V.S.T. Tillers Tractors Limited (531266) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '22 Earnings Conference Call of V.S.T. Tillers Tractors Limited, hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities. Thank you, and over to you, sir.

Thank you, Welcome to the V.S.T. Tillers Tractors Limited, Q3 FY '22 post result conference call. From V.S.T. Tillers Tractors management, we have with us today Mr. V. T. Ravindra, Managing Director; Mr. Antony Cherukara, Chief Executive Officer; and Mr. Pankaj Khemka, Our Chief Financial Officer. I now hand over the call to management for the opening remarks to be followed by question-and-answer session. Over to you, sir.

Yes. Good afternoon, everyone, and happy to be here to share with Q3 FY '22 results with all of you. The company achieved a quarterly turnover of INR 208.44 crores in Q3 of FY '22. That is a grow of 2.75% year-on-year. The overall EBITDA percentage is 16.62% compared to 20.47% previous year. The reduction in EBITDA is mainly due to the reduction in other income. The operational EBITDA is at 14.51% compared to 14.71% the previous year. The impact is at INR 21.05 crores, previous year INR 30.83 crore, down by 31.72%. Again, this is mainly due to the other income and increase in [indiscernible] . Coming to the 9-month results, April to December, the company achieved a turnover of INR 635.5 crores year-to date, December 21, growth stood at 11.6%. Overall, EBITDA percentage is at 18.35% compared to 19.25% previous year. The reduction in EBITDA again is due to the reduction in other income. The operational EBITDA percentage increased to 14.80% compared to 14.74%. And the profit after tax is INR 77.21 crore against previous year of INR 77.84 crore. Now coming to quarter 3 volumes on power tillers. Power tillers in quarter 3 FY '22, we have done 7,139 power tillers against previous year quarter 3 number of 6,734 and tractor 2,043 against previous year of 2,433. This is mainly on the model and financials. And with these opening remarks, we could go on to the question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Krupashankar NJ from Spark Capital.

A couple of questions from my side. So what would be your sense on the medium-term demand outlook for power tillers and tractors? And if at all, can you share your guidance for FY '22 and '23?

Yes. The medium-term outlook looks positive for power tillers, especially the short term. The medium term is difficult to predict. However, the monsoon prediction is good for the next monsoon as well. So that augurs well for the industries. So overall, it looks positive for power tillers. Even for the tractors, it looks positive. However, currently, there is a slowdown in the tractor sale. Primarily, there was a cash flow delay into the farmers hands, which affected the tractor industry majorly. But however, given the reservoir water levels, the crop prices and the cash flow now happening into the farmer's hands. It again looks positive in the short and medium term.

Right. So any major update on the subsidy allocation in major power tiller states?

Yes. In this quarter 4, we are seeing some subsidy allocation happening from the Northeast in Tamil Nadu, in Karnataka and in Maharashtra.

Right, sir. right. And second question from my side. Your -- can you share the revenue breakdown between the powers tillers and tractors for the quarter?

What breakdown?

The revenues for power tillers and tractors.

Yes, just a second, for quarter 3 -- just a second -- quarter 3, power tillers was INR 105 crores and tractors were INR 80 crores.

[Operator Instructions] The next question is from the line of Devanshu Sampat from Yes Securities.

So 2 broad questions from my side. Can you hear me? Hello?

Yes. Yes. I can hear you.

Okay. So 2 things. One is recently the management of Mahindra and Mahindra spoke about launching code under the Swaraj brand, right? And there was a very distinct comment made by the management where they said they are targeting and they are confident of in pacing tillers. So what are your thoughts on this one? Secondly, if you can explain what kind of -- how is the pricing and the subsidy environment situation is different for this code? And will that be something to -- that can -- will that be applicable to code as well if you have an idea about that? And if this does turn out to be a threat over time, will this require us to be more aggressive in terms of power leaders and these kind of things, just your thoughts?

Yes. So we have seen code and right now, it is not eligible under any subsidy because that is a completely new segment. Probably, government will have to come out with testing regulations and standards for that just like that happened to the quarterly cycle if you recall. That is something that's likely evolve. Right now, subsidy is not there. However, on closer look, we see limited applications of that machine, which is again one thing in terms of traction in terms of all that. But yes, there are certain crops where it could be applicable. But we are not seeing any big movements. We have seen it in the market, there is no big shift happening. There is good demand for power tillers even now. And the power tiller business continues to grow. However, I would say innovation will keep happening and we will also be not far behind in terms of bringing innovations in the market. This year in fact, we have been awarded by CII as one of the most 25 innovative companies in the country, wherein we launched multiple models with various innovations, which enables the small and marginal farmers. So while we keep a watch on what is happening with the core, one thing is for sure that V.S.T. will not be far behind in terms of innovations.

