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Ladies and gentlemen, good day, and welcome to Endurance Technologies Q1 FY '23 Results Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Nishit Jalan from Axis Capital Limited. Thank you, and over to you, sir.
Thank you, Vivian. Good morning, everyone. Welcome to Q1 FY '23 Results Conference Call of Endurance Technologies. From the management team, we have with us Mr. Anurang Jain, Managing Director; Mr. Ramesh Gehaney, Director and COO; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Satrajit Ray, Director and Group CFO; and Mr. Raj Mundra, Treasurer and Head of Investor Relations.
I'll now hand over the call to Mr. Jain for his opening remarks, post which we can get on to Q&A. Over to you, Mr. Jain.
Thank you very much, and Good morning to everybody. I would like to share details of how we have done in the first quarter of the financial year '23. In India, in the first quarter of FY '23 as per the CM data, the 2-wheeler industries sales grew by 37.24% compared to quarter 1 of the previous financial year. Scooters grew by 87.86% and motorcycles grew by 24.24%. The automotive industry in India had a growth of 37.7%. The standalone income of Endurance grew by 39.9%. The 2-wheeler business is approximately 82% of the total Endurance India standalone business. In our overseas operations in quarter 1 of this financial year, the EU and U.K. market saw a decrease of 16.4% in the volume of passenger cars sold, while our European overseas sales degrew by 1.9% in euro terms.
I would now like to brief all of you on the financials of the first quarter of FY '23. During quarter 1 of this financial year as compared to previous year's same quarter, our consolidated total net income grew by 24.2% from INR 17,063.6 million to INR 21,185.1 million. Consolidated EBITDA degrew by 4.9% to INR 2,570 million to INR 2,444 million. Consolidated EBITDA margin was at 11.5% effect. The profit after tax grew by 7.1% from the previous year and was INR 1,033.85 million at 4.9%. This included the extraordinary expense of our B20 Chakan, Pune, Voluntary Separation Scheme of INR 102.85 million and the income from the Maharashtra package scheme of incentive scheme of INR 395 million. There was no consolidated net debt, and the company had a positive cash flow of INR 4,981 million.
During quarter 1, our standalone total income grew by 39.9% from INR 11,578million to INR 16,201 million. Stand-alone EBITDA grew by 11.6% from INR 1,596 million to INR 1,782.2 million with an EBITDA margin of 11%. Standalone profit after tax grew by 42.5% and was INR 809.26 million at 5%. This included extraordinary expense of our B20 Chakan, Pune Voluntary Separation Scheme of INR 102.85 million and the income from the Maharashtra package scheme of incentive scheme of INR 300.95 million. There was no net debt, and there was a standalone positive cash available of INR 3,420 million.
We would like to mention that Endurance is focused in both its Indian and European operations for a profitable growth, and growing higher than the industry growth. The detailed financials are available with the stock exchanges and on the Endurance website.
I would also like to share certain other key points for quarter 1 of this financial year. 76% of consolidated total income, including other income, came from Indian operations and the balance 24% came from our European operations. In India, in quarter 1 of FY '23 INR 4,040 million of new business was won from OEMs other than Bajaj, which included HMSI, Hero MotoCorp, Ather Energy, Hero Electric and Tata Motors. I would like to mention that we have INR 16,320 million worth of requests for quotes from OEMs, which are in discussion.
The electronic vehicles market continues to offer a significant opportunity for growth for the auto component industry. It is estimated that the Indian EV market will touch USD150 billion by 2030, growing at a CAGR of 90% in the next decade. Therefore, at Endurance, we have taken a major step forward to harness this opportunity by executing a share subscription and purchase agreement for acquiring 100% of equity share capital of Maxwell Energy Systems Private Limited in a phased manner. 51% equity stake has already been applied by us in July.
Maxwell is in the business of advanced electronics, particularly in the battery management systems or the BMS for automobile EVs and battery packs. We plan to leverage Maxwell's deep technical expertise and its BMS deployment experience in India and Europe. We aim to offer our products to multiple new clients, including Indian and overseas automotive OEMs and manufacturers of battery packs. At present, Maxwell supplies to over 70 automotive OEMs and battery pack makers spread across 15 countries, including India, France, Spain and USA. Since its inception, Maxwell has deployed over 65,000 smart BMS units in EVs and stationary storage systems and has active orders in the pipeline of over 400,000 BMS units from OEMs in India and Europe. This includes orders from Hero MotoCorp, with supply started in July '22 this year.
This year, Maxwell has launched integrated IBP BMS and ancillary PBU for 2 and 3-wheelers. Maxwell is also engaged in new business for the soon to be launched lower-cost PC and PRO BMS. While EVs will be a big focus area for us in the coming years, we are also looking at scaling our growth in the conventional markets of India and Europe. The acquisition of 100% stake in Veicoli SrL in Italy, will help us expand our innovation solution offerings in the mobility sector in Europe since Veicoli enables fleet operators to increase route efficiencies, enhanced safety, optimize maintenance activity and lower the fuel costs. The acquisition is in line with our strategic focus on new organic and inorganic growth in both India and Europe, by gaining access to new technology backed by continued product innovation.
As you are aware, we have added a high-technology new product, which is the drive shaft at Waluj, Aurangabad. The driveshaft is a proprietary product and an EV agnostic product in an automotive application. The driveshaft transforms the torque generated from an engine through its transmission to the wheels. The application is for 3 wheelers and 4-wheelers, including some LCVs. The launch of the driveshaft has opened an additional revenue stream for Endurance, and will lead to a significant business growth opportunity for Endurance in the future. We have also won orders for Mahindra and TVS and commercial supplies have started to Bajaj Auto from July '22 onwards.
To help our overseas operations to grow in the European 2-wheeler component profitable aftermarket business, we have acquired an Italian company, Frenotecnica in July '22. This company is involved in the business of friction materials and components for braking systems, like brakepads for 2 wheelers. In 2021, we had a sales turnover of EUR 3.6 million with an EBITDA margin of EUR 1 million. We have a very renowned brand name called Brenta in the aftermarket and replacement business. With this acquisition, and acquisition of the 2 Italian companies, which are Grimeca and Adler in 2020, we want to create a centre of excellence in it and grow in the premium components in the 2-wheeler segment. This acquisition gives growth opportunities to the Endurance Group in the aftermarket, as well as provides access to the in-depth know-how for production technologies of friction materials, especially for brake applications.
