Kirloskar Oil Engines Limited (KIRLOSENG) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Kirloskar Oil Engines Limited post 4Q results conference call hosted by Antique Stockbroking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Dhirendra Tiwari of Antique Stockbroking. Thank you, and over to you, sir.

Thank you, Aman. Good afternoon, ladies and gentlemen. I'm glad to welcome you to the post earnings conference call of Kirloskar Oil Engines Limited. I'm pleased to have with us today the management of Kirloskar Oil lead by Mr. Sanjeev Nimkar Managing Director; and Mr. Pawan Agarwal, CFO. With this, I'll hand over the call to Mr. Nimkar for his opening remarks, following which we will open the call for question and answer. Thank you, and over to you, sir.

Thanks. This is Pawan Agarwal. Good afternoon, everyone, and welcome to quarter 4 FY '21 earnings call of Kirloskar Oil Engines Limited. My name is Pawan Agarwal, and I'm the CFO of the company. Today, I have with me is Managing Director of the company, Mr. Sanjeev Nimkar. Our 2 other colleagues have also joined this call, but from different locations. Rahul Pravudisai, who heads the strategy and new businesses has joined this call from his residence in Pune; and Amit Gupta, who leads corporate finance function at our subsidiary company, Arka Fincap Limited, has joined this call from Mumbai. As the second wave of COVID pandemic rolls through our country, we are all in a somber mood, and we thank you for being with us in these trying times. We essentially hope that all of you are safe and healthy and taking abundant precaution against the second wave of the pandemic. The need of the hour is to remain safe, and the priority for KOEL is more about safety of our employees, customers, suppliers and all other stakeholders. We wish to state that during the call, we will make some forward-looking statements. These statements are considering the business environment we see as of today. And therefore, there could be risks and uncertainties that could cause actual results to vary materially from what we are discussing on the call today. And we would not always be able to update on these forward-looking statements. During first half of FY '21, the economy and various industries were severely impacted. Thereafter, business activity started to recover on the backdrop of improved customer sentiment and visibility of vaccination program. Financial year 2021 saw the full impact of COVID-19 on life and business in a manner we could have never imagined. As we remain persistent to grow, we quickly adapted to the new normal for working and ensure continued supplies to our customers without any major interruption or shortages. This has enabled us to achieve a satisfactory performance in a very difficult year. There is some potential pushback in demand as we see. But from our experience of the first wave, we do expect volumes to recover soon, especially with the increase in coverage of COVID vaccination program in the country in coming months. Overall, in our assessment, rural demand is expected to be good on the backdrop of normal monsoon prediction, but it is also dependent upon the intensity of spread of second wave of COVID in rural parts of the country. On the supply side, there could be some loss of production and sales in the current quarter due to the micro lockdowns and restrictions imposed by various state governments and local bodies. Other constraints such as delays in supply of certain raw materials and availability of manpower are also likely to impact the business performance. Currently, except Nashik, all our plants are operational. Of course, we are taking all safety precaution as mandated by various authorities. We are also providing guidance and support to our employees for testing and vaccination. I would now like to discuss the highlights of our fourth quarter and stand-alone financial performance. We concluded the year on a positive note with quarter 4 revenue from operation and PAT growth of 29% and 56%, respectively, on year-on-year basis. Part of the growth is attributable to lockdown imposed during last week of March in the previous year. We have been able to achieve growth in quarter 4 of the financial year 2021 in many business divisions we operate. However, the impact of COVID is visible in our results, especially on the top line for the financial year as a whole. While the top line and the profits declined in the first half of the fiscal year, we were able to reverse this trend and achieve growth and better margins in second half of the financial year 2021. KOEL delivered highest ever sales in quarter 4 of FY '21. Revenue from operations for the fourth quarter stood at INR 915 crore against INR 711 crore in the same quarter previous financial year. Total income of INR 923 crore for the quarter was approximately 28% higher compared to INR 720 crore in the previous financial year. EBITDA of INR 117 crores for the quarter was 70% higher compared to EBITDA of INR 69 crores in quarter 4 of last year. PBT before exceptional item for the quarter stood at INR 107 crores as opposed to comparable PBT of INR 60 -- INR 61 crore, in quarter 4 of FY '20, thereby registering a growth of 76%. Except institutional