Endurance Technologies Ltd (CN)

NSE:ENDURANCE

Earnings Call Transcript 2024-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Endurance Technologies Q4 FY '24 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this call is being recorded.

I now hand the conference over to Mr. Nishit Jalan from Axis Capital Limited. Thank you, and over to you, sir.

[Nishit Jalan, analyst]

Good morning, everyone. Welcome to Q4 FY '24 Post Results Conference Call of Endurance. We are pleased to host entire management team of Endurance. 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; Mr. Raja Kal Katri, Group CFO Designate; Mr. Rajendra Amanda, COO Designate; and Mr. Raj Mundra, Treasurer and Head, Investor Relations.

I'll now hand over the call to Mr. Jain for his opening remarks, post which we can have Q&A. Over to you, Mr. Jain.

[Anurang Jain, executive]

Thanks a lot, and good morning to everybody. I would like to share details of how we have done in the fourth quarter of FY '24 and in the financial year FY '24.

In India, in the fourth quarter FY '24, as pecan data, the 2-wheeler industry sales grew by 25.87% compared to the previous financial year. Scooters grew by 21.82% and motorcycles grew by 28.21%. The automotive industry in India had a growth of 20.5%.

In Europe, in Quarter 4, there was an increase of 4.4% in the European Union automotive sales. On the financials, I will first brief you on the Quarter 4 of FY '24 and then the financial year FY '24. In Quarter 4, our consolidated total net income grew by 20.2% and was INR 27,113.14 million as compared to INR 22,551.54 million in Quarter 4 of the previous financial year.

Consolidated EBITDA grew by 35.8% and was INR 4,159.36 million as compared to INR 3,062.1 million in Quarter 4 of FY '23. Consolidated EBITDA margin was at 15.3%. The net profit grew 54% and was INR 2,101.54 million at 7.8%. This includes the Mara state mega project incentive in Quarter 4 of INR 203.34 million.

In Quarter 4, our stand-alone total income grew by 26.1% and was INR 20,931.19 million as compared to INR 16,595.76 million in Quarter 4 of FY '23. Stand-alone EBITDA grew by 51.5% and was INR 3,802 million as compared to INR 2,058.34 million in Quarter 4 of FY '23. The EBITDA margin was at 14.9%.

Stand-alone net profit grew by 74.4% and was INR 1,823.13 million at 8.7%. This includes the Marash state mega project incentive in Quarter 4 of INR 203.34 million.

For FY '24, the full financial year FY '24, our consolidated total net income grew by 16.7% and was INR 103,264.86 million as compared to INR 88,494.73 million in FY '23. This was the first time that Endurance Technologies crossed the INR 100,000 million mark.

Consolidated EBITDA grew by 30.7% and was INR 14,135.99 million as compared to INR 10,816.93 million in FY '23. Consolidated EBITDA margin was at 13.7%. The net profit grew by 41.9% and was INR 6,804.8 million at 6.6%. This included the Mara State mega project incentive of INR 792.35 million.

In FY '24, our stand-alone total income grew by 16.6% and was INR 79,204.71 million, as compared to INR 67,957.07 million in FY '23. Stand-alone EBITDA grew by 30.8% and was INR 10,557.83 million as compared to INR 8,074.34 million in financial year '23, with EBITDA margin at 13.3%.

Stand-alone net profit grew by 43.7% and was INR 5,877.93 million at 7.4%. This includes the Mara state mega project incentive of INR 792.35 million. There was no net debt, and there was a consolidated positive cash available, which has crossed the INR 5 billion mark, and it was at INR 5.044 billion. The detailed financials are available with the stock exchanges and on the Endurance website.

I would now like to share certain key points for the financial year FY '24. 77% of our consolidated total income, including other income, came from Indian operations and 23% came from a orphan operation. In India, in FY '24 INR 11,980 million of new business was won from OEMs other than Bajaj Auto, which included Royal Enfield, Hero, Tata Motors, HMSI, Jaguar Land Rover, Hyundai, Mahindra, Tata Punch Powertrain and Suzuki.

This business win of INR 11,980 million constitutes 8,248 million of new business and INR 3,732 million of replacement business. This INR 11,980 million of business will reach peak sales in FY '27.

