Greaves Cotton Limited (501455) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Greaves Cotton Limited Q3 and 9 Months FY '25 Earnings Call. We have with us today Mr. Nagesh Baswanghali, Non-Executive Vice Chairman, Greaves Cotton Limited. Ms. Akhila Balachandar, CFO, Greaves Cotton Limited; Dr. Arup Basu, Managing Director, Greaves Cotton Limited; Mr. K. Vijaya Kumar, ED and CEO, Greaves Electric Mobility Limited; Mr. Narasimha Jayakumar, CEO, Greaves Retail; Mr. Chandrasekar, Thyagarajan, CFO; Greaves Electric Mobility Limited; and Mr. Atindra Basu, Group General Counsel and Company Secretary. We will begin the call with brief opening remarks from the management. Following which, we will have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward looking in nature, and disclaimer to this effect has been included in the results presentation shared with you earlier. Further, as you are aware, Greaves Electric Mobility Limited has filed a draft red herring prospectus with the capital markets regulator, SEBI to raise funds through an IPO, all discussions in this call with regard to this entity may be read in conjunction with and be limited to the said DRHP, which will be updated periodically to reflect current developments. [Operator Instructions] Please note that this conference is being recorded. I hand the conference over to Mr. Nagesh Basavanhalli. Thank you, and over to you. Sir.

Thank you. Welcome, everyone, for our third quarter call. On behalf of the management, let me welcome everyone of you. Let me just give you a quick overview of where Greaves Cotton is today. As some of you are aware, prior to '16 to the pioneers in the diesel engine segment for auto applications. Post '16, we went on a journey of getting closer to the consumer, offering fuel-agnostic solutions and democratizing sustainable mobility. Those were our 3 pillars. As part of that, we repurposed the organization. We redefined the businesses and worked towards sustainable and forward-looking multiple revenue streams. In summary, from a single-cylinder single-customer, single-industry company, we are now moving towards a pure agnostic multiproduct, multi-business company, playing in the sustainable mobility ecosystem with much bigger focus on competencies and areas and different businesses. We have the 5 distinct businesses, and I'll ask our CFO and our 3 CEOs to comment on their respective businesses. With that, let me hand it over to the CFO, Ms. Akhila Balachandar, who will give you details on the financial performance. Thank you.

Thank you, Nagesh, and good morning, everyone. I'm delighted to share that we delivered strong financial performance, validating our strategic initiatives and positioning us for sustained growth. For the quarter, we achieved consolidated revenues of INR 751 crores, with Greaves Cotton posting standalone growth of 13% at INR 502 crores. Excel reported revenues of INR 69 crores and the Electric Mobility reported revenues of INR 184 crores. Both engineering and retail businesses continue their upward trajectory. It's Q3 revenue growing year-on-year by 14% and 13%, respectively. The Electric Mobility division also gained traction, delivering INR 184 crores in Q3, supported by new product launches. Notably, 64% of our business now comes from B2C segments, reflecting our strategic pivot towards customer-centric growth and market alignment. Our EBITDA margins continue the journey of sustainable improvements, demonstrating operational efficiency and cost management. GCL plus Excel, we have delivered margins at a healthy 15 percentage plus. The diversification strategy is contributing to the resilience in revenues, ensuring that we are not overly reliant on a single segment. Our continued focus on margin improvement is yielding excellent results both in terms of EBITDA growth and margin expansion. New strategic investments across the group are being effectively utilized for new product development, building brand building initiatives, expanding adjacencies in high-growth areas. Our profitability in Q3 stood at INR 67 crores at a stand-alone level and for 9 months FY '25 at INR 176 crores. Our strategic portfolio evolution growing non-auto contributions and disciplined capital management have strengthened our revenue. Near 0 debt and strong cash results of INR 503 crores, we are well positioned for future growth. Looking ahead, we remain committed to sustaining this momentum, driving innovation and creating long-term value for all stakeholders. With this, I hand over to Dr. Arup Basu, to share his remarks on the Engineering business. Over to you, Arup.