and project solution, what we call IPS business, all other businesses have delivered growth in quarter 4 on a year-on-year basis. In fact, industrial and -- which includes engine supplies OEMs in tractor, construction equipment and other segments and customer support business divisions delivered highest ever sales in quarter 4 of FY '21. On an overall basis, the domestic business grew by 31%, whereas 7% growth was seen in exports in quarter 4. Momentum gained in GCC and other Middle East countries in preceding quarters in the current financial year was maintained in quarter 4. As far as KOEL's stand-alone annual financial performance is concerned, the total revenue from operations for FY '21 is at INR 2,694 crore, which is 6.4% lower against FY '20. EBITDA for FY '21 is reported at INR 282 crore, vis-à-vis, INR 242 crore in the previous financial year. Profit before tax before exceptional items for the financial year '21 stood at INR 240 crore as opposed to PBT of INR 209 crore in FY '20, delivering a 15% growth year-on-year basis. The company generated INR 526 crore of cash from operations in FY '21, which is more than 3x the PAT for the year, against INR 228 crore of previous year number, representing 1.3x the PAT of FY '20. The liquidity position of the company continues to remain very strong. I would now like to touch upon -- briefly touch upon the financial performance of our 3 subsidiaries, La-Gajjar Machineries Private limited, in short LGM; KOEL Americas; and Arka Fincap Limited. In the financial year 2021, LGM registered more than 12% Y-o-Y growth in sales despite COVID-19. The revenue from operations grew to INR 520 crore in FY '21 from INR 467 crore in FY '20. PBT for the year was INR 26.7 crore versus INR 23.3 crore in the previous financial year. Retail and export segments grew by 14% and 17%, respectively, at LGM. OEM segment, however, saw a decline of 3% year-on-year basis. LGM has formed a wholly owned subsidiary by the name Optiqua Pipes and Electricals Private limited in February 2021 to tap the market opportunities in the Allied segment and adjacencies in the Water Management Solutions division. There was no material transaction in Optiqua in FY '21 because the company was formed in February. Optiqua has recently acquired an Ahmedabad based partnership firm by the name Optiflex Industries on a slump sale basis at an enterprise valuation of approximately INR 15 crore. Optiflex manufactures and sells winding and electrical wires used primarily in submersible pumps, flat cables, poly-coated tapes and UPVC column pipes. The acquisition of Optiflex is expected to strengthen the company's position as a solution provider in the electric pump segment. It would also help the company in expanding its existing electric pump segment and extend the value chain through backward integration into select raw materials. The Optiflex business also has operational synergies with the water management business division of KOEL. The closing of transaction happened on April 16, 2021. As far as KOEL Americas is concerned, its revenue from operations grew from USD 2.5 million in FY '20 to USD 3.8 million in 2021, and it reported a profit before tax of nearly USD 116,000 in the year 2021 compared to approximately USD 129,000 in the previous financial year. The growth in revenue was predominantly seen in agriculture and industrial segment at KOEL Americas. Now I come to Arka. Arka has been delivering profits quarter-on-quarter. Total income for FY 2021 increased from INR 48 crore in FY '22 to INR 102 crore and the PBT rose from INR 10 crore in the previous financial year to more than INR 23 crores in FY '21. As you are aware, KOEL has infused INR 124.82 crore of share capital in Arka in FY '21, and the total investment of KOEL in Arka stands at approximately INR 651.31 crore as on March 31, 2021. Arka has an asset under management, AUM, of INR 1,124 crore as on 31st March '21 versus INR 447.5 crore as at 31st March 2020. There have been no overdues in the portfolio of Arka. And on the liability side, Arka has established relationship with 16 institutional lenders and raised more than INR 750 crores during the year. As on 31st March 2021, outstanding borrowing was approximately INR 666 crore at Arka. Arka continues to enjoy credit rating of AA minus for its long-term borrowings and A1 plus for its short-term borrowing from CRISIL. Now I will touch upon the consolidated result. At a consolidated level, the revenue from operations in quarter 4 jumped by 31.5% from INR 827 crore in FY '20 to INR 1,087 crore in FY '21. However, on an annual basis, revenue from operations reduced marginally by 2.5% from INR 3,379 crore in FY '20 to INR 3,296 crore in FY '21. The profit before tax, before exceptional item, for quarter 4 FY '21 stood at INR 114 crore versus INR 63 crore in quarter 4 last year, depicting a jump of nearly 80%. For the full year FY '21, the group delivered PBT before exceptional item of INR 278 crore versus INR 228 crore in FY '20, representing almost 22% increase. So that was a quick snapshot on financials. Now I would request Sanjeev to share with all of you the strategic direction and thrust areas for KOEL and its subsidiary for next few years. Sanjeev, over to you.

