Olectra Greentech Limited (532439) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Olectra Greentech Limited Q2 FY '25 Investor Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amar Kant Gaur from Axis Capital Limited. Thank you, and over to you, sir.

Thank you, Neha. Good evening, everyone. On behalf of Axis Capital, I welcome you to the Q2 FY '25 post-results conference call of Olectra Greentech Limited. From the management team, we have with us Mr. B. Sharat Chandra, CFO; Mr. P. Hanuman Prasad, Company Secretary and Compliance Officer, along with teammates from finance and strategy. I will now hand over the call to Mr. Sharat Chandra for his opening remarks, post which we can have the Q&A. Over to you, Mr. Sharat Chandra.

Yes, thank you, Amar. A warm welcome to all of you who have joined us today for the Olectra Greentech Limited earnings call for the quarter '24-'25. We are taking as read the presentation which is put on our website, along with the safe harbor statement thereon. Before I talk on the key financial highlights for the second quarter, I would like to state that overall results of quarter 2 have set the trend for the future second half of the year, and we are reasonably confident of delivering the guidance, especially with regard to the targeted volumes for the FY '25. We have registered our highest-ever quarterly revenue, EBITDA and profit after tax. Till date, we have delivered 2,217 electric vehicles. I would like to present the key highlights of your company as of 30th September at a glance. Olectra buses have successfully covered more than 28 crore kilometers across the length and depth of the country. The strong demand continues with the company's net order book of electric buses stands at 10,503 numbers after delivering 315 buses in quarter 2 financial year '25. Our focus continues on increasing our manufacturing capacity and enhancing our technology capabilities. The construction works of the new state-of-the-art plant at Seetharampur is in full swing, and your company has transitioned to the new facility, as informed earlier in quarter 1. Now I will begin with providing the key highlights. Coming to the consolidated financial year for the quarter 2 FY '25, on our revenue, Olectra has clocked its highest-ever quarterly revenue at INR 523.67 crores, marking a growth of 70% over INR 307.16 crores from Q2 of last year. Our EBITDA was at INR 85.69 crores, once again our highest-ever quarterly earnings, up by 90% from INR 45.06 crores in Q2 last year. PAT at INR 47.65 crores, up by 156% from INR 18.58 crores in Q2 of last year. On a consolidated basis, Olectra has clocked highest-ever revenue at 514 -- on a stand-alone basis, sorry, Olectra has clocked highest-ever revenue at INR 514.07 crores, was at INR 297.87 crores of previous year, up by 73%. The company's EBITDA for quarter 2 reached an impressive INR 83.24 crores, once again our highest-ever quarterly earnings, up by 88% from INR 44.1 crores in Q2 last year. The PAT stood at INR 48.2 crores, up by 130% from INR 20.99 crores in quarter 2 last year. So thank you, and over to the Axis team for the Q&A.

[Operator Instructions] The first question is from the line of [ Gaurang ] from Utility Unified.

Congratulations on fantastic set of numbers. This is more than the expectations that the numbers are. So my query is related to the operational revenue which Olectra gets as a virtue of partly owning the operational from EVEY Trans. So I'm specifically interested in BEST and MSRTC as that's where our major chunk of numbers are. So suppose when we deliver 5,150 buses for MSRTC and 5,100 buses for BEST that will happen in probably next year, put together, that number is roughly around 10,250 electric buses. So my question is, EVEY Trans would be operating those buses at an average of 300 kilometers per day. That is 200 kilometers for BEST and 400 kilometers for MSRTC at, say, an average of INR 70 per kilometer. So I'm right -- if so, am I right in projecting that the yearly revenue of EVEY Trans would be around INR 7,856 crores for that financial year? And again, if so, I want to know what percent of the INR 7,856 crores will be part of Olectra's profit and loss sheet and what would be the net margins from this operation that the company has projected? That's my first question.

