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Good morning, ladies and gentlemen, and welcome to the Q2 FY '23 Earnings Conference Call of Endurance Technologies Limited, hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [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, Mr. Jalan.
Thank you, Sal. Good morning, everyone. Welcome to Q2 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 have the Q&A session. Over to you, Mr. Jain.
Thank you, and good morning to everybody. I would like to share details of how we have done in the second quarter of this financial year. In India, in the second quarter of FY '23, as per the CM data, the 2-wheeler industry sales grew by 7.35% compared to quarter 2 of the previous financial year.
Scooters grew by 15.78% and motorcycles grew by 5.62%. The automotive industry in India had a growth of 12%. In our overseas operations in quarter 2 of this financial year, the EU and U.K. market saw an increase of 0.4% in the volume passenger -- in the volume of passenger cars sold, while our European sales grew by 25.9% in euro terms.
I will now brief you on the financials of the second quarter of FY '23. During quarter 2 of this financial year, as compared to previous year's same quarter, our consolidated total net income grew by 25% from INR 18,957.5 million to INR 23,690.6 million.
Consolidated EBITDA grew from INR 2,681.9 million to INR 2,800.2 million. Consolidated EBITDA margin was at 11.8%.
The profit after tax degrew from INR 1,333 million in quarter 2 FY '22 to INR 1,314.9 million in quarter 2 of this financial year, and the PAT was at 5.6%. This included the income of the [ Maharashtra ] PSI scheme incentive of INR 284.61 million. There was no consolidated net debt and company had a positive cash flow of INR 2,838 million.
During quarter 2, our standalone total income grew by 26.9% from INR 15,057 million to INR 19,130 million. Standalone EBITDA grew from INR 2,170 million to INR 2,377.4 million with an EBITDA margin of 12.4%.
Standalone profit after tax grew from INR 1,223.6 million in quarter 2 of FY '22 to INR 1,312.7 million in quarter 2 of this financial year, and the PAT was at 6.9%. This included the income of the [ Maharashtra ] PSI scheme incentive of INR 284.61 million.
I would like to mention that Endurance is focused in both its Indian and European operations for a profitable growth and on growing higher than the industry growth. The detailed financials are available with the stock exchanges and on the Endurance website. I would like to now share certain key points in the quarter -- till quarter 2 of this financial year FY '23.
In quarter 2 of FY '23, 80.7% of consolidated total income, including other income, came from Indian operations, and the balance 19.3% came from our European operations.
In India, till date of this financial year, INR 6,928 million of new business has been won from OEMs other than Bajaj Auto, which included HMSI, which is Honda 2-wheelers, Hero MotoCorp, Ather Energy, Hero Electric and Tata Motors.
I would also like to mention that we have INR 22,822 million worth of request for quotes from OEMs. Our consolidated net worth is now in excess of INR 40 billion.
Our customers recognize us as a trusted and [ favorable ] partner in their value chain in terms of both technical and financial strength. The electronic vehicles market continues to offer significant opportunity for growth to the auto component industry. It is estimated that the Indian EV market will touch INR 150 billion by 2030.
Therefore, at Endurance, we have taken a major step forward to harness this opportunity by executing a share subscription and purchase agreement by acquiring 100% of equity share capital of Maxwell Energy Systems Private Limited in a phased manner. We have already concluded acquisition of the first 51% stake in Maxwell.
Maxwell, as you all know, is in the business of advanced electronics, particularly in the battery management system or the BMS for automobile, EVs and battery packs.
We plan to average Maxwell's deep technical expertise and its BMS deployment experience in India and Europe. We are offering our products to multiple new clients, including Indian and overseas automotive OEMs and manufacturers of battery packs.
We've already started supplies to Hero MotorCorp for their new EV, which was launched in October. With the existing current book -- with the existing order book beyond the pipeline, the technical capabilities and synergies between Endurance and Maxwell, we are confident of achieving our goals in the embedded electronics space.
As you are aware, we have added a high-technology new product, which is a driveshaft. Driveshaft is a proprietary product and an EV agnostic product in an automotive application. 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 light commercial vehicles.
The launch of the Driveshaft has opened an additional revenue stream in the transmission segment for Endurance and will lead to a significant business growth opportunity for Endurance in the future.
We have won orders from Mahindra and TVS, and commercial supplies have started to Bajaj from July 22 onwards. To help 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. So it's a highly profitable business. They have a renowned brand name called Brenta in the aftermarket and replacement business. With this acquisition and acquisition of the 2 Italian companies, namely Grimeca and Adler in 2020, we want to create a center of excellence in Italy and grow in the premium component in the 2-wheeler segment. This acquisition gives growth opportunities to the Endurance Group in the European aftermarket business as well as it provides access to in-depth know-how for process technologies of friction materials, especially for brake applications.
We are looking at more such acquisitions. I would like to mention that Endurance is focusing on a more value-add and a profitable product mix in a suite of business, which includes braking, suspension, advanced electronics and aluminum casting supplies to 2- and 3-wheeler OEMs and new start-ups. 200 cc-plus motorcycle brakes and clutch SMEs 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 last year and a 200 cc plus motorcycle's clutch business, which is your new assistance made clutches for the high-end bikes will start in quarter 1 of the next financial year.
The other product mix focus areas are the paper-based clutch assemblies replacing the fork-based tech assemblies for motorcycles to get a better value add. Continuous variable transmissions or automatic clutch for scooters with Hero MotoCorp. We are at an advanced stage of testing, and we expect to start supplies from the next financial year. It is a bit late, but we will start the supplies with them. We will also increase anti-lock brake systems or the ABS business for 150 cc clutch motorcycles with a collaboration with Beijing West Industries. We've already started supplies to Bajaj Auto and Royal Enfield and I engaged with other OEMs for building new ABS business.
We are increasing the business of the 200cc plus motorcycle inverted front box 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 of both on-road and also start with off-road motorcycle higher technology, inverted front forks and rear shock absorbers. And we have already made a 3-year business plan for this.
We have also started supplies of inverted front forks to HMSI or on the 2-wheelers in India and 1 order for inverted front forks with 3 of Hero MotoCorp new platforms, vehicle platforms and also enable other OEMs on the inverted front fork new business. This is indeed a fast-growing business for lures.
We're also focusing on full finished machine castings as compared to raw casting and semifinished castings for all the 2-, 3- and 4-wheeler OEMs. As the brake assembly business; is growing with the addition of Bajaj, TVS, Royal Enfield, Yamaha, Hero MotoCorp and Ather Energy as well as HMSI new business wins.
