Greaves Cotton Limited (501455) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Greaves Cotton Limited's Q3 and 9 Months FY '24 Earnings Conference Call. From the management, we have with us Mr. Nagesh Basavanhalli, Non-Executive Vice Chairman, GCL; Dr. Arup Basu, Managing Director, GCL; Akhila Balachandar, Group CFO, GCL; Sanjay Behl, CEO and ED, GEMPL; Narasimha Jayakumar, CEO, Greaves Retail; Chandrasekar Thyagarajan, CFO, GEMPL. [Operator Instructions] I now hand the conference over to Mr. Nagesh Basavanhalli, Non-Executive Vice Chairman of Greaves Cotton Limited. Thank you, and over to you, sir.

Good afternoon, everybody. Thank you for joining the Q3 call for Greaves Cotton. At the outset, let me say a few words and then hand it over to management for the commentary. I'd be happy to report the results, the details of which the CFO will be discussing shortly. At the outset, our diverse portfolio and the strategy over the years with the commitment to fuel agnostic solutions have played a pivotal role in driving our advancements. We're also glad to report the synergistic collaboration with Excel Controlinkage is bringing new capabilities and newer avenues of growth for Greaves, and Greaves Engineering continues to expand its presence in engines and other areas. Greaves Retail, backed by its asset-light, high-ROCE business, fortifying its presence in the aftermarket, aligning with our goal of continued expansion both in domestic and other markets. Our enduring success is rooted in steadfast focus on capability building, our value proposition and our ability to fulfill the requirements of our diverse customer base. With that, let me hand it over to Dr. Basu, the MD of Greaves.

Thank you, Nagesh. Good afternoon, ladies and gentlemen. My commentary is on the performance of Greaves Engineering, that is Engines and Excel Controlinkage. We continue to make good progress on our ongoing program to build a future-ready, fuel-agnostic portfolio to gradually wean us from a dependence on demand for diesel engines. As I mentioned during the analyst call on 8th November 2023, the ICE engine and genset portfolio is being augmented with greener, fuel-agnostic variants that can use CNG, biodiesel and ethanol blended fuels. In addition, we have commenced sales of fuel-agnostic engine components. This new product line utilizes our current manufacturing equipment and will help us extract more value from our manufacturing infrastructure and other equipment. Additionally, as this new product line relies on our existing domain expertise in precision machining, the business can grow relatively rapidly. Simultaneously, we are increasing our share of exports, which, in Q3 FY '24, has increased to about 15% of our revenues. The integration with Excel Controlinkage has moved to the next stage with the initiation of cross-selling products and services. Simultaneously, we are continuing to augment our prevailing domain depth in mechanical engineering with mechatronics and electronics. The latter will also help accelerate the growth of electronic sensors. In Q3 FY '24, Greaves Engineering delivered an operating profit margin of 15.5% on revenues of INR 375 crores, higher than the 5.5% EBITDA that was delivered in Q3 FY '23 and higher than the 14.5% EBITDA delivered in Q2 FY '24. In the Engine segment, operating profit margin improved to 12.6% in Q3 FY '24 on revenues of INR 301 crores compared to 5.5% EBITDA in Q3 FY '23 and 10.5% in Q2 FY '24. Excel Controlinkage delivered an operating profit margin of 27.5% on revenues of INR 74 crores in Q3 FY '24. Overall, the prevailing tailwinds in the Indian economy, our increasing global customer base, the diversity of our platform technologies and application areas, combined with our brand Greaves, makes us optimistic about the future. Thank you. I now hand it over to Sanjay Behl. Over to you, Sanjay.

