Tube Investments of India Limited (TIINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to Tube Investments' Q4 and FY '24 Earning Conference Call, hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anupam Gupta from IIFL Securities. Thank you. And over to you, sir.

Thanks, Rea. And good morning, everyone, and welcome to the results conference call for Tube Investments of India for FY '24. From the management, we have Mr. Vellayan Subbiah, Executive Vice Chairman for TII; Mr. Arun Arunachalam, Executive Chairman for TII; Mr. Mukesh Ahuja, Managing Director; Mr. AN Meyyappan, Chief Financial Officer; Mr. K R Srinivasan, President and Whole-time Director for the Metal Formed Products business; Mr. Shivdeep Singh Jammu, Vice President for the -- for TPI; Mr. N Govindarajan, CEO for 3xper Innoventure; Mr. K K Paul, CEO for TICMPL; Mr. S Gopalakrishnan, CFO for TICMPL; and Mr. K Murali, President for Business Development. To start off, I'll hand it over to Mr. Subbiah for opening comments. And we'll start the Q&A post that. Over to you, sir.

Thank you, Anupam. And good morning, everybody. The Board of Directors of TII met yesterday and approved the financial results for the quarter and year ended March 31, 2024. The Board has declared an interim dividend of INR 2 per share in February 2024, and the same was paid to shareholders in March. The Board has now recommended a final dividend of INR 1.50 per share for the financial year 2023, '24. Revenue for the quarter and -- was INR 1,962 crores, as against INR 1,663 crores in the same quarter previous year. And revenue for the year was at INR 7,611 crores compared to INR 7,236 crores for the previous year. PBT for the quarter was at INR 318 crores, as against INR 301 crores in the same quarter previous year. And PBT for the year was at INR 970 crores compared with INR 876 crores in the previous year. ROIC was at 54% for the year ended 31st March 2024, as against 55% in the previous year. Free cash flow for the quarter was INR 104 crores. And cumulative free cash flow for the year was INR 376 crores, which was 51% of PAT, mainly driven by additional capital expenditure in some of our existing businesses. I'll go through a quick review of the businesses. The Engineering business had revenue for the quarter at INR 1,276 crores compared with INR 1,044 crores in the corresponding quarter of the previous year. Profit before interest and tax for the quarter was INR 160 crores, as against INR 132 crores in the corresponding quarter of the previous year. Revenue for full year was INR 4,921 crores compared with INR 4,562 crores. And PBIT was at INR 617 crores versus INR 549 crores. That was for the Engineering business. Metal formed revenue for the quarter was INR 386 crores versus INR 347 crores. The PBIT for the quarter was INR 42 crores, as against INR 45 crores in the corresponding quarter last year. And revenue for the full year was INR 1,519 crores compared with INR 1,424 crores. And PBIT for the full year was INR 187 crores, as against INR 174 crores in the previous year. The Mobility business. Revenue for the quarter was INR 154 crores compared with INR 155 crores in the corresponding quarter. And losses before interest and tax was INR 9 crores, as against a loss of INR 5 crores. Revenue for the full year was INR 664 crores compared with INR 800 crores for the previous year. And loss was INR 18 crores -- PBIT -- before interest and tax, versus INR 17 crores the previous year. Other businesses revenue was INR 230 crores compared to INR 191 crores. And PBIT was INR 17 crores, as against INR 11 crores. And full year, INR 834 crores compared to INR 768 crores; and PBIT of INR 65 crores compared to INR 48 crores. At the consolidated level; and that's consolidating in all of our subsidiaries, including CG Power and Shanthi. The -- and Clean Mobility. The consolidated revenue was INR 4,490 crores, as against INR 3,778 crores in the quarter. And our PBT, before share of profit of an associate/joint venture, exceptional items and tax, for the quarter was INR 401 crores, as against INR 403 crores in the corresponding quarter previous year. TII's consolidated revenue for the year was at INR 16,890 crores, as against INR 14,964 crores in the previous year. And profit was INR 1,683 crores, as against INR 1,592 crores in the previous year. CG Power, a company in which we have a 58.05% stake, had consolidated revenue of INR 2,192 crores for the quarter, as against INR 1,903 crores. And PBIT was at INR 301 crores, as against INR 281 crores. For the year ended March 31, 2024, CG's consolidated revenue was INR 8,046 crores, as against INR 6,973 crores in the previous year. And profit before tax was of INR 1,158 crores, as against INR 1,002 crores in previous year. Shanthi Gears had revenue of INR 154 crores for the quarter, as against INR 123 crores. And profit before tax was INR 32 crores, as against INR 27 crores. Revenue for the year as -- was INR 536 crores, as against INR 446 crores. And profit before tax was INR 110 crores, as against INR 90 crores. Commenting on the financial results, Mr. M A M Arunachalam said TII demonstrated resilience, achieving a consistent growth on consolidated profits before tax, driven by a strategic focus on cost reduction initiatives and operational efficiency through Kaizen. Exports during the year have grown by 14%. Notably, our subsidiaries CG Power and Shanthi sustained their impressive performance. CG Power secured approval from the union cabinet under India Semiconductor Mission to establish an outsourced semiconductor assembly and test facility with an investment of INR 7,600 crores over 5 years. The investment will be supported by government subsidies, equity and limited bank borrowing, with technology and joint venture partnerships with Renesas and Stars Electronics. Additionally, TII and its subsidiary TI Clean Mobility forged an agreement with GEF to raise INR 580 crores through compulsory convertible -- CCPS. TII's Board has recommended a final dividend of INR 1.50 per share for the financial year. So Anupam, I'll stop with that. And we'll be happy to take questions.

