Talbros Automotive Components Limited (505160) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 FY '22 Earnings Conference Call of Talbros Automotive Components Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] please note that this conference is being recorded. I'll now hand the conference over to Mr. Anuj Talwar, Joint Managing Director of Talbros Automotive Components Limited. Thank you, and over to you, Mr. Talwar.

Thank you so much. Good morning, everybody, and a very warm welcome to our quarter 4 earnings and our financial year earnings of '22. I hope you all are staying safe and healthy. On the call today, I'm joined by Mr. Navin Juneja, our Director on the Board of Talbros and our Group CFO. We also have SGA, our Investor Relation advisers joining us from Mumbai. The results and the presentations are uploaded on the stock exchange and the company website. Let me begin with the industry and the overall economic environment at the moment. The overall auto industry has seen a degrowth of 6% in FY '22. Sales of all segments, that is passenger vehicles, commercial vehicles, 2-wheelers, 3-wheelers, are still below 2018-'19 levels despite some recovery from a low base. Despite that situation, our company has outperformed at all levels. Our revenue grew by 29% to INR 585 crores. Our EBITDA grew 29% to INR 83 crores. And we also reported highest ever profit after tax at INR 45 crores, which was a growth of 84% over last year. As committed, we are keeping in pace with all technologies at the moment and also looking actively at getting a larger market share in both domestic and global markets. As we have stated in the past and still state once again, it was a very challenging year, but being a hedged auto component company suppling to all vehicle platforms from 2-wheelers, 3-wheelers to 4-wheelers to passenger cars, heavy-duty, lightweight commercial vehicles, agriculture, exports, domestic, tractor industry, we were able to maintain a good profit margin. A quick highlight about Talbros Automotive and our joint ventures. As mentioned to you earlier, we are a diversified auto com player across all segments. Our business is broadly divided into our stand-alone business, which is our Gaskets and our Forging business and 3 Joint Ventures with global auto leaders in gasket, chassis and rubber portfolios. In our stand-alone gasket business, we continue to dominate in India with our market share being in excess of 50%. I'm happy to announce out here that we have successfully started our heat shield business line with some good business orders that we have won, which will commence in this financial year and also making good inroads in exports with this division. Forging business continues to perform well with almost 48% contribution coming from the export portfolio. Could have done slightly better, but some of our customers had this semiconductor shortage globally, which resulted in a little bit of a sluggish in quarter 4. Our joint venture with Marelli is a 50-50 joint venture to develop and manufacture chassis components, front axles, rare axles. And from this joint venture, we are supplying a lot of components to the electrical vehicle market, especially with one of the large point in OEM like Tata Motors. Not to mention in Forging also, we do supply to electric vehicles globally. Talbros Marugo, our rubber joint venture with Marugo Japan manufactured rubber components as well as hoses. Our FY '22 sales in the domestic segment about 26% came from 2- and 3-wheelers. This has come down a bit over the last 2 years. Obviously, with the 2-wheeler market having its own struggles with EV as well as the fuel price has been very high. But hopefully, with this new cut that the government has announced on excise duty, we may see recovery in this financial year. 28% of our domestic revenues came from passenger vehicles led by Maruti and Tata, which are doing pretty well, and about 28% came from heavy commercial vehicles, 10% came from the agri sector. So you can see it's a very hedged and a diversified portfolio. Our exports are doing well. Our export constitute about 24% to 25% of our turnover and our endeavor as committed earlier also is try and hit the 30% mark over the next 2 to 3 years over a larger turnover. Just before I hand the call over to Navin, who will take you through all the numbers, I think Talbros is in a good position even now -- even though we faced a lot of headwinds in sale with inflation and cost measures, but we have got to try our best to cap their performance and try and definitely capture a larger market share within India as well as in the global market. I'll hand the call over to Navin now.