Thank you, Arup. I'm going to talk about the Greaves Electric Mobility business for quarter 3. Overall, Greaves Electric Mobility had an excellent quarter in 3-wheeler business with 37% Y-on-Y growth. While our L3 business registered a healthy 18% growth, the L5 business nearly doubled during the quarter with 94% year-on-year growth. Our new Electric Cargo 3-wheeler business, Greaves ELTRA branded, is now FAME subsidy eligible and listed on the NAV portal effective 15th of January 2024. The Electric Passenger 3-wheeler vehicle business has also been FAME certified now, and we expect listing on the NAV portal over the coming few days. We are confident of a good retail offtake starting this month for our EV 3-wheeler business, both for ELTRA Cargo and Passenger vehicles. In our 2-wheeler business, while the overall volumes declined on a quarter-on-quarter basis, Ampere registrations grew on Vahan by 9% in quarter 3, and the brand continues to be amongst the top 5 electric scooters in India. As announced during the Auto Expo last year, we will soon be launching the much-awaited NXG Scooter. This new-age, high-speed, fully connected scooter is 100% in-house designed by the Greaves design team and will be manufactured at our EV mega site in Ranipet. This new scooter from Ampere portfolio is equipped with one of the lightest operating software and brightest touch screens, ensuring seamless navigation and connectivity, elevating the driving experience to a new height. With an objective to demonstrate NXG's impressive power performance and superiority, we have embarked upon an unprecedented 5,100-kilometer long Kashmir to Kanniyakumari drive on January 14 of this year, just about 3 weeks back. And we started symbolically with Reasi, a source of the lithium find in Jammu Kashmir. This is the first of its kind road travel challenge undertaken and that too in extreme climatic condition and vastly varying road terrains of the country by any electric vehicle of any format in India. With these vehicles halfway in their journey, the response from the field has been extremely positive thus far. We continue to stay invested in launching new products and variants, and we are hopeful of continuing profitable growth in the coming quarters. Thank you. May I now hand over to Narasimha from Greaves Retail.

Good afternoon, ladies and gentlemen. This is Narasimha Jayakumar, CEO of Greaves Retail. Very pleased to give you an update for quarter 3. Greaves Retail recorded a revenue of INR 141 crores for quarter 3 FY '24, very strong EBITDA margins of 21.4%. We had higher spare part sales in all our core markets with much better product mix. Q3 EBITDA margins were up by 310 basis points on a year-on-year basis. And for the 9 months financial year '24, we recorded a revenue of INR 425 crores at 8% Y-o-Y. Greaves Retail continues to be committed to this strategy to be a fuel-agnostic aftermarket player with a focus on multi-brand part sales. During the quarter, Greaves Retail expanded its range of various products, namely our Greaves Power Raja Battery, various EV parts for the aftermarket catering the E-Rickshaw segment. These include motors, controllers, chargers, DC-DC converters, et cetera, for the E-Rickshaw segment. We also did launched a number of digital and technology initiatives, including the launch of our new Greaves Care app for 3-wheeler and 2-wheeler customers that enables them to digitally manage their service bookings and get notifications when their service is due. Considering the growth of the EV population, particularly E-Rickshaws, the business continues to expand distribution and retailing reach, as I've stated previously in our calls, across the country with a greater emphasis on Tier 2, 3, 4 cities and towns in the north and east of the country. At the end of quarter 3, we had our retailing network had approximately 9,300 retailers, including 250 specialist stock kits for our EV parts and batteries, 130-plus distributors, and we have engaged with 21,000-plus mechanics in the country. Our recent launch of our Greaves Upahar, which is our mechanic loyalty program app, and our other apps strengthens our connections with our partners and customers. I just want to reiterate that we are a very asset-light business and with a very high ROCE. ROCE for the quarter exceeded 100%, so excited about that. Just handing it over to now Akhila.