I'd also like to mention that Endurance is focusing on a more value-add and profitable product mix in its future business, which includes breaking, suspension, advanced electronics and casting supplies to 2 and 3-wheeler EV OEMs and new startups, 200 CC plus motorcycles, brakes and clutch assemblies, with help of our acquisition of Adler and Grimeca in Italy in the year 2020. The 200 CC plus motorcycle brakes business has already started, and the 200 CC plus motorcycle clutch business is expected to start in quarter 1 of the next financial year.
Our product mix focus areas are, paper-based clutch assemblies replacing cork based clutch assemblies for motorcycles; continuous variable transmissions or the automatic clutchless scooters. As mentioned earlier, with Hero MotoCorp, we are at an advanced stage of testing, and we expect to start supplies from quarter 4 of this financial year. We will increase also our anti-lock brake systems or ABS for 150 CC plus motorcycles, with our collaboration with Beijing based industries. We have started supplies to Bajaj Auto and Royal Enfield.
We are also increasing our business of the 200 CC plus motorcycles inverted front forks and adjustable rear mono shock absorbers. This is with the help of our collaboration partners KTM AG. We are working with KTM to increase supply for both on-road vehicles and also to start with off road motorcycles, higher technology inverted front forks and rear shock absorbers. And we have made a 3-year plan for it.
We've also started supplies to HMSI or Honda 2-wheelers in India for inverted front forks and have also won orders for inverted front forks from Hero MotoCorp. We are also focusing on fully finished machine castings as compared to raw castings and semi-finished castings for 2, 3 and 4-wheelers. As disk brake assembly business is growing with addition of Bajaj, TVS, Royal Enfield, Yamaha, Hero MotoCorp and HMSI new business, we are increasing our plant capacity of these brake assemblies from 285,000 numbers a month to 570,000 numbers a month, and disks from 375,000 numbers a month to 675,000 numbers a month. Our second plant at Waluj, Aurangabad has been set up for this increase in volumes, and has already started operations. By October '22, we should be supplying 470,000 disk brake assemblies per month, from both our brake plants at Waluj, Aurangabad.
As you are aware, the supply of 2-wheeler ABS semis for Bajaj started in the last week of September '21, and to Royal Enfield from February 2022 onwards. Our plan is to reach a run rate of 400,000 ABS assemblies per annum by September '22. As you may be aware, competition is mainly from Bosch, which controls the major market share in the Indian ABS motorcycle market, which acquires approximately 3 million to 3.5 million ABS assemblies an annum. We are also right now in the process of clearing a dual channel ABS also by end of this calendar year, and we are scaling up additional assembly lines for the same. This is a large business opportunity for Endurance.
We are also focused on supply of our products for EV 2 and 3-wheelers. We already started supplies of brake assemblies, suspension and aluminum casting for electric scooters and 3-wheelers. After the acquisition of Maxwell, we're also supplying BMS for 2-wheeler EVs and battery pack makers. Our focus is to supply our EV products to 2 and 3-wheeler OEMs, both existing and new. We have won INR 4,814 million of new business for EVs till quarter 1 of this financial year. This business is all planned to start in this financial year, and reach its peak in FY '24. Apart from this, Maxwell has won a 2-year business of INR 254 million from top motors -- mainly from top motors in the quarter 1 of this financial year.
This INR 4,814 million of business, which Endurance is on also includes INR 1,108 million of new business wins for EVs in quarter 1 of this financial year, including from Ather Energy, Hero Electric, Mahindra Electric and Bounce. We're also focusing on e-bicycle business, especially for our suspension BMS and brakes. We already have received certain orders for this. This is both for our Indian OEMs and exports.
Due to increased orders from Bajaj, Yamaha India, TVS and Hero Electric, we have added a new plant at Chakan to help increase our supplies from 240,000 alloy wheels a month to 380,000 alloy wheels a month. This plant has already started operations in July '22. We also started supplies to TVS for alloy wheels in July 2022.
In Europe, in quarter 1 of this financial year, we have won EUR 14.32 million of business from Daimler, Magna Lighting, Bosch and Stellantis. As you all know, we won EUR 71 million new business in the last financial year in Europe. I would also like to point out that Endurance both in India and Europe is actively pursuing its focus on gaining access to new technology and focusing on new product organic and inorganic growth.
As I mentioned earlier, Endurance has also entered 2 backward integration product areas, which are import substitutes also, versus aluminum forging axle clamps required for our inverted front forks, for which we have a technical collaboration with a company called FGM Italy. And as you know, the supplies have already started at our Waluj, Aurangabad plant since April '22 for Bajaj and RE, exposed to KTM. But there has been a lot of interest from other OEMs and we are also engaged with them for supply of aluminum forgings other than axle clamps, because opportunity is not only for axle clamps for inverted front forks, it is also for other applications.
The second product is the steel braided hoses for ABS applications for mid and high-end bikes. This supply has already started last year. Both these other projects will help us in our profitable growth.
In quarter 1 of this financial year, our aftermarket sales grew by 53.75% from INR 626.47 million in the previous year to INR 963.19 million in quarter 1 of this financial year. We are exporting our aftermarket parts to 31 countries, and we are adding 4 new countries in this financial year. The aftermarket sales growth is a very large focus area for us at Endurance.
Also in quarter 1 of this financial year, the export sales for India's standalone business increased by 11.88% from INR 361.8 million in quarter 1 FY '22 to INR 404.8 million in quarter 1 of this financial year. We're also happy to inform you that Endurance has been chosen as one of the Factories of the Future by the Economic Times Promising Plant Initiative 2022, which is for the mid-scale and the large plants across India. The evaluating criteria is leadership, innovation, Make in India and Atmanirbhar Bharat focus, strong EHS culture and women empowerment.