Thank you, Anuj. Good morning and a warm welcome to all the participants. Let me begin with the financial overview. In the Gaskets division, including Nippon Leakless Talbros, for FY '22 our stand-alone Gasket sales was INR 382 crores as against INR 287 crores in FY '21, a growth of 33%. Total revenue on Nippon Leakless was INR 74 crores in FY '22 as compared to INR 83 crores in FY '21. The major reason is that we developed a new BS-VI Gasket for Hero with the localized deal and the selling price came down by approximately 20% because of that. This segment saw a combined EBITDA of [ INR 70 crores ] in FY '22 versus INR 50 crores in FY '21, a growth of 40% here. Now coming to the Forging division. The Forging business is consistently performing well. The revenue in FY '22 is INR 204 crores as against INR 170 crores in FY '21 growth, a growth of 20%, but here, the last quarter, the export because of the semiconductor issues that force little bit came down and in the last quarter, it was only 48%, generally, it is 50% plus. Now coming to our Magneti Marelli Chassis Systems Private Limited. Revenue for FY '22 stood at INR 165 crores versus INR 124 crores in FY '21, resulting a growth of 32%. The Talbros Marugo Privation Limited, revenue stood at INR 55 crores in FY '22 versus INR 41 crores in FY '21, a growth of 33%. Now coming to the consolidated financial performance of the company. For FY '22, revenue has grown by 29% to INR 585 crores. Our ability of reporting multi-years orders have helped us to achieve growth in such a challenging environments. EBITDA grew in line with revenue by 29% to INR 83 crores. We have recovered major portion of steep price increases for our major OEMs. We are closely monitoring the commodity market and continuously working with our customers on the pass-through front. Our PAT stood at INR 45 crores for FY '22, highest ever profit the company has achieved. PAT grew by 84% on a Y-o-Y basis. Our ROCE for FY '22 stood at 16.3%. Our ROE of FY '22 stood at and I think there is a mistake, saying 16.3%, let me check and come back to you. Gross debt at the end of March 22, stood at [ INR 89 crores. ] We have continuously reduced our debt and our current debt to equity ratio is 0.29 percentage. The Board of Directors have recommended a final dividend of INR 1.50 per equity share for FY '22 in addition to the entire dividend of INR 1 per equity share of face value of INR 10. The total dividend is INR 2.5 per equity share, that is 25% of the face value. We continue to witness strong momentum and benefits of our hedge portfolio. And accordingly, we foresee our of Talbros in coming FY -- financial year '23. For FY '23, we are working on multiple orders across exports and domestic markets and across various segments of OEMs. Some orders achieved in FY '20 and '21, we'll see a full year of execution in the current financial year. We remain confident of achieving growth over FY '22 in revenue terms. However, we are facing some medium-term challenges on raw material inflation, logistics. We'll refrain in guiding margins for FY '23 and is post Q2. Structurally and long-term basis, we believe that we are in a substantial margin movement and environment. That's all from our side, and I will allow I'd like to open the floor for the questions and answers. Thank you.

[Operator Instructions] The first question is from the line of [ Sanket B ] from Kedia Securities.

Firstly, congratulations on good set of results. Just wanted to understand in regards to our heat shield product, which is a transfer of technology with Sanwa. What would be the market potential for us going forward?

Yes. Regarding heat shield, we are in the process of resolving the technology from Sanwa. And I just want to tell you, the senior engineer for Sanwa is stationed in our factory, and he still has 45 days and he will install the machines, tell us the processes, and he will do everything for us, and he will visit our customers. So we are having a very good traction in this business. If we see in my order book of this heat shield business as of today, which business has been closed here approximately to the tune of INR 35 crores to INR 40 crores. We have already closed the businesses, of course, but it will take some time. And I think within the next 6 months, this figure can touch up to INR 40 crores, INR 45 crores. We are getting very good relation of that.

Understood. And secondly, is the management looking for any more inorganic acquisitions or partnerships or any investments like the one which we did in Lohum or any update with how it is going with Lohum and it can benefit us?