Thanks, Narasimha, and good afternoon, everyone. We are very happy to report our consolidated revenue for the quarter of INR 665 crores, up by 30% on a year-on-year basis compared to INR 514 crores last year Q3. On a stand-alone basis, GCL has reported a revenue of INR 443 crores, up by 21% year-on-year. Excel, as already shared by Arup, reported a revenue of INR 74 crores, and Electric Mobility has reported a revenue of INR 149 crores. For the 9-month period, GCL has reported a stand-alone revenue of INR 1,297 crores, up by 17%. Again, on a stand-alone level, GCL reported an EBITDA of INR 67 crores, which is a growth of 73% year-on-year. Our margins have improved by 450 basis points, that is we moved from 10.7% to 15.2%. Here, I would like to share that we continue on our EBITDA improvement journey. This quarter, we have reported EBITDA at 15.2%, which is possibly the highest in the last 8 to 10 quarters. And if I were to look at GCL plus Excel as a combination, the margin stands at a healthy 16.9%. This now puts us back on track of our historical trend of 13-plus percent margins of pre-COVID levels. On a YTD basis also, our EBITDA for the 9-month period stood at INR 175 crores. Same period last year, our EBITDA was INR 100 crores and, hence, a growth of 76% year-on-year. Our improvement in margins has also been by 450 basis points for this period, up from 9.1% to 13.5%. Along with the margins, we have been very focused on capital efficiency, both at the CapEx level and at the working capital level. And this has ensured that our ROCE today stands at a healthy 50-plus percentage level. In terms of balance sheet strength, the company continues to be almost at a 0 debt level. And we have a consolidated cash position of INR 600-plus crores, which we can be used for further expansion as we go forward. Looking forward, we remain steadfast in our commitment to our growth strategy. We're also confident that our strong foundation and unwavering commitment to excellence will sustain our success in the forthcoming quarters and the exciting opportunities the future holds. One area that we had seen a lot of pressure in the early part of last year was the overall commodity cycle, and that led to increase in the raw material cost for some of our product segments. I'm happy to note that the commodity cycle softening is having a positive impact. And as we go forward, we're expecting the raw material prices and raw material cost as a percentage of revenue to remain stable in the coming quarters. I would just like to take a step back. We did receive a number of questions over the last quarter regarding FAME subsidy. And I would like to point out to the Note #6 in our consolidated financials and would like to share again that GEMPL has submitted its response to the notice that it received from MHI within the prescribed time lines. The management has complied with the scheme, duly considering and supported by legal advice. However, keeping in mind the interest of the consumers and without accepting any of the allegations, contentions or statements in the notice and without any prejudice, GEMPL on October 27, 2023, offered to amicably resolve and put the quietest to the matter refunded an amount of INR 140 crores towards the subsidy reimbursed by the MHI to date, which is INR 124.9 crores and an interest of INR 15.1 crores. The amount refunded and the subsidy receivable of INR 337.3 crores net of provisions have been fully provided for as an exceptional item in the statement during the second quarter of the financial year. With this, there is no further liability which rests on the company regarding this matter. Again, this is explained in the last quarter. But given a number of questions, I'm just re-clarifying the entire position. With this, I now open the floor for any Q&A. Thank you.

[Operator Instructions] The first question is from the line of Amyn Pirani from JPMorgan.

My first question is on the EV business as well as more specifically on the EV 2-wheeler. You mentioned that you are going to be soon launching the NXG, which was shown at the last Auto Expo. I just wanted to get a sense from you in terms of how we should think about pricing given that a lot of the start-ups as well as legacy companies have launched a lower-priced product. And we, in an extreme case, at least one company has started launching extremely low-priced products, almost taking the price of a smart EV to the price of a very basic EV more recently. So how should we think about pricing and profitability going forward as you embark on new launches and try to regain some of the market share?

Thank you very much. I will take it. Sanjay Behl here. Look, if you've seen the philosophy of pricing by Greaves, in fact, over the past 4 years, if you look at our electric portfolio, we have adequately [ demand ] cost and price in this category and will continue to stay the course. Our core philosophy is to balance growth, market share and profitability. So you -- and if you look at the overall numbers, we still are, even without subsidy, double-digit gross margin positive business in EV, and I'm specifically talking to 2-wheelers that you referred to. So what is to be expected is in the new scooter that we are launching, the price will be competitive to make sure that we stay unit economics positive. And if subsidy gets restored going forward, which we expect, I think it will be a healthy margin. That's what you should expect.