Thank you, Akhila. Good morning, ladies and gentlemen. I will speak about the engineering business, which comprises Greaves Engines and Excel. I am pleased to report that in Q3 FY '25, on a year-on-year basis, Greaves' Engineering delivered a double-digit growth in revenue. In today's commentary, I would like to add some more color in terms of internal factors that have resulted in this profitable growth. The results reflect our progress.

Sorry to interrupt, sir, you are not audible, sir. Ladies and gentlemen, please stay connected while we reconnect the line, please. [Technical Difficulty] Ladies and gentlemen, we have the management line connected. You can go, sir.

Thank you, and apologies for the disturbance and the connection. Let me just restart a little bit in terms of Greaves Engineering delivering a double-digit growth in revenue in Q3 FY '25 on a year-on-year basis. And in today's commentary, I would like to add some more color in terms of internal factors that have resulted in this profitable growth. The results reflect our progress on diversification of revenues and profits across automotive and non-automotive applications. As I have consistently communicated, we are working diligently on expanding internal capabilities and competencies to diversify both our products and services and their respective application areas. As a result, currently, less than 1/3 of our revenue is generated from automotive diesel engines from a nearly 100% share a few years ago. In Q3 FY '25 on a year-on-year basis, revenues from non-automotive applications registered an over 30% increase in revenues. On gensets, we have significantly expanded our dealer work across India and continue to receive positive response to our CPCB IV+ compliant product line. Our market share has inched up from less than 3% to nearly 4% in this quarter. In keeping with our stated fuel-agnostic strategy, we continue to expand our product portfolio of tailored multi-fuel solutions for specific segments and applications to meet the diverse energy needs of our customers. We are also working towards increasing the share of exports in our revenue mix. Exports constituted around 10% of revenues in Q3 FY '25. We have established collaboration with alliance partners across EU, U.S.A., key economies in Africa and the Middle East with team members based in UAE and U.S.A. While Q3 FY '25 revenue in Excel Controlinkage was 7% lower year-on-year, quarter-on-quarter, it was 15% higher. Excel is accelerating steps to expand capacity, develop new products and diversify across geography and customer vectors. New products typically constitute about 20% of Excel's product portfolio. Looking ahead, we are well positioned for sustained growth. At Greaves Engines manufacturing plant at Shendra, Chhatrapati Sambhaji nagar, a new assembly line for motor controllers has been installed for manufacturing EV powertrains for mobility and other applications. In addition, the Shendra plant received AS9100D certification required for machining components for the aerospace industry. Finally, we continue to make good progress on our sustainability road map to meet and exceed our sustainability-related ambition. For the next commentary, I now hand over to my colleague, Narasimha Jayakumar. Over to you, Narasimha.

Yes. Thank you, Dr. Arup. Good morning, ladies and gentlemen. I'm Narasimha Jayakumar, CEO of Greaves Retail. I'll be giving you a little bit of color commentary on our performance in Q3. Greaves Retail delivered INR 159 crores of revenue in Q3. This represents a 13% Y-o-Y growth. We continue to be amongst the top 2 players for the 3-wheeler parts segment, and we are making significant strides in electric 3-wheeler aftermarket parts and the powertrain business as we capture greater market share and strategically expand our presence in this area. We are seeing an overall demand recovery for our diesel, CNG and EV parts with the retreat of monsoon and the pickup of last-mile economic activity driven by quick commerce. We are rapidly upskilling our mechanics on the new product range for electric vehicles with now a wide-ranging network of 250 distributors, more than 10,000 retailers and 25,000 mechanics. We have built a strong ecosystem that offers seamless experience for our customers. Our multi-brand parts, particularly CNG and 2-wheeler are growing well. Exports is growing strongly. We've opened several new markets, including Philippines and East Africa. Greaves Care services franchising operations continues to be the leader in multi-brand servicing for 3-wheelers. And increasingly, this network is getting enabled for servicing electric 3-wheelers and electric 2-wheelers -- we have now 225-plus franchised outlets at the end of quarter 3. Leveraging Excel's manufacturing capabilities, we have also expanded into construction equipment and heavy duty parts, which are growing strongly given the overall infrastructure push and construction activities all over India. Looking ahead, we plan to grow our contribution from the EV component business, the HCV business and the small commercial vehicle part lines. This is in line with our fuel-agnostic strategy to diversify away from 3-wheeler diesel spares. We are leveraging digital significantly across the business, which will result in better operational efficiencies and improved customer experience. I would now like to hand over to my colleague, Mr. K. Vijaya Kumar, the CEO of Greaves Electric Mobility.