So we are always open for -- looking for some investments developing technology in new orders, we are always open and we are looking for that. But unfortunately, nothing is there as of worth able right now for us because the market is very, very cued. So we are working more towards surviving of business first. And there's a very good scope in expanding our business sectors. And you've seen the growth of 33%, that [ 30% ] total loss basis in this last financial year in spite of the major challenges of COVID, you know that what has happened. But there's a huge scope in our heat shield business, in the company that commenced and our export customers like JLR there is a huge scope going forward and Forging is an ocean who can go anywhere in that. So we are working towards that, but our deals are open and we are open to take any project and technology or anything and we're always open to that.

I'd like to add to what Navin said. At the moment, we have a good order book in all our divisions, number one. Number two, the export markets are looking very, very interesting. A lot of other OEMs in the world are looking at us to change from the heavy weights to light weighting forging, which we're working on, which there'll be more clarity after let's say, quarter 1. At the same time, there is a lot of -- lot of, lot of potential in the Indian market as well with our product portfolio. Even Marugo rubber is now working with Maruti, we've won some new kind of hoses going forward in the future new engines. So at the moment, organically also, you look at it as enough potential in the company to look at higher return ratios in challenging environment and at the same time, keeping our debt levels at an optimal level, but we're always open for new ideas, new technologies as always.

And the investment in Lohum it is just from the investment perspective or are there any strategic benefits to us growing from their business?

Lohum is not a part of Talbros Automotive.

Okay. Understood. And can you tell us about any projects going on the R&D side and new products ...

R&D, we're working on light-weighted heat shields. We're trying to work on underbody heat shields. We're working on some cylinder head gaskets for a large OE customer. We're working on some other components for electric vehicles or light weighting, suspend control arms. We're trying to work something in the export market. We're always ongoing. Hoses -- like I mentioned due for future models [indiscernible]. That's an ongoing process.

And with our customers like Tata Motors, they are going in a big way in the EV sales as with Hyundai and Kia. So even Ashok Leyland for that matter in heavy commercial vehicle. So what type of comments are we getting from them? And how do we see market development with these customers going forward?

In Tata Motors, from our Marelli joint venture for the EV vehicles, we are supplying our products. proud to say that in Tata Motors all PV segment, which is ICE engine and EV, our product, which is called the suspension control arm, our market share at 17%. We are making more at Leyland also, although our large customers in our Gasket division is from coming followed by Tata Motors and Volvo Eicher. Ashok Leyland being located in the South, we're now making a few more inroads into them as well. So that's an ongoing process.

Plus, we have started developing a smart heat shield for the Tata EV vehicle also.

And also to your last part Hyundai and Kia, we are commencing production in June from our Gasket division.

And any benefits which are coming to us in a part of PLI or any other schemes which the government is announcing? Like we are not the direct beneficiaries for any of the scheme, but any indirect benefits flowing to us?

Indirect benefit result, the more these companies like Kia because of localization forcing the location on these people to enable -- to avail PLI, of course, we are getting good traction from Kia and Hyundai who are importing these gaskets and Maruti also is giving [indiscernible ] business because they were importing, they are currently importing all these things. So the import substitution is happening, and we are getting the benefit of that.

The next question is from the line of Harshil Solanki from Equitree Capital.

I have 2 broad questions. First is, the industry has been struggling since the last 3 years, but Talbros has done very well. ROE has improved and the debt has also reduced. So I wanted to know what is -- has the company done differently to outperform? And why do you see the growth coming from when the industry recovers? And the second point is Marelli, your JV partner has recently launched a wireless system for EV batteries. So will that product flow into our JV in the future?