Our second plant at Waluj, Aurangabad has been set up with a high increase in volume that has already started operations. As you are aware, the supply of 2 ABS assemblies to Bajaj had started in the last week of September 2021. EVs assemblies to Royal Enfield started from February 2022 onwards. You may be aware the competition is mainly from Bosch, which controls a major market share in the Indian ABS 2-wheeler market, which requires approximately 3 million to 3.5 million ABS assemblies per annum.
We are now in the process of even getting our huge channel ABS cleared by the end of this calendar year. And we are scaling up additional assembly lines by adding an addition of 200,000 ABS assemblies per annum to our existing 400,000 ABS assemblies per annum, which will give us a total capacity of 600,000 ABS assemblies per annum.
We are also further planning to increase these volumes to 1.2 million EBIT assemblies per annum by the second half of 2024. So this is a very good growth opportunity for us. We're also focused on supply of products for EV 2- and 3-wheelers with product supplies for brake assemblies, suspensions and aluminum casting for electric scooter and 3-wheeler. After the acquisition of Maxwell, we're also supplying the battery management system 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.
In this financial year, we have won INR 2,168 million of new business for EVs in quarter 2 of this financial year. All this business has been planned to start in this financial year or early next year and should reach peak volumes by the end of FY '24. The total business win for electric vehicles is today at INR 4,891 million till date. This does not include a business which we just won a couple of days ago from Hero Electric, which is about a INR 1,200 million business for both the BMS and suspension, and this business should start by early next year. So this actually takes our business win for EV vehicles to now slightly more than 6,000 million till date.
We are also focusing on the e-bicycles business, especially for suspension, battery management system and brakes. This is both for our Indian OEMs and exports. Also due to increased orders from Bajaj, Yamaha, India, TVS and Hero Electric, we have added a new plant at Chakan to help increase supplies from 240,000 alloy wheels in a month to 380,000 alloy wheels a month. This plant has already started operations in July '22, and the peak volumes should be done by next month and the supply to TVS has also started in July 2022.
As far as Europe is concerned, till date of this financial year, we have now -- we have won EUR 42 million business, mainly from Porsche, Daimler and Stellantis. As you know, we had won EUR 70 million business last year. And this year till date, it's EUR 42 million. So both India and Europe are really aggressive going after new business. So this is a very, very good sign for us, what we have seen in the last 2 years and impressed with our customers.
I would also like to point out that Endurance both in India and Europe is actively pursuing its focus on gaining access to new technologies and focusing on new product organic and inorganic growth. As I mentioned earlier also, Endurance has already entered to backward integration product areas, which are import substitutes also. First is aluminum forging axle clamps business, which is with a collaboration with FGM in Italy. We already started supply since April '22 for both Bajaj as well as for exports. We have recently won an order also from Hero MotoCorp for a different application of an upper bracket aluminum forging, which will also start by next year. So the aluminum forging itself can become a segment and it's a huge opportunity for growth for us.
The second product is, of course, the steel braided hoses for ABS applications for mid and high-end bikes. These supplies have already started. So both these above -- both these projects, I would say, are helping us already to make higher profit margins in these businesses of inverted front forks and also for ABS.
In the first half of this financial year, our aftermarket sales grew 16.2% from INR 1,727 million in the previous year to INR 2,006 million in the first half of this financial year. We are exporting our aftermarket parts to 31 countries, and we are adding 4 more countries in this year, which are Rwanda, Burundi, Brazil and Vietnam. So aftermarket sales growth is a very large focus for us, and this will continue to be like that.
In the first half of this financial year, the export sales for India standalone business decreased by 8.4% from INR 878.56 million in the previous year to INR 804.91 million in the first half of this financial year. This major impact was due to the lower orders of aluminum die casting exports to the European OEM. That's the main reason. But I think slowly it's coming back. We are getting new orders also from Europe and only for castings. So the future looks quite good, actually.
We are -- and I'm also -- we are also extremely happy to inform you that Endurance has been judged as one of India's best managed companies based on Deloitte's Best Managed Companies 2022 program. On the environment front, I would especially like to mention that Endurance is striving to be carbon neutral in its plants by effective use of solar power and wind power, creating carbon sinks by driving tree plantations and thereby creating dense forests and driving use of natural gas and LPG in place of electric fire and furnace oil, I'm happy to tell you that the use of furnace oil has been completely stopped now at Endurance. We're also focusing in lowering hazardous waste generation and to achieve zero waste to landfill.
At Endurance, it will be our continuous endeavor to grow through organic and inorganic growth with a focus on technology upgradation, quality improvement, cost and environment, 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 our large new business win in the last 2 years, including the electric vehicles, both in India and Europe. With these opening remarks, I would like to invite questions from all of you. We also have the Maxwell Founder and CEO, Mr. Akhil Aryan on the call to answer any of the questions you may have on Maxwell. Thank you.
[Operator Instructions] The first question is from the line of Aditya Jhawar from Investec.
My first question is on India business. Anurang, if you can help us understand the breakup of the INR 7 billion order win in this year. And also, you indicated that the cumulative order wins for EV is about INR 6 billion. Is it including Bajaj or excluding? If you can include Bajaj number, that will be great. And a related question is that any breakthrough into new age OEMs for EVs in India. Yes.
Yes, sure, sure. So if you see the INR 7 billion order, which I mentioned, is actually INR 6.9 billion, this -- the breakup is it is from HMCL for castings. It is from HMSI for the rear shock absorbers and front shock absorber is from Tata Motors for the high-end machine castings. It's from Hero Electric for alloy wheels.
I have not counted the recent order of the BMS and suspension that's INR 1,200 million order. That I've not counted in this 692 -- I mean, INR 6.92 billion. Then we have Ather Energy for the battery box housings, which are there. Then we have orders [indiscernible] we have a lot of orders from Tata Motors, Hero MotoCorp, Hero Electric, HMSI. But we also have from Yamaha. There is a large order for their suspension, which we have just got. It's a [indiscernible] It is known as a B693 model.
From TVS, we have got brakes orders, very large break orders for the new [ NN360 ]. Then we have orders from Royal Enfield also for castings. So basically, what I would say is the best part is that in this order, 80% of the business is new business and replacement is 20%. So that's the good part. And of course, this INR 6.9 billion doesn't include the INR 1.2 billion, which we got from Hero Electric just 2 days ago.
So the breakup of the figures, which normally -- but basically, it's a combination of suspension, braking and castings. And basically, it was a breakup -- and I have to add up the figures to give you the differentiation. But the customers mainly are HMSI, Hero MotoCorp, Royal Enfield. There is also Mahindra Electric. There is TVS. There is Ather Energy, so -- then there is Tata Motors, and Suzuki 2-wheelers.