Good afternoon to all of you, and a warm welcome, and thank you for joining on this call. This is Sanjeev Nimkar, MD of KOEL on this call, this side. Thanks, Pawan, for giving a detailed briefing to the Investor team here on this call or the analyst. What I will do in next 5 minutes is pick up some nuggets and give my side of the assessment as we stand here. If we look at last quarter, specifically, this was a quarter for BS4 transition for our industry engines. And even in our last investor call, I had clarified that this time, we are extremely well prepared for this transition. And that point in time, I had talked about we had clocked 17,000 to 18,000 hours of field trial before going to the market. And when actually we hit the market, that is April this year, 25,000-plus successful field trials were completed, and that helped us for this transition extremely successful. And this acts as a foundation for our situation for BS5 going forward, down the line 3 years. And even CPCB 4+ which is maybe down the line one year, which is coming through. So that's a very positive homegrown technologies, what we have given to these customers, and all our OEMs are extremely happy with that move. Not only that, this BS3 prebuy, which was there in the last quarter, almost on a weekly basis, the demand from OEMs are continuously going up. And thanks to our robust supply chain, we could cater to the all risen demand into the Q4, and they were extremely happy with that. Last quarter, on the power generation side, specifically, our 750 and 1,000 -- 910 and 1,000, this range. This is almost like 4 years we have ended giving this range to the market, and now it is well stabilized. Last year, this range has grown by around 50%. So -- which is like indication that these products are well accepted by the market, and we are clear #2 in this segment in the market. Tractor engines were continuously on a high demand and one of the highest numbers we delivered to our biggest OEM as well as to the open market. So that was also a very positive story on the tractor side. As I informed even earlier, that our strategy to cater to global need of a firefighting segment through FM-UL range has been runaway success in the last 2, 3 years. As we speak, in the Middle Eastern market, we are close to 40% market share. We are now planning to replicate the similar market share in the U.S. and the LATAM market. So those actions are on track. So that's a very positive story for us. And this gives us further scope to extend our offerings even into the nonlisted domain. And that firefighting range we have just introduced in the last month or so, and we expect good traction on that. As Pawan was just talking about, our Water Management Solutions story of last 3, 4 years, the way the company is aggressively capturing market share is a classic example that when the industry was at 15%, 20% decline last year, our subsidiary, LGM, and our KOEL Electric Pumps, which we sell through Kirloskar, the main company. So both the segments shown tremendous growth, and LGM could get double digit. Probably in our assessment, that's the only company in this space who has grown double-digit and with that kind of a size. So that's a very, very positive story, and all our strategies are coming true there, working fine for us. As Pawan just talked about Optiqua in detail, that is the new subsidiary, what we have created under LGM. This is primarily looking at allied products opportunities in water management space. And those are primarily control panels, flat cables and column pipes. And these go alongside these pumps. Pumps is the -- electric pumps is the main carrier and these product, these accessories go alongside that, and it becomes a complete solution. So the company is making a transition from selling just a product to giving a complete solutions to our target audience. So -- and that's how the Optiqua's acquisition there comes very handy, which is a unique company, which you could get -- this Optiflex industry is what we have acquired. So under one roof, we could get all these 3 together. So that was a unique advantage of what we got out of this. And going forward, we expect this to add up to good revenues in water management solutions. Coming to the farm mechanization side, last year, and some questions came on this call as well. There were some government regulations coming in for importing from China. And we had some products which were coming from that said in this farm mechanization space. I'm very happy to report here that almost 90% plus products are localized here, and we have started using our own engines here. Not only that, with -- through our these own engines, the kind of power tiller, which we have made right now, their performance is one of the best in the country right now. So compared to any competition, they are the best-performing power tillers. Not only that in the Weeder segment, we are leading the pack. So we are holding close to 40% plus market share in weeder. And going forward, along with diesel weeders, we will be also offering petrol weeders starting this quarter. So that completes the range and all -- small and marginalized farmers will have a very cost-competitive offerings coming from Kirloskar house through this petrol and diesel-based weeder segment. Along with these weeders, we have also come out with some unique products. The weeder and reaper as a -- in one product we are giving these solutions. Currently, all the farmers are required to buy these products individually, separately, that cost them very high. When they go for this unique product, so they get huge cost advantage as well as the same product can be used for both the applications. So we are the unique company giving these solutions in the market. Coming to Kagal plant, we have received many green awards last year and our story of green manufacturing continues from Kagal. As we speak, we also installed 2.8 megawatt solar plant at Kagal, which brings the renewable sourcing of Kagal plant to close to 65% now, and in the industry, that may be one of the highest. Coming to the research and engineering side, next 2 years, we will be directing our focus towards offering CNG and PNG based products to the market, so that before this market shifts to some more advanced technologies, we clearly see a transition happening on the gas side of the story, and the company is completely gearing up for that. So with that, I hand over back to the organizer.