Okay. Okay. And so also there was this press release that the company put out a few weeks ago regarding this INR 1 payment for brush cutters. Now of course, this is something that I presume that you will also be looking at making this facility available for one product and then eventually taking it to the other products that are out there. So can you give a little sense on whether the tie-ups are specific to that? Or can it be -- if you can share more details in terms of how many people we tied up with and how many -- where is financing facility available at all the outlets and is it for other products? If you can throw some light on that, please?

Yes. So this INR 1 particular scheme was launched only for brush cutters. And there has been good response in the market for that. What we have seen is customers coming with Kisan credit cards and actually buying the brush cutter and converting the balance to EMIs. Brush cutter cost, typically anywhere between INR 17,000 to INR 28,000. So depending on which capacity and what it is buying. So this all scheme is enabling the farmers to actually buy easily through an EMI just like you and me would go to consumer durable store and buy a TV using easy finance availability. So that is what we wanted to emulate for the rural consumers in the .......

Members of the management, we could not hear you at the moment. We can hear you now. Sir, we lost you there for a while.

So I will repeat the whole thing again. If all of you can hear me. Can you just confirm again hear me?

Yes, sir. Yes, sir, we can hear you.

So I'll repeat what I said. Just like the consumer finance available for durables like TV and fridges and all that -- Hello, can you hear me?

Yes, sir.

Yes, sir.

Yes. So the same thing we are enabling for the small farm machinery customers. We have got good response on the INR 1 scheme wherein the farmer comes in with the Kisan credit card and buys the -- makes the down payment of INR 1 and rest he converts into an EMI. So the same methodology, of course not the INR 1, but different schemes, we are also launched for power tillers, wherein the downpayment is INR 4,000 and rest of it is converted into EMIs for the farmer to pay. So that is also yielding good results. The other thing which the company is doing is creating digital payment ability in all our dealerships. We have reached about 85 dealerships now, where Paytm machines have been installed. We are taking it up to 300, 400 dealership within the next 2 months. Wherein the whole digital Abhiyan of the government, where the farmer is using the Kisan credit card, which will also -- I mean, this facility will also enable him to buy machinery now, which he was not able to do until now. So with this initiative, we are able to get good response from the consumers. I hope I have answered your question.

Yes, sir. So just to clarify, so basically, what you say is financing availability will be there at all your outlets maybe in a quarter or 2, right, not only for brush cutters but for all products essentially, all products?

Exactly yes.

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

My question is like considering this subsidy surge in the raw material cost, how are you placed in terms of the steel price increase and all those things. So what do you think in terms of margin during the Q4, like what's your sort of guidance to quarter 3, number one, the first question? Second question there, how do you see this the sale of tiller and tractor during the Q4 as compared to Q3 in terms of numbers?

Yes. So the commodity inflation continues to be an issue. That is definitely better in terms of cost that is being created through the commodity inflation. However, the company has been able to manage the costs very efficiently, both the operational cost and the various efficiencies that we've been talking about in the last few quarters that is yielding a result. That is the reason why our operational EBITDA has not gone down. So it has been maintained. And on a 9-month basis, we have also seen slight growth. And going into quarter 4, I think we will be able to manage our costs some of the accrual of all that we have been doing will continue to go in quarter 4 and in the coming quarters as well. So we should be able to manage our margins in the range that we are currently talking about which is 12% to 14%, which we have sustained and I think we will continue to sustain.

And what about the numbers, like projected numbers of sales for the tillers and tractors considering that it's year-ending also March quarter. So every company tries to push more in the market and to book more sales. So what do you think in terms of how many tillers were sold, how much tractors we sold in Q3 and what's your target to sell in the Q4?

Yes. I just read out the Q3 numbers. So we have sold 7,139 tillers in Q3 and 2,043 tractors in Q3. Q4, we should be better. We don't give any number -- forward-looking numbers in our call. But we think it will be -- it is going to be positive.

Very good. And sir, last thing that did also take some price increase because the steel was very high and the power tillers is also getting higher, so what about price increase?

Yes, we are looking at the price increase and we have taken that in quarter 4.

Okay. So [indiscernible] has increased in Q3?