Yes. Gaurang, see, basically, with regard to the numbers, what you have quoted for EVEY Trans, I think based on 10,250 numbers at INR 70, the turnover will be approximately whatever you have stated. So as far as we are concerned, just to clarify once again, so we manufacture and supply and sell the buses to EVEY Trans. So our revenue is recognized the moment we sell the bus to them. Post delivery of the buses, we take care of the maintenance for the entire project duration, which will be about 12 years. So during the operations, based on the number of kilometers, whatever EVEY Trans buses of 10,250 buses are operating, we will be generating annual maintenance service revenue, which could be approximately, say, about INR 5 per kilometer on an average. I think -- I hope I clarified your question.

So the revenue realized for Olectra would be into -- per kilometer into INR 5. And what would be the net margins out of this that we have projected?

So net margins on this will be about around 15%.

Okay, okay. And my second question is related with Chennai bus tender, which recently got concluded, where Switch won the tender for 500 electric buses. My question is whether we participated because Switch has quoted some INR 70 or INR 80 per kilometer for the non-AC and AC buses respectively. So do we participate? And if we did, were we like really high in the bid that we couldn't win through this tender? Or what is the [indiscernible]?

So 1 second there, just I'll ask my colleague to just clarify this question.

EVEY Trans Private Limited has participated in this tender since it is a GCC tender. And we have provided -- from Olectra side, we have provided our bus cost and all the buses and AMC cost to EVEY Trans, and they have taken a call. And as per their calculation, they have bidded this tender.

Yes. But the bids were around INR 70 crores for non-AC; and INR 80 crores, I think, for our AC as per the article in one of the newspapers that I read. So is it that we have lost the competitive touch? Or is it because the delivery schedules were very stringent that we were not considered?

I think this is -- as per the EVEY Trans and EVEY Trans' calculations, we can't comment on that.

Gaurang, just to clarify, EVEY Trans, at the time of bidding, uses manufacturing authorization form of Olectra. And based on the project metrics with regard to number of kilometers, the number of buses, the project duration and all the scheduled trips, so we provide the cost -- tentative costs. And based on that, they bid.

Got it. Got it. Understood. So probably this time, there's a lot of technical specifications that were added, and probably we couldn't probably outbid them.

The next question is from the line of Yash from JM Financial Limited.

My first question is on receivables. So what sort of receivable days should we work with? And how much time will it take to liquidate these receivables? I assume it's from EVEY Trans only, most of it. So that's the first question that I have.

Yes. See, as far as receivables is concerned, if you see the past 3 quarters or 4 quarters, the receivable is coming down. So currently, it's about 5.5 months. And overall net working capital cycle is less than 3 months. So we expect maybe a couple of quarters improvement in the working capital cycle.

But the receivable number will stay elevated, the receivables number?

See, as we increase our sales, the receivable numbers obviously will go up. So -- but in terms of overall number of days, it will come down.

Okay. And what is the risk that you carry, I mean, in case of this receivable in the worst case? Is there any risk?

We don't foresee any risk. And the other good thing is all the contracts -- new contracts, the customer, EVEY Trans has secured sanctions in terms of term loan facilities. And we hope, accordingly, the working capital cycle to come down.

Okay. Just to delve a little on this. What is the amount of guarantees that Olectra has given to EVEY Trans, if any, corporate guarantees against the loans?

No, we have not given any corporate guarantees.

Okay, okay. And my second question is, what is the sort of volumes we are looking at for the second half? And is the new facility which you mentioned, is it now completely running? Or what is the status of it, if you could provide some?

Yes. As communicated in the last earnings call, we have met the target for Q2. And Q1 and Q2, it's in line with our guidance. And we are aligned and on track with our target of executing about 1,500 numbers in this financial year.

So that means about 1,000 in H2 that you're targeting?

Yes, that is what is the targeted volume. Yes.

Okay. And the new facility is up and running? Or what is the status of it?

Yes, we have -- it is up and running. So partially, we have started the facility, and we have shifted from the old facility. And currently, we have capacity to meet this target.

And in the second quarter, what was the number from the new facility, if you could give that?

See, entire numbers are from the new facility. We have delivered about 315 numbers.

Okay. And my last question is, what is the bid pipeline like for the next 2, 3 quarters? Any material bid pipeline that you have for the new orders?

So you're talking about new tenders?

Yes, new tenders, new tenders.

Yes, 1 minute.