The total 4-wheeler business win in FY '24 is INR 2,810 million, which is 22% of our total auto wins in FY '24. These orders are mainly from Tata bunch powertrain, Tata Motors, Mahindra, Gadwalandan Rover and Honda. I would also like to mention that we are in discussion for INR 18,440 million worth of request for codes from OEMs.

Since FY '20 in India, INR 4,857 million of business has been won out of which INR 29,306 million is new business and INR 11,551 million is replacement business. Out of INR 29,306 million new business, INR 26,900 million is expected to reach peak sales in FY '27 and is mainly for suspension, castings and brakes.

DS business win has been INR 5,320 million till date and is growing. The business win is largely for brakes, aluminum alloy deals and suspension. The INR 5,320 million sales will peak in FY '26. The total business win for electric vehicles will go to INR 7,145 million. These orders are mainly from HMSI, which is Honda, scooters and motorcycles, Wecenergy, Bajaj Auto, Zero Electric, is electric, which is Amp, Tata Motors, Browns and Aptiv. This is apart from INR 3,785 million business win by a subsidiary company.

Significant new business wins in this year are -- I mean, with wins in FY '24 are, we have INR 790 million of new business from PBS in FY '24, which included INR 309 million of inverted Fund Fox and RiaMonehocks suspension business and also INR 404 million of the PBS rider and HMX bikes front fork and Restock business, with SOP is planned in August 2024.

We have also won INR 1,750 million of new business from Euro Motor pop in FY '24, which includes inverted front fork new business win of INR 240 million and SOP is planned in June 2024. The brake assembly new business of INR 263 million, and this SOP has already started in April of 2024, and the front and rear shop absorber business of INR 1,247 million, and this business has also started.

We have won Suzuki's new scooter transport business of INR 253 million. This is an addition to the INR 1,400 million fund for business already won the previous year, and the SOP of both will be in Quarter 3 of this financial year. We also won the Honda scooters and motorcycle brake assembly new business of INR 294 million and the SOPs planned in Quarter 3 of FY '25.

We have won Royal NPEs allow new business of INR 961 million and SOP has also started. We have won Tata Motors punch powertrain 4-wheel aluminum casting new business of INR 1,026 million to INR 582 million. SOP has already started for its first project and INR 444 million second proposed Project SOP is expected in Quarter 3 of this financial year.

The new 35 suspension inverted front or forks will supply to and Astea will start by quarter 3 of this financial year with the help of TM technology from our Valucrangaba plant. The value of the business will be INR 400 million per annum and will be exported to Kin Austria.

We've also won INR 876 million per annum business from Hyundai for aluminum castings, which SOP is in Quarter 3 of FY '27. HCMS has awarded us 2 new businesses in Quarter 4 of FY '24, which are 100 cc motorcycle front for e-shop absorber business or INR 343 billion per annum, which SOP is in February 2025.

We also won the first EV scooter front for soccer business, which SOP is also in Quarter 4 of this financial year. For EV scooters, we are ramping up our sales to 240,000 sets per annum of aluminum castings, which are applied for electric vehicle battery packs and motor housings. The total value will be INR 1,000 million per annum, which has already started and will reach peak sales value in this financial year.

For AB 3 wheelers, we have won new business for case transmission and battery housing castings of INR 200 million per annum, which will peak in FY '26. Our customers recognize us as a trusted and capable partner in the value chain in terms of both technical and financial.

The electronic vehicles market offers significant opportunity for growth in the future with the auto component sector. As you know, Endurance have executed a share subscription and purchase agreement for acquiring 100% of equity share capital of Maximum Energy in a phased manner, we have last year increased our equity space to 56 Maxwell as per our agreement.

Maxwood is in the business of advanced electronics, particularly in the battery management system for 2-wheeler EVs and for automotive and 2-wheeler battery packs. At Maxwell, we BMS business, Battery Management Systems business of $793 million in FY '24 and have a pipeline of RFPs of more than INR 1 billion. Till date, since FY '22, INR 3,785 million business has been won by Maxwell. Despite the later strength in the EV market, we believe that these orders will help us achieve sales in excess of INR 2,500 million in FY '27.