Q3, no. Q3, we took in October.

Okay. Okay. And then again -- so again, you plan to take in the -- so you are planning to have other price hike during this quarter?

Yes. See most of the industry has already done the price increase in December. We are looking at doing the price increase in quarter 4, yes.

Okay. So one you didn't -- yes, effective from November, second price increases you're targeting to do during this quarter.

Yes, correct.

[Operator Instructions] The next question is from the line of Anand Srinivasan.

Sir, how is the expansion in higher HP tractor going on in status, what is the current status there?

Yes. The higher expansion, I mean, the higher tractor expansion is going as per plan. We shifted to Hosur in the beginning of this year. So the entire production capacity is completely set up for higher HP tractors. We have also taken steps to grow into the [indiscernible] markets this year. So we are making -- beginning in those markets like UP, MP and Rajasthan. We are getting very good response. We should be able to do 1,000 plus numbers in this financial year, hopefully in the higher HP segment. And going forward, we should be able to grow it further in the coming years.

sir. Sir, on the increment side, how is -- what is the current status? And also on the precision implement side you are talking [indiscernible] expanding on those lines. So any light on that side?

Yes, precision implement division is something we have started manufacturing of rotovators in Mysore. The business team is also being put in place. We have seen early beginnings of [indiscernible]. But I think in the coming years, it will scale up further.

Okay. And sir, what is the current inventory status, sir? Just it normal lines or how is it?

Yes. In normal lines, of course, in quarter 3, we had a slightly higher inventory of about INR 133 crores, but we should -- I mean it is in line with our plans to build inventory for the season, considering January also is Pongal and harvest season and an upward tick in the industry as per plan and things between normal, as you said.

[Operator Instructions] The next question is from the line of Sonal Gupta from L&T Mutal Fund.

Sorry, I joined a call late. Could you repeat the revenue numbers for tiller, tractors and parts for this quarter?

Yes. Just a second. For quarter 3, the company revenue was -- did you get the company review, right? You just wanted the tiller and tractor revenues?

Yes.

Okay. The tiller revenue is about INR 105 crores and tractor revenue is at about INR 80 crores.

INR 80 crores. And parts, sir?

Parts is about INR 23 crores.

Okay. Same as last call. So just on the carrying on with the previous question on higher HP, tractors. I was just trying to understand like this year, Europe also along with the industry seen a sharp decline in tractor volumes despite the fact that you launched a new product range as well and our overall base is also relatively small. So could you, I mean, like shed some light on that like you mentioned that you're going to do like almost 1,000 units for higher HP tractors. So the underlying lower HP tractors are seeing a very sharp decline and overall, how do you see this thing? I mean is there some -- what are the factors here?

Yes. So the higher HP tractors, there is not going to be any decline. This year, we have set up operation in Horsur and it has begun. And as we move forward, you will see the growth in the volumes in the higher HP production and [indiscernible] stabilizes. So apart from that, the compact tractor segment is predominantly for us being sold in Gujarat and Maharashtra, Karnataka. So what has happened this year, the industry fall has been at a certain level for a few -- I mean, the last few months. However, the drop has been larger in states like Gujarat, where the larger number of compact tractor segment is sold. So that has impacted our compact tractor segment sale. And that is why you see the different volumes in the tractors. And secondly, as I've said before, we go only by consumption and the entire cycle is built on consumption and the billing happens on consumption only. So it is very directly proportional to the demand in the market right now. So these are the 2 reasons. So we don't build any inventory in terms of the channel inventory. So these are the 2 factors by which you see a decline in compact tractors. The higher HP tractors is continuing to grow although at a small percentage. And going forward, I think things will look better because Gujarat and Maharashtra water levels and [indiscernible] for the crop producers are looking good.

Got it, sir. Sir, but overall, do you see -- I mean, like clearly, we are hearing a lot of news flow in rural stress. I mean, even some of the larger tractor competitors have sort of commented. So do you think that the industry will continue to face pressure even in FY '23? Or do you think that we've largely seen the worst of impact?

See, the pressure seen against a very large base in the previous financial year. However, if you look at in terms of where the industry will end up this year, will be close to 900,000. So it is actually the large peak of the previous financial year, which we are comparing against and we are in that [indiscernible] degrowth that is being seen. However, what I see is in the coming near term or the medium term going into the kharif season, I see things would look good. The reason being one is the water levels are good, the crop planting is good and the prediction on the monsoon is also good. So this recently, 2 days back the prediction on monsoon also has come, which is being predicted to be normal. So with all these put together, good for the coming season as well.

