people and moving cargo in India is not going to go away, right? Moving it at the right value proposition at the right TCO, I think Is going to be the name of the game. We believe the unit economics are there and the ambition of where this can significantly scale up over the next 5 years, I think, is tremendous. We believe it's an opportunity of a lifetime right here in India. In addition to that, when you look at international markets, especially the ones in like-minded countries, right, in Asia, Africa, Middle East, I think there's a tremendous opportunity there as well. Add to that, the B2B opportunities, which needs application-specific products, right, which we will. When you look at all of the above, I think there's a huge opportunity. So our hunger, you -- thank you very much for recognizing the frugalness, and we believe that's kind of how we wanted to make sure that every single day we are monitoring that, but not also giving up the opportunity on the table. So you're going to find us hungry in terms of watching the marketplace, watching the opportunities, watching the different segmentation, whether it's in the retail consumer space or it's in the B2B space in the 2-wheeler or in the 3-wheeler space, right? We believe there is an opportunity. So our thought process here was -- and keep in mind, it's only the 150 at the 35% stake, right? That's kind of what is valued right now, just to clarify your question, right? Our intent right now is to use this as growth capital and focus this on areas build significant technology modes in terms of what could be a huge differentiator over a period of time. I think so that's kind of where we are. And that is where you're going to see us our focus over the next 24 to 36 months. And the idea is to do it once like Dalpat was saying, we ran our process. Global investors looked at it, right? It was both financial strategic. We went through almost like over 6 months process. And the intent now is to do it once to get the money, get that "Watchers ready." and now focus on the consumer, focus on the markets, focus on the business and allow our teams to give them the flexibility to succeed, go out and win. And we believe that this could be a great opportunity. Hence, the reason for the timing.

And Sonal, I would like to add 2 more points to what Nagesh mentioned. One, this $150 million are identified as the total business plan requirement. $70 million is the reserve pool available at the auction of GEMPL. There is no obligation, and the valuation parameters for that are determined taking post-money valuation of the current round as the pre-money valuation of the next, whenever if that money is called by GEMPL and if required by them with the adjustment for old time value of money in the business growth. So to that extent, the dilution that you indicated would not be the case. At any point in time, GCL will remain with significant control of GEMPL.

Got it. And I mean, do we -- I do understand that we're given there the opportunity and the -- and like you mentioned the size of the opportunity. And clearly, the business, is that an inflection point, so this is coming in just at the right time. So do we see, in that sense, that your plans are already in place, and we will see a significant step-up in execution over the next 6 -- 12 months to 18 months. Is that the way to look at it?

Yes, I think so.

And in fact, that's the whole idea Sonal where step-by-step, company is what is that or we have been talking or we have executed. So be it making up the leadership team, making up the teams at the GEMPL level, building the business to a particular size level of profitability. And now getting the right partner with the high [indiscernible] and capital resources for the company so that it can expedite and accelerate the initial plan on what we have looked as a reason for this particular company.

The next question is from the line of Raghunandhan N.L. from Emkay Global.

Thank you for the opportunity. Congratulations to the team. Two questions. Firstly, company is stepping up investments on new products and the 2-wheeler, 3-wheeler penetration, industry estimates are aggressive as stated in your presentation. How do you expect the demand to pan out for fixed rate capable technologies, B2B private segment, low speed, high-speed categories in which technologies or product segments, would you target more of investments?

So clearly, the demand is there. When you look at the retail -- let me take it one-by-one, 2-wheeler and 3-wheeler, right? The retail consumer, especially on the 2-wheeler side. I think because of the unit economics I touched upon before, I think -- and the petrol price is going up. I think clearly, the delta or the differential is more attractive. And clearly, we see the demand, right? So in terms of opportunities in the retail consumer in gas, when you look at on the B2B side, when you look at ride sharing, cargo delivery and the big basket type of companies or the Amazon type of companies, there's a lot of opportunity there, right? So when I look at it, I think the demand is strong, and we continue to see strong demand. We continue to see a lot of strong interest at our dealership level, right? One caveat, our supply chain continues to be a challenge, globally, just not just for us. So in fact, if there is 1 area we are watching very carefully and building deeper relationships with suppliers, going global, making sure that we are talking to the chip makers globally, right? Those are the things that you're going to see us do move as well, right? So that's kind of where I see, I see demand continuing to grow in the area of 2-wheeler, 3-wheeler, B2B, B2C and in India first, and then I also see good opportunities in certain parts of the world.