[Operator Instructions] The first question is from the line of Renu Baid from IIFL.

I have 3 questions. The first question would be to understand a bit more on the domestic power gen side of the business, where you are now sitting at a clearly #2 in terms of market share. So what are the key growth drivers that you anticipate for FY '22? And to what extent one should look at the growth -- industry growth and the company growth in the segment, given that second wave impact has been there initially in the first quarter since? I'll share my next 2 questions subsequently.

Yes. Thanks, Renu, for this query. When I said we are clear #2, that is in UHHP segment. That is 750 and above. The remaining segment, in -- if you look at the quantity market share, we are clearly #1 in LHP, MHP, these segments. Only HHP, we are clear #2. So that's a small correction out there. Going forward, now the second wave hit hard. Otherwise, till March, we had an indication that the capital formation in the country after a long time, we are seeing positives on that side. Infra projects were coming up very well in the country like a lot many ports and airports were also coming up very well. A lot many -- the hospital segment was also going very well. So that continues the momentum, but I do not know in this quarter or next quarter, how much the decision-making -- can be a little bit slowed, but we look at it as a temporary slowdown. And the moment this wave subsides down, the demand will be coming back on that side. So we are still quite bullish on this year. Maybe GDP, which was projected towards 11%, 11.5% kind of thing. We still anticipate 9%, 9.5% and that will be very good for power generation business. Yes.

Sure. Sir, the second question would be on the industrial segment where we did see a strong pre-buy from the emission norm. So, a, would it be possible for you to quantify the incremental sales or demand which you witnessed because of pre-buy? And also, given that some of the end markets are now looking to grow construction also on the fast track, so can industrial segment continue to grow by high double digits 20%, 30% in the next year, given the new emissions and the core construction and demand in fee?

Yes. Again, this is a very good question, actually. See, the -- at the time of pre-buy, the growth which happened in this quarter, the demand which was there,was upwards of 25% to 30% for the quarter-on-quarter for that specific segment, which were undergoing for the initial non transition. And our own assessment was that in this Q1 of this -- FY '22, first 2 months will be slow because there will be a lot of stocks in the market. And then it will pick up. That was our estimation. But fortunately, for the industry, all those prebuy got consumed by mid of April, actually. Most of that. And the BS4, with the higher pricing, the -- in fact, we are seeing that the industry leader and ourselves, all the players have behaved very, very reasonably as far as the end customer pricing is concerned on BS4, that's a very positive news, and those prices are stabilized to a large extent, and the demand has started picking up. So we, ourselves, we are a little surprised that by end of April, the demand for the BS4 started coming up, which we are actually anticipating which will come in June first week. 6 weeks it got preponed, which is a very good sign. And that also indicates that the trust of the government on the infra will continue to be very good going forward. So in the month of March, it had hit almost 38, kind of, kilometers per day was the government announced number, so which is a very good sign. And it continues. That story continues. And I expect this COVID wave, the second wave or maybe a third wave coming up, that can help momentarily blip. But the direction in which the government is operating in this space will continue for this coming year. So that's our anticipation.

Sure. And sir, third question would be overall in terms of capital allocation and CapEx across businesses. We are seeing strong growth in the agri segment and pumps you are expanding capacities, same for the diesel genset as well, where we have emissions and the leg -- second leg of CTCB 4 also coming along. So broadly, if you have to look at the CapEx or the investment that the company would be doing in various business over the next 2 years, if you can give us some broad road map of which other areas and what could be the quantum of CapEx that you're expecting in this space?

Yes. Again, Renu, good question. Yes, we are at the crossroads of allocating the resources. We're looking at this entire decade actually. We are at 2021 and the whole decade we are looking at, mapping at that. But if I break down into 2 halves, the first 5 years, our focus will be now managing the emission norms, whatever required. So whatever CapEx required for that will be allocated. So we have already done a lot of work on BS4 side, which will be useful for BS5 and CPCB 4+. But still, there will be some CapEx required. So that will go on that side. For gasification of some of the engines and coming out with the range, there will be CapEx allocation for that said as well. Post that, we will be putting a good amount of the CapEx into developing the very high-quality R&D for our water management solution options. Because in this pace, the kind of traction which we are getting and our strategies are coming good. So we will be coming out with our own integrated factory which is one of the best in the country or maybe probably we are targeting to be best in this year. So that kind of factory will come, which can be supplying to a global market and for domestic as well. So R&D as well as excellent manufacturing setup. So the way we dominate the space of off-highway market into the engine segment, in terms of our Kagal plant, our state-of-the-art, one of the best teams are there, and we dominate the market share. We will be replicating similar things in water management domain as well. So our capital allocations will be on that side also. On the farm mechanization side also, the traction is very good. If we look at our last year's performance, although we could not come into a complete black but we have wiped out a lot of problems in that businesses and a lot of sustainable solutions will be coming into that space, farm mechanization and specifically targeting towards marginalized farmers, the small and marginalized farmers. That is the space we will be playing our cards. And whatever investment required for that will be allocated for that.

