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

Ladies and gentlemen, good day, and welcome to V.S.T. Tillers Tractors Limited 3Q FY '24 Post-Result Conference Call hosted by B&K Securities. From the V.S.T. Tillers management, we have with us today Mr. V.T. Ravindra, the Managing Director; Mr. Antony Cherukara, the Chief Executive Officer; and Mr. Nitin Agrawal, Chief Financial Officer. [Operator Instructions] Also, may I remind you of the safe harbor rules. The company may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risk that the company faces. Yes, over to you, sir. Hello?

I hope we are audible. And is the presentation visible?

The presentation is not visible, but we can hear you, sir.

Okay. Yes, I hope the screen is visible now.

Yes, we can see the screen now, yes. You can continue.

Yes. So good evening, everyone. I'm Nitin Agrawal, Chief Financial Officer of the company, and I welcome you all for the investor presentation analyst meet. This presentation is uploaded on the stock exchange and our website as well. So I'll take you through, first, the sales performance for some of the key products for the 9 months for FY '24. In the other column, you have the corresponding performance for the 9 months. So in the current 9 months, we have been able to -- sales volume for the power tiller is 24,914 as compared to 25,436 number in the corresponding previous year. Similarly, the numbers of tractors, power weeders and reapers have been given over there. As you can see, there is a marginal -- there's a decline of roughly 2% in case of tillers and 21% for the tractors. However, weeder and reaper, which are the new -- are -- have shown strong growth. Moving on to performance in terms of revenue, so revenue from operations for 9 months stood at INR 694 crores with respect to INR 683 crores of previous month -- previous year same period. And EBITDA of current year, there's an EBITDA of 18%, which is -- which was 13% in the same period last year. Also, operational EBITDA for the quarter in terms of rupees stood at INR 84 crores in the current 9 months as compared to INR 72 crores earlier period, which shows a healthy growth of operational EBITDA of 12.14%. PBT and PAT numbers are impacted because of -- reflecting the impact of other income as well. So we have -- in the 9 months, we have a PAT of INR 86 crores, which is roughly 11.6%. I move on to the next slide now where Q3 performance, our sales volume of Q3 has been captured over here. So -- because of the condition in the market, the numbers are impacted for the Q3, as you can see on the screen. So power tiller, for current quarter, volume was around 5,000 tillers, tractors 979, power weeder 976 and reaper 1,192. I'll move on to the last area of my presentation, which is profit and loss statement for quarter 3. So revenue is at INR 169.9 crores, which is around 20% drop from the same quarter last year. EBITDA percentage is 14.7%, which is almost similar to the last year level. However, operational EBITDA is at 5.6% for the current quarter. We have been investing in growth for some of the newer market, which we will be discussing in the Q&A section. That has also been -- that is one of the reasons we see a lower operational EBITDA. PAT for the quarter stands at INR 16.95 crores, which is approximately 9% of the turnover. Yes. So with this, I'll stop sharing my screen, and we are open to questions. I would request Mr. Antony Cherukara, CEO of the company, to address.

[Operator Instructions] We have a question in line from Mr. [ Ayush ].

We are unable to hear. Neel, we're not able to hear the question.

Hello? I think, sir, the participant has dropped then the line. We have a question herein from Mr. [ Varun ]. So his question is, what is the revenue breakup for tractors, tillers and others?

Yes, revenue breakup for the quarter. For the quarter, for power tiller is INR 90.3 crores vis-a-vis last year same period INR 121.5 crores. Tractor is INR 51 crores against vis-a-vis last year same period INR 61 crores. Yes, 9-months revenue also I'll give you. Just a second. Yes, for the 9 months, the power tiller business revenue is INR 401 crores and the tractor business is INR 191 crores.

We have the next question in line from Mr. [ Ashish Upadhyay ].

Hello, can you hear me?

Yes.

Yes, Ashish.

Sir, the market looks to be pretty weak. Your commentary on that would help. I mean numbers on the tractor side are pretty weak. So any insights from you would help as to how you are looking ahead and regarding on the new launches that we were planning, I think, on that also some insights would help.