Thanks, Narasimha. Good morning, ladies and gentlemen. Thank you for joining us today on our earnings call. I will talk about the performance and the exciting developments at Greaves Electric Mobility, post which we can commence the Q&A session. Electric vehicles have gained significant traction as an industry and emerged as a promising solution for reducing emissions. As part of our strategy, Greaves Electric Mobility, well known for the Ampere brand, has filed a DRHP with SEBI on December 23, 2004, for a proposed IPO. We propose to utilize the proceeds for investments in technology development, enhancing capabilities at our technology center, development of in-house battery assembly, funding expansion of manufacturing capacities of our subsidiaries, increasing the stake in one of the subsidiaries, increasing digitization and deployment of information technology infrastructure, funding inorganic growth opportunities and general corporate purposes. Regarding our business performance, in the e 2-wheeler segments, we have achieved a market share of 3.4% in quarter 3 FY '25, allowing us to reclaim the fifth position in the Vahan ranking for the month of December '24. This notable growth can be attributed to several factors, one of them being our improved product and price competitiveness, which has helped us increase our market shares and specifically in states like Tamil Nadu and Bihar, where we are currently at 10% plus market share as per the Vahan data. We have also diligently enhancing our distribution network to connect with broader consumer base. In the third quarter, we added 24 new dealerships for Ampere, 16 for our Ele brand and 17 for our Greaves 3-wheeler brand. This facilitates greater accessibility of our products nationwide, enabling customers to more readily experience the offerings of Greaves Electric Mobility. Our achievements extend beyond these statistics. They reflect our commitment to providing innovative products. A prime illustration of this is our Ampere Nexus, which can be charged only in 3.3 hours. This feature aims to enhance the experience for customers who prioritize convenience and prefer to minimize their time connected to a charging station. And as you are aware, we are also addressing one of the primary concern for EV, which is the range anxiety. Ampere Nexus, notably the Kashmir to Kanyakumari campaign, which the Ampere Nexus traveled over 10,000 kilometers and established 4 national records, exemplifies the remarkable range and dependability of our electric vehicles. I'm also happy to announce that we have also recently launched an enhanced variant of Magnus EX named as Magnus Neo at an attractive price of INR 79,999. We undertook another record journey on our new Magnus Neo and achieved the record of the longest journey by a city speed family electric scooter riding 2,300-plus kilometers from Bangalore to Auto Expo Delhi. We recognize that for customers to wholeheartedly adopt EV, it is essential for them to have confidence in their ability to reach their destination without concern. In the e-3-wheeler sector, we are dedicated to enhancing our footprint through our network and product enhancement. Our Greaves Eltra City currently boast the national record for the longest distance travel on a single charge an impressive 225 kilometers. This achievement underscores our dedication to advancing the possibilities within the EV domain. Additionally, we continue to grow our presence in alternate fuels for 3-wheeler. We have successfully increased our market share in the L5 diesel segment from 1.2% in FY '24 to 3.7% in Q3 FY '25, driven by the growing demand from the southern market, propelling us to fourth ranking as per the Vahan for the L5 diesel segment. Our commitment to innovation remains at the forefront. During the Auto Expo, we unveiled a range of advanced EV 2-wheelers and 3-wheelers include products designed for both B2B and B2C use cases. This includes multifunnel 2-wheeler and 3-wheeler designed specifically for last-mile delivery as well as higher powered variants of our premium Nexus line as well as the new Magnus N. We also showcased our vision of the Ampere electric motorcycle, which received widespread coverage. That concludes my opening remarks. I would now request the moderator to commence the Q&A session.

The first question is from the line of Zakir Nasir, who is an investor.

Congratulations to the management on a very healthy set of numbers. Sir, I'm very happy to note that the Board has again reiterated its target of INR 15,000 crores for 2030, sir. As what I roughly calculated that would require a high 20s or even 30% growth rate from here. Sir, broadly, how do you expect to go forward on this path with organic or a combination of organic and inorganic? That is my question number one, sir. Should I ask the second question or after this? Let me ask you the next question also, sir. In the current expo, I see some very interesting products launched by Greaves Electric Mobility, notably the construction equipment. So would you throw some light on this, the size of the market? And also, if possible, the path forward for Excel?