Got it. And sorry, sir, and could you share some where are you in terms of financing numbers? Sorry, in terms of like which you mentioned, you have large EMI scheme, so how has the share of financing moved, maybe this year versus last year ...

Financing has over the last -- there are a few quarters we have been focusing about 6 to 7 quarters. What we have done is [indiscernible] financing happening in tillers. Currently, we are at about 3.3%. [indiscernible] used to happen, it has gone up to 3.5% to 4%. Our immediate target is to take it to at least 10% and the next year take it to at least 20%.

So in the latest quarter, we're at 2.5, is it?

Yes. Yes.

And what would be the case for you in the tractor side?

Tractor side, predominantly is financed. So there is no question of no finance availability in that segment.

Got it, sir. And just lastly, I mean, in terms of tiller volumes, could you tell us what share of would be B2B in terms of your volume?

Tiller volume B2B is about [indiscernible] number so far in the financial year.

The next question is from the line of Arpit Shah from Care Portfolio Managers.

Sir, what are your pipeline for additional launches in the tractors and in tillers for any other farm equipment that we don't [indiscernible]?

Yes. The new products that we will be launching in the coming months. We are launching couple of products in the compact tractor segment, which will be advanced products in terms of ergonomics, in terms of hydraulic in the compact tractor segment. Also in the coming financial year, we will be launching the VST range of tractors in the higher HP segment. In the small farm equipment sector, we will be launching a range of hand-held machines like chainsaws, which we will be looking at.

So these are in coming few months only...

Yes, coming few months only. See Zetor launch will be sometime in Q2, Q3.

So our business -- related to [indiscernible] crores. So as the time -- so I believe that management still stand by that work that we will be--we are trying to achieve INR 3,000 crores of top line. So is it correct, sir? We stand up by [indiscernible] -- in that?

See last financial year, we achieved a growth of 43%. This year, we should be able to -- looking at close to 20% plus in terms of growth. So cumulatively, we are at about CAGR in the last 2 years about 30%. So we need to get to about 35%, 36% on a 5-year journey to get to the vision that we are. So more importantly, what I would like to share with you for the company, it has been to get on to a very aggressive growth path, I think that point has been achieved in terms of achieving year-on-year growth. So -- and the focus will continue and more and more products and projects which we had started earlier is going to come in line in FY '23 and FY '24. So those revenues that are not being realized yet. So in the next financial year, those things should be coming through. And we are positive on chasing down this vision that we have set on.

Sir, during this journey, do we see any -- that any reversionary product for the farming segment or the small farming equipment segment or there will be some natural sunset of some products? So we will say tillers or something like that my earlier questionnaire ask that is M&M is launching something to replace the power tillers. So do we see any change in product mix or any strategy -- any change in strategy that we -- which we may have to implement or something like that?

See, some - there are -- like I have shared earlier with you, we are looking at 4 or 5 strategies in terms of gunning for this report. I'll repeat what I said because one is ensuring that the power tiller business is converted to a small farm mechanization business. Secondly, we are looking at ensuring capacity utilization for our higher horse power tractor and selling those volumes. Third is chasing of leadership in the compact tractor segment and sustaining it. That is the third one. Fourth, what we have said is we will be getting into precision implements which we are doing. Fifth is what we have said is we will look at rural distribution opportunities. Very soon, we will be coming to you and telling you probably in quarter 1 of next year that we are getting into rural distribution and I will be able to share more details on that with you in quarter 1. And the last one is we said we will invest in technology and future innovation. So you have seen us going and investing in electric tractor technology and Zimeno Inc is the makers of monarch tractor for which we are in talks with them and we have already supplied the powertrain to them.

Okay. Great, sir. Sir, Last question is on the export or how do you see exports coming in?

Yes. Export is doing quite well for us. We are doing about 140% plus on the export front in this current year. And we have been able to go into the countries which we wanted to go into like Eastern Europe, I told you earlier that we will be entering, which we have done this year. And we said we will expand in Africa. So we have been able to create a network in West Africa and Southern Africa. So we are yet to enter the Eastern African part, which very soon we should be able to.

[Operator Instructions] The next question is from the line of Anand Srinivasan.

I just wanted to ask about what is the CapEx for this year and next year?

Yes. CapEx will be around INR [ 43 ] crores for this year. And next year, the plan is in progress. Probably the next call, I will be able to share more details on it.