Currently, we are L1 for one of the tenders. And also, we are also expecting the tenders from -- the CSL tenders are there in the pipeline, and there is a tender from NW Karnataka, and we are also expecting tenders from some other new states also.

So what is the quantity of the L1 that you mentioned?

You can say that the tenders will be about 2,000 to 3,000 buses.

In L1?

L1, we are L1 for about 327 buses.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Many congratulations for a good set of numbers. Sir, I just wanted to understand how would we see the ramp-up in our volumes? I mean, this quarter, I think we delivered about 315 buses. Is that right?

Yes, correct.

Yes. So how do we see ramp-up going into third quarter and fourth quarter? And what sort of volume we are targeting for FY '26 and '27?

Yes. As indicated earlier, Q3 and Q4 will be better than H1. So we -- for the target for this year is 1,500 numbers. And next year, we are targeting more than 2,500 numbers. Next financial year '25 -- sorry, you are talking about '26, '27. '26, '27 definitely will be 5,000-plus numbers.

'27 is 5,000 plus and '26 is 2,500 buses, right?

Yes. We are targeting between anywhere between 2,500 to 5,000 numbers.

Okay. Because I mean the -- our current order book is about close to about 10,000 buses, right?

Correct.

And that we need to deliver over 1.5 to 2 years?

Correct.

So ideally, isn't that your, I mean, delivery in FY '26 would have to be much higher than what we are indicating?

So that's what -- and we are actually planning to complete this 10,500 numbers in the next 2 financial years.

Next 2, FY '26 and '27, that's what you're saying?

Yes. Correct.

Okay. Understood. And what sort of margins one should look at? I mean we saw some improvement in your margins, right? I mean with increase in volume, you are getting some operating leverage advantage as well. So your margins currently is at 15.6% EBITDA margin in the second quarter. So how should one look at the margin traction going forward?

See, we -- my margins quarter-on-quarter will be -- will depend on the product mix. And as we see larger volumes when we talk about 10,000 numbers, we expect the margins to stabilize around anywhere between 10% to 12% because we have to be in line with the competition, in line with the volumes. Because the fixed cost will also go up, and whatever additional contributions we earn from the revenue and the fixed cost absorption will be there. And on the near-term future, the margins could be like this, what we are earning now. But over a long term, the margins will come down in percentage terms. But in absolute numbers, as you are aware, it will be very high.

Okay. So what you're trying to say in the near term, this 15.5% margin can be sustainable. But as we go towards executing this entire product mix of 10,000 buses, your margins would, I mean, range between 10% to 12%.

Yes. It all depends on the -- see, we are working towards localization. We have been working on reduction of our raw material costs. So that is where we are seeing better margins in this quarter. So it all depends on various variables, which will be -- which are going to be there. So we would give the guidance around 12%.

12%, okay. On an average, for these 10,000 buses as a whole, right?

Correct.

Okay, okay. And generally, what is the realization we get per bus?

If you look at the product mix, on an average, it's about INR 1.5 crores.

Okay. Okay, understood. And how do we see the debt scenario? I mean, do we have to get more debt for executing because it's working capital intensive, right? So as you increase the volume, you would need some capital for working capital. So how are we placed there?

Yes. As of now, we have sufficient limits to take care of the next 6 months to 1 year. And what we are seeing is basically our customer, EVEY Trans, their -- all the new projects, the financial sanctions or financial closures are already in place in various stages of documentation. So what we anticipate is basically our working capital requirements will not increase as all these financial sanctions and all the financial closures are completed for all the -- for these 2 major contracts.

Okay. Okay. So do you expect increase in debt going forward?

So as of now, basically, our debt will increase with regard to the term loan where we have availed for the new facility. So on utilization of this facility, we have actually sanction of INR 500 crores. So by utilizing the facility, our term debt will increase, which over a period of 4 to 5 years, we expect the repayment should happen.

Okay. So term debt is at INR 500 crores, right? Am I right?

Yes.

Okay. So that will increase effective when?

It's already in place. We have started availing in this quarter.

Started availing in this quarter. Okay. Understood. Fair enough. I think that would be it from my side. All the very best.

[Operator Instructions] The next question is from the line of [ Sudhakar Rao ], an individual investor.