Yes. I can take your second question first. This is Narasimha from Greaves Retail. Overall, this is part of our fuel-agnostic diversification strategy into some of the newer areas. So we have looked at -- as you know, the entire construction equipment space is growing very rapidly. I mean we're talking about a CAGR growth in excess of 7% to 8% year-on-year on the back of increased urbanization and infrastructure investments. So we have also looked at selected lines which have electrification possibilities on the light construction equipment space like excavators, scissor lifts, boom lifts. So this is part of our showcasing that we have done at the recent bauma in the recent exhibition. So yes.

And what about the first question, sir, about the growth? And a small add for Ms. Akhila ma'am, what is the cash balance on the balance sheet now? And how do you see this going forward after the issue and stuff like that?

Sure. Thanks, Mr. Zakir and sure, thanks for this question. And let me take your last question first. As on the end of December quarter, the cash on our books at a consolidated level is around INR 500-plus crores, just shared marginally about INR 500 crores. In the question that you asked as to how do we believe that we will achieve this ambitious target that we have set out for ourselves. So let me take a step back and also run you through our transformation journey, which has been going on for quite some time now. We have now moved from a single product diesel engine company to a multistream, multiproduct company. And I think what we've done this time is to share the impact of this, I also put out the current revenue mix starting from 2016 and the journey till date. And you will see that this has been a really diversified revenue pool that we are now building out. YTD December financial year '25, our revenues are shade above INR 2,000 crores, and this really reflects the mix of the diversified revenue. We've also put out in our presentation that if you see from FY '22 to '25, the CAGR of growth because in between we were hit by COVID and it took a couple of years to come back. So '22 to 9 months '25, that is the last few years, we have had a healthy CAGR of 18%. And this kind of helps us believe that we will be good to achieve the ambitious target that the Board has set out for us as management, right? Will it include organic, inorganic? Surely, as you know, that we have invested in adjacencies which are very, very core to us, and we have done investment in Excel in March -- in May '23. As and when we get some really interesting investment opportunities, we will definitely have a look at it. I hope that answers your question.

The next question comes from the line of Krisha Kansara with Molecule Ventures.

Sir, my question is on the engine side first. So our auto engine division is now shifting from, let's say, diesel engines to CNG or petrol or more of fuel-agnostic engines. So what is our strategy of increasing our presence or market share in, let's say, a market like CNG engines, where Bajaj Auto dominates the market? What is our strategy to stand against our competition because our market share currently is very minuscule. So I just wanted to get an idea of our plans in place with respect to this.

So perhaps I can quickly respond to that. As you rightly said, we are fuel agnostic, and we make the prime movers for the OEMs who then compete in the market. So in terms of our whole fuel-agnostic approach, all the work that's going on in terms of engines or powertrains are to mirror the individual -- the fuel mix that's being viewed for the future. At the end of the day, how the OEMs battle with each other is really their -- part of their domain expertise, et cetera. But we see a growing 3-wheeler market at that level, and we see this fuel mixtures playing out based on a lot of factors such as availability, total cost of ownership, sustainability and so on. And as long as our portfolio has everything that the industry needs, that's our way of risk mitigation as well as preparing for a growing future's.

Okay. Sir, first of all, congratulations on launching 3 new types of engines in the recent Bharat Mobility Expo. So I have two questions with regards to this. One is how different are this newly launched engines as compared to, let's say, our current product offering in terms of, let's say, technology or value proposition? And also, do we plan to cater to the existing clientele through these newly launched products? Or are we planning to target some newer industries with respect to this? Also, are these engines ready to go in the market right now? Or is there some time for them to be commercially viable?