My second question. How are you looking at the competition scenario considering a few of the peers have PLI benefits, would that put them at an advantage over others? How would you try and differentiate from larger peers?

Well, I personally would not like to comment on competition, but one thing to know is whenever there is -- we are probably in the middle of the best longest technology disruption that mankind has ever seen. The mobility as we know it will change. The very fact that companies, old and new, are coming together. Moving more towards more technology, more connected, more data. I think you're going to see a confluence of events that happen from a technology and from data distribution models are going to change. Business models are going to change. Some of this, we were fortunate enough, we've been trying them out. Keep in mind, Ampere is a 13-year-old company, right? We have been at it for the last 4 years, and we continue to learn. So we believe, and you can take examples world over, whether it is in the west or even in China, and look at kind of how the competition was and how the competition evolves in the 2-wheeler electric industry. You can do your homework as you can see. So opportunities like this are an opportunity of a lifetime, because it's an opportunity for new people to be sitting at the table, irrespective of size, irrespective of reach, it's the vision, it's the technology, it's the products, it's understanding of the consumer that matters. And I think that's kind of what we are going to be focused on.

One last question. Over the medium-to-long term, how would you see your aspirational market share in 2-wheeler and 3-wheeler? That's all from my side.

So clearly, like I said before, we're going to be hungry. We see the opportunity as the opportunity evolves, we have a significant internal goals. At the right time, we'll come back and talk about it. But, one, we -- and with our teams, both with Sanjay coming in and absolutely with the partner now coming in, we will be looking at our business plan over the next 90 to 180 days. So I will probably address that maybe in 180 days, but enough to say that I think we saw this opportunity earlier. We have moved faster, we have done what it takes and you'll continue to see that. So just watch our actions in the last 36 months, and then you will probably get an answer for the next 36 months. I'll leave it to that.

The next question is from the line of Jyoti Singh from Arihant Capital Markets.

My questions have already been answered.

The next question is from the line of Ronak Sarda from Systematix.

Congratulations on this deal. A few questions. One, you alluded to the supply chain constraint. So first, can you help us understand how does this tie-up help us on the battery supply, the quality of cell? And also, what are the changes expected post the recent fire issues on the overall electric 2-wheelers? So a mixed question, but one, what are the changes? And second, how does this tie-up help us close on the battery supply, especially?

Yes. So I think our technology team led by our Global's CTO, I think we'll continue to focus on what's right, focusing not just on the cell quality, which is obviously one of the key things that you rightfully said, plus the battery pack design, plus the BMS and a host of other things, right? So I think the Ampere has been around for 13-plus years. And the goal is obviously to keep working with India duty cycle conditions and making sure that we have a product, right? So I think you're going to see continued focus on technology and safety, which is paramount importance to us. Coming to the supply chain, clearly, our supply chain team, and this is where we have brought in strengths from the Greaves side. So clearly, while Ampere is a startup, we've brought in key strengths on supply chain and manufacturing scaling up from the Greaves side, where Greaves was good at. And core teams are working with strategic partners, supplier partners and like Dalpat said earlier, we always look at both make and buy. And as the volume increases, some of that will evolve, but we have strategic partners. And in some cases, even though, as we all know, lithium cells and chips come from outside the battery pack design or the battery packs come from India, right? So the -- our teams are in touch with our partners, both here and in some cases, working with the original source, wherever that original source is to ensure that we get not only the quantity, but also the right quality, looking ahead 1 to 2 quarters ahead, right? So I think that's kind of will be the focus of a very experienced supply chain team that we have. And over a period of time, we'll continue to do that and also evaluate what is the right to be done along with the partner, what is right to be done internal. From a scaling up or from a quality perspective. So all of that introspection keeps happening from time to time. And I think you're going to continue to see that.