With the current order book, order pipeline and technical strength, both Endurance and Maxwell, we are confident of achieving our goals in this advanced electronics space.

As the Disbrake assembly business is growing with addition of customers like Bajaj, TVS, Royal NPL, Yamaha, EuroMotocop, AC as well as HMSI. Our second plant at Balu Orangabad has been set up for this increase in volumes and has started SOP last year. We have already started the display Casselli supplies to Hero MotoCorp from April 2024, and the supplies to Honda scooters and motorcycles will start from Quarter 3 of this financial year.

With this new plant, we have already reached a run rate of disc SMD volumes, which have increased to now 6.2 million numbers per annum and break this to 28.1 million numbers per annum. As you are aware, the supply of 2 miles assemblies to Bajaj Auto and Royal Enfield have started. We have reached a run rate of 400,000 ABS assembly panel.

As you are aware, the competition is mainly from Bosch and Continental, which controls a major market share in the Indian ABS 2-wheeler market of approximately 3.5 million number of motorcycles, which needed per annum. We are now in the process of supplying our dual-channel ABS from July 24, 2024.

Today we are doing only single channel, and we have scaled up additional assembly lines by increasing the capacity by another 240,000 ABS assembly style, which has taken now the total capacity to 640,000 ABS assemblies panel. We are further planning to increase this capacity to 1.2 million single and dual channel ABS assembly panel for the second half of FY '26.

We have also, as mentioned earlier, in March '23, started manufacturing the ABS valves which is not only a technology component, but has helped us to substantially lower our costs. Due to increased orders in alloy yields from Bajaj Auto, Jamai India, TBS and now Ronnie, we have added a new plant, as you know, in July '22 at Chakan to help increase our supplies to 4.5 million bits per annum, which we have already reached.

Now with the new order wins from Royal Enfield and TBS, we are now expanding to supply and 5.5 million be pan and the SOP has already started for April '24 for Royal in and EBS will start from the end of this first quarter of FY '25.

As far as Europe is concerned, till date in FY '24, we have won EUR 13.8 million business, mainly from the Volkswagen Group, including Porsche and Audi and Mercedes Benz. In the last 24 months, out of EUR 115 million order, EUR 61 million orders are for the growing battery EV business and EUR 35 million are for hybrids.

In 2023, the battery EV penetration in Europe has been at 15% and hybrids at 33%. We are, therefore, well placed in terms of securing orders for this growing segment.

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 products, organic and inorganic growth. At Endurance, our future focus will be on the following projects for a better product mix and better profit margins, increase our 4-wheeler share of consolidated business from 25% now to 45% by FY '30.

This increase is going to come from aluminum castings and aluminum forgings as we are going to be increasingly used for lightweighting as we can see now, and also from proprietary products through acquisitions, joint ventures and technology agreements. We will be focusing on increasing our share of business for the premium bikes 150cc and above for our brake assemblies and ABS suspension as well as place assemblies with upgraded product technologies and process.

We will focus on increasing our business for electric vehicles with existing and new products. We will also increase our embedded electronics business by becoming a significant player in the future for battery management systems and electronic products required for EVs and other applications.

We will focus on nonautomotive business, which has large opportunities, especially in aluminum castings. We are now in the process of setting up a new plant in the 11-acre land at Orangabad, 17 kilometers from the Orangabad Airport, where the SOP will start in Quarter 1 of FY '26, which is the next financial year, where our focus will be on 4 wheelers, including 4, 4-wheeler parts and nonautomotive aluminum casting business.

The total CapEx is expected to be INR 4,009 million, which will be spent in stages from now to March 2028, with a sales expectation of more than INR 5,000 million per annum. Our focus also is to reach 10% of India sales in our aftermarket business in India by FY '28.

In FY '24, our aftermarket sales grew by 6.92% from INR 4,310.9 million in the previous year to INR 4,609.36 million in FY '24. With 3 more countries added to our network, we are now exporting our aftermarket parts to 34 countries.

Aftermarket sales growth is a large focus area for us, and we are targeting a good growth in this financial year. In FY '24, the export sales for India standalone business grew by 4.43% from INR 2,116.2 million in the previous year to INR 2,210.76 million in FY '24. The sales growth came from 2-wheeler suspension exports for KPM plants in Austria, China and Southeast Asia and from the aftermarket export sales.