Sure. But would you have any number in mind in terms of the next 5 years investment that you are planning to look across all these segments? Broad number? Would it be like something like INR 500 crores plus..

Yes, yes. More than that actually. And we will also be actively looking at M&A options into related spaces. We will not go for non-related domains. But related spaces, we will be investing into M&A.

So Renu, this is Pawan here. As far as numbers are concerned, typically, next to 2 to 3 years, anywhere between INR 75 crore to INR 100-plus crore kind of CapEx would be continuing, give and take INR 5 crore, INR 10 crores on some of the areas that Sanjeev talked about. And of course, on top of that, we are actively exploring the market for the right opportunities. And once we identify right asset, obviously, we will be exploring the acquisitions.

Yes -- just a minute. When we talked about the INR 75 crore to INR 100 crore, that is per annum.

Per annum.

For the sustenance and that emission norms, what I talked about.

The next question is from the line of [ Sandeep Mehta from ValueAdd Research. ]

Congratulations on the strong results. The company has a strong -- it's a large net cash position on a stand-alone basis as well as a consolidated basis. So why not pay a higher dividend? Or are you looking to deploy more capital into the Arka subsidiaries?

This is Pawan here. Thanks for the question. Yes, you are right. There is substantial cash sitting on the balance sheet. Our dividend policy is very clear. We have announced it. Board has approved it, and we are adhering to range which is defined over there. And in the near term, next 2 to 3 years, we believe that the dividend payout will be maintained. As Sanjeev just talked about, acquisitions, growth opportunities, adjacencies in water management, expansion of water management, and also the potential acquisitions. So this cash that we are holding would be utilized and put to work in a rightful manner going forward. As far as Arka investment is concerned, we have intimated to the stock exchange also yesterday in our filing that as of now, Board has capped the investment at INR 1,000 crore. Out of that, some INR 651 crore we have already invested. And we are committed to invest another INR 350 crores over the next couple of years, something will be contributed in the current year and remaining in the next year. So that is the investment plan in Arka.

Okay. If I look at your EPS annualized, so if you take the Q4 and you annualize that, your EPS level is INR 21.6 per share. If I take the last 2 quarters that you have reported, your annualized EPS is INR 20 per share. Is that sort of a normalized basis, sort of normalized run rate? And looking forward, can we sort of view that as a base and expect the company to grow from this base in that sort of earnings -- EPS level?

Yes. No, it's a good question. The quarter 4, as you know, has been an exceptional year for KOEL, and that's visible in our earnings per share. But you would appreciate that this profitability is a function of a lot of factors. And minimal cost was one of the reasons. Because of COVID related restrictions, many of the administrative selling overheads were not incurred to the fullest extent. As the situation normalizes, going forward, the cost would go up. And also there could be some pressure on margin, probably for a few months. We are actively watching the space as far as the input costs are concerned, and we are engaging with our customers in all the segments. In FY '21, we have taken price increase in various segments that we operate. And in the current quarter also, looking at the crazy input cost increases, we are in touch with our customers for possibility of price increase. So obviously, the EPS that you are seeing in quarter 4 may not be a sustainable EPS, but certainly, the numbers that we will be delivering in this year subject to COVID pandemic second wave third wave, whatever, the numbers are -- we are quite optimistic about the superior financial performance of the company.

The next question is from the line of Sandeep Tulsiyan from GM Financial.

Sir, my first question is pertaining to the Optiqua acquisition that we have done, this Ahmedabad-based company. If you can just shed some more light on that, what is the amount that we have paid? And in terms of end usage of these products, what form of the entire -- what percentage of the entire solution does it form? For example, we do, say, INR 500 crores of sales through LGM and INR 100 crores through Kirloskar Electric, this INR 600 crore pump, what percentage of this would start getting catered from Optiqua and will we sell to other companies? If you can give a broad outlook on that business purchase.