Sure. And I just wanted to know if there are any subscription-based models that can be explored. I just wanted to know how technology can disrupt the business model that are existing currently because there are also some players who are working on tractors for hire or something like that. So are there any opportunities you see on this side?

We have operated custom hiring service centers. And the business model has not proven to be quite profitable. However, I think what we have said is so many things are emerging and we are closely watching it. One of the latest things that is emerging is drone as a service. So these are the things that we are budgeting closely and the company will be taking steps to be in the forefront of emerging technologies, especially for the small farmer.

The next question is from the line of Sonal Gupta from L&T Mutual Fund.

Sir, just wanted to understand on the precision implement you mentioned you started rotavator? I mean like what part of implements are you looking at? I mean, and by when do you expect to have a complete portfolio?

Yes. So it will be a continuous journey. So right now, we have started with rotovators. Second thing we are working on currently is sprayers and we are also looking at certain components like times that go into tillers and rotovators. So we are in talks, multiple talks with them. And I think this journey will continue. There is no complete portfolio kind of situation that we are looking at. What we are seeing is wherever the opportunity is now, for example, like I was just telling the previous caller, one thing that is emerging is the drones now. So we would be looking at it as well. So we will be working on it.

Got it. And I mean, like, are there any other like plain vanilla things like we're seeing now a lot of OEMs getting into? I mean, just from other segments like getting into the usual stuff like even lubricants and all they're selling to the network as part of the spare part business. So I mean are we looking at -- yes.

Yes, we're definitely doing that. I spoke about the rural distribution that we want to do. So we are building a completely digitally enabled funnel. So I will share more details with all of you once we have completely get it off the ground and going. Right now a lot of work is happening on that front. And probably in the coming quarters, I will be able to share more details with all of you.

Got it, sir. And just on the precision implement, largely, again, cash and carry? Or there is an element of financing or like...

Everything is cash and carry. At least to the channel partners, we are on cash and carry model only.

Right. No, I understand like for the end customer, I mean like you've launched this brush cutter scheme where you are giving it on a EMI basis. So I would imagine that a lot of these implements are...[indiscernible]

No, for tractors and implement, there is finance available. So many of these implements are financed by the customer. The real issue of finance in the small farm machinery segment, which is the power tiller, power weeder and brush cutter space.

The next question is from the line of Kunal Sabnis from Nine Rivers Capital.

The average realizations for tractors have gone up sharply. What do you attribute this to?

Average -- of course, we have had a price increase in the year due to continuous commodity inflation that definitely has happened. And secondly, there is also a shift towards higher horsepower sales. Our -- even in our compact segment, larger number of 27-horsepower selling compared to 18-horsepower, 30-horsepower is another compact tractor which has started selling. Then of course, we -- our journey into higher horsepower space, which is the 45 HP and 50 HP segments that come at a higher price. So from all these perspectives, of course, if you compare the average realization with previous years definitely you will see that it has gone up.

So mix change and the price hikes?

Product mix and inflation, yes both.

Got it. Got it. On the export front, you said you will grow this year 40% above last year, right? Is that...

140%.

140%. So last year, you bid about 650 volumes that will grow by 140%?

Correct.

And which geographies is this primarily driven by? I mean, is this...

Europe price Republic I would say. Africa, we have just entered. We are getting good growth there, but the base is small.

Got it. And you're planning to leverage the Zetor supply chain in Western Europe. Is that also...

Right now, we are not doing it. But in the future, yes, we will be doing it, not necessarily for Europe because Europe, we have a very good network. But the other continents like Latin America, we are looking and talking to them currently.

Got it. Got it. And if you could just give me the dealer count on tillers and tractors, both?

Dealers, we are at 554; and the tractors, we are at 325.

The next question is from the line of Anand Srinivasan.

I just wanted to follow back on the drone. Have you applied for the drone PLI? Are we eligible for that?

PLI, no, but we are looking at drone as an opportunity. We are just -- I mean, we have just begun the studies on that. We're working on it.

The next question is from the line of Devanshu Sampat from Yes Securities.

A few questions. So can you give a bit of an update on what's happening on the tie-up with Pubert and the power weeder side?

Yes. Power weeder side, the progress is good. The volume is growing. However, no other modality improvements have happened because of COVID. I -- we traveled to France. We had a discussion. Pubert is also expected to come to India. However, due to COVID, those things have not progressed.