Fair enough. And the second part of the question was on can we give us a EV order book, including Bajaj?
Yes. So EV order book now, which is now the INR 6 billion, includes -- so in this figure of INR 6 billion, you have Bajaj of INR 1.24 billion for the 2-wheelers and 3-wheelers scooters and 3-wheelers. But the other main player in this is Ather, you've Hero electric. There is Mahindra Electric. There is a company called Bounce. And as we speak, we are engaged with all these new big companies which are there in the market. And we hope to give you some more good news in the next call which I have, because we are just going after new business and of course, the EV business. Basically, for braking, for suspension, for castings and for battery management systems as of now.
Okay. Yes. All the best for that. My second question is on the European business. Now there are two parts to this. Number one is that how have been the customers reacting to price increase, by when should we see that the customers agreed for higher energy cost. And the second is, how is the production schedule of our customer looking like in the next couple of months?
So I would request Mr. Venuti, our Director and CEO, to answer that question.
Okay. Yes, the first question regarding the energy. As you know, we are -- in this quarter, we have had an important peak of energy cost. We reached EUR 472 per megawatt compared to EUR 70 of the previous financial year and EUR 208 per nitro fuel [indiscernible] of gas.
First of all, it's very important to underline that the European government and also Italy are supporting us with different contribution only to give you an idea, in Italy, we received from the government in this period of time in this quarter, more or less 25% of contribution. And this 25% will grow 40% in the month of October, November. At this moment, they defined only the month of October, November.
And we are discussing as usual with our customer in order to find a solution for the future. I'm very happy to inform you that starting from the 1st of October, we found an agreement with our major customer. And so it means that in the next quarter, the contribution from the government and the contribution from the customers will not cover 100% of the increase of energy costs, but we are pretty confident about an increase of our EBITDA.
Why we are not closing in a structural way these agreements with our customer only for one reason, because unfortunately, in this moment, in Europe, the policy of the government of each country is different. For example, in France and Spain, they decide for a price cap for energy and gas. In Germany and Italy, unfortunately not. Germany officialized that they will put EUR 200 billion in order to support the consumer and also the company, but it's not so clear as they will support everybody. They will officialize this strategy at the end of November.
In Italy, as I told you, they are supporting us, but in a temporary way, and they remove, time to time, the situation month per month. And so it's very difficult to find an agreement with the customer because everybody in the OEM are waiting an official position from the European Union. And so -- but the situation will improve in the next month for sure. Speaking about the production. In this quarter, the market closed with registration and the registration were up by 0.4%, and so more or less on line compared to the previous year.
But at Endurance, we performed very well. We increased the turnover of 25.9% from EUR 45.3 million to EUR 57 million. And please consider that the positive aspect is that the production in the same period, the production of passenger car in Germany was up by 42%. And so it means that for sure, they are increasing again the stock because they used the stock in the previous quarter. But apparently, the volume for the next months are positive compared to the previous year.
Okay. That's good to hear. Now just Massimo, just to summarize what you said that the energy cost because of the government measures should be slightly better in Q3 and a large customer of ours, they have agreed for a price increase from Jan onwards. Is that understanding correct?
Yes. Yes. They will support us in a different way, considering the different customers in different countries, but I'm pretty open to be able to recover an important part of this increase of energy costs Only to give you an idea, in the last quarter, we have had the impact in our profit and loss of EUR 1.9 million. If I consider 6 months of this financial year, the total impact was EUR 3.6 million. The EBITDA of this quarter would have been 16% without the energy cost and the EBITDA of the 6 months, 16.6% without energy costs. And so in this moment, our profitability is more or less on line compared to the previous year. But unfortunately, the only problem is the energy.
We have the next question from the line of Nitin Arora from Axis Mutual Fund.
So first is on the Maxwell energy, if you can talk about the order book because I think when we acquired 51%, I think, that time the orders in the pipeline was about INR 150 crores. So if you can throw some light, how much orders have increased, more specifically because it's actually an electric order rather than counting the alloys wheels for the electric vehicle. So if you can throw some light on that? And anything if you can comment on the acquisition price and then it should be done 100%.
Yes. So of course, I mean, I will request Akhil Aryan to reply to this. So as of now, the orders are in excess of INR 105 crores because sum of the orders of INR 150 crores, included, I think, Hero MotoCorp also. But at the same time, there are leads of INR 125 crores being pursued. Plus, we have got another INR 70 crores or INR 700 million of order, like I said, for the BMS from Hero Electric 2 days ago, which I've to add to the orders in hand of INR 105 crores. So it becomes INR 175 crores or INR 1.750 billion.
And what was your next question, which I request -- I -- actually let Mr. Akhil Aryan further speak on this acquisition cost. So the acquisition costs we can explain. But would you like to explain -- I'll request Mr. Satrajit Ray our Director and Group CFO, to answer this.
So to answer your question on acquisition cost, there's a stock exchange release, which we've given post our results yesterday. It's quite clearly mentioned that we purchased 51% of the company through primary issuance and secondary purchase for a consideration of INR 1,350 million. That is INR 135 crores. And with that, Maxwell became a subsidiary that happened on July 1.
So the results are getting consolidated from July 1, 2022. The balance 49% of Maxwell equity share capital will be purchased by Endurance in 5 tranches spread over next 5 financial years, and the consideration of each tranche will depend on Maxwell achieving certain financial targets as specified in the share purchase [indiscernible].
My question was more that is there. I mean I read the press release and my question was that in the next 5 years, I was asking more of the benchmark. So that question was more that when the -- let's say, the electric market, which is growing very fast in the last, let's say, 1.5 years and last 5 months have been increasing quite -- the growth has been higher also led by [ Teslas ]. The order book seems not increasing. Here is a new launch, but not in the top 5 of the top 6 market share people in electric. Can you throw some light how we are looking to increase this by? And I think some part with the order was also overseas? So anything on that, that would be helpful. That's my question.
Okay. So what I gave you was a total figure, which is about INR 175 crores of order wins, including the recent INR 70 crores of Hero Electric. I can -- but I will request Akhil Aryan to answer this because we are pursuing orders from every, I think, company which matters in this space. But let, I think, Akhil throw some more light on that. Akhil?
Yes. Can you guys hear me Okay?
Yes, yes. We can hear you.