[Operator Instructions] The first question is from the line of Jinesh Gandhi from AMBIT Capital.

My first question pertains to the clarification on other expenses [ on ] standalone...

[indiscernible] clearly? Can you hear him clearly?

Yes. Is it better now?

[indiscernible].

Yes. Am I audible now?

Yes, yes...

Yes.

Yes, yes, much better.

Yes. My question is on a, first, clarification on the other expenses, which seemed to have gone up quite substantially in the fourth quarter. And because of a sharp -- reported margins have declined. Any one-offs in other expenses that you can call of? Or what's the reason [indiscernible]?

[indiscernible] onetime -- yes.

Okay, go ahead -- okay. There are a couple of onetime expenses, including political contributions, that might have contributed...

Okay. And a large part of delta, which would be about 50-odd crores, would be one-off.

Sorry...

Almost one-off quantum would be 40 crores, 50 crores; or lower than that?

No, no, no. It's lower than that...

Okay. And second question pertains to the Engineering business. So given that FY '24 was a year where we started to see recovery in exports, can you talk about how did exports grew in FY '24? What was the contribution in FY '24 from exports? And how do you see that scaling up?

So exports this quarter was pretty good. There was a good growth in the Engineering business as well as the other businesses. Exports, as a percentage totally, was about 14% in this financial year. And we see good leads available going forward, with a couple of OEMs getting approved in the short term, so we are bullish about exports going forward.

Okay, okay. And effectively a target of taking it up to 20% would play out in the next couple of years.

Yes, that's right.

Got it. And the other question pertains to the large-diameter tubes given that our expansion will be completed by second quarter. What kind of revenue can we expect from the full year expanded capacity including the first and the second -- I mean, the existing capacity and the new capacity put together?

So like said, that capacity expansion will be over by Q2. And then because it is where we are investing into capability, then we have to go for approvals of the large customers for which we are doing it. And then [ PPAP ] process followed. And there' will be good headroom available for enhancing revenue from that expansion.

Okay. I mean, can you quantify in terms of -- either in terms of the capacity addition or the kind of revenues which we can do?

Maybe you can take it about the range of around 30% to 40% excess capacity will be available for the expansion for large-diameter tubes.

Got it, got it. I'll -- a few more questions, but I will fall back in queue.

Next question is from the line of Nishit Jalan from Axis Capital.

Yes, yes. Sir, I just wanted to take one thing from you. Tube is getting into a lot of new businesses, right, and so also CG Power. So just wanted to understand. How are you deciding which company will enter into which business? So for example, the medical business or the optic lens business was in tube, while the semiconductor business and was part of CG Power. So any top-down thought process as to which entity will be part of which new businesses that you enter in future?

Yes. No, I think that's a good question. See broadly the approach we've taken is kind of that CG is sticking to businesses that are kind of -- or what I would say kind of in the power and industrial and electronics areas, but I would also say that I don't think it's kind of we -- I don't think it's basically going to be predetermined, right? So basically, once an opportunity comes up, we basically try and assess what is the better long-term home for it. And also you have CG's and TII's managements also doing some independent valuation and coming up with opportunities for themselves, so I don't think there's a deterministic path by which we can tell you A, B, C will be there. Because a lot of these businesses are new businesses for us.

Okay, okay, got it. And sir, I mean, a couple of quarters back, you talked about building capabilities on electric vehicle side. I think you did highlight that right now we are more like doing assembly and securing component from outside. I just wanted to understand. Any progress that you have made on building capabilities? How big is the R&D team now? And in the next 1 to 2 years, which kind of components will you look to source in house? Or build in house rather than buying from outside?

Yes. So again, we're developing an approach to it. I mean I don't know if the question is specific to CG than kind of...