Okay. Okay, that's good to know. And as a corollary to this, how much of a benefit are you already seeing or are expecting to see from the fact that cell prices have fallen? So, a, is this double-digit gross margin helped already because of the decline in cell prices? Or this is something that can get some more benefit going forward?

Yes. So partly, you're right. In fact, there has been a globally softening of cell prices that we've seen over the last 2 quarters. And part of the benefit is being passed on by the industry in the -- that is helping us also, so that is there. And we expect that with the overall scale going up in electric vehicle industry and across all the formats there, we expect the cell prices to continue to stay where they are. And if that happens or it's going to continue to come down slightly and if that happens, you will find us also becoming more price competitive and margin healthy as we go forward. That's right.

[Operator Instructions] The next question is from the line of Jyoti Singh from Arihant Capital Markets.

And sir and the Greaves team, congratulations on a really good set of numbers this Q3. And sir, my question is on the growth side. Like what are the expectations going forward for the '25 and '26?

Jyoti, can you repeat the question, please?

Yes. Ma'am, my question is on the growth side, what are the expectations on the top line side going forward?

Oh, you're talking of the future?

Yes.

So Jyoti, we will not be -- as a policy, the company has not been giving any forward guidance, and that is the policy that we continue to have. But if you have been -- I mean, you've been tracking us for the past many quarters, there has been a transformation journey, which is now in play for more than 7 to 8 quarters. And whatever has been talked about and committed by the management is a lot of things, work in progress, and a lot of things are continuing now to play out. So that is what I would be able to share about it.

Yes, ma'am. Ma'am, also it will be very helpful if you can guide us segment-wise, like which segment we are seeing more traction, that will also be helpful for us.

When you say segment, would it be Retail and the Engines business? Or is there anything else that you're looking forward?

Yes, ma'am, Retail and Engine.

Sure. So if you were to look at both the business performance over the last -- this quarter as well as a journey over the last 7, 8 quarters, let me just go back in time a bit, where the Greaves Engines business, if I were to take Q3 FY '20 -- Q1 FY '23 and therefore, 7 quarters, we've really moved from INR 253 crores on a quarterly run rate to now INR 300-plus crores and an EBITDA improving from 2.9 percentage margin to 12.6%. On the Greaves Retail, we moved the needle from INR 121 crores to INR 141 crores, and the margin improvement has been significant from 16.5% to 21.4%. On a quarter-on-quarter basis, we have done a growth of approximately 21% compared to same period last year. And at a Greaves Cotton level, and this has been the journey of the company, given that we acquired Excel in May of 2023, this also now has been additive to our overall business performance. And if you note, Excel has done extremely well. They have delivered results of INR 74 crores top line and an EBITDA margin of 27.5%. GCL plus Excel, hence, gives me a very good combined result of INR 517 crores for the quarter with a margin of close to 17% -- or 16.9% to be very precise. So this is the journey that we've now gone through.

[Operator Instructions] The next question is from the line of Himanshu Dugar from SafeGainz.

I would like -- if you could just give us an update around the cash deployment plans on your CapEx and your time line and any acquisitions and what are you looking at right now?

Sure. Thanks, Himanshu. So Himanshu, as you are aware, we currently have close to INR 400 crores plus of cash at a stand-alone level and close to INR 600 crores plus at the consolidated level, which means our subsidiary, Greaves Electric Mobility, has INR 200 crores approximately of cash on their books. Both these companies have very strong CapEx plans going forward. Greaves Cotton, our CapEx plan is approximately INR 100 crores for this year. And Greaves Electric Mobility has got its own plans of another INR 100 crores CapEx in the current year. All these investments are towards development of newer technologies and improving the existing product portfolio. This is core to the business, and that is where we are currently investing. Apart from that, we are also actively looking for opportunities where we can acquire stakes in businesses, which will be additive to our core businesses, which is both the Engines, Retails and Electric Mobility businesses. So we do have enough strength in our balance sheet today to do some really good acquisitions. I hope that answers your question.