So yes, like Anurang mentioned, we already have about INR 175 crores in our order book. We have about another INR 125 crores in active lead pipeline. Our thought process behind the market is not short term, right? So we are not chasing the last 3 months or last 6 months volumes. We're looking at what are the volume creators of 2025, of 2030. We have to identify the OEMs that are genuinely being serious about their EV plant and also the ones that are building robust products that will stand the test of time.
There is a lot of -- of course, in the EV space with the numbers as well, there has been a lot of noise, very little signal. For us, we have chosen -- in terms of business opportunities, you either go after high volume or high margin business. And so in India, our goal has really been identifying, especially with the new regulations coming in, you've heard of the new AIS-156. You've also seen the same 2 considerations how the government is sort of evaluating, improving safety and span in the battery space in the vehicle space. We are now seeing how OEMs are responding to that, which ones are actually taking the additional effort to gear up and be in alignment with these, I would say, new regulations.
Of course, there are some OEMs that have been in the market, right? Some with, I would say, supplying these BMSs that now have to eventually -- like I also mentioned on our last call, that are now being forced, practically speaking, to localize that supply. And so we are seeing a lot more, I would say, conversations that are happening in our lead pipeline where we are speaking to these OEMS. So those -- that transition from China to India is happening as we speak right now.
And then there are also some OEMs that have traditionally built their own BMS that are in the market today, right? So an example of that is Ather, right. So Ather has their own BMS and they're in the market. So even if their volumes, so let's say, in the last 3 months have gone up, that is not really a space for us to sell to them.
However, apart from them, all of the other, I would say, major OEMs that are coming into the market, including Hero, okay? So Hero is basically the Ather company. So this is like -- Ather is owned by Hero to some extent. But Hero MotoCorp is a significant customer for us and not just Hero MotoCorp, many other customers in India as well as in Europe are choosing to buy this from technology experts like us.
So what I'd like to say over here is primarily that our focus is not necessarily on chasing short-term trends of 3 months or 6 moths through selling more volumes right now by lowering their cost or doing something else. We want to focus on volume creators of 2025. So we are spending time integrating our technology and integrating our BMS into the battery pack designs of those OEMs, both in India as well as in Europe.
And there is a vast, I would say, set of conversations that we're having over and above the orders that we already have in the pipeline. That will help us gear up for the next FY and the FY after that in order to really ramp up as you've identified, as the EV market starts increasing its space and all the serious OEMs step in, who want to be part of that journey moving forward.
We have the next question from the line of Ronak Sarda from Systematix Group.
The first question, sir, on the standalone operations, the quarter-on-quarter and even if I look at the Y-o-Y growth, it looks pretty strong, despite Bajaj facing a lot of issues on their export market. I mean production would have got curtailed there. So if you can help us understand what has driven this strong growth? Also, how is the product mix? And in connection to that, how has been the ABS revenues seeing the scale up over the last few quarters?
Yes. You see, what is -- I think it's -- see, the business growth has mainly happened because of our new order wins over the last, I would say, 3 years. Even during FY '21, I think we won INR 565 crores or INR 585 crores of new business with all INR 5,850 million. Last year, we won INR 7,650 million, and so far, like I said, we've already won almost INR 7 billion worth of orders till date. And we're going strong. This doesn't include the Hero Electric INR 120 million -- I mean, INR [ 120 ] crore business we won 2 days.
So I think it is -- the question is, like I've always said on calls, I have no control on the outside uncertainties. We at Endurance are going after business, profitable business, and doing a lot of cost controls, whether it is consolidation, more operational efficiencies helping in the product mix being better. And it's not about casting our machining, casting, we are trying to improve the profitability by going from machine castings.
I've said alloy wheel is doing quite well. We're expanding alloy wheel, like I said, on to 380,000 alloy wheels a month from 240,000. Brakes is growing very fast. We have a new plant for brakes, which has started, got orders from EV companies also like -- in a big way, actually. We're almost like a single source there.
So the question is we are driven. One focus is, of course, EV. And luckily, except for the clutch, all our products, I've said, are EV agnostic with castings being different types. But similar machining centers, similar die casting machines, only you change the tooling for the die casting machines, that -- so that's the good part. We're also doing backward integration to improve profitably like I said, steel braid hoses and aluminum forgings for inverted front forks.
This has helped us to increase our margins because these are both import substitutes. So we are doing -- our strategy is, of course, outsourcing to our Endurance vendor association as one and to be able to focus on more important or critical operations they announce, like surface treatments or a different type of assemblies.
But at the same time, we're also doing backward integration, which gives us higher margins. also the product mix, fortunately, brakes, suspension, alloy wheel, machine casting business is really growing. And of course, the advanced electronics with Maxwell as well as drive shaft is still at an initial, I would say, I would say, a beginner stage, a long way to go. We have very big plans for both these also areas.
Also, I mentioned about aluminum forging is not only about inverted front forks. We've got upper bracket for a conventional front fork from Hero MotoCorp. We are getting a lot of inquiries for other type of aluminum forgings. So I think it's a combination of product mix, technology products focusing on upgrading products, technology products on one hand. And for EV, because EVs will grow for sure with the push, which is happening on EVs. So I'm sure it will grow. It will grow very, very fast. So we want to be a part of that growth. That's why almost the INR 600 crores of business, one already, and we are going strong on this business.
And of course, the cost controls, like I mentioned, whether it's consolidation of plants, operation efficiency, the purchasing is better. Like if you see quarter 1 and quarter 2, the RMC percentage of sale in quarter 1 was 67.6%. Quarter 2 is 67.2%. -- so it's only gone down by 0.4%. But the EBITDA margin has gone up by 1.4%. So extra 1%, I would say. So this is the kind of focus we have on product mix and cost control.
And this is something we'll continue to do. The quarter 3, we're expecting a huge drop in raw material prices because steel -- like aluminum is almost, I think, 51% or 52% of our purchases. Another 32% is steel, different types of steel, or different grades of steel. Both these are going to further go down substantially in this quarter. That, of course, helps the EBITDA margins because your raw material percentage of sales, the moment it goes down, it has a direct impact on your EBITDA margin, that the percentage.
So of course, we are very optimistic. I mean and I'll be very honest that looking at the way we are getting business and we are focusing on the efficiencies and as well as the mix getting better, more technology products. And the most heartening note is overseas with energy prices now being addressed by the major OEMs. And I think in the future, I mean, we are very, very optimistic on the future. And I'm just not saying it just because you are visiting, because I only say what I mean. So I'm seeing after a year, a lot of things which are positive in Europe especially because energy really 18%, 19% EBITDA margin company has come down so heavily to 11.7%, 11.8%. So you can imagine what impacted -- it would have done for us.