Yes. So the -- in Q3, due to the rainfall, both temporal as well as spatial distribution of rainfall, which was detrimental to agriculture, that has affected overall agriculture, reservoir levels and, hence, the demand across states, most of the states. Some of the states, the intensity of that effect is more, especially Karnataka, Maharashtra. Some of these states, the intensity is much higher than the other states. And this is one reason why the demand has been -- demand has affected most of the industry players, and it has affected us also. What we believe is that in some of the states in the coming months, especially in quarter 4, there would be some release of government-supported subsidy schemes, which will enable some amount of buying and also some cash flow that has started, especially in the sugarcane belts where the payments are coming to the farmers. This should enable some amount of movement in Q4. However, complete recovery of the sector, I believe, will happen after the rains. The silver lining is that the first estimates of the forecast is stated to be normal monsoon for next year. This will definitely help us bounce back across the country.

Okay. And how are you thinking about your strategy on the launches, plus how is the exports market shaping up? Is there anything to -- on the progress of this?

Yes, yes. So on exports, for the first 9 months, we have done well, almost 40% growth in terms of exports. However, towards the end of quarter 3, the Red Sea crisis has created a huge problem in terms of logistics and the cost incurred in terms of moving material from India to various markets in Europe. That is going to be detrimental in quarter 4. I hope the issue does not last long. I hope there is a resolution because this is definitely affecting the volumes in quarter 4. However, the company is also, as announced earlier, working towards expanding across geographies, and the work on entering the U.S. market in the next 2 years is progressing as per plan.

Okay. Okay. So broadly, it seems like till the next monsoon comes in, it's a bit of a challenge on the ground?

Yes, it is definitely a challenge in terms of demand. However, all the long-term plans are in progress, and we are focusing on that, executing those plans so that we make best of the bounce-back when it happens.

All right. And sir, today, in the press release, you also mentioned about the JV that you had with one of the Japanese companies. So can you elaborate a bit on what contours of those -- that agreement is, I mean, as in what are the plans on that?

Yes. Kobashi is a blade manufacturer. The blades go into our power tillers, power weeders, rotavators, rotary tillers, et cetera. So, so far, we have been sourcing these components from outside. Kobashi also has good technology, which is Japanese technology in this segment. So with this joint venture, we want to make in India the blades and bring this technology into the Indian market.

Okay. Okay. Sir, on the higher HP tractor launches, so what's the thought process? I mean, I believe that those would have been postponed given the market conditions.

So the VST Zetor joint venture company has been formed, and there were delays in the procedural aspects of formation of the company, which is completed and the seeding of the tractors are on. So it is going as per plan. There has been 2 months delay in terms of the procedural activities, as I said, and it is now completed. In every sense, the joint venture company is in operation and the billing has started. So it is going as per plan. As I've said before, the ramp-up of volume production will happen from March, April onwards.

Okay, okay. So mostly, we are looking ahead for next year for things to normalize on all fronts, basically, to give us some traction.

The next question in line we have is from Mr. Ayush.

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The next question we have is from Mr. Saket Kapoor.

So pardon me for repetition, if you could just give me some more color on the environment currently shaping up. And going ahead, sir, I think so for top line part, we are flattish in terms of 9 months. So where should we end this year, sir? If you could give some more color. And just for the sake of repetition, if you could just summarize the quarter and the business environment, please?

Yes, Saket, today, as I've explained already, the demand drivers are not working in the favor of the industry. And definitely, it is affecting us as well. The monsoon, in terms of both the spatial spread and the timing of monsoon, has been a problem. And that has affected crops, that has affected yields and especially it has affected some of the strong markets, compact tractor markets, which we are operating in. So this has definitely affected our volumes. However, we feel that it is a temporary phenomenon because we still see lot of inquiries coming into our showrooms, but the farmers are postponing their purchase. So it is an issue of cash flow. It is an issue when -- it is not an issue of need. The need is still there. But the farmer needs cash in his hand to make the purchase. So I think that is where the delay is. I think I'm trying to dig a little deep and give you the detail, and that is what is happening in the market. However, we feel that with little liquidity, with cash flows happening from the sugar mills and some states declaring certain subsidies in quarter 4 that we have seen in January and which likely will go into February as well before the election announcement happens, which will -- we feel that it will trigger a little bit of purchase in the quarter 4, which will enable us to do a good quarter 4 and get into a single-digit kind of growth for the year. That is what we are looking at.