Just a follow-up on that, especially on the electric side. Could -- like what is the current capacity levels and utilizations? And in this new CapEx, are you looking at design-related CapEx? Or is it again going to be towards some amount of capacity?

So Sanjay Behl here. Most of the CapEx till now, if you know the Ranipet, which is the EV mega-site capacity for our 2-wheeler business, 0.25 million already existing with 1 shift and going to 0.5 million scooters in 2 shifts there. So there is a very limited capacity. Most of this is growth-related CapEx, which is getting into product development. That's really the #1. And capacity is minimal in the current financial year. We already have adequate capacity, both are 2- and 3-wheeler businesses.

Sorry, I'm not able to follow. Like this INR 100 crores that you're planning to spend in the coming year, like what are your...

Most of it is on product development. Capacity is limited because both our 2- and 3-wheeler businesses have adequate capacity and headspace for continued growth for some time to come.

Okay. Any insights on your product pipeline in terms like what are the kind of products you're planning to launch or some other gaps in your product portfolio? Because I understand, given the recent launches, also you're kind of covering most of the gaps, the different types available. So what else do you think is pending or where else do you want to introduce more products?

So in Electric Mobility side, one segment where we wanted to represent, and that's what I talked about in my opening commentary also, was the high-speed, fully connected IoT segment, right? And that's getting filled up with the launch and pending launch of NXG as it gets into the launch sometime in the first half of this year. So that is the one that is getting filled up in electric 2-wheeler. That will make Greaves Electric Mobility a strong player across all the 3 segments in slow speed with Rio, which we launched last week -- last quarter; city speed, we have anyway been in a very strong leading position there with Magnus EX; and coming to high speed, one with Primus that we launched, and now getting completed with NXG, we would have a representation across all the 4 segments. On the 3-wheeler side, one segment where we have not been represented is the electric 3-wheeler L5 format, and that we launched an electric cargo last month; and passenger, we should be launching any time over the course of this quarter itself. So that fills the electric 3-wheeler both cargo and passenger segments. So that will now give us, if you look at Greaves Electric Mobility, a full representation across all the customer segments in both 2- and 3-wheelers and both for B2C and B2B plans.

Got it. And just one last question on the Electric Mobility side. Then -- I mean, now that the same thing is kind of getting settled, and are you looking at some aggressiveness towards your campaigning or the marketing or some changing in the model? What are you kind of trying to gain market share here? What else are you working on?

Yes. So look at our current position as we get into this, 3 basic facts and 3 initiatives that you see. The 3 basic facts are that even without subsidy now running for 8 months in a row, Greaves Electric Mobility continues to be amongst the top 5 electric scooters in the country in terms of its market share. So look at our YTD market share, it's close to about 7%. I'm talking about YTD as of now, it's close to about 7%. And that's -- and then we can -- with subsidy getting restored, hopefully, it has enough resilience because subsidy will be to the tune of about -- an added 15% does make us more competitive in our product price proposition in the market. So that would be one key thing and specifically to your question about regaining market share, so that gives us resilience in the market gap. Added to that, there are both initiatives on products. One, new variants have been launched; and second, new products are being launched. One variant that has just got into the market is a variant of Magnus, our flagship product Magnus EX, that's Magnus LT, which is still in the city speed segment, but it attracts a different kind of a customer. And the second one, which is a new product and will attract a new set customer segment altogether is the launch of NXG, which is a high-speed scooter. So these are the -- some of the things specifically in 2-wheelers. If you see, these are the products that we are launching, and I already talked about 3-wheelers will be filling the product. In addition to that, I think there is -- and the point that you made on additional marketing spends and all that, I think we will continue to stay extremely capital efficient in our marketing right now, given that it's still a nascent category with low penetration. So we will be a lot more digital and direct marketing-focused, and we will evaluate from quarter-to-quarter as to when is the time to go and really start increasing our marketing dollars so that the ROI in terms of marketing will remain very, very high priority for the company.