[indiscernible].

Sorry -- for tube...

Tube, yes.

So for tube. So specifically, I mean, from a TI Clean Mobility R&D, that's going to be focused on vehicle integration, right? And so -- and then we'll basically start thinking on the component side. And like we've articulated before, CG will be more focused on the component side developments. And TI Clean Mobility will be more focused on vehicle integration and being an OEM. So I don't know if that gives you clarity. If you want to know more about TI Clean Mobility's R&D, we can kind of give you details on that.

So basically, for example, BMS, battery pack, anything -- I mean you have talked about that motor will come under CG, but what about the BMS, battery pack or anything that you decide to do on the software side? Because that will be an important part of the EVs. So I primarily wanted to understand more on the R&D capabilities of tube other than CG.

Yes. So battery packing and software development obviously will kind of be part of vehicle integration. That's overall software development. And Paul, who's on the call, can give you a bit more detail as to what we're doing on R&D for TI Clean Mobility. And Paul, do you want to take this Ontari this Clean Mobility?

I think currently we are focusing on the vehicle integration for different platforms. We currently have about a 200-member strong central R&D team and we are further strengthening it. So that's one piece. The other piece that we are concentrating is building the software capabilities over the next 1-year period, where we would like to take over much of the consumer experience part of it through software and then have a lot of control over the powertrain. That's -- basically that's a BMS, motor and controller related with software and hardware. That's the direction that we are taking to truly become quite technologically superior from a software-integrated hardware piece, yes. Does this answer your question?

Okay, okay, okay. One last one, on the [indiscernible]. If we see this year, FY '24, will we see good growth in two-wheelers, double-digit growth; and also good growth in passenger vehicle segment, including [indiscernible]? But if I look at Engineering and metal formed revenues, the growth have been [ 7% to 8% ]. Any particular reason? Are we running out of capacity somewhere? Or our customers have not done well. Because our expectation was that we could have grown in double digits given how the industry has shaped up. I just wanted to understand on [ comparative basis ].

So to answer this question. We have grown in the double digits only because, like we shared in the last quarter, raw material prices are comparatively down, as compared to the previous year. Otherwise, our growth in the quarter 4 -- and two-wheeler, like you mentioned, it is picking up. We have grown in-line and in some cases even better than the market.

[Operator Instructions] Next question is from the line of [ CA Garvit Goyal from Invest Analyst Advisers LLP ].

Am I audible?

Yes, sir.

Sir, my question is on Engineering and Metal Formed parts. So given that our Engineering and Metal Formed as a industrial systems contribute over 80% of our revenue. And we have achieved a Y-o-Y growth of 8% to 9% in FY '24. So what are the specific strategies does the management plan to implement to sustain and potentially accelerate this growth in the coming years? And additionally, are there any particular market or innovations that the company is targeting to enhance our competitive edge [indiscernible]?

So our strategy for Engineering business and Metal Formed division continues to be, first, grow in-line or better than the market for the domestic market. And there is clear-cut focus for the exports because our market share in the exports are pretty low and there is a good headroom available for growth there. And we are focusing those segments to drive the growth. As well as we are targeting -- the EV evolution is happening the country, so there are many applications which are emerging as new. And we are focused on that. And the way the EV business evolves, we'll be participating in those new opportunities, which will be in area of weight reduction and the area of the improved efficiency, because those are the new norms getting set up in the EV industry. So we are focused on it.

And sir, are -- new verticals like mobility and others, these are expected to drive the growth future.

Yes.

So my question is basically can you share how the things are shaping up across the new verticals. Like how do you expect the things to ramp up from here? If you can just share the indicative time lines. Like when are we expected to achieve the breakeven in Mobility, for example? And like, last quarter, you mentioned Q4 will be critical to EV business, but we are Q-on-Q down, so can you please put some color on it?

Yes...

I think, for -- specifically for EVs, we've articulated that we won't give any forward-looking guidance because it's basically it's -- there are -- just there are too many kind of uncertainties in the business. What we've clearly articulated for EV is that now we have 2 products launched. The three-wheeler product is doing well in the Southern markets, and now we're entering the Northern market. And we've also launched the trucks, which is kind of in its early days of kind of its sales cycle. What we have also kind of clearly articulated is that, with the fundraising -- and -- we will not depend on TII for funding -- the parent stand-alone TII for funding in that business. So that business is pretty much self funded now. I mean as in like it is funded into the entity. And so [indiscernible] TI Clean Mobility. It's self funded. So more than that, kind of giving specific guidance -- so those are the 2 businesses that are selling now. We are hoping that, in the next 2 quarters or so, we will get the small commercial vehicle also out. And so that's the status on that business on the Clean Mobility.