Okay. Okay. So it's safe to assume that FY '23, we should be able to -- first half is something that we should...

We're definitely working on it. But today, we are in an unpredictable environment. So we are definitely working on that, yes.

And a question for the MD, if he chooses to answer. So can you talk a bit about the challenges that we are facing, not from a macro environment, but from within, right? I mean, there has been a bit of senior management attention that I have read some news. And there are also a little bit of a channel check that I did. I got to know that the tractor oil leakage issues are still the complaints that still are coming around. So if you can comment a bit on that and how we are looking at addressing these issues?

On the management front, we have not had any serious issues. Yes, we've had 1 senior person leaving us, and that's been taken care of. We have enough management depth true and issue. We don't see any problem on that. On the tractor front, you said leakage issues, we've overcome all the issues on the tractors as of now. Our tractors, the last quarter, I'd say the tractors that have gone out do not have leakage issues pertaining to models which had gone out earlier possibly.

Okay. Okay. So you're saying from...

I'd like to just add on to what MD just said, I'm very happy to say that the company has begun TQM journey. And we just had the first audit and we actually got an exemplary award on the quality front and that to none less than from the [indiscernible] and the company's -- hello, can you hear me?

Yes, sir. Yes, sir.

Yes. So the company's objective to go on the journey and look at even bidding at a later stage continues. So definitely, a lot of work has happened in the last 2 to 3 years. And I mean, the problems you spoke about are no more there.

Okay. Okay. That's great to hear. And when it comes to R&D and innovation, if you can give your honest assessment, do you think they are self sufficient? Or are we -- we need the help of tech partners to sort of keep up with a lot of startups and some of the larger names also are up in the R&D gain from what I've been reading? So your take on that in terms of how we are approaching this and to stay ahead of the curve?

Yes. So definitely, innovation is going to be a critical part of our journey. So I'm very happy to share with you this year, CII has awarded us V.S.T. as one of the most 25 top most innovative organizations in the country. So we have been doing a lot of innovations and especially in the small farm mechanization space. And that journey will continue. And we will continue to partner, especially for technology. As you know, we have partnered with Zetor. Similarly, we are working together with monarch for electric and autonomous tractors. So those things will continue. Innovation definitely -- I mean, there are several projects that are underway looking at innovations that needs to be done, especially in the small farm mechanization space.

Sure. And last question from my side is any update on the land parcel sale? And if not, then what is the reason that this is getting delayed, given that the land value and the real estate cycle news are generally quite favorable right now, so?

See, like I kept on saying that land, we are not looking at immediately. But like I've said before, we will definitely unlock the value of this land. But the critical factor is the company is looking for opportunities of growth and we will need cash at some point in time. And also you know very well that the real estate, this is not the best time to get into a commercial deal on a real estate at this point in time. But definitely, we will be unlocking the value, but nothing decided at this point in time.

The next question is from the line of Marshall, an Individual Investor.

Yes. Just I think in the month of August or something, there was a press release regarding the agreement signed with Zimeno for this electric tractor vehicle. So if you can just spell out where do we stand on this one, number one.

Okay. So Zimeno, we are -- we have supplied tractors to them. They are in the process of developing, testing, there is a huge regulatory requirement in the U.S. So there is a lot of testing needs to be done. In the coming financial year, the Monarch that is Zimeno Inc is expecting to launch those tractors in the U.S. market. So for those tractors, the powertrain will go from us in India.

So it means we will see some production during Q4 or the next year -- or the Q1 next year?

Next year, next year, most likely Q3, Q4 of next year.

Okay. And second thing, we have receivables of INR 82 crores in our balance sheet. So whether all those receivables are less than 6 months or something older, which may not be realizable?

There are subsidy outstanding, which is greater than 6 months, which the company has provisioned for. So that is what is greater than 6 months. Whereas the regular payments -- the regular receivables are the aging is in a comfortable zone.

So -- but like why we have to make the provision for the subsidy, if it is -- if the government has to give some subsidies for the policy or [indiscernible], we should get it, isn't it?

We should get it, but we are following the credit policy set by the company, whether it is subsidy or not...

Okay. Okay. Fine. Okay. But otherwise, it's recoverable?

Yes, see the government -- and it is not only us, the entire industry has to get money from the Andhra Pradesh government.

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

We thank all the participants. We thank V.S.T. Tillers Tractors management for taking time for the call. Have a good day.

Yes. Thank you.

Thank you.

Thank you. On behalf of Batlivala & Karani Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.