Okay. So we did a top line close -- above -- just tad at INR 1,000 crores. So we are, as of now, we are already 1 month down, I think. So sir, the Feb numbers have been declared. I think the January numbers have been declared by you, the volume numbers. They are higher than what sequentially quarter -- month-on-month. So that reflects the optimism of what you were trying to articulate now? And maybe take the January sales number, I think the tractor numbers are lower, the volume numbers, but...

Yes, tractors continue to be lower because, like I said in my explanation, the key markets, compact tractor markets have not revived yet, which is Maharashtra and some parts of Karnataka, which has not revived yet. We have seen but an uptick in Gujarat and Tamil Nadu and certain parts of the South as well, we have seen an uptick. However, the higher HP market is also doing well in some parts of the northern parts of India. However, we are not a major player at this point in time in the higher HP space. So that is what is affecting the tractor business. As far as power tiller is concerned, like I said, the issue is not demand. The issue is cash flow into the farmers' hand. And I believe in quarter 4, we are seeing an uptick in terms of the cash flow in some parts of the country, the sugarcane belt. And we also see some states like Karnataka, Orissa, some schemes in Assam being declared by the state governments, which should give us a single-digit growth is what we are looking at in quarter 4. So we should end the year with single-digit growth, as I explained before.

Okay. Sir, just a small point. If you could give the, firstly, revenue split between power tillers, tractors, power weeders and reaper, that would be helpful. And as you were mentioning that we are looking at a single-digit growth. So we did a top line of INR 170 crores for this quarter. Just to put the maths into place, if we are to reach INR 1,000 crores, we are looking at a top line of closer to INR 310 crores, INR 315 crores that will translate into INR 1,000 crore top line for the year. So that math is correct, sir? We can look forward for this Jan to March quarter to post top line closer to this INR 310 crores, INR 315 crores bracket?

Saket, your mathematics is absolutely right.

Okay. Okay, sir. Now if you could give me, sir, the split between the product-wise split in revenue terms, sir?

Yes. Saket, just for your information, I will give you the numbers. But just for your information, this is already uploaded, the revenue figures, but I will repeat that again. For quarter 3, we have done power tillers, INR 90.3 crores vis-a-vis last year INR 121 crores. Tractors, INR 51 crores vis-a-vis INR 61 crores last year. And 9 months, it is power tiller INR 401 crores, tractors is INR 191 crores.

Okay, sir. Where are they uploaded, sir, in your presentation of 12 pages...

It is on our website.

Okay. Kindly make it a part of the presentation also, sir.

Yes, presentation, I think, is already uploaded...

In the stock exchange...

No, no, I'm telling that please make it a part of the presentation. Your presentation...

Okay, okay. Fine, fine, fine. Okay. You want the revenue figures in crores as well, right?

Yes. Yes, sir. Yes, sir.

Okay. Done, done, done. Done, Saket.

And one more adjustment if that can happen, sir, when you are providing a comparative number for last year's quarter, kindly provide the sequential numbers also along with that. So...

Okay. Yes, previous year also. Got it, got it.

No, no, current year only, sir, sequential number. When we are looking at Q3, we should also get the glance of how Q2 have performed. That would give us a better understanding there also.

Okay.

And sir, now coming again to this -- our -- I think so we were also working with our Mysuru unit earlier, sir, with I think the precision equipments that will get aligned with -- as an integration part for our main business. So where are we, sir, in terms of utilizing that unit?

Yes, exactly, that is one of the projects that is coming up is the Kobashi joint venture that we are working towards. That is, again, part of the precision implement division. The rotary tiller production is continuing out of Mysuru. And various projects are being planned under this precision implements division. One of them is the Kobashi JV that we have just announced today.

Okay. And also, sir, we found that capital work in progress for closing balance for September was around INR 17 crores. So what have been our CapEx for the 9 months, sir?

The 9 months CapEx figure, do you have it right now? We will get back to you on that, Saket.

Okay, sir. And sir, as we -- as the turnover did not commensurate, I think so that is the reason why the employee cost looks higher in terms of as a percentage of sales. This will get even out when we are in -- when we post better number in the next quarter. So this will...