Yes. Sandeep, thanks for this question. The first part, I will ask Pawan to answer that, but I will answer the second part, which is what percentage and what kind of this thing. So this company primarily mix winding wires, which goes as the input into the -- making the rotors and stators of these things. So that's one side. So the drawn copper wires is one production of this company. And they have flat cables and column pipes. So flat cables and column pipes goes along with the solution to the customer, whereas this winding wire goes as the input into the making of the motor. So let's not discuss the winding wire because that will be going as a input from their side. So I'm more talking to you on the flat cables and column pipes side. So when we are talking about the INR 600 crore, our play in this flat cable and column pipes right now is not even to -- how much, INR 2 crores, INR 3 crores or INR 4 crores, not beyond that. But there is a possibility that in the best of the scenario, 3 to 4 years down the line, this scope can be taken to another INR 100 crore. So that much possibility does exist alongside that. And once this INR 600 crore moves to INR 1,000 crore, this INR 100 crore can move to INR 150 crore or INR 175 crore. So that is the addition which this Optiqua can do to this business. So that's the percentage which will go. And it goes along with this solution. So when someone is buying the pump, the column pipe and this cable goes alongside that. So that's how the combination goes. So that's the answer to the question.

And the first question regarding the amount spent on acquisition. As I mentioned, it's INR 15 crore enterprise valuation. We have taken over a debt of roughly INR 11 crore and INR 4 crore is net assets.

Got it. And second question was pertaining to the margin. So you have guided that there might be an impact of 100 to 150 basis point on gross margins in 4Q versus what we delivered, but there actually has been a margin expansion. So that is very commendable. However, what I noticed is, although engine segment margins have improved, the pump segment margins have consistently been coming down over the past 2 quarters. If you can explain, have we taken the price increase in engines, which is delayed in pumps? Or is there a mix impact here? If you could shed some more light on these 2 aspects.

Yes, Sandeep, this is Pawan Agarwal. Yes, your observation is correct. In LGM, you are seeing some margin pressure through segment result in the last 2 quarters. There are 2, 3 reasons for this. Number one, you would recall that we had announced that in LGM, we have migrated to Oracle. And earlier system had some challenge in terms of overhead loading on the inventory, et cetera, et cetera. So the calculation has become now regularized, if I can say so. So that has had onetime impact in quarter 3 a little bit on quarter 4. Second, the copper prices are going through the roofs, and there have been multiple increases, which LGM has got from the supply side. And they have been able to pass it on to -- in some of the segments. But it's still the full passing on of the price increase has not happened. This will again get addressed in quarter 1, but there is a timing issue of 2 to 3 months, 2 months roughly in terms of passing on the input cost increase. So there has been some pressure on margins, but this is temporary in nature.

I see. Okay. Fairly explained. And sir, lastly, if you can just share numbers of the diesel pump set sales or maybe the electric pump set sales that we've done under KOEL in the current quarter. And also the overall UHHP sales, what we have done for full year versus how it has grown on FY '20 base. Those 2 data points will be helpful.

Yes. So KOEL Electric Pump in March quarter '21, KOEL Electric Pump sale is INR 49 crore. And full year sale is INR 127 crore, KOEL. LGM is, for the quarter, INR 156 crore; full year is INR 519 crore from segment revenue. What was your next question, Sandeep?

Yes. Second one was on the UHHP, the 750 kg and plus. Overall, if you can share the numbers for full year versus last year?

Yes. So full year revenue for FY '20 is INR 60 crore, and quarter 4 is -- just a moment, quarter 4 is INR 26 crore.

The next question is from the line of Bhavin Vithlani from SBI Mutual Funds.

Congratulations for good set of numbers.

Can you speak louder please? We are not able to hear you clearly.

Am I audible now?

Yes, we can hear you. Go ahead, please.

The question is on Arka Fincap. If you could give us what was the link during the quarter and in the fiscal year? And what is the broad breakup for AUM in terms of [indiscernible] segment.

Sorry, Bhavin, your voice is breaking. We can't hear you clearly.

I heard his question. He was referring to Arka Fincap.

So with the permission of Pawan ji and Sanjeev ji, can I take this question?

Yes, Amit, go ahead. Go ahead, Amit.