On the environment front, I would especially like to mention that Endurance is striving to be in carbon glutinous plants, effective use of solar power and wind parks creating carbon sinks by driving tree plantations and thereby creating dense forests and driving use of natural gas and LPG in place of electric power and furnace oil.

The use of burners oil has been completely stopped now. We have achieved now a carbon-neutral percentage of 35 in this -- in the financial year FY '24. And the aspiration is to reach a carbon-neutral percentage of more than 50 by FY '30. This has increased from a carbon neutra percentage of 22.6% achieved in FY '23.

We are also focusing in lowering hazardous waste generation and to achieve 0 waste to land. At Endurance, it will be our continuous endeavor to grow through organic and inorganic growth with a focus on technology upgradation, quality improvement cost as well as our focus on environmental health and safety. We will do our best to fulfill 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 new large business wins in the last 4 years, including for electric vehicles, both in India and Europe.

With these opening remarks, I would now like to invite questions from all of you. Thank you.

[Operator]

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

[Jinesh Gandhi, analyst]

Congratulations on excellent quarter results. A couple of questions from my side. First, if I look at the India business, margin has been a very sharp improvement ends for incentives. What are the drivers for the same -- any one-offs in the margins and at substrate margins?

[Anurang Jain, executive]

You are talking about India as -- okay, yes. So India margins have been largely helped by the increase in our volumes and the improvement in the product mix. At the same time, there has been an approximate $200 million impact -- I mean, again impact both on the client as well as on the vendor side because we have got a onetime gain of INR 200 million. But largely, it has been because of the good volumes we have seen and the product mix has been improving every quarter. So that's the reason for it.

[Jinesh Gandhi, analyst]

Okay. So no one-offs there status this INR 200 million of incentives, 13.5% margins are still, I mean, driven operationally in the one-offs there?

[Anurang Jain, executive]

Well, I'll only tell you that we will continue to do our best.

[Jinesh Gandhi, analyst]

I understand that you don't like for margin, but there's just some -- and directionally, our mix is improving and there is recovery in the plans as well. So that should also aid margin recovery process.

Secondly, if I look at the European business, so there has been -- the new order win has slowed down considerably in the last 9 months. Is this largely a reflection of slowing EV sales in EU or there's something else what you're seeing there?

[Satrajit Ray, executive]

Jinesh, can you repeat your question because the audio is somewhat unclear.

[Anurang Jain, executive]

It's very unclear from your side. I could understand it, but Massimo could not understand it.

[Jinesh Gandhi, analyst]

The question is on Europe about the new orders and have slowed down considerably in the last 9 months. So what are the reasons for that?

[Anurang Jain, executive]

Two auto rains have slowed down. Yes.

[Satrajit Ray, executive]

So in the previous financial year, we acquired only EUR 31 million business. And we reduce this less compared to the previous year, but considering the situation into the market from my point of view is a very important result also because we acquired business for the strategic project of Mercedes assemble line.

So the total acquisition reached EUR 250 million in the last 5 years. And so more or less, the total turnover of Indonesia. So I'm really optimistic for the future, and you will see an important increase of volume in the next financial year due to the business acquired in the previous 3, 4, 5 years.

[Jinesh Gandhi, analyst]

Okay. Okay. And Massimo, on the European business, margins were also flat on a year-on-year basis despite sharp decline in energy costs. So what offsetting of the minister of pure energy costs on the margin rate?

[Massimo Venuti, executive]

Yes or an like the last quarter of year that is the same of the first financial year. But please consider that in the previous financial year, January, March 2023, we received -- we had from the government 45% of grant for the energy cost. And also in the previous financial year, we received money from the customer for the impact of energy cost of the total previous financial year.

And so if you compare the profitability of the previous quarter compared to the previous financial year, from my point of view, we are growing more or less 2% of EBITDA compared this year. From an intent point of view, we are doing better compare previous year. In fact, if you analyze our profit and loss, you will see a reduction in the material cost of 12% compared to the previous year, more or less with the same turnover, an increase of other expenses of 26%.