Absolutely. You see the absolute value has come down. It is only the percentage that looks up.

That looks up, okay. Right, sir. I'll join the queue. And sir, I'll request that if feasible, we should be having an audio call. That is a better one than going for the Webex mode. Although its medium is okay, but for audio, I think so the connectivity is much better at places. So looking forward for that.

But earlier, there was a request for the presentation to be made. So that is why we got on to this. We will check if there are better ways to do it, Saket.

And on the property part, sir, any updates, sir, on the land which we have on our books? Any steps to monetize the same? Or what should...

Not at this point, Saket. We don't have any new news at this point.

Okay. I'll join the queue. I have a couple of points. I'll just note down and just get back to the queue.

Yes. Thank you.

The next question in line is we have from [ Udaya Prakash ].

So I just have one question regarding our volumes in power weeders and reaper segment. They have been doing really well. So is the growth due to low base effect? Or are we witnessing increased demand? So can you also comment on the market opportunity in the segments? What is the market share we have and the competitive scenario in the segment?

Yes. So this is an unorganized segment. So there are no organized figures in terms of giving you a kind of a solid market share figure. But what I can tell you how we get out these figures, the -- what is happening on the growth rates of the industry in this is we take out the imports data. So many of the players are importing from China, and we can estimate what kind of sale is happening in the country. That is how we get the power weeder figures for India and which is consistently showing 25%, 30% CAGR over the last several years. So I mean, to answer your first question, there is a good demand for these products. Small farm mechanization will continue to grow. And this is why we entered into this space in the last year. And from last year, we have grown rapidly. This year, we should be closing anywhere between 5,000-plus numbers. And I think that growth will continue going forward as well. Same is the case with the reaper. Reaper is a slightly different machine. This is mostly used by small and marginal farmers for harvesting. They reap the harvest and then they use a thresher to separate the grain and the chaff. So reaper is quite seasonal. So there won't be continuous demand throughout the year, but then it is seasonal during the harvest season. And here also, in these seasons, typically spread over 4 to 5 months, we will see very high demand and it will continue to grow.

And sir, the margin profile for these 2 products, is it similar to the power tillers? Or is it lower, higher?

It is good margins. We won't be able to get into the specifics right now as we are setting up these businesses at this point in time.

Okay, sir. And in next -- let's say, next 2, 3 years, what is the long-term revenue contribution of the 2 segments? Do we have any plan for that? Or you -- or do you just want to go with the flow looking at the demand scenario?

No, this will definitely -- we see that this volume will sustain for a long period of time. We are looking at this segment, the power -- we call it the small farm machines. We believe that this segment will continue to grow over a longer period of time, more than 10 years plus. So we are expecting huge revenues from this segment.

We have the next question in line from Mr. Vandit.

[Audio Gap] the R&D facility spending and how is that going? And maybe what kind of product launches are we looking at with Zetor?

Yes. So the first 3 products, 42, 45 and 49 HP launches we are doing now, and seeding is happening now, 20 machines we have already put into the market, we will start volume production sometime in March. We have lined up multiple product launches with VST Zetor in the coming years as well. We have not announced the specific models yet. So probably in some other quarter, coming quarter, we will be able to give you more detail.

Okay, sir. And on CapEx spend, sir, I think we were planning to put up a R&D facility worth INR 50 crores, I think.

Yes, yes. So the current -- the -- definitely, the work is in progress. It will take at least 1, 1.5 years to complete this project. So we will give you more details as we get closer to the completion of the project.

Okay, sir. So as of today, what kind of amount would have already been invested in this project?

The land has been procured. So the work -- the planning progress is happening at this point in time.

Any absolute amount, sir?

I won't be able to give you an exact amount. I will get back to you on that.

We have the next question in line from Mr. Arjun Khanna.

My first question is now that the Zetor JV is on stream, could you help us with how much have we capitalized the JV?

I didn't understand that question.

We would have put capital in it, right? So how much have we put in and how much have the JV partner capitalized in terms of equity?

Yes, I'll ask CFO to answer this question. Yes.