First question regarding how we have outperformed the industry and performed as compared well as to the industry. There are 2 to 3 major reasons for that. One is we are not dependent on one company and one segment of auto industry. We are there in every segments, you know that we are totally hedged. Number two, our export is 24%, 25%. We used to be at 15%, 16% 3, 4 years back. Number three, we are in the Gasket, we are there in the BS-VI. We are the only company who has developed BS-VI Gasket successfully from BS-IV to BS-VI transition. We have done very successfully within all OEMs and we are getting very good traction on that tax zone. Currently on the basis of this -- our R&D facility and our knowledge in the industry, we are getting some -- we're getting new businesses from our [indiscernible]. You know that we got the business of that. That is giving us a good -- very good traction. I'm just pleased to announce that at present my capacity is around 8,000 to 10,000 per month. And keeping, our company is expecting to double this volume and they have ordered us to set up one more set of lines, which will be operational by October of this year. So these -- all these 3 -- 4 sectors and plus Forging, we are again at Ford is here, our major customers like BMW, JLR everything we are growing, and we have tracked that our delivery cost, delivery, everything, quality has helped us in growing distance. That's the major reason sir. Regarding the second question -- again, you repeat the second question, I just missed that.

Yes. Marelli is your JV partner has launched a wireless system for EV batteries recently. So will that technology flow into our JV in the future?

No, our JV is for the suspension and related components, not in that.

The next question is from the line of [ Nisarg Parekh ] from Native Capital.

A couple of questions. First thing, I want to understand of the current portfolio mix that we have.

Sorry to interrupt you, sir. Your audio is not very clear. I would request you to come on the handset mode and maybe closer to the phone.

Sorry, is this better?

Yes, this is better. Thank you.

Yes, my question is on EV. When we look at the current revenue stream, what percentage of revenue or what percentage of our products are -- actually will be irrelevant when it comes to EVs?

When it comes to our Gasket business, I think there is hardly anything in EV at present, maybe after 6 months, 9 months might when the issues start going, we will go into EV. And on this Forging Division, I think about INR 25 crores to INR 30 crores of the business about 10% of the business is in the EV sector. Suppling to electric vehicle's and military. And I think it's around much more than that. It's around 50 -- 20% is going to the EV vehicles that is...

And how much of the business is threat with EV?

As a threat, how much of it will be in '24, '25?

Yes.

First of all, if I go to the EV, the transition from ICE to EV, the maximum is 3-wheelers. The 3-wheelers I have bought the other with sales in FY '22, [ 2,27,000 ] 3-wheelers will be there going to us and out of which [ 4.3% ] is EV in this year, FY 2021-'22. By '25-'26 -- FY '26, they are saying this [ 2,27,000 ] should be 600,000 3-wheelers, out of which 26% to 27% will be EV. If we take out [ 26%, 27% ] in absolute number but still ICE growth is there. If we come to 2-wheelers, 2-wheeler for the last financial year ended '22, I think that 2-wheeler registration is approximately [ 12,00,000 lakhs ] -- just a minute, 1.2 crores -- 12.3 million that I suppose 2-wheeler numbers. Yes, ICE total 2-wheeler is 12.3 million, out of which 1.8% is EV. And by '26, they're saying this 12.3 million will be around 19 million. And out of which 12% to 13% will be ICE --- not IV sorry EV. So if I take that into account, but there will be no downfall, I'm not -- we are not seeing any downfall to the EV -- ICE engines going forward. They will -- everybody will grow. ICE will there and EV will be there. But next 3, 4 years -- we don't think that the 2-wheeler sales will come down, but ICE it will not come down. We are not there in passenger vehicles and -- we are still not there in passenger vehicles and in the commercial vehicle, [indiscernible] major driver of commercial vehicles business. Of course, if we're there in 2-wheeler then it would be great but I don't know. But at present we don't get insight that.

Got it. Got it. No, that is helpful. And as of today, what percentage -- what -- how much revenue do you get from sale to EV?

Pardon me.

What percentage of your EV sales as the turnover of the company?

At present, [indiscernible ] lower of 700 think we are there 724 consolidated sales proportion to our EV. Our position should be around 3.5 crores --- 3% to 4%.

The next question line of Dipen Shah from HNI.

First of all, congrats on a good set of numbers in these trying times. I had just one question on the margins. Mr. Juneja mentioned that there are a few challenges as far as the raw material costs are concerned. If you could just give us some more insight on how things pan out in the first and the second quarter as compared to what they were in the fourth quarter? And in light of the recent duty cuts, and reduction in the steel prices, how do you see the scenario planning forward maybe in the next couple of quarters?