So what is the overall outlook for FY '25? This is the last question from my end.

For Clean Mobility or for TII. Or for what...

For TII.

Again, we've not -- I mean basically we've not specifically guided, but like, I mean, the growth has been kind of in the teens or like kind of what I would say -- it's kind of in the teens is where kind of growth has been. We assume -- we believe that, [ that will continue ].

Next question is from the line of Nikunj Agarwal from White Whale Partners.

This is Hardik here. Can you hear me?

Yes, sir.

Yes.

Okay, okay. So just going back to the -- one of the questions asked earlier in terms of how you decide on entering new businesses. I think, maybe, a few quarters ago, from what I understand, the thought process was that anything related with motors and with power would be coming through CG Power. And the rest of the unrelated businesses, let's say, like medical equipment or [indiscernible], would come through tube. But right now it seems like -- has there been a change in kind of the mindset or the thought process here in terms of how new businesses [ are seeded ]?

I think, see, the question keeps coming back to -- obviously kind of it is going to be, anything that's going to be related to motors or power, it will naturally go to CG, right? Whether it is a natural fit, I don't think that that's much of a question, right? I'm saying kind of, where something may not be 100% natural fit, we will have to evaluate that space when the opportunity comes up, all right? That's all we're articulating. So I don't think there's any change. We're just kind of elaborating because it's a bit difficult to kind of make a statement on when it's not so deterministic, right? I mean that's it is new business. If you take medical for example: There was not a natural home in either places. It was a new business for us, right? So that's the question, your question is ]; is like when opportunities like that present themselves, when we decided -- and as you know -- on where we think the best fit will be.

So -- but then that is a bit of a change in shape, right? Like, for example, if a medical equipment were to come, if -- you will be open to kind of possibly putting it to CG Power as well. You're open to that.

Yes, yes. So I mean I think, if you're asking -- so I would broadly say CG Power is fairly well defined in terms of the businesses it takes on, right, but like I said, if unrelated things come on, we will take a look at kind of which -- where is the more natural place to house it. So yes, if you see that...

Yes, yes.

So we can say that, that is the way we're thinking about it.

Got it, got it. Just 2 other questions. One was you mentioned about how, Metal Formed, the top line was low because of the correction in commodity prices, but even if I look at the EBIT -- I mean the EBIT is the conversion margin, so EBIT should be growing kind of in double digits, which it's not, so anything else that's kind of weighing on the Metal Formed Products business from a probability perspective?

Like we shared in the previous quarter, in Metal Formed particularly, we are finding railway businesses getting more competitive. And that is a little bit pulling down the margin, but otherwise, all other key business from the margin perspectives are okay. Railway, we have yet to figure out the answer for margins.

Okay, okay. And on the electric vehicles front, in December quarter, we did about 81 crores revenue, but in March quarter, it's about 57 crores. This is very -- this is a very kind of nascent business. We would have thought there should be a big ramp-up on a sequential basis, so any issues or concerns over there?

Paul, do you want to take that?

So I think, as we've said, that these will -- these are newer business that -- and actually the volumes or the projections actually will start firming up as we get more traction in the market. And we are currently on that basis. With the first products that we launched in the three-wheeler, we make good progress. And gradually, a lot of products will be launched this year. As Subbiah was saying. And over a period, then we will have adequate representation in the market across the different segments, be it on the heavy commercial vehicle side or the small commercial vehicle side and then a few more variant on the three-wheeler side, followed at the end of the year with the EV tractor launch. So with all this, then we should be in a position to garner some steady business and steady volumes. And that's the -- a plan that we are working on.

Specifically to your question also is there was -- in March -- for the month of March, because of the change from FAME to the new scheme, there was a drop in three-wheeler primary sales, all right, though there was an increase in secondary sales, so that would have also swung [indiscernible].

Got it, got it. One last quick one: There is an approval being sought for [ INR 350 crore ] long-term borrowing. Is there any specific plans to deploy that? Or is this just an enabling...

No. We always kind of -- I mean [ like what I keep on saying here, which we basically kind of take those approvals. There are no specific plans that's driving it. It's just a blanket approval that we take.

[Operator Instructions] Next question is from the line of Rushabh from RBSA Investment Managers.

Looking at the company, say, 5 to 7 years from now, how much percentage of the total profit pool do you think would come from TI-1, TI-2 and TI-3, respectively? Is there an aspiration or target on this?

Well, it's a bit tough to say. Ideally we would like to be 1/3, 1/3, 1/3, but I don't know if we'll kind of evolve in that way, though.

Okay. And sir, any traction on progress on CDMO, medical devices and the camera modules; anything that you'd like to share?