On the environment front, I would especially like to mention, Endurance is striving to be carbon neutral in its plants by effective use of solar power and wind power, which is increasing every quarter, creating carbon sinks by driving tree plantations and thereby creating dense forests, and driving use of natural gas and LPG in place of electric part and furnace oil. We're also focusing on lowering hazardous waste generation and to achieve zero waste to landfill.
At Endurance, it will be a continuous endeavor to grow through organic and inorganic growth, with a focus on technology upgradation, quality improvement, cost reduction and environmental health and safety. We will do our best to fulfill all our stakeholder expectations by following our 5 values of customer centricity, integrity, transparency, teamwork and innovation. We at Endurance have a very positive outlook, based on a large -- new large business wins in the last 2 years, including for electric vehicles, both in our India and European operations.
With these opening remarks, I would like to invite questions from everybody. I would like to inform you that Maxwell founders, Mr. Akhil Aryan and Mr. Alex Collett will also take your questions on Maxwell. Thank you.
[Operator Instructions] We're the first question from the line of Jinesh Gandhi from Motilal Oswal Financial Services.
A few questions from my side. Firstly, on the India business, you have talked about the mix-related impact. So can you share some numbers how the mix changed and what was the impact of that in the India business?
No. What I said is we are focusing on a better product mix...
So I'm referring to the -- sorry, I'm referring to the first quarter, where there was lower production of premium motorcycles, and which in turn also impacted our revenue growth?
Yes. So yes. So basically, I would say, increase in ABS supplies and increase in inverted front forks and rear mono shock supply for both KTM and KTM Bajaj India, doing more machine castings. And also, I would say, more supplies of our backward integration products like aluminum forging we started and wire steel braided hoses. And I mean, these were the, I think, major -- also our Vallam plant for Hyundai and Kia, and that business increases also helped us in a better product mix which is there.
Also setting up -- starting a new plant, our second brakes plant at Waluj, has also helped us to do more brakes business, which is a better value-add, but the brakes business has had an increase -- has had a share of our business also since quarter 1 of last year. And that -- the share of business is continuously increasing for the Indian market. In quarter 1, the brake systems were about 31% of the total market size, and as these new orders, there will be a ramp-up from all the orders we have got from various OEMs, which I mentioned. This figure is really going to increase as a share of business, which we are taking from other players -- regarding the main products. I'm talking about India right in.
Sure, sure, sure. And secondly, in the India business, and the 40% revenue growth which we have seen, any indication of what was the benefit of RM cost pass-through in that group number?
See, as you know, the RMC percentage of sales went up from 64.9% in the first quarter of last financial year to 68.8%, which is almost a 3.9% increase. Here, basically, I mean, to put a value because one is a direct value which we buy, as you know, aluminum and steel -- aluminum is almost 50% of our purchases. That rate -- to just give you an example, the aluminum, which we buy the maximum has gone up from INR 162 a kg in quarter 1 to INR 228 a kg in quarter 1 of this financial year. It's a 41% jump. Steel, which is almost more than 30% of our purchase, I mean, both aluminum and steel are more than 80% of our purchases. Steel, which is more than 30% -- which has growth -- has gone up by 20%, which includes steels like bar steel, forging steels, stainless steels and spring steels. And this has been the major impact of the 3.9%.
But having said this, I can't put a figure, if you ask me a figure, because there are a lot of indirect aluminum purchases, like bottom case, say, as we buy for front forks. We buy various castings required for clutches. Brakes also require master cylinder and caliper castings. So there are indirect purchases directly from component, but we have to pass on those increases to our vendors. So this is not a direct purchase. So if you see from this 3.9%, which is about INR 460 crores is the total increase in sales, if you take. Direct what we can relate to is about INR 150 crores, INR 160 crores.
But it will be much more when I go into the indirect aluminum steel purchases from our suppliers for components. So I don't have a figure right now. But let me tell you one thing, that in terms of volumes, we have grown more than 30%, the issue has been that, with certain customers like HMSI, there is a quarter lag, where we are getting the increases after 1 quarter. And even for certain areas like the AC2B for bottom case, it's a 2-quarter lag, which we are trying to correct. So that also has its own impact, which is there.
But also, I would like to mention that, like though the volumes have gone up in certain outstation plants in Sanand and in Kolar, in Narsapur, which is -- what is happening, the volumes are not enough. Like Honda has done quite well, HMSI 2-wheelers, has done quite well, I would say, in quarter 1. You've seen the growth of -- but looking at our capacities we have in the outstation plants, still with this increase, it is not enough. So that is why I've been mentioning, we are taking new orders from other customers in both these plants to get better economies of scale, to have better profitable growth and to lower our breakeven point.
So multiproduct and multi-OEM is a focus on most of these outstation plants, like we have done in our Pantnagar plant. We have achieved that also. So I think these are a few of the reasons. I don't have a total figure, but I know that 80% is aluminum and steel, 50% plus 30%, more than 30%. Aluminum at 41% and still by 20%. But -- seeing a decline from August, just to let you know, just to further go into it, we are seeing a decline on aluminum prices by almost INR 20 a kg and steel by about INR 6 a kg from August, which is a very good sign. It helps us in the RMC percentage to sales going down.
Got it. And on the similar line now, given that this quarter, we had very multiple impacts on margins. How should we look at margins from 1Q levels, given that many of these challenges lessened -- the last 2, 3 quarters are easing. So how should -- how do you look at margins for the India business, particularly?
See, what we feel is we have lost at least 3% in RMC in the first quarter, okay? Now I'm mentioning all this all this has been for the last 18 months, when this raw material increases have really troubled us. The moment the RMC percentage to sales goes down, the EBITDA margin goes up, and this is what we are expecting from August onwards. And let's hope this trend continues. We are quite optimistic about it based on our talk with OEMs. But definitely, we are seeing softening of aluminum and steel prices, which are more than 80% of our purchases directly or indirectly from vendors.
Okay. So effectively, we should go back to that 13%, 14% margin as we possibly...