First of all, I would like to say, let's not look at quarter-to-quarter the prices are going up is because sometimes as we get after 2 quarters, some we get after next quarter. I think we should see the margin for the total year. Our margin is around -- our EBITDA is around 14% -- nobody gets 100% recovery. Nobody gets 100% recovery. You know that better price, but nobody gets 100% recovery. Of course, we have to absorb something. We're trying to recover 95%, we can say it in prices we have recovered that in that year. And last quarter, it is a combination of various factors because Marugo prices we got in the last quarter for the full -- last 6 months so that is a -- so that's why I talk about full year. And in the freight. First, we have to face the freight business. I think most of the customers are given, somebody has 75%, somebody has given 80%, but BMW unfortunately for 6 months, we are not able to recover, but we are still fighting with them, let's see. So going forward, while we just write in the papers [indiscernible] the steel sector, so steel is going to come down, let's see. But nothing -- as of now, nothing on the ground. Of course, the effect will come after one month or so. If it has come, the way steel prices increases of course we will get the benefit of that. After we get the price decrease after 6 months, 9 months, whatever it is. So that is a better thing how we go in the industry. We have also with the challenge of the foreign currency, like my dollar is going crazy, you know that dollar is going crazy these days, and we are reporting in gasket materials in dollar. On the export front, we are major exporters and importing in Europe. And euro is again weak against the rupee. So there also -- there's price reset -- settlement after average 6 months, average price of last 6 months is being considered for the next 6 months. So these are business challenges we have, sometimes it pulls in our favor, sometimes it pulls against us. But we are hopeful to be able to maintain these types of margin on a yearly basis, mostly quarter-wise, [ 13.34 ] in one quarter, [ 14.25 ] in next quarter. So we have around this, I hopeful have -- we'll need to maintain 14-plus EBITDA next week. We're trying to work that.

Okay. That's nice to hear. And on the other side, any levers, further levers which are available in terms of protecting the margins, say, localization of content further than what you have done or maybe any other levers which you could have?

So we are constantly working on the localization but the problem here is because our product is very, very -- in Gasket areas there is no import first of all, I want to clarify, one. And Gasket, whole in the area, the quality we need to check very, very deeply for us, people like Daimler and Volvo, they are happy to pay more price. They happy to pay price more source, pay more for refundable source which is approved. They're approved globally. So they don't want to be on that front. We have no choice in that sense, but people like Hero, Bajaj there we're talking about localization. Hero is not there, but Bajaj materials, they used to import materials. Now we are starting giving them local materials and they are selling that. The customer also compete for.

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

Congress on the good set of numbers. So my question is if you can guide us for the revenue growth for the FY '23 and '24. And similar on the margin side. And another question, if you can comment on the PLI approved product of Talbros.

We have already said, I'm not in a position to give you any guidance at this moment because of the -- you know what's happening all over the world. But it is -- I can say that we will like -- able to achieve digit growth in the next year. That I can say definitely with confidence but regarding [indiscernible] about guidance, at present no, may be after first quarter, we'll be able to have a better picture and we'll be able to do that. Second, margin, we just -- before that, I will try to maintain that we'll work -- will work to maintain the margin, which we are getting right now because the price that we are still going in our components, in our chemicals, in our imported steel and dollar also has gone up that from INR 75, INR 76, touching now INR 78. And your third question, PLI but have not direct benefit of PLI. Of course, I mentioned in the earlier call also we have indirect benefit of PLI because vehicle manufactures who are availing PLI localized a lot of components, and we are getting the benefit of that.

The next question is from the line of Kunal Patel from Equilligence Capital Advisors.

Sir, my first question is regarding the investing. So when you hear the commentary from auto OEMs, especially the 3 players, they are quite confident of achieving FY '19 numbers this year. So what kind of action do you see on this side of business?