I'm Sudhakar from Hyderabad. Hearty congratulations for the excellent results for this quarter. I have a few questions, sir. The gross margins were very good at 15.65%. Was it due to improved operational efficiency and localization of components or due to the composition of the type of buses delivered and it will be restricted only to this quarter or whether we can expect the same margins in the future also?

Okay. Thank you, Mr. Sudhakar. Basically, it's a mix of both. So in terms of -- we have been working towards localization and our cost of efficiencies we are bringing in. So that is one reason and also the product mix. It's a combination of both which has given us this margin. And we expect -- see, overall, if you look at the gross margins, we expect on a company as a whole, it's between 25% to 28%.

25%?

25% to 28%, the gross margins. When you talk about gross margins, I'm talking about the material versus the sales.

Okay, okay. Sure. Have you finally dropped the plan to raise equity through QIP and other things? You're going ahead with the debt only for the new projects?

As of now, we are actually funding the project through internal accruals and debt. So the management is yet to decide on the -- any kind of fundraising activity. So at an appropriate time, whenever there are internal clearances and the management is going ahead for a fundraise, we will definitely notify the shareholders.

So still there is a possibility even though we are almost halfway through the new project implementation?

Not now, Mr. Sudhakar. Basically, as we are growing in the future...

Okay, okay. Sir, we cannot say, okay. So the present project on hand, the new greenfield one, I think you're already tied up for the debt there. So you must be mostly going ahead with that. And sir, regarding the deliveries and your capacity, present capacity and when the full capacity of 5,000 buses will come, there's a lot of confusion. In each con call, there is a different story I get there. Last time, you said that you'll be doing 1,500 buses in this financial year. And -- but so far, the deliveries are not promising. And will you be able to reach 1,500 in this financial year?

Mr. Sudhakar, actually, we have given a guidance of about 300 numbers in this quarter. Against that, we have done about 315. Overall, H1, we gave a target, and we are in line with the guidance, whatever we have given for H1. And we have indicated also H2 will be the biggest half year. And we are confident of meeting the guidance of 1,500 numbers at this juncture.

Okay. Earlier on, you said that the total capacity of 5,000 will be ready in this financial year by March. That was the last time we have said that. Just now I heard you say that the next year capacity will be only 2,500. How come they don't match it on there?

No, no, I have not said capacity, I said the target. Capacity, we are building to 400 buses per month by the end of this financial year. What I mentioned is the target for this year is about 1,500 numbers. Next year and next 2 years, we'll complete this -- the order book, 10,500 numbers, we are planning to complete within the next 2 financial years.

So from April '25 onwards, sir, there can be deliveries of 400 buses per month, April '25?

That is our target.

Okay. Got you. One more thing. This one, other expenses have doubled to INR 12 crores from INR 6 crores. Any extraordinary item? Or any...

In line with the growth in operations and in line with the growth, there is no extraordinary items, extraordinary expenses.

I see. One more small request, sir. The financial figures in the quarter, so they are given in lakhs. Considering the growing size of the business, sir, the figures are given in crores, it will be easier to read and understand. Please consider this if there's no law prohibiting it.

Yes, we will just examine and then we will discuss with our auditors and then do the needful.

The next question is from the line of [ Sanjay ] from SK Securities.

Congratulations on good set of numbers. I'm very happy that this time, whatever numbers were committed, and really, you've got the numbers. So congratulations to your whole team. My question is, you just mentioned about, in H2, you are targeting around delivery of 1,000 buses. So any -- in Q3, what number you are targeting?

See, overall, Q3 will be better than Q2. That much I can say as of now.

Okay. Okay. And generally, this Vahan Portal generally gives a 90% accuracy of numbers because the numbers are not there. And October, it shows a number in about single digits. So any challenge, any delay in delivery because there is not much delivery happened in October month?

I think we have clarified in the past about the Vahan Portal. So as far as Olectra is concerned, we manufacture and deliver our buses to our customers, and the customer completes the other process of registering and getting the approval from the STU. And there will be a time lag between delivery and the registration. So that is one aspect. Second is, till recently, some of the states are not included in the Vahan Portal. So there could be differences because of these reasons.