Yes, Bhavin, just to give you a brief perspective on the performance of the Arka Fincap and about this AUM as on March 31, 2021, I'd like to highlight the fact that for the first year -- this is in fact the second year of a full-fledged operation. Arka Fincap does have revenue base of more than INR 100 crores. Year-on-year, the company has been delivering a profit. This and last financial year, fiscal year 2021, the company has delivered a INR 15.88 crore of PAT, which is more than double as compared to the last fiscal year, which is fiscal year 2020. As compared to the AUM, in FY 2020, we had an AUM of INR 447 crore, and this financial year, we have closed at an AUM INR 1,124 crore. The broad breakup of the AUM is basically split into 3 different business segments. 55% is constituting from a mid-corporate, 40% constitutes real estate and allied activity. When I'm saying real estate and allied, it's 2 different domains. Out of this, INR 380 crores is into the real estate and INR 71 crores is into the allied, and the balance 5% is coming from the SME and MSME space.

Sure. And couple of years ago, we had highlighted that a target market could be our channel. So any update on that? How have we been able to capture our channel, which is the exact Kirloskar Group channel?

Bhavin, if I can take you through, yes, we have started doing the supply chain finance. But this is only one of the target segment. As we have always been saying that we will be doing a little bit of business within the Kirloskar ecosystem, and our major focus will also be on the outside of the Kirloskar ecosystem. Among the various products, we have started doing a little bit from a Kirloskar ecosystem on a supply chain finance. And yes, this INR 51 crore of SME and MSME includes a small portion from that particular channel also.

Sir, the second question is, if you could -- the way the commodities have moved up, what is the kind of pressure that we are seeing on the profitability and if you could talk about the price increases that we would have taken across, let's say, power gen or industrial or the added culture segment?

Bhavin, good afternoon, and thanks for your compliment. Nice to hear your voice after long time. Yes, you are right, this commodity pressure is definitely there, and this has started growth story from the month of October actually, last year, October '20. And October to December, we had seen close to 6%, 7% kind of collective pressure coming up in all commodities put together. And in the month of Jan, Feb, we tried passing out some -- closer to 75% to 80% of that to the industrial channel as well as on the power generation channel and also water management side. Unprecedented things continued in April. And now even today, it is continuing. So in a very quick succession, this kind of commodity price rise at least I have not seen in last decade actually. Because there was gradual price rise and then plateau coming in and then declining, that's a normal cycle. But this time, it is very different, and it is also linked with the global cycles which are happening. So all the commodities are almost linked with the global commodities right now. And we expect that may continue for maybe another quarter -- at least this quarter and maybe in -- up to mid of the next quarter. We are quickly working out that wherever possible, like power generation or water management side, very quickly, we will be passing out these prices to the market. And as always, we will be taking a lead in doing that. Whereas in the industrial side, we find it a little tougher, but the discussions will be initiated immediately because unfortunately, the industrial OEMs are not able to pass on the price to the market. Because with BS4 also, there is already some price rise, which is already happened for the end customer. On top of that, this commodity price rise, they have to pass on very heavily. So there is a resistance coming in there. But we are able to settle down at least the mid part somewhere. So that is what we had done it in February, March, and we will again be initiating in this month. And probably by June, we'll close somewhere. So -- but there will be a little bit of pressure, yes.

So from October till, let's say, end of April, what is the kind of price increases that you would have seen in power generation, industrial and water management?

Water Management side, at least, we have gone up by 8%, 9%. Power generation up to 5%, 5.5% and almost similar percentage on industrial side as well.

The next question is from the line of Bhagyesh Kagalkar from HDFC Mutual Fund.

Yes, sir. This is regarding CPCB 4. What's the time line in this government wants it done now? Secondly, you have excellent technical capabilities, as you have said. So going forward, do we expect further gaining market share that our solution will be slightly affordable compared to the MNC peers.

Are you through?

Yes.

Okay. Thanks for the question, and I appreciate that you are tracking our calls very, very closely. Otherwise, you would not have given the second comment. Thanks for the compliment. And yes, indeed, our solutions will be cost competitive compared to anybody in the market, that's for sure. As far as CPCB 4+ is concerned, our current estimation is July 22. So that's what it is. But the circular is yet not out. And there is an unwritten rule that whenever the circular is out, generally, government gives a 1-year window. We expect circular to be out maybe somewhere in June and July '22 can be reality. But what has happened because of this COVID lot many government departments functioning has been paralyzed actually. So we do not know whether the authorities are following the right file because the programs are getting shifted to a different priorities. And obviously, right, because different departments have different priorities. So we do not know, but looking at BS4 thing what has happened, that there were also some attempts from some of the construction equipment lobbies to postpone this, which government didn't accept. So that gives us some confidence that maybe July '22 can be -- 70%, 80% probability can be a reality. And as you said, we are geared up for that. There will some price increase that point in time. But compared to whatever will be the industry increase, ours will be reasonably competitive in that space as well. And yes, we do anticipate that this transition will be far different than what happened in CPCB 2, where CPCB 2 most to the players could transit that. This time, we expect there will be some consolidation. And this is -- again, I'm putting my probability of 60%, 70% on that, there will be consolidation and KOEL will gain because of that.