Yes. Yes, so the share capital of the new joint venture is around INR 19 crores, 51% is invested by V.S.T., 49% by the...

Zetor.

Zetor, yes.

So INR 19 crores would probably be not enough to set up a full assembly facility. So are we using the facilities of V.S.T.?

Yes, absolutely, Arjun. I think this we have discussed before. I have explained to all of you that the manufacturing will be done by V.S.T. The joint venture is a sales and marketing company.

Sure. Then what's the use of this INR 20 crores? Just to understand. So what is this capital for? Is it for holding inventory? Or...

It is working capital requirements. It is development expenditure as well, product development expenditure.

Sure. Yes, sure. Just the second part on this. I thought we were taking products from Zetor. So this is largely the indigenization of these products?

No, we have jointly engineered this product for the Indian market. So it has been an engineering effort by both the V.S.T. engineers and the Zetor engineers.

Okay. Sure. In addition, these products, we were looking at possibly for even other geographies such as Africa, et cetera. Are those plans also on stream?

Absolutely. So this -- the first focus is on the Indian market. And the next products that we will be launching, which will be announced later, which is also work in progress, will be for the African markets.

Sure. And the entire lot would be manufactured in V.S.T. facilities?

Correct.

Sure. So you mentioned just 20 units sold in the previous quarter. In this quarter, what's our outlook? Or it actually starts only from first quarter FY '25?

I didn't get your question. Are you asking about FY '25 first quarter or this quarter?

No, no, no. So in terms of volumes, so fourth quarter, would we see additional volumes coming from this Zetor JV? Or it would start from the first quarter FY '25?

The larger volumes will come from first quarter next year.

Sure, sure. In terms of the calendar year, we had indicated earlier that Monarch had an order with us for the chassis of maybe 1,000 units. Do we have a sense what would be the order outlook for CY '24?

Yes, we are continuously supplying to them. They -- and the supply is at this point at about 300-odd units that we have done. Do we have a separate -- so we'll have to get back to you on the exact numbers because we give them the entire drivetrain. Because it is not a complete tractor that we supply, the drivetrain we supply.

Okay. Sure, sure. In terms of tie-ups with other players, so Kobashi is the JV you've talked of the small implements. So what kind of capital outlay would be for this JV?

The details and terms and conditions are being worked out, Arjun. So probably the next call -- next quarter call, I'll be able to give more details.

So just to understand, this would be only for internal consumption or also for selling in the market to other players?

Both.

I'll take certain questions from the chat box. We have a question here from Mr. [ Piyush ]. He is asking, what is the average price of a single unit of a power weeder and a reaper?

Power weeder ranges between INR 40,000 to INR 70,000. The reaper is just over INR 1 lakh.

Next question we have is from Mr. [ Vinay ] in the chat box. He is asking for what is the rough number of power weeders and reapers that are being imported into India?

Rough numbers is around 120,000.

We'll take the next question in line from Mr. [ Masal ].

Our current revenue size is about INR 1,000 crores. In PPT, it's mentioned that during FY '25, we want to be INR 3,000 crores company. So can you spell out that how are you going to take this -- such a leap, about 3x?

Yes. See, FY '26 is when we said we will get to INR 3,000 crores. Like I said to one of the...

It's mentioned '25, sir, FY '25.

So in several calls before, and I've clarified that Vision 2025 is what we stated. And after which, we got into a period of COVID. And 2 years, many projects, we couldn't move physically and get it done. And hence, there has been a delay. So the team had to rework the plans and looked at how can we ensure that the Vision 2025 is achieved. Then we realized that certain plans is getting a delay because of the disruptions that we had during COVID and the supply disruptions as well. So we said, okay, we can take an aggressive target of chasing down that in FY 2026. So we have been clarifying that for quite some time that FY 2026 is when we will chase down INR 3,000 crores, for which we have taken several steps, several projects, including getting into the small farm mechanization like power weeder, getting into new segments with joint ventures, getting into production of new products, getting into new markets, consolidating in Europe. So several number of projects that we launched, all of them are progressing. And we are confident that we will be able to chase down this number, plus or minus 6 months, 1 year, that might happen. But we are confident that we will be able to chase it down.