Yes. Thank you. I can take this question. So in the Bharat Mobility, we have exhibition, we have launched 3 sections of products. One is, as I mentioned in my commentary before, this is Magnus Neo, which we have launched and it is ready for production and sales with immediate effect. The second one is on the Nexus, we have launched 2 variants. One is on the executive variant where a younger generation gets much better power and pickup. And then there is another variant, which is we're calling a tourist mob on which they can go around for longer drives. So both of these products -- so Magnus Neo is immediately available and Nexus will also be available around the corner. Then there are a couple of concepts which we have presented there. One is on the motorcycles, where we intend to study the market and study the potential and work on it. And on the 3-wheeler, we have presented a new concept, which we believe can create a large market potential in a country like India, especially in the B, C class cities for B2B purposes, which we have demonstrated. These are under study, and it will be developed as per our NPD plan going forward.

My question was more of the newly launched products in our engineering side of business. For the biofuel engine or let's say, the hydrogen powered engine or the Euro 5 diesel engine, these are the 3 products that we launched in the expo. My question was regarding those products.

Right. So perhaps I would maybe just give you a quick response. The hydrogen engine was a concept engine. The others are further developed in terms of availability. The hydrogen engine can also be made. There are some customization that we do by specific OEM. So that will depend on demand. The Euro 5 plus compliant engine is actually up and running because the norms were applicable from 1st January of 2025. So there, like probably the world's first single cylinder Euro 5 plus compliant engines for that category.

Right, right. That's great. Sir, quickly, 2 questions on Excel Controlinkage. So in your opening remarks, you mentioned that we are expanding our capacity in Excel segment. So can you throw some more light on that statement?

Expanding capacity, I thought it's quite easy to understand statement. We are seeing opportunities for growth, and we are expanding capacity so that whatever is the demand from our customer base, we are able to fulfill it satisfactorily. So we are just preparing ahead of time so that as and when the demands grow and they are not always uniform, we are ready to meet the requirements of the customers.

Sir, my next question is more on the non-auto business. So can you just throw some light on each of our subsegments in non-auto in terms of how they are performing or let's say scale or market leadership? Also, what is the existing breakup of, let's say, auto and non-auto, and how do we plan to move forward with the ratio, let's say, 2 to 3 years down the line? How do you see auto versus non-auto in a engineering side of business? And also, which segment will majorly drive this shift, is my question?

We see all segments growing. I think our key approach was we were overdependent on one specific application, and the work that has been done over the last few years is to create a portfolio of prime mover applications across multiple segments. We see gensets growing. We see auto demand also growing. We see non-auto applications also growing. An economy of our size and globally that's growing at the kind of GDP rates that we have, pretty much all the engineering applications that we serve are going to grow. At what rates may change from one to the other. And we have, therefore, a fully diversified portfolio to meet all this demand, and that's the way we view it.

Ms. Kansara may we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn? [Operator Instructions] The next question is from the line of Tushar Bohra with MK Ventures.

Congratulations to the management for putting a healthy set of numbers. Sir, first of all, I would just like to understand there was a reference made to aerospace segment or industry in the opening remarks. Sir, can you just expand upon that a little bit qualitatively or some more inputs that can be given?

Yes, sure. Maybe I'll just elaborate on that. We do a lot of machining and engineering fundamentally. And one of the areas which require a long lead time to prepare ourselves is the area of aerospace, which is growing in India quite a bit. So from a precision manufacturing and a precision engineering capability, this is one of the wave 3 horizon opportunities that we see, and we thought it's better to prepare for it early on. And one of the first steps in that is to qualify your plant for these kind of products because there's a very long lead time to qualify yourselves because it's a very structured and high-quality barriers and high entry barrier industry. So we are -- we see this as a wave 3 potential opportunity and the work -- early-stage work towards that has started.

Are we also looking at any other adjacencies from a precision engineering standpoint, maybe railways, defense. I think we are supplying a few products into marine, but not on the engineering side. Any other adjacencies like aerospace that you are working on, you want to share a bit?

Sure. So in a way, Excel, the acquisition of Excel was strategic because that opens up the whole adjacency from an engine ecosystem perspective around the controls, the 5 or 6 controls that are used to control any vehicle, whether off-highway or on-highway, et cetera. And that represents one adjacency. That itself is growing in terms of the technologies, et cetera, available. So you have a core and then you start building the adjacencies like this. So that's one. The applications of powertrain is the second one. The electric powertrain capability building is another. In a way, the application is moving from one type of prime mover. First level was fuel-agnostic IC engines and the next level now is electric powertrain as well. So all of this, you will find are kind of expanding the canvas in which we play and adding to our diversification approach.