CDMO, Govind, do you just want to give a quick update?

Govin, are you there?

Am I audible?

Yes, sir, you're audible.

Yes.

Govind, go ahead, please.

Okay. So as far as the lab is concerned, like, we already started receiving custom synthesis orders. We have received 6 orders. In fact, 2 of them have been delivered even ahead of time. As far as the manufacturing side is concerned, we commissioned the kilo lab. And we also -- it's fully functional. We had even built up before March to get the tax benefit, so -- and currently the CGMP pilot plant is under construction, which we plan to commission it by September. So that's the update as of now.

Mr. Rushabh, does that answer your question...

Anything on the medical devices and camera modules also, if you could share some update?

Medical. Like we discussed last time, we took over this company about 6 to 9 months back. And as of now, we're investing into the capabilities of the company and getting into many products within the Lotus framework. And we're looking for the future opportunity, so we expect a good growth going forward for this business. And coming to the camera module: This month, our samples from the Korea -- one of the customer in the Korea got approved, and we are expecting a pilot load order in this month. And then maybe based on the pilot load performance, then we'll be ramping up this forwards, so maybe another quarter down the line, we'll be able to give you better update, but quality perspective and technical perspective, there's a good news. Things are in order. How -- we have to see how we ramp up this capacity going forward.

Next question is from the line of [ Manish Kumar ], an investor.

Am I audible...

Could you please speak a little louder, sir?

Is the audio better?

No, sir. We're not able to hear you clearly.

Is it better now?

Yes, sir.

Yes. So my question is pertaining to the investments purchase of [ INR 500 to INR 650 crores. I am not able to find a lot more details as to what these investments are, so could you please shed some light on that?

Yes. That [ 650 crores ] is actually invested [ 333 crores ] in TICMPL, Clean Mobility, during the year; and [ 233 crores ] in Lotus Surgicals, when we acquired in May. And we have invested some 80 crores in 3xper. That's a medical company, CDMO...

Okay. And how -- what kind of synergies were -- are you looking that these investments are going to make in the existing businesses of TII or investments?

So I think the broad point is we've always talked from a synergy perspective that we're not driving this in fully synergy-based approach, we're driving this based on opportunity sets that we see in new businesses over time. And so that's the primary focus of some of the expansions. And I think we've articulated this also before.

Next question is from the line of Salil Desai from Marcellus Investment Managers.

I had a question for Mr. Meyyappan. So the segment assets, less the segment liabilities, in the electric vehicle segment are still negative as of March '24. Can you explain how to read this number?

Yes, yes, yes. I'll just explain that. See, actually the -- whatever the negative which you are saying is after considering the CCPS whatever we have got it there, almost around INR 1,700 crores which we have got it. That is coming as a liability there and there. That's a major reason [indiscernible]. Then apart from this, we are also having a cash in hand of something like INR 750 crores there and there. After putting all of those, the fixed assets, net working capital, CCPS and the cash on hand, it is coming to something like INR 61 crores of a negative over there. If you remove the CCPS and the cash on hand, then the capital employed in that business is INR 892 crores. That is what -- how to read it.

Right. So just to, I mean, make sure I understand this. INR 892 crores is [indiscernible] the CCPS and the cash on hand...

No. INR 1,700 crores is the CCPS. That's negative, okay? And that's cash on hand is positive INR 747 crores, so you've had approximately -- say INR 61 crores will become INR 892 crores. That's what I can just say.

I see, okay. I understand, fair. And sir, another question for you is on Lotus Surgicals, right, that we have this amortization of intangibles, right? Now how much longer do you think that is likely to continue? Do we remain at similar EBIT levels as we are in this quarter? Or is there a significant change that can happen...

The intangible assets which gets created at the time of acquisition. See. Because the cost of the assets, whatever it is, there in the books of account, fixed, whatever is that. That will be [indiscernible]. And we will be paying based on the market value. And difference between these two will become a goodwill, as well the other intangible assets. Goodwill be -- will be retained in the books. And balance will get amortized over the period. It will be -- approximately, it will be there, for next 5 years or so; is whatever the amortization which are happening, yes.

Got it, perfect. And my last question is if Mr. Paul could help. If you think of small commercial vehicles will also be as part of the same [indiscernible] that you have managed, sir. Or you need to create separate facility for that.

Small commercial vehicles.

What's the question?

[indiscernible].

[indiscernible] small commercial vehicles?

When you made these [indiscernible] in factory...

Factory is coming up in Chennai.

I see, all right. And how much [indiscernible] on it approximately?

Sorry. What was the question? How much...

[indiscernible].

How much are we spending on the small commercial vehicle factories?