And many companies are not even -- I think they are in a bad shape in Europe. But that has given us an opportunity to get new orders and that's why I said big business wins from Daimler, Stellantis, Volkswagen Group, including Porsche. So I just want to say that I think it's been a combination of sales growth, better product mix and cost control and purchasing being better.
Sure. That's a very detailed explanation. Sir, 2 more questions. One for Mr. Aryan. If he can help us understand how the 2 new norms on the battery side on electric vehicles, the first coming on December 1 and then on 31st March. How does that change the entire supply chain for BMS? And what could be the kind of cost increase, which a vehicle would see? That's one.
And second for Mr. Ray. Sir, the way we calculate the subsidiary performance is directly [indiscernible] standalone. Now with Maxwell getting consolidated as well. If you can help us understand what kind of revenue and costs are sitting in the overall subsidy numbers so that we can decipher the Europe performance separately, that would be really improved.
So I guess the first is for me. See, actually, we are very happy with the new norms to be honest. Because many of our products, practically all of our BMS products incidentally, from the start, when we made the design, we wanted to take extra precautions more than were mandated by law, at least in India because we were selling internationally, right? So when you want to supply to Europe, the U.S., we were already designing for global standards. And so as it stands today, many of our products by default, comply with the new norms that has been announced by the India government or this AIS-156.
There are some small, I would say, very unique things that has been also announced in Phase 2 of AIS-156. And for that, some minor adjustments that need to be made for some of our products are being made as of right now as we speak. But again, fortunately, a lot of this, because we have designed the technology of the platform and not as a product, it means that for us, we will not have to do a fully new design cycles. We are simply just implementing new firmware upgrades to our products, which will enable us to have, again, a compliant BMS.
Again, like I said, most of them are already compliant for both phases, for the other products, where minor pieces are required, we are estimating to be done before December even before Phase I. Coming to new product designs, I think what's interesting specifically with these norms, is that a lot of the guys who were buying PCM and which are protection circuits, from China, as a drop in instead of a BMS. Those guys are now realizing that, look, this is no longer going to work because the problem with -- I'm not just saying this about China, but in reality when you're buying a PCM instead of a BMS, the problem is that there is no firmware because there is no micro controller, right?
So you are basically in a place where you have a black box hardware that you just connect and it does [indiscernible], right? In a way if something goes above certain threshold, it just stops battery from working. So there is no way to, I would say, tune it or write some firmware to make it meet or comprise the standards. So it's almost as if they have to find a BMS supplier instead of protection circuit. that increases the TAM, the addressable market for us in general significantly.
And we knew at some point, it is going to happen. Even the last 2 quarterly calls, I mentioned this, that the M2 was just one step in that direction, AIS, of course, helps the adoption of reliable battery management technology because batteries are safely critical instead of just having a performance linked. We also have to have a sort of safety timing when you're designing product.
Last but not the least, I also want to highlight that not only is this sort of requiring a lot of these OEMs to source BMS into PCM, because of the same 2 subsidies, they are also trying to source with BMS locally, right, which means that they have to source it from India. And in India, when it comes to an AIS from compliant BMS, which is cost competitive because we have the volume threshold, we are definitely market leaders in that regard.
And so we are seeing a lot more conversations happening because many of our competitors do not meet the standard, some that meet the standard don't have the experience of delivering products for the Indian market. And some of the others that have that experience also will not be as competitive. So I think that overall, while the overall cost impact for companies that were using PCM will be there because they will have to move from PCMs to BMS. So maybe there will be an increase in costs for their vehicle. But in the context of us as a supplier of technology and BMS, I think that it has radically expanded the addressable market for our technology. And like I said, our BMS is already compliant, Phase 1 and Phase 2.
Ronak, to answer the second part of your question, I'll give you numbers for Europe and Maxwell separately because standalone numbers you already have. As far as Europe goes, I'll give you numbers in euro. Quarter 2 had a total income of EUR 57 million and an EBITDA of EUR 6.6 million compared last year EUR 45.3 million and EUR 6.3 million of EBITDA. Now you must remember that quarter 2 to quarter 2, there's been an 8% depreciation of euro against rupee. So as far as rupee value is concerned, it will be lower.
Now as far as Maxwell is concerned, the total income in this quarter is INR 40 million or INR 4 crores. At EBITDA level, there's a loss of INR 61.5 million or INR 6.15 crores. This is primarily driven by the fact that we considered employee costs build up, but a very major order started fructifying later. So there's a timing mismatch between revenue and cost. So that's why this kind of losses come on a low value of sales. And the last point from my side is that our straight arithmetical aggregation will not get you the numbers because between India and Europe, there are transactions, so there would be consolidation adjustments there.
[Operator Instructions] We have the next question from the line of Sonal Gupta from L&T Mutual.
So just on, sir, like you mentioned, one, sorry, a bookkeeping question. In the other operating income, is there any Maharashtra subsidy this quarter and last quarter, any number?
No. I mean, are you looking at the stock exchange publication?
Yes, yes.
See, the Maharashtra subsidy, that thing goes in revenue from operations. It doesn't go in other income.
Right, right. No. But I'm just trying to understand in revenue from operations, is there any number there?
Yes, yes. Of course, of course.
Can you highlight the amount?
Yes, sure. Are you talking about quarter 2 or half 1, which number do you want?
I wanted both numbers, if possible. But...
Quarter 2, '22/'23, the booking has been INR 284.61 million, which was covered by Mr. Jain in his opening remarks. And in quarter 1, the booking was INR 300.95 million. So half 1, total booking is INR 585.56 million.
Got it. And sir, in your comments previously, Mr. Jain, sir, you mentioned about the raw material costs going down. I mean, right now, I mean if you look at the strong growth that we've seen on a year-on-year basis on the revenues, how much of that is because of the commodity prices going up? And how much do you expect to reverse in the coming quarters?
See, like I said, quarter 1, the RMC percent -- I'm talking about standalone India right now. The RMC percentage was 67.6% quarter 1, the percentage to sale, which went down by 0.4% to 67.2, 0.4%. Our EBITDA went up from 11% in quarter 1 to 12.4% in India, which means we laid out 1% because of sales growth, very better economies of scale and also cost controls.
And the product mix being a bit better with ABS going up, with inverted front forks going up, aluminum forging starting as an import substitute. So -- but I think operational efficiency also helps. So we have get -- got an extra 1% EBITDA which is hopefully because of efficiency, mainly and product mix. And of course, we have the growth.
Got it. No, no, what I was trying to ask is like on the top line, I mean, like if we see, like, say, this quarter versus next quarter, given that you're saying that you're expecting a sharp drop in aluminum, et cetera, how much deflation of top line do you see because of that?