Sure, sure. I can understand. But there is no challenge in the production and delivery so far in October. It's going smoothly, right, in the new facility?

Yes, it's going on smoothly in the new facility. Yes.

The next question is from the line of [ Rithvik Ram ], an individual investor.

Sir, it is that the Q2 results are indeed amazing. And I'm very happy to know that Q3 will be much better than Q2. Congratulations on the performance of Olectra Greentech.

Yes. Thank you, Mr. Rithvik.

Yes. One, I have a question, sir. My first question is regarding the insulator business. In the future, do you have any plans of demerging the insulator business into a separate entity? Because in the world of mergers and acquisitions, I see companies demerging their original business and focusing on the new business. For example, in case of Unilever, they are demerging their ice cream business into a separate entity. So any plans of demerging the insulator into a separate entity?

Mr. Rithvik, as of now, there are no intentions of demerging insulator into a separate entity.

Okay. Because the insulator business is growing at a snail pace compared to the bus business. Bus business is growing very fast. So that is why I asked that question. And my second question is regarding the gratuity funding. I've seen your annual report where your gratuity liability has shot from INR 2 crores to roughly around INR 3 crores. Your liability is growing. So any plans of creating a trust and funding the liability to the trust? As you know that there are tax benefits for funding the liability.

Yes. As of now, we are actually providing based on the actual valuation. So as we grow, we may have to deliver and deliberate this internally. As of now, we have no intentions of creating a separate trust.

Yes, I understand, sir, but you can do a part funding of the trust, right? And you can do an SIP and fully fund the liability.

Yes, sir, noted. Mr. Rithvik, we will deliberate internally.

Maybe in 2 years, it would be a good idea to start a gratuity funding.

Noted, Mr. Rithvik. Yes.

Okay. I look forward for a great performance of Olectra. I've been invested since September 2017 and since 2020, because the time is magical for Olectra. I hope it shoots up like a Tesla.

Thank you. Thank you. We -- definitely, with the support of shareholders, we hope to reach those milestones.

The next question is from the line of [ Umashankar Mukherjee ], an individual investor.

So congrats, sir, for the great results. And I have a question -- 2 questions, small. One is that we have -- apart from BYD, are you planning for any vendor for our battery technology from India? And secondly, are you targeting any small player, I mean, private player for bus for our contract like apart from the transport, state transport, any private -- are you targeting a small, small customer and getting orders? That's it.

Yes, Mr. Umashankar, thanks for your query. See, basically, we have a very long-term relationship with BYD. And currently, we are sourcing the -- for all the STU related from BYD. And they are also -- as I think we have indicated in the past, we have a strong R&D team, and we have been working on an alternative platform. And we have delivered on the path on working on alternative platform. So there is no such restriction as such per se. And with regard to private players, we had in the past -- last year, we have sold about 19 buses to a private player known as Fresh Bus. We continue to engage with private parties. This market is clearly picking up. The traction is yet to happen, but there are a lot of opportunities. Definitely, the opportunities will be much higher than the STU market maybe in 2, 3 years' time. So we are working with various private customers, and we hope to finalize the contracts in the near future.

Sir, the follow-up question would be like the battery, BYD, I know you have a contract till 2030. And -- but seeing the geopolitical issues across the globe, and China especially have a relation with India, so is it possible to have an alternative Indian partner, Indian manufacturer of getting suppliers for battery to -- in the safer side? Is that what you are saying?

Yes. Definitely, basically, in the recent past, the Government of India sanctioned PLI scheme, and a few Indian companies have started in manufacturing batteries. So it will take another 2 or 3 years' time. Definitely, the company will explore based on technology and the cost and economics. So definitely, this will help in the long term.

Sir, for e-tipper, any update on e-tipper? Any new orders of e-tippers and/or hydrogen? With Reliance, we got some news, a tie-up. Do you have any update on these?

E-tipper, we have delivered till date about 51 numbers. We have been conducting a lot of demos and trials across various project sites. The traction is yet to happen. We expect the traction to come in, in the next 6 months to 1 year. As far as the hydrogen -- your question in hydrogen is concerned, as this technology is at a very nascent stage, we have decided to discontinue and considered the current economic viability. And as we have a very huge order book, we are now focusing on completing the deliveries of electric buses.