Our total CapEx would be around INR 320 crores. sir. So far, if we look at the cash outgo, around INR 12 crores. There was a cash outgo. However, POs have released to the extent of INR 80 crores to INR 90 crores.

Next question is from the line of Bhalchandra Shinde from Kotak Life.

Sir, on EV, I would like to know your road map. How do you see growth, especially on the EV tractors and EV three-wheelers? And on the dealer side, also network-wise how we are improving there. And what kind of growth targets we are targeting over next 3 to 5 years perspective? And this quarter actually, sequentially there was a decline, so in that perspective also, it is just a short-term phenomenon. We should see relatively a growth happening on that side. If you can give color on that.

[indiscernible].

Sorry...

One is we said we won't give long-term guidance, right? So your question on 5 to 7 years: We're not giving long-term guidance. I think I've answered some of the points of -- in terms of how large a business I think it can be, but again we don't want to -- don't get too much long-term guidance on that. And second, we've talked about this point about sequential [indiscernible] have lower primary sales but similar because of the change in the incentive scheme, but Paul, you can kind of elaborate things further. I think you've said it...

Yes. I think 2 things. One is currently, if you see, we are predominantly present in South and slowly started being present in North. By the end of this year, we have a very aggressive dealer expansion plan. That will support the volume plans and we are working around with that. That's number one, for the three-wheeler business. And additionally, as I mentioned earlier, some newer products also will come into the picture. That will help us to further increase the volumes as we move along. So that's as far as the three-wheeler is concerned. The other ones are the products are getting developed. They'll gradually get launched during the course of the year. And we will have to take it on from there in terms of creating -- what we are actually concentrating on is really to build a reasonably superior product that we are able to then create a pull in the market and have a traction and thereby have better customer adoptions. So that's the journey that we are on actually at the moment.

Next question is from the line of Anupam Gupta from IIFL Securities.

So a couple of questions. Firstly, on the EV side of it. On the three-wheelers, you have a passenger offering. And so why not launch a cargo offering at the same time and be in that market as well? So what is our strategy there in terms of thought process? And similarly, on the same line, sir, is if you can -- you have earlier highlighted that you'll launch further models in terms of tonnages for trucks as well as in tractors, but what's the sort of time lines there as well? So if you can give some picture there.

See. I think, on the three-wheeler piece, some of these vehicles that you mentioned will be under plan and will get launched during the course of this year. That's the plan and we are quite firm with the plan. Currently a lot of these products are under homologation, under products reliability testing. So obviously we are aware of the fact that we need to increase the range. And we will increase the range, as far as the three-wheeler is concerned, including cargo, including [indiscernible] and in these segments. In all the others, the plans have been made. For example, the small commercial vehicle, the later part on August, September, we should see some traction there; and similarly for the tractor; and similarly for another variant in the IPLT [ upscalable ], on the heavy commercial vehicle side. So with this, by the end of this year, we should be in a quite good position in terms of the product placements of the initial sale or top line.

Okay, okay, I understand, sir. So the second question is related to the Moshine and maybe the broader electronics picture as you see it. So Moshine obviously gives you a small entry there. How fast can we ramp up, especially given the news which was going around of a couple of weeks back, but broadly what is the strategy there? Will you focus more on the manufacturing part of it? Will you look at assembly, to start off with? What is the strategy, if you can outline that, on the electronic part of business?

So Anupam, thanks for the question. As you rightly said we mAdec a small entry into this business. We are further studying this opportunities in this area, and at appropriate time, we will share with you. And that's the area of focus for us going forward, so -- as of now for more -- the investment was for -- more from a learning perspective. And we are studying this market for us.

I understand. And sir, one question is on the core business or, let's say, core business CapEx. You have already projects around, but if you can just outline, what is the CapEx plan for TI India, the stand-alone business, for FY '25 and possibly FY '26, if you have that number?

So we'll be investing close to INR 500 crore in this financial year for the core business.

Okay, okay. And you said in TICMPL it will be INR 320 crore for a CV plant. And anything else, any large CapEx otherwise planned as well?

Basically in three-wheelers there will be another INR 72 crore kind of a spend. And in tractor, we are looking at INR 30 crore kind of a spend, so all put together, next year, the CapEx would be around INR 471 crores.

INR 471 crores, okay, okay.

Next question is from the line of Varun Arora from B&K Securities India Private Limited.

Sir, I just want to ask on the Mobility segment, sir, how the things are panning out right now. And if you can give some outlook on that front.

[indiscernible] question. Sorry...

Can you -- question again. Maybe your voice was not clearly...

Yes, sir. I'm audible now...

Yes, better.