Very difficult. Customers change their schedules every month. The question is very difficult to say. That's why I've always said through the IPO, higher industry growth and profitable growth, which we will retain. There's too many uncertainties out there. So we can only do our best. But yes. But to answer your question, commodity prices when they go down, we are looking at like the alloy wheel, alloy, some of the alloys, high-end alloys, there will be a sharp drop there. It could be about 12%, 13% drop in price. which is very good for us. But that's a large -- but that's also a good a 30%, 40% part of the total aluminum alloy purchases we do.
Steel is going down, I was told, about INR 6 or INR 8 a KG on the average. So all these are good signs. Because see, once the RMC purchase still goes down, your EBITDA margin percentage directly will go up. So that part, so we are sure of commodity prices coming down. But what -- as far as sales are concerned, as far as we are concerned, we are going for growth, but how much growth I can't tell you. I just can't tell you. I can only tell you all the business wins we have done and many of these businesses have started, but very difficult to talk about the future as far as what that sales can be, the guidance can be. I really don't know.
Like in spite of falling prices of commodities, we have a 26 -- we grew in a big way quarter 2 versus quarter 2. Because quarter 2 of FY '22 was not that bad like quarter 1, when we were hit by delta. Quarter 2 was quite okay. Still we have grown because this is also because of new business wins in the last 3 years.
Got it. Now so that is what I was trying to understand, right? Like on a year -- this is easier, right? Like on a year-on-year basis, how much of the revenue growth you've seen is because of commodity prices?
Because of commodity, okay. Now in this year, mainly, I would say, the first 4 months, I don't know what that percentage we had given in quarter 1.
In half 1, it has been about INR 270 crores roughly. Half 1...
So half 1 about, I would say, if you take a total sales. Our first half was how much?
Our revenue from operations in half 1, if I disregard the incentive under, that was about INR 870 crore growth in sales. Of that -- I'm rounding of the numbers, of that, about INR 270 crores came from...
So we got around the INR 270 crores out of INR 850 crores.
INR 870 crores.
Out of INR 870 crores is coming because of raw materials. The first 6 months, sir.
But you must understand these are estimated numbers. These are estimated numbers because there's a lot of indirect inflation in the components we purchase, which is very difficult to sort of put our fingers on.
We have the next question from the line of Jinesh Gandhi from Motilal Oswal Financial Services.
First is how are you seeing the order book developing or production schedules developing [indiscernible] season and the 2-wheeler side in India? .
No, I think this month is absolutely all right. I mean we don't see it down next month, we have to wait and see schedules we get in the last week of this month. But with this month -- and see, I think, in our case, is also because of business wins, like I said, last 3 years, which are all coming up. They may be a bit late, but they've all started coming up. So I would say in -- I will not tell -- I can't look at the number, but it's not going down for sure.
Okay. So vis-a-vis September, October, it is fairly comparable except for the seasonality part the [indiscernible] part of that? Good. Secondly, particularly with respect to the ABS business, which we have from Bajaj and ARAI, can you -- what kind of share of wallet we have for them for ABS?
See, with Bajaj, we would be at about -- we are in a single channel right now. So we are doing about how much with them. 17,000, 18,000?
18,000...
18,000 to 20,000 for Bajaj and about...
8,000 to 10,000. 8,000 almost.
Say, about 8,000 for Royal Enfield, but they want more. I mean the question is it more depends on us. But our capacity is 33,000 a month. which keeps going slightly up and down because of the volumes of the high-end vehicles slightly. But I would say 20,000 to 30,000 is something which we are now doing, and we should do the full 33,000 from January for sure because next month is normally a bit because most customers have closed last 4, 5 days or a week for the maintenance activities, or they have their block holidays.
But surely, from January, we will the peak. And like I said, our dual channel ABS also in the process of getting clearance. So that we are adding another 200,000 to 400,000. So we have a capacity of 600,000 in the market size of I think 3 million to 3.5 million. ABS requirements above 125cc vehicles.
Got it. Got it. And second question is to Massimo. So firstly, on the outperformance, which we have seen in Europe market where we have grown at about 26% as against just about 22% growth or even if you look at adjusted 19%, what has lead to that kind of a strong outperformance in the European market for us.
So please, I told you that in the month -- in the previous quarter, even if the registration were up only 0.4%. There was an increase in the production car in Germany of 42%. And so from that point of view, they are increasing the stock due to the fact that first of all, if you compare this quarter compared to the previous of the last year, you have to consider that the last quarter -- the second quarter of 2021, 2022, when lack of semiconductor impacted in important way.
And so in this moment, from my point of view, they are -- the market is recovering, but only for the premium car because continues to be a critical situation for the semiconductor and all the OEMs are using the semiconductor, the semiconductor only for the premium cars. In fact, if you analyze the profitability of everybody, the OEM in Europe, even if they are doing important reduction of volume compared to the previous year, they are increasing the turnover and also the profitability. And so the situation of the market is we are not in the euro market because we continue to have a problem in terms of semiconductor and those so let me say, please consider that in this moment, we have more or less 10%, 11% of inflation.
And so also, the demand is very weak. But from our side, from Endurance, I'm pretty optimist for the future 6 months, only for one reason. Because we are in the production with several new products for the electric component. And please consider that in the previous quarter that the pure electric vehicle reached a market share of 11.9%, 22% more compared to the previous quarter.
The -- in the [indiscernible], the plug-in hybrid technology reached 8.5%. So the situation is unbelievable because in Europe it is more than 20% of the market is completely [indiscernible]. And so as you know, in Europe, we started in 2015 with this technology. And in this moment, we are having a benefit in our product mix. And also for the future months, I believe the situation will be the same because for specific products as for example, Porsche, we are working 6 days per week.
We have the next question from the line of Pramod Amthe from Incred Capital.
First one, with regard to the -- considering that you are increasing the ABS production and also Maxwell needs to be gaining orders. How do you see your import contents going up in the coming years, first? And second is related to the same is to neutralize that, would you be looking at more export opportunities in the coming years so that we can balance it out in a better way?
Yes. See, I will talk about the ABS and then I think for the BMS can be answered by Akhil Aryan. As for ABS is concerned, one, I think import substitute, which we have done is by setting up a facility in-house for valve manufacturing development, which is going to be a very good saving for us and very profitable. But what will continue to be -- but we're not importing I think the EC, right? That is coming from Mando HELLA in Chennai.