The next question is from the line of [ Nanda Padmarajan ], an individual investor.

Congratulations on a great set of numbers. Q2 numbers are really, really good. I have 2 questions. The first one is in Q1, you updated that we sold 5 buses to Microsoft. Did we sell anything in Q2? If yes or no, are there any further pending orders from the same entity? Second question is on margins. We -- I'm assuming that the rate that we fixed with e-way is fixed per bus for each of the contract pre-signed. And over time, the industry believes that the battery rates will come down, which would mean that the overall cost should come down significantly, which implies that the margin should actually expand as we grow with time. Is there anything fundamentally wrong in my assumptions?

Yes. Basically, you are right in saying that the battery costs are expected to come down. Yes, we also have the same expectations. As far as the margin percentage is concerned, margin percentage, what we give a guidance is basically it could stabilize around 12% based on competition and volumes. And as far as the -- we operate, I think you must be aware, on cost-plus model. So if the cost comes down, sales price also will come down accordingly. If the cost goes up, the sales price will go up. And these are all based on mutual discussions and agreements. So when we are talking about 10,500 numbers, there will be a mutual agreement between both the companies and accordingly, the price is fixed at cost plus.

Okay. And the other question on Microsoft deliveries?

Microsoft deliveries, we completed whatever order we had in hand. We are still in discussions with various other parties, private customers. Maybe we will soon finalize based on -- we are in advanced stage of discussions.

The next question is from the line of [ Anil Singh ], an individual investor.

You've mentioned that by March 2025, we'll have a capacity of 5,000 buses per year. Is it correct?

Correct. Yes, yes. Yes.

But you are giving a projection of delivery only 2,500 buses for FY 2026. So it's almost like 50% of...

I'll clarify it again. It will be 2,500 to 5,000 numbers, anywhere between that range, and we expect to complete the existing order book in 2025-'26 and '26-'27.

So my question is that you are saying the capacity of 5,000 buses will be ready by March 2025. And why can't we say with full confidence that we'll be delivering 5,000 buses or 80% of the capacity, that is 4,000 buses in the next financial year? It's a huge gap, I mean to say that. Even if you want to be conservative, 2,500 buses in next financial year is a very -- 50% of the capacity which you are building up by March 2025 itself. So just wanted a clarification whether...

See, on a conservative note, 2,500 number is what I've indicated, but our target is to reach anywhere between 4,000 to 5,000 numbers.

Yes, that gives us a good confidence, sir. And we want that the positive sides of the company should be spoken very openly so that we can get rid of this kind of confusion. Second thing is like you are seeing that the other segment of e-truck business has already taken off, and there are many competitors who are getting the orders from different players. Are we also gearing up for that? Or we are still just focusing only for delivering these e-buses and just happy with that?

No, no, we are continuing to work on the e-tippers. We have been doing a lot of demos and trials across various project sites. So parallelly, our teams are working on that and with a more priority and focus on delivering the existing order book of buses. And e-tippers definitely is there in our portfolio, and we expect orders to come in because the traction is yet to happen in this business.

Okay. Now even e-truck business also is getting good traction. Government of India itself is focusing a lot on that in the next 2 financial years. Are we focusing for that?

Yes, definitely.

So is there any -- like what is the capacity we'll have like in terms of buses and trucks? Can we say that by March '26, we'll have 10,000 buses capacity?

We are targeting.

Okay. And do you think that the internal accruals will be sufficient enough to build a capacity of 10,000 buses or we will be going for the funding, fundraise?

We expect the cash flows to improve significantly by doing these numbers when we talk about 4,000, 5,000 numbers. As of now, there's no plans of any equity fundraise. So with the debt -- sanctioned debt, which we are availing now, we expect the numbers -- the plant capacity to be ready for 5,000 numbers. As far as civil is concerned, we are building up the capacity up to 10,000 numbers. Whatever additional plant and machinery balance sheet equipment is required, we may need maybe around INR 100 crores to INR 200 crores to increase from 5,000 to 10,000 numbers.