Yes. Sir, I can definitely say that. If the industry grow by 10%, we'll grow more than that. That I can say. Of course, they are very confident and we are also confident. But let's see how the thing moves.

Commercial vehicles have given a positive guidance. The CapEx happening from the government point of view is also private. But it will fluctuate. Like I've been in talks with a lot of my OEMs on a personal basis, who I know. The other thing, there is demand system. There is systemic adapter shortage. Then the interest rate higher. There's fluctuations happening, but there is overall demand is there in the industry. So as Navin mentioned to you, we will outperform the industry, that we will do. But I think to out the first quarter, see the let things settle down a bit.

Okay. And does that reflect in our order book as of now? Or we'll have to wait for another quarter to confirm the...

No, no, orders are all in, not an issue.

Yes. Orders is okay, not bad for the month of May, that I can assure.

Yes. And for future orders are coming close, we have a couple of months more, we'll have better clarity. No issues per se.

Okay. Sir, second question is regarding our product pipeline. So how many products are -- that we have developed are in prototype stage? How many are under final approvals almost that can be commercialized over the next 6 months? And any product that you see can add decent top line over the next 2, 3 years?

So there are -- I mean, the current projection growth rates are already products that we secured, proto, PPAP, developed given to OEM. Regarding future orders, there are several orders in the pipeline. But as I mentioned to you, I'll need maybe a couple of months more to make an announcement.

Okay. Any new customers that we have added on the export side in last quarter?

Yes, we are in the process of adding a few more customers, and we added a few. So that's an ongoing process. Yes, we have. But again, just wait a couple of weeks or a month or so for me to announce.

Just to get a better sense, are there -- okay, sorry, sorry, go ahead.

We have added. We have added.

We have added. We have added [indiscernible] [ Q4 ] we have added [indiscernible] there is some formulation, so we can't mention the name right now.

We have added.

[Operator Instructions] The next question is from the line of Riya Verma from Oracle Securities.

Most of my questions have been answered. So I only have 2. Firstly, on the capacity utilization, what is the capacity utilization in Q4 and FY '22? Do we have any capacity expansion plans? And what kind of revenue do you expect from this?

Yes. We -- I'll just tell you the capacity -- just a second. Please wait for a minute. My capacity, if we talk about the Gasket, it is around 80% plus and in forging, it's about 65% to 70%, forging it's 90% plus. If I talk about our Magneti Marelli, it's capacity is around 70%. If we talk about Marugo Rubber in Anti-Vibration 90%. And in Hoses around 40%. It will go -- I think the way the things are moving, it can go to 70% in the next 6 months. And by the Nippon Leakless it is around 65%. CapEx is of course will be expanding our capacity in the coming years, individual strategy in chip side, plus I have no gasket for our export customers. I will be spending around [ INR 20 crores ] this year in our Gasket division, which I think after doing that we'll get easily around INR 38 crores to INR 39 crores per month and keeping in the as a product baseline profit in both. And secondly, in the Forging, we'll be spending another INR [ 15 ] crores. With this, my capacity will be around the INR 22 crores to INR 23 crores per month, that around [ INR 2300 ] this year. There we need to do that this year for the next financial year. These are the major CapExs that we are doing this year.

Okay. Sure. And secondly, who are our top customers in the Gasket and Forging business? And how much do these top 5 or top 10 contribute to these businesses?

Just a minute, if I talk about Gasket business. Yes, in the Gasket business my -- one of our top customer is Bajaj Auto 66 crores. Tata Cummins INR 64 crores. Tata Motor INR 24 crores, [ BCP ] [indiscernible]. Hero MotoCorp INR 17 crores, [indiscernible] INR 15 crores. Then comes export customers of Cummins export and [ Jaguar ] 10 crores, some these other aftermarket peers [ INR 7 ] crores and [ INR 9 crores ]. And in the Forging front my major customers are BMW INR 44 crores, [indiscernible] INR 38 crores, [indiscernible] INR 33 crores, Carraro INR 19 crores, DANA Italia INR 15 crore again, JLR INR 30 crore export and Musashi INR 10 crores then these are small ones.