That is our focus. But I don't know, it will depend upon how much the aluminum and steel decreases. What I'm telling you is 20% and this thing should be about 1.5%. But if it goes on further, I can further improve on that. So I think it will all depend on RMC person to sales, depending on how much the steel and aluminum goes down in the next couple of months.
The next question is from the line of Pramod Amthe from InCred Capital.
So this is with regard to your new wins in EV. Even though in terms of order wins...
I'm sorry, I'm not able to hear you clearly. Could you be slightly louder, so I can hear you?
Mr. Amthe, hello?
Sorry, can you hear me now?
Yes. Now, it's much better.
So this, with regard to electric vehicle order wins. I wanted to -- even though in terms of order inflow side, it looks like almost 20% order inflows are coming from EVs. Wanted to know strategically what confidence or what ratios or you look at 2, 3 years down the line, as your sales mix, EV to form as a proportion of sales mix, 1. Second, also, can you give some color in terms of the profitability of EV order wins? Are they similar? Are they lower because you might be aggressively adding them?
Okay. In fact, that's -- well, I can say that because the volumes today are low, the pricing in general is better. That is very clear. But having said that, in future as the volumes really go up of EVs, there may be -- I mean, the prices could be lower. But definitely, it's not going to be lower than the existing prices for IC engine. That is for sure. Because ultimately, like I mentioned in the past, whether it's a brake product or the suspension products, they are very similar to the IC product. Suspension could be a bit different than damping force values, for example. Brakes are quite similar to what we see. Definitely, scooter, where we are getting a larger market share, which is very good for us because for scooters, this is additional business, because as you know, scooters is only 9% of our standalone India business. And most of these orders we are getting is actually for -- I mean, for scooters.
So to answer your question, one is pricing today is better -- but in the next few years, could be similar. I can't say, we're always trying to say it's going to be better. But ultimately, it's a competition also, which dictates our price always. At the same time, we are engaged, like I said, with every OEM and every new startup, which matters. And we are not, I mean, going to lose any business.
Well, let me tell you, this business of INR 484 crores, also includes a very large brakes business for Ather Energy, which is starting in October '22 and where the volumes are supposed to go up to 300,000 per annum. It's a very good business because we regard Ather as a very, very good company, similar to OEMs. Hero Electric first quarter, again, we have won volume of, say, 300,000 for the front alloy wheel, for the vehicles which are coming up. So there are some very interesting businesses we are getting, which is our strength, of course. And like I said, most of these businesses will start in this financial year and by FY '24, as per the LOIs of the customers, we should reach the peak of this INR 484 crores. This, of course, also includes the Bajaj EV wins we have won for 2 and 3-wheelers, that sell-through is about INR 124 crores. And Bajaj is going very, very aggressive. They have asked all of us to put up a capacity of 10,000 a month immediately, which we have done.
So EVs to answer your question, I can't say what percentage. We are not going to lose any order of EVs. We are going all out, based on our competitiveness, our technology, our financial strength, we are just going all out and investing in these products. So EV, like I said, is a large focus for us. And if the EV market really happens like everybody is saying, it will be great because we are just hoping that the EV market comes up.
Second question is with regard to the aluminum prices. Wanted to know the LME prices have been correcting for some time. Is there -- how to look at our costing versus LME trend. Why does it take such a lag for you one to get realized on the ground? Second, is there a way to hedge yourself, considering you are -- aluminum is a large proportion through the LME and how much transparent pricing in aluminum as compared to steel?
Okay. Now I'll answer your question. First is this quarter lag or 2 quarter is only for one customer, which is HMSI. We are trying to talk to them, but they have a practice with all their vendors, not easy to show change the Honda global purchasing policy. But one thing, let me tell you, as the tide is turning towards lower and it was a 2-quarter lag, definitely, I expect some gain from quarter 3 or quarter 4 of this financial year. Because like we have been losing the last 8 quarters, we are going to start gaining, as the tide is turning now after 8 quarters, last 2 years. This is the first part. But this is only for a certain front-fork bottom case alloy.
Now coming to your main question, our largest buying in this 50% SOB is the secondary alloy, which we use for all our aluminum die casting business, whether it's 2-wheelers, 3-wheelers. This is not depending on LME. LME could be a trend upwards or downwards. But unfortunately, the secondary alloy market trend depends on the scrap pricing, could be imported or local, because secondary alloys are made from scrap. And this pricing dictates and fortunately, with most of our customers, it is on the same quarter we get the increase, with most of them.
So whatever is the pricing available from Indian secondary alloy suppliers, that's the pricing which is dictated mainly from the scrap availability, dollar rate if you are importing, or euro-rate if you're importing or the local scrap pricing. So that's the way the aluminum alloy works for us, which is the largest part of our buying is secondary, not primary. Primary is mainly for our alloy wheel business.
The next question is from the line of Aditya Jhawar from Investec.
Couple of questions from me. Number 1 is that, how is the outlook for our customers in the premium bikes, specifically Royal Enfield and Bajaj Auto. Just what I wanted to understand that you mentioned that ABS -- the issue that we were facing gradually getting sorted. But just one clarification. So have you seen that the business for other product vertical, whether it is suspension, die casting, that momentum has already picked up in the month of July and ABS momentum is expected to pick up in the next couple of months?
Okay. See, the major issue still remains the availability of electronic items, due to semiconductor chip shortages. It has improved definitely from quarter 1, but still not back to normal. Some customers tell us it will be okay by next quarter, by -- in the second half, it will be good. But to be honest, till it happens, it's very difficult to believe it. Fortunately, for us, for our ABS, I must say that with our supplier, which is Mando HELLA, we have got a very good, I would say, response and that's how we have been increasing our ABS volumes. We're almost doing about 25,000 a month, and we want to reach a run rate of 33,000 by September.
Also for ABS, the dual channel is under clearance, which will really -- I mean, really open up new volumes for us because that's a very major, I would say, market, the dual channel, both for Bajaj, RE -- for everybody, TVS, all the players. So right now, as I said, our capacity is 400,000. We are further increasing it with the dual channel also. So ABS step-by-step, we are increasing our capacities, which are there. Fortunately, ABS, I'm quite confident, chip shortages will not dictate our supplies. But definitely, on the 2-wheeler front, I'm still skeptical, I'm not sure what we have been promised. So till it happens, I know there's been some derisking of some of the multinationals with Indian players, that has also improved, I would say, the situation in quarter 1, but still not back to normal.