[Operator Instructions] Our next question is from the line of Rishikesh from RoboCapital.

Sir, my question is with respect to our EV 2-wheelers and 3-wheelers volumes. So how do you see the volume growth going ahead from Q4 onwards and for coming 1 or 2 years for about 2-wheelers as well as 3-wheelers?

Again, I think it's a question about forward guidance, both in terms of market and specific portfolio. And as Akhila has clarified, we don't have a policy -- as per our policy, we will not be able to give you a forward guidance. But I think the current trends are indicative enough, as you've seen, and 2-wheelers slowed down a little from the earlier kind of accelerated growth gradient, but we expect this continued kind of a growth there. And in 3-wheelers, you've already seen that market is at about pre-COVID levels. And from hereon, I think we will have to see as to how, depending on many other variables which are yet unknown, like incentive schemes and government things and PLIs, how they play out. So we are in no position to give any speculative forward guidance on this.

Okay. But I think if I have to see quarter-on-quarter, both 2-wheeler as well as 3-wheeler numbers, the growth has -- they have dipped in numbers. So how do you see them going ahead? Like do we see them bouncing back to our previous numbers from next quarter onwards or from coming after coming few quarters? Can you please indicate?

It's again a forward guidance in a way. In a different way, you're asking the same question there. I do see the numbers that you are talking about, which is that in the 3-wheeler segment, you are seeing plateauing of numbers. All -- both in L3, actually, there has been a decline quarter-on-quarter. I'm talking about the industry numbers. And in L5, again, there is a very marginal low single-digit growth that you've seen in quarter 3. So that's the current trend there. If you look at the January numbers, they are no better. It's pretty much a flattish kind of a trend. So at best, the published numbers of January which I can talk about. And even in 2-wheelers, the market has been pretty flattish. If you see the January numbers, if you look at the trending, the MRR converting into QRR, in January, it's about 81,000 registrations in electric 2-wheelers, which is almost equal to the 240-odd trend that we've seen in quarter 3. So the published number is the best guidance I have at this stage.

[Operator Instructions] Sonal Minhas, your line has been unmuted. Please go ahead with your questions.

This is Sonal Minhas. I hope I'm audible. There is some problem in the line earlier.

Sir, your line is not clear. May I request you to use your handset, please?

Is it better now?

Yes, sir. Please go ahead.

Sir, I had a question on the E-mobility business. Given the EBITDA loss and the cash burn in this business, hoping it's going to improve from hereon. But from a financial prudence perspective and maybe some internal workings I'm presuming so, like what is the level to which this business can bear the losses given the cash balance? And from a time line perspective, what is it that these are near-term milestones you want to have for this business to break even and cut the EBITDA losses?

Yes. So again, a very strategic kind of a question in terms of -- look, the first thing is to get subsidy getting restored going forward. We need to start showing resilience in our market share. That's going to be the first nitpick that the management team will look at as to how can we come back and then start showing a rebound back into market share. And as I had mentioned in the earlier answer that we still continue to be having a strong position in our electric scooter segment with good traction for our products. So that would be the first matrix there. Second is going to be some of these new products that we are launching. We'll have to have that matrix in terms of looking at how they can contribute. And given that they will be addressing largely a new customer segment, that's going to be a delta on top of the existing rebound that we are likely to see going forward. So that's going to be a delta sitting on top of it. And all this with a double-digit gross margin and good contribution, healthy contribution margin even without subsidy today is only going to add up and show a road to profitability specifically that you are mentioning about. So I think these are the 2 initiatives that are currently there. Beyond that, there is a strong improvement in our overall cost position over the last 3 quarters, and that will continue to keep adding fuel to the entire profitability road map. So I would just leave it at that at this stage.

Our next question is from the line of Kapil Aggarwal from Daksh & Associates. [Operator Instructions]

I just wanted to know what is the status of FAME subsidy for Ampere? Number one. And number two, what kind of...