Sir, like there has to be a journey, phase-wise journey, for example, okay, we agree, yes, in FY '26, no problem. So for example, then in FY '25, like where do you want to reach, INR 2,000 crores, INR 800 crores, where?

We will let you know. I mean, we can't give you such forward-looking numbers, but definitely, there will be aggressive growth numbers.

Okay. So this is number one. So I'll say that like in PPT also, if, for example, some broad breakup is given so that we can have some focused discussion, that okay, that's like, yes, from power weeder, so much; from Zetor this one like JV, so much; from Kobashi, so much; from Europe, so much. And at least the shareholders and the analysts, they will have some solid number to look upon and then in future, we can also make a comparison, okay, like yes, where do we need to put more like effort, like where are we doing good and so and so.

Sure, sure.

Okay. My second question. While going through your -- the list of your noncredit investments, I don't want to go into specific script, but you can see that like there are certain shares which we are holding a sizable amount, which are not moving quite significantly. So I think there is a like a solid need to churn the portfolio. Because currently, we can see that all PSU banks are doing fantastically. PSU banks return has given in the last 6 months almost 80% to 100% return it has given. Whereas we are holding about -- Hindustan Lever, we are holding about -- Kotak Mahindra Bank, we are holding about -- like HDFC, we are holding about, for example, another company, Infosys, they are all stagnant. So I think if you can churn the portfolio towards those emerging sector. Emerging sector, currently, the PSU banks because they have just come out from the COVID phase. They have just like all the bad book and all the bad apples of the bank has been completely eradicated and all banks are in profit now, all PSU banks are, yes, in profit now. So we need to put some amount of our investment in the PSU bank, number one. Then the second is, for example, currently this railway sector, we don't have a single share in railway. Then the third is, for example, this company like this renewable, or this, for example, like solar power and other thing, we don't have a single holding. We are just getting our old legacy this thing, whatever small dividend we are getting, whatever small appreciation we are getting, we are booking in our P&L. So my humble suggestion that please churn your portfolio. Please like -- churning like all those shares which are not doing good, please shuffle into those, this like -- those sunrise industry number -- yes, of the current time, number one. Number two, we have put a lot of amount in mutual fund also, which also you can consider to redeem and put in those -- directly put in those investments in those particular companies which are -- which have grown 3x. For example, company SJVN Limited, its share was INR 30 about a year ago. Now it is almost INR 130. In 1 year, 4x. See, for example, our portfolio is about INR 100 crore portfolio. Even if you put INR 25 crores in those companies, you could have made another INR 25 crores, which is not even a full company profit. Our full company profit this quarter is only INR 20 crores. We could have made another INR 20 crores profit from those companies. There are certain other listed companies in our India, which are doing this kind of thing. So they are making good amount of like they themselves are sort of mutual fund, for example. Like this all the merger, like investing their share by having a team of 2, 3 analysts and who are doing all research and then they are putting those investments, which is really faring very well. So our company is very small size. Please do something about this.

Yes. Yes, thank you. I think, sir, I got your point. And definitely, we'll take your inputs. But the primary responsibility, ours, has been to protect the shareholders' money. However, we are taking all the inputs that you have given. Thank you.

Sir, we have another participant on the line. Hello?

Yes. And my next question -- sorry, sir, let me complete. My next question, like we have been hearing that for last few conference calls that you are going to have this -- like we are going to have a lot of JV and all those things. But we don't see the real impact coming like -- positive impact coming in our revenue from all those JVs. So can you please spell out that like where do we stand or how much revenue are we getting from Monarch or Zetor and how much revenue we are projecting from this Kobashi JV?

Yes. So what we are looking at is JVs. And as you would know, setting up a factory, productionizing, designing a product, launching it in the market is a time-consuming process. We are going through the process. And as per plan, it is progressing. Of course, like I said before, COVID did play a spoilsport in terms of delaying some of the projects, but all of those projects are falling in place. Monarch has already started bringing in revenues. VST Zetor has started bringing in revenues. The larger revenue will come in the next financial year. And the Kobashi has just been announced. It will be 1 year down the line, we will be able to look at revenues from that project as well.

Sir, my humble suggestion, kindly also put a specific slide in our PPT covering all the progress in that -- in those JVs so that your shareholders who are very long shareholders in the company, they will be having much more information from the PPT itself.