Okay. Sure. The second question was, I mean, looking at the medium term, how do you given -- there are very few electric 2-wheelers not burning cash. So how do you see this scenario changing, let's say, once the FAME II subsidy ends. I mean what are the scenarios are we working with? Does the subsidy go away entirely, given PLI scheme comes into play? And if that happens, how does the industry change? Do you see a significant volume pressure due to that? Or do you see -- or is there any other scenario which can indicate?

So you're -- I think you're talking about post subsidiary regime, yes. So the -- Understood. So clearly, the FAME II, we all know up to what time the government has allowed that, right? I mean, it's kind of clear. But our goal is always to be looking at our designs, our technology, looking at kind of how we can make it more efficient from a frugalness, right, in terms of optimizing cost, I would say, we have an internal program for Propel, right? That's one. Parallelly scale helps in automotive. So as the more number of units improve, obviously, the scale efficiencies kick in, right? And that is another area. And thirdly, as you've probably seen, we are not averse to taking price increases as and when the need arises. Our average ASP, you can look at it and has grown significantly over the last 1.5 years, right? -- average selling price. So we will do -- look at all of the 3 options I just described, right, right? And keep watching the bottom line as well as keep looking at the market share and looking at the volume. So I think with -- this is where focus on technology, focus on products, focus on a strategic supplier system that are strategic to us is very, very important. So building the long-term, what I call, technology and supply chain modes, I think, will be critical. So that's kind of what we are working towards to get ourselves ready as and when that need arises.

Sure. And a final quick question. I mean given the quantum of the capital raise, are there plans to enter the 4-wheeler space as well, whether it's on the commercial side or on the passenger vehicle side?

No plans as of now.

Okay. So the funding is dedicated to the electric 2- and 3-wheelers?

2- and 3-wheelers, yes.

The next question is from the line of Pramod Amthe from InCred Capital.

Two questions. First one is what's the exit plan for the new investor? And what's the time line you guys have signed as part of the deal?

So Pramod, some of the details are confidential, and we are bound by the confidentiality under the agreement. Having said that, from the overall investment deal perspective, it is an equity deal and both the investor -- basically investors are going to carry [ parity agreement ] in this particular part. There are customary processes of exit, which will be done on a [ buyer-supplier ] basis. But if you are -- there are no strict obligations taken by either the company or the promoter.

Second one is with regard to the way the structuring of the dealers statements and the questions that surrounded the extent of dilution. So if I have to ask you, usually, the industry phenomena in these startups is people go through a different series of funding to discover the valuation. Whereas in your case, it looks like you have taken 1 big jump into it. I wanted to know what's the thought process why not to discover the value as you go forward? One. Because as you clearly alluded, it's a more test match and there will more positive, negative surprises, which may come in. That's one. Second, consequently, you are the of the material amounts of startups have been well funded with the support of the share range and the way the products are performing. Was there a need to go for this big jump was also with the fact that you expect some shakeout to happen might be 12 months, 18 months down the line in the industry and hence, you want to be fully [indiscernible].

We elaborated on it earlier. On the last part, we are not a startup as could do. The company Greaves Cotton has been there. And as a company, we have always been focused on profitability and making sure that business runs as per what it is required. From a capital raise point of view, as you know the opportunity is very big, be it in the 2-wheelers and the 3-wheelers. We wanted to go for 1 have the required resources so that the management can continue to focus on business and driving the growth that we look for.

The next question is from the line of sale from Faisal Hawa from H.G Hawa and Company.

With Sola and Kaithal really leading the charge, and we have kind of captured the imagination as startups some of the buying population or public. So we still -- the image of our scooter as well as the corporate is a -- like an older world company. And so we have lost some kind of discourse there itself. How do you want to correct that? And secondly, the private equity investor that we have got on board has also invested in Rivian, which is more into truck manufacturing. So do you feel that it could also lead to more synergies there. And we get into that, then also there is a huge use case argument for it also?