Sir, I'm asking about the Mobility segment. So how the things are panning out right now. [ On quarter, that is -- it was flattish ], so can we expect the pickup on the demand of -- the outlook will be positive for this going forward in FY '25?

So this business is going through tough phase as of now because of the market conditions. Cycling market is not growing. And we are focusing in this business also in export area, which will be a little long-drawn process. And so we are focusing on the e-bikes in this business. And so there's a work in progress. These are the growth area identified for the Mobility business going forward.

Okay, sir. Sir, again, on lens -- I guess the last participant already asked the question, but there was some development going on regarding that. So any development that is going on, on that front? [So maybe actually on the basis that there was some [indiscernible] going on, like in April, May [indiscernible]. So if you can give some [indiscernible] on that, sir.

So as of now, we are focused on the lens business, which is -- basically goes in the camera modules. And if any further opportunity comes, we will share with you at appropriate time.

Okay, sir. Sir, last, just to clarify, sir, I mean, by what time line that the electric tractor will be launched. And the commercial vehicle, the small commercial vehicle, will be launched when?

We're looking at the end of -- beginning of Q3 really, actually. That's when it will get launched.

For electric -- or for both, I think, for both...

There is a large commercial vehicle which will be launched sometime around July, August period. That's the period. And the first variant of the electric tractor will be launched sometime in the period of October, November of this year.

Okay. Sir, just last one, sir, on the -- I guess the last one for you. You said that, by the FY '24, you'll have the dealership around 75 number. So have we achieved that target? Or we are still on the way.

Varun, you are talking about the three-wheeler?

Three-wheeler electric, yes, yes. That's correct, sir.

Yes. Currently we are at 63 dealers, against the 75, but by the end of this year, we should be about -- close to double of these numbers as we expand in the North and the East.

Next question is from the line of [ Vipulkumar A Shah from Sumangal Investment ].

Would you repeat the CapEx numbers for TI Clean Mobility? And can you break down it for all individual products again, sir?

Yes, yes. See, if we look at from next year, '24, '25, the total CapEx outgo would be INR 471 crores. If we see the breakup: Three-wheeler will be INR 72 crores, tractor INR 31 crores. And small commercial vehicle business, we'll be investing INR 278 crores. And in medium-mile heavy commercial vehicle business, we will be investing around INR 71 crore, yes. And there will be some marginal investments in [ SEM ] and in several [ R&D substance ]. So all, total will be around INR 471 crores.

So what will be the nameplate capacities for each of the business, sir? Can you quantify it, sir?

Capacity, as we've said earlier also, there will be -- for example, the three-wheeler plant will have a capacity of 75,000 in terms of -- the small commercial vehicle plant that we are building will have capacity. Once we have completed the entire thing, that capacity will be around 50,000 vehicles. There will even -- tractor currently has a capacity of 25,000 numbers annually. And IPLT at the -- once we add a line, we will have a capacity this year of around 4,500...

Last one. Which -- I didn't understand your last comment, sir.

Last comment was on IPLT. So in IPLT, we are in the process of adding one more line. With that, the capacity this year will finally get to 4,500 numbers.

Next question is from the line of [ Rahil Shah from Crown Capital ].

Sir, this investment in the core business of INR 500 crores for this year you mentioned earlier. So what will be that for exactly? And how will it help us?

So it will be helping us building the capabilities in the Engineering as well as Metal Formed divisions and which will be in terms of some money will go for capacity expansion. Some money will go for capability enhancement.

Okay. And have you already started spending? Like has the CapEx already started? And that's the figure for the FY '25, correct?

So most of the INR 500 crore will get spent in this financial year. However, some money will be work-in-progress which will get spent by quarter 1 or quarter 2 of next year.

Okay, okay. And on a consolidated level for the -- overall for the company, I believe you've said -- so you've been seeing teens growth and that should continue ahead as well, but when it comes to margins, what is the outlook there? Which businesses are you focusing on to improve the gross margins, EBITDA margins? Can you share a guidance or any directional outlook?

Actually, sir, you will take this question -- or I mean generally, Mr. Vellayan, sir, we don't give the future guidance, as already said that.

What are you looking for, on a consolidated?

I just want to know on a consolidated level of -- if you can provide. It's not an exact guidance but a directional outlook. How will the margins improve? Which businesses will lead to that? So where is your focus when it comes to improving margins?

So broadly I think you understand the 2 largest contributors to consol right now are TI-1 and CG, right? And both have specific indications on what the margins are. And we'll continue to maintain that we'll maintain at least these levels of PBT margins which are north of 13% for both businesses today. So that, I do believe, will broadly continue. And those are the 2 largest contributors. Now obviously, when we take at a consol level, we will continue to have TI Clean Mobility being the largest, yes, let's say -- the negative contributor. And I think that, that will also continue for this year and so you'll have to just kind of make your own kind of assumptions then based on this -- on that combination of things.