Okay. So recently, Government of India announced that they are looking for INR 1.75 lakh crores of budget for this e-buses and e-trucks. Do you think that we are -- just by building 10,000 buses order book or 10,000 buses capacity, is that sufficient that we are trying to be in the top 5 player of the country? It's way behind, isn't it?

See, today, if you look at it, all entire India, taking into consideration all the capacity of all the players, it's definitely below the market demand and market expectations. So we are going step by step. We are first to targeting to reach 5,000 and 10,000 numbers. And if really the market demand and market expectations comes into reality, we will accordingly take a decision to increase our capacity.

Okay. I think that gives a good confidence to all of us that you are gearing up for the future capacity requirement as well. All the best to the entire team.

The next question is from the line of [ Rutvik Vora ], an individual investor.

I just wanted to understand, what is the current localization? And how do we see it over the next 2 years?

So as far as the localization is concerned, we've been working continuously. It's a continuous process, except the battery cells and some of the powertrain components, other components are localized in India. We have developed the various vendors and that localization is a continued process. So what we seek today will be different after 3 months, 6 months. So we continue to strive to localize as much as parts possible.

So do we meet the Government of India requirements to claim for the subsidies?

Yes.

Okay. My second question, if and when BYD decides to set up a manufacturing plant and sell the e-cars in India, the electric cars in India, if and when, will it be through the same company? Or will it be a different entity which will be formed?

So as of now, Olectra, we are focusing on electric buses and then electric truck segment. We are -- we don't have any interest in passenger vehicles.

I'm talking about commercial vehicles, sir.

Correct. Even commercial vehicles, we are not -- we don't have any focus. We don't have any interest as of now.

So Olectra is only for e-buses and the trucks and the tippers, that's it?

Correct. Correct, yes. Correct.

So one last question from my side. I'm missing the question. I will let it go if somebody would want to go ahead.

The next question is from the line of [ Raju Mathi ], an individual investor.

Sir, my first question is, what is the run rate per month from October?

What is the run rate?

Yes, yes, per month bus manufacturing.

See, next October to March, we are targeting about 1,000 numbers. So it could -- so it will progress from month of October onwards, it will go up so that we meet the target of 1,000 numbers in this H2.

Now what is our revenue projection, 2025 and '26?

I could not hear. Can you repeat?

What is the revenue projection, 2025 and '26?

Next year?

Yes, 2025, current year. Yes, it's about 3,500?

Current year turnover, the top line we expect around 2,500.

And next year?

Next year, it will be more than somewhere between 5,000 to 7,000 numbers. It all depends on the volume. We are targeting about 4,000 to 5,000 numbers. Accordingly, the top 10 could be about INR 7,500 crores.

The next follow-up question is from the line of Gaurang from [ Unified Unity Research ].

So I have a couple of questions. My first question is the last new product that we had launched was way back to in April 2022, that was an electric tipper. So my question is, are we working on any new variant of that tipper, like a trailer or something that we would be showcasing any sooner?

See, we are working on truck side. Tipper is the dumper. So we are working on the -- so we are working on various products, in fact. And at an appropriate time, we will notify. In the truck segment itself, our R&D team has been working on various products.

Okay. So when can it fructify, probably, say, in another year's time or so or it will take a little more time?

See, we -- any R&D actually takes about 2 to 3 years, but we expect that the duration could come down.

Okay, okay. My follow-up question is in the AGM, Mr. K.V. Pradeep had mentioned about battery energy storage system. So I feel that it's one of the upcoming segments where there is a lot of talk about renewable energy getting contracted and Government of India is particularly interested in this. Since renewable energy will require battery energy storage system in huge numbers, so where have we reached in terms of battery energy storage system? Like what are the current strategic plans?

So as of now, basically, we have an idea. We have deliberated internally. So it is a very, very nascent stage. At appropriate time, we will report back to the investors.

Okay. Great to know about it, but I would love to hear about this in probably the next few quarters because I feel this will have some huge potential. Okay. My other question is the electric tipper that we have made is, I believe, not from the BYD technology, but it's a homegrown technology within the R&D team and it has a CATL battery. Am I right on that?