So actually, for ABS, we do not have much of an impact, if you ask me in terms of imports because Mando HELLA is supplying us the ABS shoe from their plant in Chennai. And we have -- and I think from next month or from -- I think from this month end, we are starting a valve manufacturing in-house with the technology by itself, where we not only it will be an import substitute, but at the same time, we would save -- I mean we'll increase the margin because of this. And it will be pretty good, the margin.
So we don't see an issue on ABS as far as imports are concerned because we like to be self-sufficient as soon as possible. When we start some of these high-end products. We like to do it in-house. That's why I talked about aluminum forgings and steel braid hoses in the past. So ABS, I don't see an issue. But as far as BMS is concerned, I think I will request Akhil to answer that.
Yes. So look on -- when you get into the domain of designing and manufacturing advanced electronics like Maxwell is. Unfortunately, the reality today is that there are not many global semiconductor companies who have set a shop in India. I think India is actively now as a country trying to overcome this. Of course, that's a bigger discussion. But in the context of the BMS product, we will have to continue importing the semiconductor components, right?
So your controllers and -- there are, of course, active as well as passive components, some passive component can be sourced locally, but a lot of the active components, if we want to build world-class products, then more often than not, we have to rely on international semiconductor suppliers, like say, a Texas Instruments, some Microchip, NXP and so on. And most of them don't have any presence in India. So we will have to continue importing that. They are -- I think that they are -- they had, of course, initially set up shop in multiple places around the world, but they are also derisking themselves after the whole China scenario as well as COVID thing happened. There are sort of new plants in and around not only India but also derisk themselves outside of China.
But anyway to answer the question in short form, I would say that we will -- we, as in, as we start setting up a manufacturing plant inside of Endurance for manufacturing and assembling our own electronics, Endurance will most certainly be placing orders on Maxwell's behalf to import some of these components. And as the volumes for Maxwell pick up, unless there are ways in which India as a country overcome the semiconductor dependence on other countries and these large semiconductor companies set up shop in India, I would say, for the foreseeable future, at least for the raw material of semiconductors, not the PCB or the assembly, we will have to depend on that and so import will continue.
However, I think from a strategy standpoint, we are very aggressively looking at the international growth because like I said, for us, we focus on either high-volume business in India of high margin business in Europe, and also in the U.S. So we have now created a dedicated team that is -- dedicated like a team, of course, we had smaller company. So we've a small, dedicated team that is focusing on winning business in Europe. And we are focusing not only on the 2-wheeler market there, but really also looking at industrial equipment like forklift excavators, and so on because a lot of those industrial equipment are going from diesel to electric in Europe as we speak right now.
Sure. And related to that, itself was the -- you addressed for your own axle for export opportunity. I wanted to chat with Anurang on the broader theme of [ euro plus 1 ]. How are you looking at the power crisis giving you any opportunity to build your export business from India for metal forming as in the medium term? Any thoughts on that?
See, our strategy right from when we did the acquisitions in 2006 is that we don't want to try and substitute -- be a substitute for our business in Europe. We want Europe to grow. I am so happy they have grown 25% this quarter. But we don't want to come in the way. Our exports have been on our own through certain companies like GETRAG, for example, for GETRAG. We've been supplying to them for many years.
Of course, this year, they have been down even last year, they were a bit down, but we're getting new business from them. So we have our own exports to Europe. But we don't -- our strategy is very clear. We don't want to come in the way of our European operations to try and take their business or try and take the customers unless we both agree that it makes sense, it should not go to a third party, and then we take business. It's fine.
But even if you see the sea freights were so high, now it's coming down. It was not viable to export. If you see in the last 1 year, the sea freights just doubled or maybe even more. So it didn't make sense, so people were not even looking at India, to be honest. But yes, to answer your question, we have enough business opportunities here. In fact, we are -- like I said in the last call, last quarter call, we've got a good business from Sanmina, which is JV with [indiscernible] for the castings required for their [indiscernible]. We've got a good order from Generac for their gensets for exports to the U.S. So yes, I mean, we have enough profitable business here to deal with. So we refer to come in the way of our European operation. So that is our strategy for the future.
We have the next question from the line of Arvind Sharma from Citigroup.
Am I audible, sir?
Your voice is breaking. I would request you to use your handset or come in the [indiscernible], please.
Sure. Can you hear me now?
Yes, yes. Now we can hear you.
Sir, 2 questions. First, on the domestic side of the India business. Can you please give some details on the driveshaft dry shaft business? What's the current revenue and what are the revenue opportunities there? That's the first question. And second question I'll ask after this on the European business.
No. Okay. Second question was, sorry, I didn't hear the second one clearly.
Okay, I'll ask that right now. On the European business, what was the PAT for this quarter? And how do you think that the energy prices would perform over -- can you give some idea, but over second half, how much can be the expected decline or easing out of the energy prices? So those 2 questions.
Arvind, the PAT in Europe for quarter 2 was EUR 1.7 million. On the energy cost, Mr. Venuti has explained in detail. So I'm again requesting Mr. Venuti to explain in a nutshell what he explained about the energy cost, how we see it panning out.
So Massimo answer that one.
Massimo, can you answer that again?
For sure. So as I told you before, in the second quarter of this financial year, we have had a price of energy of EUR 472 per megawatt and EUR 208 of the gas. In this moment, the future for the Q3 show to us EUR 300 for the energy and EUR 120 for the gas. And so the situation is improving at this moment in terms of price. But in this moment, it's not possible, as you can imagine, to fix the price. And so we are living day by day. But in this moment, the price is going down compared to the previous quarter.
For this reason, we are optimists due to the fact that, first of all, there is a reduction and second, we are receiving incentive support from our customers and also from the government. From my point of view, as I told you before, in the next quarter, the profitability of the overseas will grow compared to the previous year.
And on the India driveshaft business, sir, the revenue for...
Yes. See -- yes. So on the driveshaft business, I'm just checking -- I'm just [indiscernible] somebody would check the figures where we already started with Bajaj and Mahindra, TVS, we are starting in the first quarter of next financial year. I would not like to give you any wrong figure, but I will -- let's see if I can get back to you during this call itself. And what is the sales figure we are, I mean, expecting to do because we started this in July of this year.
We have the next question from the line of Ashutosh Tiwari from Equirus Securities. Tiwari, I have unmuted your line, kindly proceed with your question. Mr. Tiwari.
Am I audible?
Yes, yes. Now we can hear you.
Sorry. So firstly, on the margin side, you mentioned that from next quarter, the raw material prices should come down, [indiscernible]. So will it lead to margin expansion or already, like say, second quarter, we got the pass-through and all or some pass-through remaining with the customers.