Please use your handset, please. Sorry to interrupt you, your voice is muffled, sir.

Yes. Now can you hear me?

Yes. Okay, go ahead.

So my first question is, what is the status of FAME subsidy for Ampere? And the second question is regarding, what kind of response we are getting from the Nepal market in terms of volume and pricing over there?

Okay. So to the first question, and as you heard Akhila clarifying the subsidy clarification that we gave, we refunded the subsidy amount to MHI on 27th of October. Ampere products were taken up by the authorized testing agency immediately after that for FAME scheme recertification. And the -- our flagship scooter, Magnus EX, has already been recertified for FAME II eligibility in December month. And now we are expecting other models to get certified soon. So we are awaiting the MHI's approval at this stage to be registered -- regularized on the FAME scheme soon, and this will happen by actual activation of the electric 2-wheeler products on the NAV portal. So that's the status, number one -- answer to your number one question. Your number two question on Nepal, we have sent 80 Primus vehicles in the last quarter to Nepal, and that's the one partner dealer that we have, one of the largest firms in Kathmandu. And we've already started retailing the scooters there, about 20 of them have already got retailed out in the last about 4 to 6 weeks that the scooter has hit the shores of Nepal there. And we expect this to continue growing as we go forward. The pricing is extremely competitive. In fact, it's the same pricing converted for Nepal currency that was stable [indiscernible].

Okay. So approximately by when we can say that our FAME subsidy will be, we can say, started for our 2-wheelers? Any time line or any -- if you can give...

We're in no position to give a time line. We are just -- as I told you, we await MHI's approval. So -- but we are not in a position to give any time line today.

Okay. And any other plan or, we can say, any other overseas market to tap, any other overseas market in the near future?

No, at this point of time, we are in talks with some markets there, but at this point of time, nothing firm for me to commit at this stage.

Our next question is from the line of Anubhav from Prescient Capital.

Sir, are there any fundraise plans for GEMPL in like the recent which are given like cash has gone lower and like still a loss-making business in the foreseeable future. So are there any near-term fundraise plans? Or are we even considering sort of an IPO for this year?

Thanks for the question. Akhila here, let me take this one. So Greaves Electric is obviously here for the long haul. They are currently in the process of developing various new products, both in the 2-wheeler and 3-wheeler categories. And the management and the Board, essentially the Board will take an appropriate decision as and when required. I hope that answers the question.

Just as a follow-up, like do you see enough runway given the cash on books and given product development spending and all? And given the losses, like do you see enough runway for the cash on books?

As of now, we do have sufficient runway, and the Board is actively seized of this matter and will take an appropriate decision.

And did we apply for the PLI scheme for like the EV business?

Sanjay, you want to take that?

Yes, I'll take that. So we're not part of the PLI scheme and [indiscernible].

Okay. And sir, in terms of the...

Sorry to interrupt, sir, may we request you to rejoin the queue, sir, as there are several participants waiting for their turn, sir? Our next question is from the line of Faisal Zubair Hawa from HG Hawa & Company. [Operator Instructions]

Sir, in the repeated questions about the Electric Mobility, the original business of our power generators, that gets largely ignored. So how are we doing in that business? And what is the kind of R&D we are trying to do to be much ahead of competition? And because Cummins seems to be doing very well, how are we placed against them now?

So let me take that question...

What are the kind of ROCE and ROE that we have in that business?