[Operator Instructions] The next question is from the line of [ Nisarg Parekh ] from [ Native ] Capital.

I just want to understand your margin profile for the Gasket and Forging also separately for the OEM versus exports? Sir, could just throw some light on that, please?

If we talk about the margins -- talk about the EBITDA margins. EBITDA margin in the Gasket business for the last year is around 14%, okay? And in the Forging business is for the year, it's approximately 14.5%, that is EBITDA margin. And we are -- if we see the last 3 years, we [indiscernible] EBITDA by 1.5% and Forging is again fluctuating from [ 16, 14, to 14.5, 15 ] depending on the order mix of export and industries. And further question was...

For OEM versus exports.

We can't hear you very well.

Sorry, the margins for OEM versus exports.

I think OEM and exports margin...

If we see the -- there is a difference of 3% to 4% in Gasket. There is a difference of 5% to 6% in Forging. Export import [indiscernible].

Got it. And can you throw some light on the order book, what is the order book today and what will be order intake in Q4?

Sir, I don't know that, of course, which should I say because no customers give full year projection by the way. We are [indiscernible] the base rate move we'll move. We are single source to Cummins. We are single source to Bajaj. We are single source to [ BCP ] and we are 60% to Tata Motors. If they all will grow at 20% of course, we'll also grow by that pace. And regarding some export customers, the way their growth goes up, we are the single sources in some components so we'll grow there. It's very difficult to tell today because if I have [indiscernible] very, very difficult. Of course, the growth will be there, but it will be 10%, 20% because they are also not giving full year projections. And if they give the full year projection, they have not bound to that projection. They can change that projections also.

Got it. And last question is on pricing. How does your pricing work -- your pricing -- how often are you able to revise your pricing especially in light of what is happening with raw materials, given you would have long-term relationship. Can you just talk a bit about pricing and how does that factor?

Yes, in all our customers, we have a formula of course, we [indiscernible] -- will go up, of course, for every quarter, some are every quarter, some are after 6 months. In Maruti, its every quarter. In my customer like Cummins 6 monthly, Volvo 6 monthly, Bajaj 6 monthly. So in the export customer [indiscernible] in the export customers in the case of [indiscernible] 1 month after 1 month we increase the price of steel, if the raw material goes up. Regarding the [indiscernible] after 6 months, there is a price change. So we have with every month. After market, it's open demand and supply that's. This is a formula broad.

[Operator Instructions] The next question is from the line of [ Rajiv Re ] an Individual Investor.

Yes. Sir, I wanted to know...

Rajiv, your audio is not clear.

Hello?

Yes. Now we can hear you better.

Just wanted to have an idea on the segmental distribution in the domestic -- over the last 3 years, the passenger vehicle and 2-wheeler contribution has gradually come down in FY '22. So what is the reason for this?

I think heavy duty has gone up. The reason is that after BS-VI implementation in our Gasket business line, the value per engine has gone up about almost 2.5 to 3x. That's the reason.

And there is a degrowth in the commercial 2-wheelers in the last 2 years.

2-wheeler is degrowing. We're not talking market share, we lost lot of customer, added customers, but there's just a general degrowth in this segment. CV, we're reporting kind that we are the right product, investors in the right technology at the right time and we're able to help -- do a lot of localization for our top customers and increase the value content per vehicle.

And where EV section comes under this bifurcation, sir?

It's basically in passenger vehicles.

And that is, as you mentioned, it is around 3% to 4%.

Yes. Yes.

And where do you see to go up, sir, contribution to the entire revenue?

I think it's -- going forward, it's going to go up to [ 7%, 8% ] in the next 2 years -- 1 or 2 years definitely.

As there are no further questions from participants, I now hand the conference over to the management for closing comments.

I would like to thank you all for joining the call. I hope that we were able to answer your questions. For any further queries, you may get done to the SG&A, and they'll be happy to forward them to us and address all your questions. Thank you, stay safe, stay healthy, all the best.

Thank you.

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