Just 1 minute. Yes, yes. Yes, you are right on that part.

So we can say that we are no more dependent on any foreign technology. We have an in-house technology and we can use it, right?

Still, we are -- as our CFO has said, still we are dependent on the foreign technology for the powertrain components as well as the cell battery side.

Okay, okay. Okay, understood. Okay. My last question. So recently, I read in a midday article that Megha Engineering is going to conduct this Borivali-Thane tunnel project. It is the contractor which has been finalized. And in that article, it mentions that, that project will require approximately somewhere around 1,200 tipper trucks because there is a lot of soil that is going to be dug because it's an underground tunnel. So my question is whether our Olectra team is in touch with Megha Engineering team for these particular 1,200 trucks because I feel this is a huge opportunity we should cater to.

From time to time, we are in discussions with... [Technical Difficulty]

Ladies and gentlemen, we have lost the management line connection. Please stay connected while we reconnect them. Ladies and gentlemen, we have the management line back on the call.

Should I repeat my question?

Yes, you were talking about 1,200 numbers of Megha Engineering, right?

Yes, yes. Yes, I feel...

As of now, see, we have a continuous dialogue with Megha Engineering. As of now, there is no discussion happened on the 1,200 numbers. So it's a continuous process.

Okay. Understood. I'll definitely share that article with Mr. Hanuman Prasad. Probably you guys can internally discuss because I feel it's a fantastic opportunity that the company should cater to. So I'll share that article with Mr. Hanuman Prasad so your team can then go over it.

Yes, thank you so much.

The next follow-up question is from the line of Sanjay from SK Securities.

I already got answered for my question in previous questions.

The next question is from the line of [ Ayush Jain ], an individual investor.

Congratulations for a good set of numbers. I want to know how much loan amount have you utilized up to the date as a term loan and as a working capital?

So as of now, we have utilized about INR 50 crores term loan.

How much, sir? Sorry.

INR 50 crores term loan as of now we have utilized.

Okay. And what about, sir, working capital?

Working capital, we have utilized about INR 75 crores to INR 80 crores.

The next question is from the line of Sanket Kelaskar from Ashika Stock Broking Private Limited.

Congratulations for a great set of numbers. I just have one question. What is your growth plan for the long term with respect to being -- staying ahead of the curve, like with respect to your R&D or with respect to growth? For example, many of your competitors have been tied up with foreign entities in order to scale up their technologies, so on that front.

Yes. Thank you, Mr. Sanket. Actually, to clarify your question, we are tied up with the world's largest EV manufacturing company, BYD. Our agreement is until December 2030. So they invest huge money in R&D. And whatever technologies they have on their platform, we do have access. So we have that advantage by having the strategic and technological tie-up with BYD, which is the world's largest EV manufacturing company. manufacturing company. I hope this clarifies.

Okay. I'm having one more question. So this would be the last question. I wanted to know like what kind of initiatives are we taking with respect to safety and hazards on our vehicle?

See, all of our buses, we have basically safety as one of our key initiatives. We have our own SOPs with regard to safety. And our buses meet the highest safety standards in terms of battery and in terms of other features.

The next question is from the line of Rutvik Vora, an individual investor.

The question I missed that time, I think I just recalled. I wanted to understand if the industry works in the fashion in which currently Olectra is executing such deals like the one in Mumbai where Olectra manufactures and sells it to a company, let's say, EVEY Trans, who then gives it to the end customer. Is this how it is across India? Or is this some special kind of a setup only for Olectra?

Yes. Just to clarify, NITI Aayog, when they drafted this policy and the same, they brought in the model called GCC, gross cost contract model. So under this gross cost contract model, there is -- there are 3 parties involved: one is the manufacturer; second is the operator or owner of the fleet; third is the state transport utility, which is the end customer. So accordingly, as per this model, not only Olectra, all the other companies also use the same stream of operations.

[Operator Instructions] As there are no further questions, I would now like to hand over the conference to the management for closing comments. Management?

Yes. We thank all the shareholders who have participated and have been very supportive in your company's growth journey and the patience and the faith you've put in your company. We expect good growth in profitability in H2 of this financial year. Thank you very much.

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