I mean, I think quarter 1, they did about 4.8 million vehicles, which is not bad. But I think the time has come to go back to a level of 6 million -- 6 million a quarter or 24 million every year. So that is what we are hoping for because -- so let's hope that happens. But to answer your question, semiconductor chip shortages are still going on. And that's why you don't see. People like Bajaj have only gained 1.1% in motorcycles in quarter 1, because they don't have semiconductor chips to make more vehicles.
My second question is for Mr. Ray. Sir, if you can highlight that -- for specifically, if you look at the standalone business, there has been an uptick in the OpEx as well as employee cost. Anything you want to call out for, in these 2 items specifically for this quarter?
Yes, see. Firstly, are you asking this question with respect to quarter 1 of last year.
Yes. I mean, even sequentially, sequentially, there has been an increase as well as with...
Quarter-to-quarter has its own peculiarities to just clarify, I'll use a few pointers. Quarter 1 to quarter 1, the employment cost increase has been about INR 5.5 crores, a little less than INR 5.5 crores, about INR 5.2 crores. That's entirely driven by increments paid to our management staff and agreement benefits paid to unionized staff. When you come to other expenses, you must remember that last year, out of the 3 months, there was 1 month when the results were extremely depressed, and we were partially locking down our plants, drawing down our inventory, trying to see that in those low-volume situation, what was the best way to operate. So it's not a fair comparison because at least for 30 to 40, 45 days, the operations were extremely depressed. So all the manufacturing overheads were quite low at that point in time, with plants practically coming to a standstill. So many of the overheads are now at a fairly normal rate. So that's point number 1.
The other problem which we face very significantly, is a huge increase in fuel costs. All our energy costs have gone up significantly. To give you a few examples, like PNG between quarter 1 to quarter 1 increased by 60%, LPG, 49%, furnace oil, 48%, light diesel oil 73%, so that's the kind of increase. Now this has a cascading increase in other items like freight. So we had a bit of a problem, with regard to these type of cost increases during quarter 1 to quarter 1.
Now coming to quarter 4 to quarter 1, the increases in employment costs were because in quarter 4, on actuarial valuation because certain leave as per our rules lapse, so we got a gain in our actuarial valuation. So that had an abnormal dip. But to come back to our question, the main increases are happening from employee increments and agreement benefits for workmen. And between quarter 4, quarter 1 and just to give you a technically sort of arithmetical answer, like -- let's take one item, just to give you an example. Let's say, our corporate social responsibility expenses. We had pretty much spent the year's quota almost by December, okay.
So therefore, there was hardly any CSR expenditure in quarter 4. But as we start quarter 1, we would be spending in a certain way during this quarter. So there's a pretty large gap there. But these are all to my mind, sequencing issues, there's no -- I mean, real issue. If you really want to know one problem which we really are somewhat wise about, that's the fuel and gas and oil cost increase, which is an issue because even between quarter 4 and quarter 1, we've seen increases ranging between 12% and 25% kind of. So that's something which is worrisome.
I would also like to add to that, these fuel cost increases affecting operational costs and freight costs. Now we have taken up with the customers. One customer already, we are getting increases on conversion costs. Already actually, we have received it from 1st July. But other customers as commodity prices are softening, we are going a bit assertively to try and get these conversion cost increases because these are very high, these are unprecedented, with the kind of energy and fuel cost we are seeing. So we are quite hopeful that this will be handled partly or fully.
One additional point, though, this is not a part of your question that between quarter 4 and quarter 1, there was significant reduction in aftermarket sales. In quarter 4, we did very well. In quarter 1, the figure was considered to be lower, and that's also partially driven by the fact that exports in quarter 1 aftermarket were lower due to our not being able to sell in geographies like Sri Lanka, Bangladesh, Egypt, for a very well-known reasons. So we expect that situation to improve from quarter 3. And by quarter 4, you will see very good numbers in aftermarket. But that's, again, something which has got to do with the way it is getting phased out. But when you compare quarter-to-quarter, that comes out as a point of comparison.
Yes, so quarter 1 to quarter 1, as you know, we have grown more than 53%. So I mean, that's going to happen this year, for sure.
Sure. The next question is from the line of Chetan Gindodia from AlfAccurate.
Sir, firstly, with respect to our standalone revenue sequential growth, if I see our sequential growth is around 4% and the EV industry on a sequential basis grew by 7.5%. Even if I consider the effect of Bajaj auto -- motorcycle volumes not been doing so well, even excluding after that, there is no benefit of new order wins that I can see sequential revenue growth increasing. So why is that, and do you think this on a volume basis, we will be able to outperform 2-wheeler industry this year?
See, what you have to see is, what I give you figures was quarter 1 to quarter 1, because that's the way we see it normally. And that is a 39.9% growth versus 37 point odd growth of the industry, not 2-wheelers, but actually of the industry. And so we are higher than industry as well as the 2-wheeler, quarter 1 of last year to quarter 1 of this year. Now definitely, semiconductor shortages have -- definitely affected the growth of -- at Bajaj Auto, which is our largest customer in India. And that also surely effects. But like I said earlier, our new orders in the new brakes plant from other customers like TVS, also Vallam plant increasing orders with Hyundai and Kia, ABS supply is increasing, inverted front forks increasing both in India as well as Europe, machine casting business increasing. These are all orders which are of the last 1.5, 2 years.
So definitely, it has played a part for sure. But like I said, the 2-wheeler industry still in quarter 1 is at 4.8 million. So it is better than last financial year, but that was also affected by delta, mainly in the months of April and May. But going forward, like I said, whether it's EV or it's new business wins we have done last year and this year, most of it we will get by end of this financial year, starting from this quarter. And maybe partly, of course, the orders will go to the next financial year, too. So there is a lag, because customers do give us orders 1.5 to 2 years earlier. Some, of course, give us even 1 year earlier. So if you see, there has been growth from quarter 1 to quarter 1.