Okay. Thank you.

[Operator Instructions] We have the next question in line from Mr. [ Shreyas Jain ].

I just have a first question on like, can you give us, sir, what is the exports revenue? And what impacted the margins? You said like you were incurring some additional costs investing in something. So like what has impacted the margins? And like what will be the sustainable margins going ahead?

Yes. So we have given a margin range of 11% to 13% for the year. And we would be tending towards the 13% than the 11%. So that doesn't change.

We have the next question in line from Mr. Dhanan Bagrodia.

Sir, I just wanted to understand, how is the competitive intensity happening right now in terms of are we able to gain market share? How is the pricing going? And how are we seeing that for the next few years?

Yes. So the competitive intensity in the tractor market, as you know, is very high. And there is definitely all kinds of competitive forces playing out there, which includes pricing. That is where we see that the niche compact tractors is a clear segment that is emerging, wherein we are strong players, and I think that segment will continue to grow, and that will give us reasonable profits, not only in India, but geographically across Europe and the other markets as well. And the small farm machine space is also very -- growing at a faster pace and that we expect to continue. And here, the competitive intensity is much lower. And we feel that, that helps companies to generate profit margins if you are frugal and efficient because that is critical because it's a price-sensitive segment.

How are we seeing our market share then play out with competition being severe? How are we seeing that?

So we are -- like I've clarified before, we don't -- we are not in the market share game. We are looking at utilization of capacity. That is where the growth of tractor business, the Monarch business, the VST Zetor business, all these businesses which will help us increase capacity utilization. And I think that complete play-out will happen by the next financial year, and we will be able to increase capacity utilization of our Hosur plant in a big way.

We'll take some questions from the chat box. This is a question coming in from Mr. [ Laxmi Narayan ]. In the Zetor JV, the profit share is in line with the equity capital. So any royalty and technology transfer charges are being paid currently?

No, there is no technology or royalty charges to be paid.

We have one more question in line from Mr. Vinay. He's asking, do we plan to export weeders and reapers as well? And if so, what is the rough overall size of this market in terms of volume?

Right now, we've not started exporting because India itself is a huge market, but we definitely have plans with our manufacturing starting in this year. In this coming financial year, we will be looking at export markets outside India as well. The market size is in couple of hundred thousands across the globe.

The next question we have is from Mr. [ Navin Dube ]. He is asking, in this quarter, margins have seen a steep fall, EBITDA margin. So what could be the reason behind the possible fall? And what could be the sustainable margin range?

Definitely, the top line has affected the margins. However, if you look at what the CFO, while he made his presentation also, he made a statement that we are doing some expenses, which is towards our long-term growth, especially towards entering new markets like the U.S. market and building our brand, et cetera. So those expenses, we have not stopped. We continue to believe in the strategy that we have set for ourselves and the belief that the goal can be achieved if we sustain on the path. So that has definitely affected this quarter. If you remove those onetime expenses, our margin should have been about 7-odd plus percent. So -- and the rest of it has been affected primarily because of the top line degrowth. The expenses, if you see, has been maintained relatively. Considering that the top line has fallen sharply, there is an effect on the profitability.

What is the status of V.S.T.'s supplies to Zetor, which was expected to start in November? And also, if you could elaborate on the supplies on Monarch Tractors?

Yes. So VST Zetor is a JV wherein we are working and selling those tractors in India. Also, we supply compact tractors to Zetor Europe, which we have started. Some small volumes, some -- 2 batches have gone to them, and we should be able to slowly build on that in the coming years.

In the event of time constraint, we'll have the one last question. We have the next question in line from Mr. [ Kashyap ]. I think so the participant has dropped this line. You could have one question from Mr. Shreyas Jain.

Can you just share the export revenue for 9 months and Q3?

So the export revenue for 9 months is roughly about INR 90 crores.

Okay. And for Q3, sir?

[Foreign Language]

On behalf of B&K Securities, we thank all participants for joining the call, and special thanks to V.S.T. Tillers Limited management for taking out the time and giving us the opportunity to host the call. Have a good day. You may now disconnect your lines. Thank you.

Thank you very much.

Thank you so much.