Next question is from the line of Jinesh Gandhi from AMBIT Capital.

My question pertains to the electric truck business. So I believe we were looking to start deliveries from fourth quarter, so can you talk about how many trucks that we deliver? And how does the order book look like?

See. Currently we have about 70 trucks on the road, all, so far. And the order book that we have is close to about 35, 40, which we are in the process of executing now in the month of May and June. That's where we are at. And we are working around with a number of customers -- large customers, in terms of proving the concept actually because this -- we'll have to prove the concept. Then we'll have to look at what the savings are, demonstrate that. That's the kind of work that's going on. And we are quite hopeful of building traction in the coming months because these results are coming out very favorable when you compare it with the current ICEs. It is what they are deploying. So that's as far as IPLT is concerned.

Okay. So would it be fair to say that IPLTech effectively probably will get into a material ramp-up mode only by end of this financial year or early next financial year given that process of customer approvals and all those things will take at least another 6 to 9 months?

Part of that work is in the processes. Some of this is a new concept, so one is never really sure, if it clicks, it clicks a big way. It takes a little time; the decision time that takes for people to absorb, to change some behavior in terms of adoption. The benefit is very clear. That's the good news. Now we'll have to get them, in terms of we are working around different models to see how the adoption can start happening. And once a few adoptions, and we have succeeded, starts happening, there definitely will be others that will come into the picture. So that's where it is. We are hopeful of building up good volumes, but difficult to say at this moment what can it -- what that will be, nor would I like to say that, but what form in terms of building the pipelines?

Got it, got it. And lastly, when we talk of the EV business, of -- we have talked about investing of roughly 3,000 crores into this business. And so far, if I see it, we have invested close to INR 1,900 crore. That's what the sets for the EV business are referred to. If I knock off cash, then close to about INR 1,200-odd crores. So incrementally, balance CapEx beyond this INR 470 crores, INR 500 crores of this financial year, what it could be going forward. I mean, is this plan of INR 3,000 crore investment largely formed? Or this will depend on how the business ramps up going forward.

[indiscernible] CapEx beyond this. I think there, we'll see, will be more development of -- vehicle developments. R&D will be there, and then obviously the build-out of the businesses themselves.

Next question is from the line of [ CA Garvit Goyal from Invest Analysts Advisers LLP ].

My questions are answered.

Next question is from the line of Nishit Jalan from Axis Capital.

Largely on the three-wheeler electric vehicle industry. If you see -- what we understand is that FAME is a very important part of the overall three-wheeler vehicle adoption. Now that is under uncertainty and incentives are coming down. Do you think that, without FAME incentives also, EV penetration can pick up in three-wheelers? Or it will be slower than what you would have thought earlier? And do we have the PLI benefits that we will get in three-wheeler business? Or it's not there.

So 2 parts to your question. The first part is currently we don't have a PLI benefit as such in terms of this on the three-wheeler business. That's number one. Number two is, see, the FAME has already come down. There are different component prices that are moving down, primarily the battery, so that should go a long way in building -- giving some stability to the prices. That's the second piece. The third piece is the TCO portion. That means the benefit to the customer. What we have seen is reasonably substantial. And we believe that, from the experiences that we've got, there will be good traction. How much it will be and in what way it will be, we'll have to see as things turn out. The success really will work around how you handle a combination of factors: the product, the range and the performance and the customer service. And so many other areas linked with the customer experience that should help us to get through with the numbers that we are doing. Temporarily, yes, there will be a setback if FAME -- but FAME is not completely gone. It's got reduced now. And once the elections are through, I'm sure the government will work out some policies, for some more time at least, till the EV adoption, as per their plans that they have made, it starts stabilizing. Along with that, we have to bear in mind that the charging infrastructure and many of these things are in active development. And if this starts developing in a larger way, then that provides an opportunity for you to down the -- rightsize your battery and therefore your costs. And therefore, a lot of that is advantage one cannot yet achieve.

Okay, okay. So just one follow-up. After FAME incentives got reduced, did you take price hikes? Or you basically absorbed it given the reduction in battery prices and other cost reduction that you have talked about?

So we did take a price hike. We took an industry also took and part of that absorption we did take by ourselves for a certain period of time, but we are also in the plan of seeing in what way in our bill of material we can shape up so that we don't have that effort beyond the first -- this effect beyond the first half of this year.

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

Anupam, thanks, that's it from my end. I turn it back to you.

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

Thank you.

Thank you.

Thank you.