Okay. Got it, sir. And sir, secondly, with respect to our shock absorber business, which is a major business for us. Our revenue growth in standalone business for shock absorber for FY '22 was 15%. Whereas if I see for our major competitor, it was upwards of 35%. So just wanted to understand, have we lost any market share in the shock-absorber business? And what is our market share trends in this segment?
See, so let me first tell you I don't know from where you have the 15% figure, because as far as we are concerned, our shock absorbers and front forks have also grown by 33%, 34%. And in fact, if you see our SOB as a whole -- let me tell you, our shock absorber still is at about 36%. And if fact, at 36%, which would have been much higher as the SOP for all products sold, would have been much higher, if it wasn't for Bajaj being stagnant at 1.1% growth, being the largest OEM. So as they improve, this figure will go up for sure.
Okay. Okay. Got it. Actually, I got the number from our annual report, standalone segment wise revenue. So...
You are talking about -- okay, that must be last year's figure. No, I was talking about -- this year, you mentioned, right, quarter 1 FY '23?
No, for FY '22. Wanted to understand for FY '22?
FY '22, I don't have all the data here, but the growth must have been -- I was more focusing on this financial year first quarter, which is more than, like I said, 33%, 34%. And let me tell you, in front forks, like I said, 36.2%, there we are more than 42% market share in the front forks. And as you've asked me this question, let me -- I'm very happy to tell you that in July, which is last month, which I have not included in my sales figures, we have got 100% of Suzuki front fork orders, a value of INR 140 crores, which is starting in 2024, this is not included in my opening remarks. And that's a huge thing, because it's a huge leap forward, and they are doing very well in scooters, as you know, Suzuki. 100%front fork orders, INR 140 crores, starting 2024. So we are -- why I'm telling you this is, because suspension, we are taking a lot of new business from new OEMs also.
Okay. Got it. Sir, just last 2 questions. Firstly, can you give an update on European power cost situation? I can see that our margins on sequential basis have improved in the European business, and when do you see getting back to normalcy? And lastly, can you share the customer-wise revenue mix for this quarter or for FY '22, whichever is comfortable?
Well, I will not tell you the revenue mix. I will only tell you that Bajaj Auto share of business has gone down, okay. That has gone down without us losing a single business of Bajaj obviously, because they have only grown 1.1%. And HMSI because of the very good growth, that's really gone up. I'll leave it to that. But I request Massimo Venuti to answer the question about Europe, energy costs. Massimo, are you there or are you on mute?
Sir, this is the operator, his line just disconnected, we have dialed him out.
Okay, sure.
So Mr. Venuti connected.
So Massimo, did you hear the question is about the energy costs...
Of course not, because I lost the connection. Could you repeat, please, sir?
So would you like to repeat your question? Though I know it's related to energy cost status in quarter 1 of FY '23 -- energy cost situation, Massimo.
Yes. In the first quarter of this financial year, we have had an impact of more or less EUR 2 million for higher cost energy. The gas from an average price of EUR 70 of the previous year, reached an average of EUR 100 per megawatt, 500% of increase of price -- regarding the electricity from EUR 70 per megawatt we reached in the previous quarter to EUR 250 per megawatt more or less 150% of increased price. And we are speaking about the first quarter, because if you see today, the situation in the month of July and August, there was an increase of more or less 100% compared to the first quarter. So the situation starts to be very, very difficult. But in our profit and loss, the impact in the fourth quarter was more or less EUR 2 million.
The next question is from the line of Pujan Shah from Congruence Advisors.
I have just one question. So can you just make us understand about the mechanism related to how you procure the raw materials? Are they based -- on a 6-month, 3-month basis of contract basis, and how we are passing the cost as like the volatility is so much that we can't continue to keep passing on. And as this -- like the commodity price has been decreasing currently. So like might be -- there will be some chance that we don't pass and we just maintain the relation. So can you just make us understand the mechanism for it?
Yes. Sure. As far as aluminum alloy is concerned, it is always based on either 2 or 3 monthly for all customers, except for one I said HMSI, which is a quarter lag. Now as far as quarter lag is concerned, these rates are fixed based on the quotes you get from the secondary alloy ingot suppliers. And this is for all the customers for the quarter, for which we are asking the increase.
So in some cases, we are directly buying from our own suppliers. There are also customer-directed suppliers for whom we have to buy. It's a combination of both. But normally, these prices are settled for that quarter between us and the customer, based on the alloy supplier competitive quotes you get from approved suppliers. You were talking about aluminum for Endurance or you're talking about Maxwell?
No, no. Just for Endurance.
Yes. So it's only for Endurance. So basically, it is based on a quarterly basis. Sometimes you have customers like Bajaj, who may just do for 2 months, if the trend is very volatile, so then we'll fix up those prices with Bajaj in agreement with them for 2 months or 3 months, depending on the case, as maybe. And then we accordingly finalize rates with our suppliers for the specific 2 or 3 months. So we don't lose. So it's a back-to-back with the supplier, is normally what we do for that period. Only for one customer, it's a quarter lag or in AC2B like I said, a 2-quarter lag. So when the prices are increasing, you lose, when the price are decreasing you gain.
The next question is from the line of Arvind Sharma from Citi.
Sir, just a question on the European operations. If you could share the revenue and EBITDA impact in Euro terms?
Sorry, Arvind, you are not clear. Can you speak clearly? We are not able to hear you?
I mean, we are not able to understand the question.
Am I clear now? Can you hear me?
Now it's much better.
Sorry for that, sir, if you could share your revenue, EBITDA and PAT in euro terms for the European operations?
So Massimo, can you answer that, quarter 1? Revenue, EBIT and PAT?