In terms of industries, do we also have potential players in maybe, say, railways, defense, marine, other industrial? Are we looking at anything which we last few quarters?

We've been -- we work already with railways. So the ecosystems where we are already present, represents another way to expand because you have a customer, you have one set of products, you go with them, and that expands. So the whole railways expansion fits in with our sort of expanded engineering capability. So that is one thing that will be fed. Similarly, in defense, as they expand their portfolio, we are a qualified company with them in terms of registration, et cetera. So all of them are entities we have worked with in the past, we continue to work with and represent natural extensions in terms of the portfolio that can serve them.

Yes. From a Greaves retail aftermarket perspective as well, we are looking at new areas like I think my colleague touched on railways. -- where we have already looked at energy management service as an offering, where we are working with some of our institutional customers, notably railways and telecom tower companies for basically assisting them in their transition away from diesel gensets to lithium-ion-based battery packs and really providing Energy-as-a-Service. So this is sort of as part of our own sort of diversification and new business strategy from a Greaves retail perspective. I hope that answers your question.

My next question is on the hydrogen engine that we've developed as a concept. Are we looking at this as an independent engine? Or are we also looking at retrofitting possibilities to existing engines where they can be sort of made compliant to run on hydrogen as well? Also, are we looking at this only from a 3-wheeler perspective? Or because unlike diesel, where obviously, a lot of firms globally have been at the technology front. In hydrogen, it's still an evolving concept. We could be one of the few companies that are in the first wave of working on it. So are we looking at only 3-wheelers? Or are we looking at this maybe for even 4-wheelers, even commercial vehicles for that matter? What are the possible applications for the hydrogen engine?

So perhaps I can respond to that. The idea of showcasing a hydrogen engine at the expo was to demonstrate that we have the engineering know-how and know-why on this fuel for an IC platform because this is also in consonance with our sustainability approach that we work. It covers our fuel-agnostic approach as well as our environmentally green approach. Now once an engine capability is there for a hydrogen-based engine, sizing is less of an issue. We are working actually with a larger engine on the retrofitment because of the economics. So at the end of the day, there will be many other factors, for example, availability of hydrogen, the total cost of ownership, et cetera, which will determine which ones take off or which ones take what time and what are the triggers which will allow a repurposing of the portfolio of fuels that are fuels of choice. The purpose of this was to show that we have the capability. We are working with a small engine as well as large engines and working on the hydrogen platform. And it will allow us to, therefore, probably be one of the early movers as this fuel plays out going forward.

Tushar, may we request you to return to the question queue for follow-up questions as there are several participants waiting for their turn. The next question comes from the line of Abhishek Salunke with VEC Investments.

So my first question relates to Eceitrolinkage.

Sorry to interrupt, sir. May I request you to use your handset, please?

My first question relates to the Excel Controlinkage. So what I want to understand is what are the growth constraints we are facing since last 2 quarters in this business?

Apologies, could you repeat that? I could not understand.

Sure. So my question relates to Excel Controlinkage. What I want to understand is what were the growth constraints that we are facing since last 2 quarters because the revenue growth seems to be -- in fact, it's declining year-over-year. Is this a conscious decision or it's because the industry is slowing down?

Right. So actually, over the first couple of quarters, Excel control linkage products goes largely to the OEM industry and a little portion goes to aftermarket. So the OEM industry in India, as you are aware, in the first couple of quarters had been reasonably flat or a bit tepid, typically, particularly the commercial vehicles as well as the agri vehicles like tractors, et cetera. So those were some of the industries that were kind of flattish and the commercial vehicles industry even had a small contraction. We see that being a temporary phenomenon because of elections floods, et cetera, all the reasons. But overall, we see it growing. So we don't really see that sector going down. The other piece is,, in exports, there was a little bit of a reduction in terms of the export volumes, that too, because there was some inventory destocking taking place in some of our customers' supply chains. Over a period of time, we are rebuilding the export portfolio, like I mentioned in my talk that we are expanding our set of export customers. And also, we see industry growing in India. So in the medium term, you are seeing that change already happening between Q3, Q4, et cetera. And overall, we are positive about the demand side across all the sectors that we serve.