So in terms of the products and the offerings, first of all, we have a diverse set of applications where we are selling our engines as well as our components and the applications range on the way from auto to pumps to gensets and now to the components of various engines, where irrespective of the fuel which is used for the engine. That's one line of growth. In terms of the others, we are looking at enriching our product mix through new product development. So fuel-agnostic engine designs is a new product area because of the changing landscape on emissions. So our entire genset portfolio, for example, is CPCB IV compliant, which is the latest compliance norms on this application. Similarly, all our engines for the automotive applications in 3-wheelers are also compliant to the latest norms that are there that are prevailing in India. The third area of work is new customer acquisition because our portfolio across Excel and Engines opens up a larger landscape of potential customers for our products. That's the other dimension we are looking at. And all of this is also linked to a growth in exports where we've got customers across EU as well as U.S., where we are selling both engines as well as engine components. And this is underpinned with our higher capacity utilization of our current asset base, which is now up in the high 80s and 90s, and that is also giving us a decent amount of operating leverage. We have a fairly high degree of ROCE in the business as a result of all of these actions. Needless to say, our cost focus is also very intense in terms of both the design of form and the design of engines and components that we are doing.

Sir, do you mean to say that our capacity utilization is around 85% to 90%? And how are we doing on orders? Is the industrial revival and the CapEx cycle also boosting our orders?

So the CapEx, we are -- we have a complex set of manufacturing facilities, which is a combination of assembly lines as well as manufacturing. So the bottleneck areas now have -- there was a lot of work done on debottlenecking and increasing capacity utilization, which has happened internally, which is why we have created a fair amount of additional capacity, which we are able to cater to the next tranche of growth. So we are very thoughtful about how we spend our CapEx. And so we don't have a challenge in terms of meeting spikes in orders or increasing orders, and we have enough of our asset base to be able to do that without incurring a very, very heavy CapEx.

And sir, would it be a right statement to make that most of our divisions are like firing on all cylinders and it's only this FAME subsidy which is causing some kind of problem for us? And also, sir, on many con calls previously, you have referred that you would like to build up an entire ecosystem of ancillary suppliers for our electric scooter. So how far a progress you have made on that? And are there people ready to invest money for us on a stand-alone basis to supply to us so that our capacity can move up substantially as and when our profitability comes in?

Okay. So let me start. I think there are multiple questions there I'll attempt. So I think the first part is multiple businesses firing, I think that was the first part of the question. If you look at our strategy several years ago, right, we went from a single fuel, single customer, single industry to multiple revenue streams, which is Greaves Engineering, which is components, both in the auto, non-auto as well as construction of highway equipment now with the addition of Excel. So the addressable market increased there, right? And yes, both on the Engines as well as on the Excel side, you're seeing the margin improvement and the revenue growth, aided both by domestic and some exports. Now coming to Retail, you have seen the spares and the services part, and that's again the CFO talked about the margin growth in both of these businesses. Greaves Electric Mobility, obviously, Mr. Behl has shared a lot of the details into that and the short-term challenges that, that business face. So clearly, the businesses have moved from a single business, single fuel to multiple businesses, multiple revenue streams and both between B2B and B2C, thus moving towards a strategic focus of getting closer to the consumer, doing both B2B plus B2C and leveraging life-cycle value extraction over the value chain. And I think that's kind of what you're beginning to see, which is part of your next question, which is the ecosystem effects. When you look at -- while the component play is done out of engineering, high-end engineering, precision component manufacturing, supply chain capability exists out of the first core, Retail is the post-purchase solutions which have the spares, the service, the aftermarket sales. In between, of course, you sell the vehicles through Electric Mobility. Then of course, we have 2 small enabler businesses, the Greaves Finance, which enables the financing of EVs; and Technologies, which helps develop advanced technologies into some of those engineering divisions. So when you look at it, aided by the 20,000-odd mechanics, 10,000-odd retailers, Pan-India presence and growing capability between mechanical and mechatronics to electronics to sensors, that capability expansion, we are moving from an industry which is a metal bashing industry to over to a lot of the mechatronics and then the software part. So I think that skill set addition is also happening as part of this transition. So I think that's kind of what you are seeing. Hopefully, that shows why it's multiple revenue stream, it's diversified across fields, across industries, across geographies. Hopefully, that addresses your question.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you all for joining. Much appreciate you taking the time this afternoon. Obviously, our management will be available for answering any questions off-line through our respective coordinators. Thank you so much. Have a great day.

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