The first quarter '22, '23, we closed with EUR 61.1 million of turnover compared to 62.3% of the previous financial year, with a reduction of 1.9%. In terms of EBITDA, we closed with EUR 8.4 million, 13.7% compared to 18.2% of the previous financial year. In terms of net results, we closed with EUR 2.9 million, 4.8% compared -- to EUR 4.7 million of the previous financial year. Please consider that in this amount, in this profit and loss, we have had an impact of the increase of aluminum, of more or less 0.8%. So it means that the EBITDA without considering the effect of aluminum, should have been 14.5% and as I told you before, another impact of EUR 2 million in terms of energy costs. And so without energy and without aluminum, the EBITDA should have been 17.5%, more or less in line compared to the previous financial year.
Got it. And just one question on the Indian operation. Can you hear me?
Yes, yes, I can hear you.
Okay. Sir, what do you think would be -- could be the impact on margins of general premiumization if it happens in the Indian motorcycle business? Do you see any premiumization happening, and that's helping you, apart from the ABS?
Actually Arvind, I'm not able to hear you clearly. I'm sorry. I'm not -- can you please...
Can you hear me now?
A notch better.
Sir, your views on premiumization in the Indian motorcycle business and the impact on Endurance?
Okay. If I understood correctly, your view on premiumization in Indian motorcycle market and that impact on our margins? Is that the question?
Right -- that's right.
As the premiumization increases, which is -- which we are fortunate with the mandatory ABS inverted front forks coming in, paper-based clutch assemblies coming in. We also with Adler, introducing newer assistant slip APPC clutch assemblies from the next financial year, early next financial year. This definitely will add to our margins. Coupled with the fact that we have gone from backward integration of these high-end products, like steel grade hoses for ABS to improve our profit margins further and for axle plants for aluminum forging -- I mean, aluminum axle plants, which are aluminum forgings for our inverted front forks.
So definitely, as this increases, our margins will definitely increase. I am seeing the premiumization happening. I'm seeing most OEMs going more and more to high-end vehicles. But today, I think the leader is Bajaj KTM, TVS with BMW and with their own products are also, I think, catching up. And we see all other OEMs focusing on the higher end. All other OEMs. But of course, what percentage it will be, that will dictate -- depends on the appetite of the Indian market to purchase these high end vehicles.
Apologies for the connection problem.
The next question is from the line of Ashutosh Tiwari from Equirus Securities.
Firstly, if I look at your aftermarket sales, while it has grown 54% Y-o-Y. But if you look at last 3 quarters, the run rate was around INR 120 crores per quarter on an average. So there is a big drop over there in this quarter. So any reason behind that?
I mean the reason behind is, see the quarter 4 is always the best quarter in terms of profitability and growth. So that has an impact definitely in April month. So if you see historically, and if I go back last 10 years, quarter 1 is always the lowest, always the lowest. So that's the main reason. But as you go towards quarter 2 -- quarter 3 and quarter 4 are going to be the best. So always the second half accounts for, I think, almost 2/3 of the aftermarket or could be higher in a standard year. So we track this quarter-to-quarter, which is a 53% growth.
Okay. So we are confident about delivering, say, high double-digit kind of growth in this vertical, right? Aftermarket?
Sorry...
So we are confident about delivering high double-digit kind of growth in the...
For sure, 100%.
And secondly, in this brake assembly business, you mentioned you have 31% market share this quarter, right?
Yes, yes.
Sir, if I recall correctly, I think maybe 1.5 years back in FY '21 calls, you are mentioning that -- our market share was around 29%, and we are aspiring to go towards 50% plus because of the order that we got from TVS and other players. So is there some delever there, because we were supposed to reach that number by April '24 - '22 end this year?
Yes. See, yes, that is depending upon the, I think, increasing the capacities -- increasing the supplies. We already have the capacities in our new plant. And all these new orders of HMC has not started. Yamaha also, the scooter disc brakes is still at 50%, it has to go to 100%. Bajaj also the new, I would say, a range of 250 CC Pulsars, that has to go to at least 15,000 to 20,000 sets compared to 3,000 to 5,000. And TVS has to go to that high level, it will reach the peak of the INR 125 crores order, which we have got. Once these will happen, our focus, of course, is 50%, but it will go up. Also, Bajaj not growing. Bajaj, we have a very high share of business, as you know, in brakes. So in quarter 1, there only 1.1% growth has also dampening this, I would say, the brake system SOB. So I would say, as the new OEMs really ramp up the volumes, and as Bajaj improves, definitely, our target is 50%, for sure.
And what was the market share last year in this brake assembly?
In the brake, it was -- in the brake assembly, it was, I think, about 30%.
Okay. So now that things are normalizing on this semiconductor and everything, premium motorcycles have increased. So in this year, can we see at least going towards 40%? Is that a possible number?
Well let's really hope so, because I have got the capacities. Like I said, in October, I'm planning 470,000 brake assemblies from October onwards. So let's really hope so that happens.
The next question is from the line of Akshay from Anand Rathi.
So a question for Massimo, sir. Sir, the out -- could you provide us the outlook for the European business after the recent tensions? And last quarter, you had won an order of EUR 14 million from Stellantis for mild and full hybrid applications. Any more color on that?
So yes. In the previous quarter, we closed more or less EUR 14.5 million of new business with our customers, basically EUR 7 million with Daimler, and the rest shared between Magna and Stellantis. All these projects are in electrical solution, the SOP, the leverage of the start of production for this business will be in 2024. And this reinforces our excellent performance of the previous financial year, where, as you know, we go with EUR 71 million of acquisition. This was the best year of our history.
So only to demonstrate that in this moment, even if the market is very weak, because frankly speaking, in this moment, in the European market, we are doing more or less minus 35% compared to the previous financial year. All the OEMs are working in a tough way, in the new project for the electrical vehicles, also because, as you know, in the month of July, the European government officialized that starting from 2030, we will stop the production of internal combustion engines. So it means that everybody, we have only, let me say, 10 years in order to create a new segment, a new range of products for 100% electric.
But just a follow-up then, there have been news -- there are some companies that are trying -- so how does that play out?
Sorry, we lost your question there. Could you please repeat it...
Am I audible now? Yes. So the question is, so there are some companies in Europe, so they are developing Euro 7 diesel engines. So how does that play out? So considering the story that the EV -- electronic the EV -- the EVs would still be in picture, of course. But then there are some companies developing Euro 7 Diesel engines as well. So how does that story play out, sir?