Can you quantify, sir, how much can the price rise will be? And the second question is, others are saying that since they are doing CPCB 4+, this uses extra advantage in the export market in the developed world. So same thing [indiscernible] on this portfolio?

CPCB 4+ gives extra advantage to the developed world maybe in a few countries only. Because right now, whatever CPCB 2 we are giving, that itself is -- very few countries are ahead of this right now in the -- globally. Maybe you can count on fingers. Only those many countries are ahead of us. So that much competitiveness is there even with CPCB 2. Now coming to the price rise question, it will be too early to comment on that because there will be -- lot of water has to flow first. But if you ask me ballpark number, can be anywhere between 20%, 25% minimum, even upwards to 30% also because there will be a lot many new technologies coming in this space. And that is -- this is a bare minimum side I'm talking about. It will be only upward than this.

Okay. So it will a substantial jump, okay.

Yes, it will be. It will be substantial jump.

The next question is from the line of Arun Nahar from Alpna Enterprises.

Just one question, if you could clarify. How much of our sale is direct-to-consumer? Segment-wise, when I say that, I mean, how much in power gen, surely industry it is not bigger. But how much in power gen , how much in the pumps as a total percentage or total number? And sorry, with a follow-up on that. And do we have the liberty of raising prices there faster than the others?

Yes. I think both the questions are linked to each other, and you are absolutely damn right there that on the consumer side, we definitely get a higher liberty to raise the prices faster. You are absolutely right. We did these calculations, maybe a few days back. We ourselves wanted to check how much is our businesses are dependent on B2B kind of a scenario and B2C directly going to the end consumer side. So right now, we are 30% on the end consumer side. I will give the examples to you. We have our electric motor based all pumps going into -- almost like 70%, 80% plus going into end consumer side. Only whatever that OEM segment is there, which goes -- or government is there, which goes to the B2B route, otherwise entirely in a B2C space. Then we have farm mechanization, also goes through majorly the B2C route. Then we have -- on our crop irrigation businesses, we have this diesel engine based pumps, those also go to B2C route. So those are the spaces we are directly into the B2C space, and it adds to around 30%.

I have a follow-up. The follow-up is how much of your exports is B2C? And what is the total volume of your exports?

Total volume of our exports in terms of percentage you're asking to the total sale or actual value?

Percentage to total sale. I presume it is only...

9% of total sales of KOEL comes from export. But if you add -- on the water management side, I think our percentage is much better. We are around 25%. Our La-Gajjar Machineries exports are 25% into export side. So that's a very significant there. And our products are very well accepted in that space. Whereas the power generation and industrial side, the mainstream KOEL side, we are at around 9%.

And what are your targets there, sir? And I presume La-Gajjar would be what geography, mostly Africa, Middle East or?

La-Gajjar primarily Africa, Middle East, you're absolutely right. These are the 2 geographies. Middle East, we are almost 10% plus market share. And in Africa, many countries, we are doing reasonably good. Target there, in the next 4 years horizon, we are targeting around 35% to 40% on the La-Gajjar side and around 20% on the KOEL side. That's our aspirational targets.

[Operator Instructions] The next question is from the line of [indiscernible] from Phillip Capital.

So my question is regarding the overall growth opportunity for next 2 to 3 years, sir?

This question can be as broad as broad it can be. So -- but, yes, there are definitive plans we have jotted down in terms of growth opportunities individual business wise as well as on the M&A space as well. So all businesses is like right from industrial engines to power generation to water management, farm mechanization, each business has jotted down the plans for next 3 years. So if I get into the details of the every domain then -- but at least each of this vertical is planning for year-on-year growth of at least 15% to 20%, that -- at a plant level. But of course, the environmental factors come into the picture. But if you ask me generically, we'll be targeting for double-digit growth CAGR for next 3 years at the organizational level.

Ladies and gentlemen, due to time constant, that would be our last question for today. I now hand the conference over to Mr. Dhirendra Tiwari for closing remarks. Thank you, and over to you.

Thank you, Aman. Let me take this opportunity to thank the management of Kirloskar Oil for the conference call. I also thank all the participants for active interest in the call. Thank you, sir. Thank you very much. And now we can close the call. Thank you anyone in queue.

Thank you, everybody.

Thank you, everyone. Thank you.

Thank you very much. Ladies and gentlemen, on behalf of Antique Stockbroking, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.