So normally, we do get the pass-through, but I would not say it is this is 100%, but -- because they don't address see different customers, see aluminum steel, everybody will address. But there are so many other components like rubber and there are centered items, there are -- so everything will not get addressed. But I would say almost 90% does get addressed, and it's all customer to customer. But that is something which we have been used to for since the beginning. So it's not something which is new, which is there. But to answer your question, largely, it is addressed quarter-to-quarter. Only the amendments, some of them come early. Some of them come later. But the amendments do come.
So you mean to say that by, let's say, that from third quarter margins should improve from Q2 levels. .
Yes, that's a focus to keep improving the margins.
I am asking this question because if you look at, I mean, now the revenue versus pre-COVID has gone up, we are probably operating at the highest ever revenue on a quarterly basis, but our margins are significantly below what they should do earlier, standalone I'm talking about. So can that normalize? And then what is the target range you are looking at, say, over the next [indiscernible]?
See, when we had margins of 14.5%, 15%, that time the RMC percentage was 62% to 63%, okay? Right now, this last quarter, which is July to October, we were 67.2% and 67.6% in the first quarter. So as these raw material percentages go down, it will have a direct upward impact on the EBITDA margins, the percentage. So you will see that improving. And definitely, the trend is downwards now for sure. And that is clear from all commodities because we're also buying it for our suppliers. So it's for sure. So this will, of course, positively impact the EBITDA margin perfectly. As raw material goes down, the commodities go down.
And secondly, on this aftermarket sales, while there was growth in the first half versus last year, there is a small decline of 5%, if I look at the second quarter. So how should we look at this aftermarket sales going here because even the base in the second half of this year is -- for last year is literally higher. So how should we look at aftermarket over for the full year perspective?
This is mainly because of exports. One is for Sri Lanka, which was a good country for us for exports. And so that was one, and Bangladesh, and third is Egypt. So we were impacted in these 3 areas. But what we have done is that our aftermarket is going through this merchant export route with these people who are in India because see, we cannot risk the payments because that we are -- we cannot have any outstanding debts and stuff like that. So of course, there has been a financial crisis in Sri Lanka, which is a good country for our aftermarket products, Bangladesh, and Egypt. In Egypt we are seeing signs of improvement. But what we have done is we are going through this merchant export route. So that decline you see is mainly because of exports. [indiscernible] remarks. We're adding 4 new countries now in the next few months also. So -- but overall, there will be growth. This quarter 2 is only because of this reason. We'll see a good growth in aftermarket.
Okay. So I mean maybe the issue this year may not be very high growth. For next year, we can expect growth will be bigger, right?
Yes, yes, for sure, for sure. See, that's why there are, like I said, there are external factors, which are not in our control. So Sri Lanka, Bangladesh and Egypt is one of those factors. But let me tell you, as far as the profitability is concerned, there is no compromise and getting our payments on time. That is something which is not going to be impacted.
Okay. And lastly, on the ABS side, how much revenue we would have done in the first half or maybe a broad range for full year?
Normally, I don't give individual product-wise revenue. So I've got total volumes, though. We have now reached 28,000 to 30,000. We'll lose 33,000 from Jan to the next month, we should see a dip because we block closures, like I said. And we're adding another 200,000 ABS for dual channel also so -- but I can't give you individual -- we have not been saying that we don't decline product volume.
[indiscernible] capital come up in Q4, [indiscernible] capacity of dual channel?
The total revenue start from Q1 -- we'll start from Q1 because the lead time is there, there are some important machineries. So it will be more up towards end of Q1 because the imported machineries will take 6 months to come. So we gave the order.
And 1.2 million, you said it will come up by second half?
Second half of 2024.
Calendar year. Calendar or financial year?
It will be in the second half financial year.
So by about March '24.
Sorry. So it will be more towards the third quarter of 2024. I mean when I say third quarter, means of -- okay, or it will be the fourth quarter of calendar year, if you say 2024.
Fourth quarter of -- this is December 2024, yes.
Calendar year 2024.
Yes, calendar year, yes.
We have the next question from the line of Aman Agrawal from Carnelian Capital.
I have 2 questions. First is on our incremental capital allocation. So in past, we have allocated the capital very wise again that has led to sales growth and profit growth for us. So going forward, sir, which area are we looking to allocate more capital. Will it be more towards agnostic products like driveshafts and all, or will it be towards EV-related products like the BSM and all? Or will we be focusing more on in the EV opportunity. So like increasing the EV share?
So it's a combination of everything. I think drive shaft, we have enough of capacity. But see, that's still a smaller business right now. It's not, in fact, such a large business. And that CapEx, we have already done. So I don't see there's much of CapEx there going at all. The focus, of course, will be on the high-end suspension, on the brakes business, on the machine casting business also for 4-wheelers, adding more and more machining -- fully machined in castings.
EV, of course, will be a major focus for us, but that's a part of the suspension, brakes and casting business. We'll -- of course, we're investing in our own assembly lines for the BMS. We hope to start in the first quarter of next financial year. Target is April now, '23, which will help us really improve our margins also on the BMS, rather than buying from outside. The strategy we have followed for 12 years.
So critical operations we like to do in-house. So I think the major -- see, we'll go for anything which is profitable growth. So all these -- all this, like I told you, whether it's suspension, brakes, machine castings, backward integrations also which are happening towards hoses and aluminum forgings, you will see more going. So I think it will be in all areas where the business opportunities are coming for us.
Understood, sir. And my second question was on this new technology evolving in casting globally, called 1 die casting or integrated die casting. Where some of the players at Tesla are basically using a large machinery to cast the EV machine at once like the overall structural body of EV at once. So like in terms of our European business, like do we see this as an opportunity, a threat? Or how do you see this in terms of our European business?
I will request Mr. Massimo Venuti to answer that. Massimo?
Yes. So for sure, the new technology of the [indiscernible] die casting is absurdly interesting for the production of [indiscernible]. But in this moment, all the European OEMs are investing in this technology, not the supplier because it's not possible to move -- to transport this part. So this will be a technology from a point of view that can ensure so the OEM. In this moment, also filing with the supplier of the [indiscernible] machine. Only the big OEMs are trying to implement this technology because as you know, this technology is very well known in China and also in U.S. because of the technology [indiscernible]. I don't believe that this could be an opportunity for Endurance in the short time.
Ladies and gentlemen, that was the last question that the management could answer today. I would now like to hand the conference over to the management for closing comments.
No, I don't have anything further to add. I mentioned in my opening remarks what I had to say. Only one thing I would like to say that we are very, very positive about the future.
On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.