Sure, sure. And it's a commendable job considering that even in the weak demand scenario, you have managed to grow your EBITDA margins. And I mean, I think the enterprise value for Excel Controlinkage is around INR 620 crores, and then we own 70% of the business. So when we look at future, for example, the inorganic opportunities, is this a guideline that we would look for EV to EBITDA of around 8x to 10x, and we will not -- we would be conscious in not overpaying. And then the second part of this question relates to Excel Controlinkage only. What is the current capacity utilization levels at present?

So maybe I'll just comment on the second one, and the CFO is best placed to comment on your first query. We have -- this is an assembly type business. So we don't have very clear-cut capacity calculations. But by and large, we do have capacity in terms of the setup that we have to be able to cater to a larger demand. So as of now, there isn't really any bottlenecks. We are proactively expanding certain parts, certain upstream components, which feed into the end product as well as have a market of their own such as rubber. So there will be piecemeal kind of expansions going on. But as of now, there really isn't any constraint to fulfill any orders that we get. Over to you, Akhila.

Yes, sure. Each I just want to share that each inorganic opportunity will be different. And as and when we look at opportunities, we will evaluate them accordingly and come back when something is final. So I don't think we have anything fixed or set. We definitely have our internal metrics in terms of ROI, ROCEs and so on. But we will definitely treat each opportunity as it comes.

May we request that you return to the question queue for follow-up questions, please. [Operator Instructions] The next question comes from the line of Jyoti Singh with Arihant Capital Markets Limited.

Congratulations Greaves team to doing such a well job for the Greaves cotton. And my question is on the -- firstly, on the spare and services side, which is 75% of revenue. So how do you plan to sustain growth in this segment? And are there any new partnership or product category in the pipeline? And second, that we have vision of INR 15,000 crores revenue by 2030. So could you give us a little bit in depth on the key drivers and time line for achieving this target?

What was the first question? It was not clear. What services?

It was spare and services, which is 75% of our revenue. How do you plan to sustain growth in this segment? And are there any new partnership or product category in the pipeline that you are planning?

Yes, I can take the first question. This is Narasimha Jayakumar from Greaves Retail. As I was mentioning in my update that we've already sort of as part of our fuel-agnostic strategy, diversified quite a bit away from our traditional diesel spares, 3-wheeler spares. We've now, as I said, expanded into CNG category. We have gone into a very big way into electric 3-wheeler space, particularly for eRrickshas. I think I touched on that. These are very large markets, if you look at the way the electric 3-wheeler growth is happening in the country. Also looking at adjacencies, leveraging our Xcel manufacturing capability into the HCV and construction equipment aftermarket spare parts. So there are -- these are sort of the growth trajectories on the automotive side. And on the nonautomotive side, I've touched on both for Xcel as well as for -- in newer sectors like railways, energy management service, telecom and so on. So these are all large markets, and we believe these have sufficient growth opportunities for us for Greaves Retail.

So, I'll take the second one, how do we plan to achieve this ambitious target. Mr. Zakir had raised this earlier on, and I have fairly elaborated. So maybe we'll move to the next question, if that's okay?

Okay. Fine. Fine, ma'am. So just another on the Excel side that we recently increased its stake on that. So are we planning further to acquire 100% or we'll be keeping in this level only?

So as far as Excel goes, there is a path to 100% ownership. And this is as per the SPA SHA signed with the promoters, and we will be working along the same lines.

The next question is from the line of Shi Shukla with SUD Life.

Part of my questions have been answered previously. Just one follow-up on one of the previously asked questions on CapEx in Excel Controlinkage. Is it going to be greenfield or brownfield? Like how -- what sort of cash outflow can we expect there? And are there any time lines that you're currently working on? That's all.