So I think there were a couple of questions there. I'll start. First of all, I think we have a strategic investor, not a private equity, right? So Abdul Latif Jameel is going to be a very strategic long-term investor, right? And then the second thing is -- and so I don't want to talk about competition. But at the end of the day, you have seen a performance. I think the '21 versus '22 the performance our volume went from 129%, I believe it was 27,000 to 62,000, right? Quarterly results to INR 37 crores and positive PBT and positive EBITDA. So if it is this -- we are not in the business of likes. We are not in the business of -- we are in the business of adding significant shareholder value and taking care of our customers. And I think that will be our focus. By doing the product right, the technology right and getting the customer what the customer wants.

No, sir, sir, I was not talking more in terms of numbers. I was talking in terms of the branding because -- I'm totally the view that on numbers, there can be hardly any company electric vehicle, electric scooter which is better than us. So the branding itself is a little I mean old world or something like that, which is very sorry about that branding.

Okay. I was going to come to the branding. Thanks for clarifying. I was going to come to the branding next. As I said earlier on, one of the areas where the money is going to be used is to build brand Ampere. We clearly want to build an aspirational brand Ampere, right? And the early indicators you saw. And if you've not seen that, I would welcome you to see our Ampere Experience Center, right? Some of our new dealerships that are coming on, where we are headed. And the reason for bringing in Sanjay, who's got a significant experience in this is exactly also in this area in terms of the branding, in terms of digitization data, right? So you're going to see us get into some of that. And that's one of the areas the money will be utilized as well.

And about the truck, if you have some views?

About the -- like I said, right now, our focus is 2-Wheeler and 3-wheeler, If anything changes, we'll talk about it at the right time.

And sir, we have a 2.5 lakh -- 2,50,000 kind of management in capacity, which is almost ready and built up you feel that in '22, '23, we could fulfill that target?

So again, like I said, I think April and May, when I look at the numbers, interesting trend, I think the volume numbers are shown in the chart, I think we are seeing the demand -- we're just watching the supply chain and how to manage the supply chain. But yes, the things within our control, manufacturing capacity, talent, production, products, I think we got all of that under control. The things we don't control, global supply chain is the only 1 that I am not going to be able to answer directly your question. That will be the determination for whether we get into 20,000 a month or not, right? So -- but stay tuned. I think as we go through these calls every quarter, we will be updating you from time to time.

You mean to say there's a set target that we may be able to reach it or at least we may be able to reach our 20,000 run rates in 4 to 5 months from today?

Well like I said, we have done everything within our control to be ready for that opportunity, right. Let the supply chain things pan out, and then we will determine what the final numbers are. But anything within our control, we are already ready.

And what is your sense that the electric scooters coming up could actually expand this INR 2 crore 2-wheeler market also because even so far we were only talking about replacing the 2-wheeler. It could actually expand it to people who cannot afford the petrol or the diesel?

No, no. I think -- absolutely. I think that's a good point because when you look at it, the market will expand, both at the higher end or the -- and at the lower end. And the reason I say that is India is relatively a young country. There are a lot of people, lots and lots and lots of people who turn 18 every month, right? And they need affordable mobility solutions, right? So I think that's the beauty of kind of our vision, our strategy, where we are in that 2-wheeler at the lower end, we are the 2-wheeler at the medium-to-value-plus range, right? And over a period of time, we are also obviously going into additional new products, plus we are into the 3-wheeler, at the very low end and at the medium end. So when you look at it, right, I think we play in the belly of the market. And the market will itself, when you look at it, will expand. And keep in mind, there will be a B2C customer and the B2B customer with distinctive needs. So yes, we do expect the market to expand over a period of time.

Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Nagesh Basavanhalli, for closing comments.

Thank you all for joining us on the call. Thank you for your time and attention and your interest. We at Greaves Electric Mobility continue to keep working to continue to keep adding shareholder value. And this announcement is 1 of the series of several initiatives over the last 18 months. So thank you for your interest. Thank you for your time. Have a wonderful day. Thank you so much.

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