They are developing engine, if I understood well the question, only for one reason because starting from 2025, for sure, you can sell -- you can register the new car without electric technology in Europe. But we consider that in this moment, the German market export more or less 1.2 million of cars per year. So it means that they will continue to produce internal combustion engine technology for the other country.
Got it. And just a question for -- on the Suzuki order that sir had mentioned, that INR 140 crores order. Just to clarify that the share of business is 100%, right? And what would be the execution period for the same, and any possibility to get orders for Suzuki export market as well in this -- in the future?
I think this -- see, this is 100% SOB in July, which is starting, I said in 2024. I think it's April 2024. I could be wrong slightly here and there. I don't have the LOI in front of me. But I'm sure that they would be -- this would be both for domestic and exports. I'm sure the same scooter -- if they are exporting it, I'm not very sure whether they're exporting the scooter. But if they're exporting it, then, of course, these front forks would also go for exports. But right now, I'm not sure whether this scooter is being exported or not. But I will get back with you. I will just check with my marketing team.
Ladies and gentlemen, the management will be taking one last question.
No, I just wanted to clarify, this is also for exports. I've got an answer. The Suzuki front fork is also for exports. And we are also anyway doing existing -- other model front box, which are being exported. But it's via Suzuki. We supply to Suzuki and they export it. So it's for both.
The last question is from the line of Jai Shah from Capital PMS.
Congratulations for the great set of numbers. My question was partly answered at least one part of it. But I just wanted to ask the management that as you said, that premiumization is happening, and we have a heavy dependency on one of the OEMs, do we have in plan something that we might even try to derisk the dependency, because it may be that someone might grab the market share and our wallet share for that OEM might not be that significant, but we may try to get a good amount of wallet share from that OEM?
See, fortunately, when you talk about premiumization, when it comes to inverted front forks, there may be only another one player as of what I remember now, okay? If you see ABS, there's only Bosch mainly, there could be Continental. If you talk about machine castings of high-end motorcycles -- I'm now talking non-Bajaj. We are the first choice normally, unless there are some strategic reasons of going to a multinational competition, which have been the case in the past. But we are always in consideration because of our experience on Indian road conditions, our competitiveness, but sometimes, we have seen in spite of being competitive for strategic reasons, some of these -- it only happened in one case -- the premium, one of the products led to a competition. And they openly told us it's a strategic call.
So like I said, we are focused on all our premium products, because we have the longest experience. We are competitive. We have the technology, both in product and process. And we are -- and I'll tell you, we are just going after business. We are really hungry for this business, and we do not want to leave any stone unturned in this process here.
That's great to hear. That's great to hear. Can I just ask one more question to the Maxwell management, please?
Yes, sure. So you have both the founders here, Akhil Aryan and Alex Collett, both are in Europe actually right now. So you can ask them.
So I just wanted to ask -- anyone can answer. I just wanted to ask the way the technology is changing, when it comes to the EV batteries. I wanted to know what is our preparedness when it comes to maybe getting in and blending in with, if there is a newer technology that's coming up. How does our BMS -- how is our preparedness and how much time does it take for us to get in tune with the new technology that's coming up? Like for example, right now, lithium is probably ruling the roost, but you never know. I mean the way it's changing, then how do we change our systems according to that?
All right. This is Akhil. I can take part of the answer, and then Alex, if you want to chime in, up to you. So typically, at the end of the day, battery will always be a battery. There will be a cathode and anode separator, and there will be ion moving between those 2 terminals and batteries will require battery management systems. So in terms of a very -- at a fundamental level, batteries require active management, to perform their entire life to be safe, to be reliable and also to be able to predict your state of health, date of charge, range estimation, so on and so forth. So at a core level, battery management systems are a very fundamental element of being able to deliver anything that is actually powered, whether it's your phone, your laptop, your electric vehicles, scooter so be it.
Now your question is really about how adaptive and how fast we can adapt to the market. And I think this is one of our core USPs, right. What we've done as a company when we started building the technology, is instead of taking a product approach where you design a specific product for a specific chemistry or a specific application like a 2 wheeler or a 3 wheeler, what we've done is we designed the technology as a platform. So it takes a little bit more effort, it requires a lot more investment on the software, which is the embedded software side of things. But we've taken, I would say, a platform approach, which is a longer journey, which allows us to now very quickly configure the battery management system for various different technologies, various different applications as well as chemistry.
So an example over here would be, let's say, our LD products, which is the SSLD the low-voltage BMS product. We've invested heavily on the software side of things, which includes your desktop configuration tools, as well as config tools on the BMS itself, which allows us to use it across chemistry, so there it's LFT, MMC LTO, LCO. So there are different variants of lithium ion, as you might be aware. So we can work across chemistry and across applications, which means that the same hardware can be reconfigured very easily in a matter of minutes, I would say, to work with different chemistries as well as different applications.
So a scooter, an e-rickshaw, a motorcycle, a telecom tower, a forklift, all of them can use the same product with -- using our platform approach, by configuring the embedded software that goes inside of it. So by taking a platform approach, we've really invested early on, in order to be extremely agile and ready for the future. When it comes to actually designing new battery management systems, for different chemistries beyond lithium, I think that's also something we have a keen eye on, the market and seeing what kind of technologies are getting adoption.
But eventually, these technologies, even if there was, for example, a better technology product compared to lithium, from a commercialization standpoint, as you know, batteries are really expensive. And so for them to reach mass market, it's not just a technology but also the commercialization that needs to unpack. So we're looking at technologies that both have technical depth as well as scalability. And looking at BMS is a function of recalibrating some of our algorithms, but the core platform can be reused. So I will pause, unless you have anything more?
Ladies and gentlemen, that was the last question. I now hand the floor over to the management for closing comments.
Well, the only thing I would again repeat, is that for everybody on this call that, we at Endurance have a very positive outlook, based on our new large business wins in the last 2 years, including for electric vehicles, both in India and Europe. And we'll do everything possible to grow in a higher profitable way in the future. All the best. Thanks.
Thank you -- ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.