Sure. Let me take that. We have a very fairly strong, robust CapEx program, both across Greaves Cotton and Excel. The number of initiatives which we keep doing, which we call internally sustenance. But like Arup, Dr. Arup mentioned earlier, any assembly line or manufacturing line, while there may not be an overall capacity constraint, there are also ongoing projects on debottlenecking, which ensure that we are able to run our capacity and our CapEx far more efficiently. So these are multiple projects which we have evaluated and are currently in place across all our organization. Then there are some larger initiatives which we are undertaking to ensure that we are able to move along the visions that we have set forward. Overall, in this year between GCL and Excel, we will have roughly INR 100 crores approximately of CapEx being spent out. Trust that answers your question.

The next question comes from the line of Amit Kumar from Determine Investments.

Can you hear me? I'm on mobile only that should be okay. I just had one question with respect to your 2-wheeler electric business. I think in September, we got back on to the government subsidy program. And we were sort of anticipating then -- I mean, obviously, it takes a little bit of time for things to -- for that subsidy to basically get into retail. We were anticipating a little bit better improvement in your month-on-month 2-wheeler sales numbers. In fact, I mean, we have seen on a quarterly basis, we've seen a little bit of an improvement, but things are still sort of fairly subdued on that count. Is there any sort of constraint there in terms of ramping up the 2-wheeler sales given that now that pricing differential versus competition would not be there, I presume. And how should we -- I mean, I don't -- I'm not sort of looking for a forward guidance, but -- just in terms of a constraint, if you can sort of highlight anything on that count.

Good question. So sorry, thank you so much for the question. So from a constraint point of view, I don't think there is any specific constraint. So what has happened was October was a bumper month. And as you all know, post November end and December, the industry itself was 30 -- close to 30% down. The industry in the month of December had gone down to 73,323 from 118,000 in the month of November. So that is the sort of steep fall it had taken. And plus -- so that's point number one. Point number two was we were transitioning into the new Magnus Neo means we have inventory in the dealerships and in the market. We want to transition to get ready for the launch, which we did on -- in Auto Expo in the first week of January. These are the 2 things, and we are -- that's behind us, and you will see the traction what we foresee.

The next question comes from the line of Atul from Sunidhi Securities.

Congratulations on great set of numbers. My question is on generator side -- yes. So my question is on the generator side. Like how much -- how the performance has been for Q3 FY '25 from this business? And I understand that there has been a slowdown in the genset side, but just would like to know the status of this business for this quarter.

Right. So Atul, maybe I will respond to your question. There has been a significant change in the regulatory norms that happened in this financial year, which was the CPCB IV. This is for the India geography. And a significant range of gensets had to be upgraded by all players. towards that. And what has happened is, overall, the genset demand is, in a way, linked to your underlying GDP growth because infrastructure, everything needs backup gensets, as you're aware. The sizes differ depending on the size of the project or depending on the application where it's going to be used, but it goes from a fairly large scale and range of products that are in demand. So overall, in India, the demand is going to mirror the GDP growth and infrastructure growth, which are both seen to -- the prognosis is positive on both counts into the future. The other part is we also have building, as I said, an export business also in gensets and engines. And export business is quite large. There are certain geographies where one is focusing. And overall, if you take both combined, I think all the players in the industry have a headroom to grow. We particularly have a headroom to grow because we are relatively small as of now. And so we see a runway for significant growth for these reasons.

Yes, that's helpful. My second question is on like on overall business, like now the EV segment is doing well, like we reported almost 40% volume growth in that segment. And we are anticipating genset business will also start reporting a good number starting Q1 FY '26. So on a consolidated basis, on an overall basis, can we say that starting FY '26 will be -- performance will be much, much better than what we are seeing currently?

Yes. Maybe I'll take that. So if you see this quarter, we have done a consolidated revenue of INR 751 crores and a stand-alone of INR 502 crores and a growth of 13%. We will continue on our journey of ensuring that we are growing on all cylinders. A lot of effort is on, which has led us to the consistent improvement in our margins over the last 8, 10 quarters. And again, that's a journey we will continue being on. So I think this is something as a management team, we are all focused on, and we are working towards. I hope that answers your question.

Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to the management for closing comments.

Thank you. In the interest of time, I'll keep it brief. Again, management has summarized how we are moving from a single cylinder diesel engine company to a diversified multi-business B2B plus B2C organization. I hope you had answers to most of your questions. Our teams are always available should you have more. Thank you for your time and attention today. Have a wonderful day.

Thank you. Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.