The material cost is due to the fact that we are producing a lot of part only machining. And as you know, in this case, the profitability is higher compared to the -- okay? And with the other expenses, the increase of the previous financial year is linked to the increase of energy cost due to the fact that in the previous financial year, we have this grant from the government and the customers. So the profitability in this quarter was very good compared to the previous financial year.

Speaking about the total financial year, we closed with 16.1% of EBITDA, combat 14.5% of the previous financial year. And please consider that even if the energy goes down in an important way, we have continues to pay more or less the double 3x compared the recovery situation. And this affected our EBITDA of more or less 1.8%. And so if I do have a statement of the EBITDA in this 1 Europe, we have more or less 17.9%, 18% of it.

[Operator]

Your next question is from the line of Mumuksh Mandlesha from Anand Rathi.

[Mumuksh Mandlesha, analyst]

Congratulations strong results. Just on the intent part, will there be an intensive sir, like last quarter, we saw?

[Satrajit Ray, executive]

Can you repeat the question? The audio is not audible.

[Anurang Jain, executive]

He say, will the inset also in FY '25? The mega project.

[Satrajit Ray, executive]

Yes. This is Tim explain. We are looking at the incentive scheme of FY '13 to FY '19. So in the last year, we have booked close to INR 79 crores as incentive. So in the current year that FY '24, '25 under megaproject incentive team of 2013 to '19, we expect to book something around INR 30 crores plus/minus in that region. So I hope that answers your question.

[Mumuksh Mandlesha, analyst]

Got it. And it would be like spread out equally sir, across quarters?

[Satrajit Ray, executive]

No. Normally, the way we see, as you know, this incentive is paid by government based on our GST paid sales in the state of Maharashtra. So therefore, this appetite is normally consumed over 1 or 2 quarters. So I don't expect it to go beyond the second quarter. But also, there would be incentive for 2019 to '24 scheme as and when we apply as and when we get approval, but that is not within the purview of this discussion right now.

[Mumuksh Mandlesha, analyst]

Got it, sir. Just on the next question just on the new capacity. We announced for the 4-wheeler and non-auto rate of $200 million of per annum potential -- any other the order wins we have already won for the plant?

[Anurang Jain, executive]

See, this is an activity we started actually at the beginning of this calendar year in January 2024. I cannot disclose that much to us or the wins that will be correct at this stage. But let me just give you just a brief idea of what we are doing.

These are basically for 4 pillar parts with a EV focus and a technology focus. This also has nonauto parts would be for segments of 5G 6 ATVs, 5G telecom, like I said, and other industrial areas. These will have special, I would say, special processes.

It will have automation, very good surface treatments and there will be self-sufficient sales with minimal handling because largely, this project will be for exports. So I'll just leave it at this. But definitely, to answer your question, already, we have order wins and that's the reason we have committed to this project, which will start in Quarter 1 of FY '26.

And only the buildings that construction has started. So as you know, our strength is in aluminum diecasting and machining. So we are very well equipped with our own engineering skills and no room and over 35 years of experience in this line. To explore these new opportunities, I've already told you about the 4-wheeler focus and the nonautomotive focus. So this is in line with that kind of focus and strategy, which we have for the future.

[Mumuksh Mandlesha, analyst]

Got it. So this helps. So on the CapEx side, what the guidance is there for FY '25 and '26.

[Anurang Jain, executive]

Please the CapEx will be we have done a CapEx of about INR 3,833 million in FY '24, which was 81% of growth, which included drilling and machinery and pipes. Rest was, of course, in quality process efficiencies. There was also routine feed there was additive.

Next year, the figure should be similar to about say INR 4,000 million -- we don't -- at this stage, unless there are new opportunities, this is a very dynamic situation. So practically, we see we will say that we'd spend a similar kind of money because we have this new plant also coming up at ORIC plus we have very, very key investments in our growing business of brakes and oil deals as well as suspension. So that's the kind of figure that we are talking about.

[Mumuksh Mandlesha, analyst]

Got it, sir. And just lastly, sir, any growth outlook for the disc brake and alive for FY '25, sir? Revenue growth outlook, sir, for the segments.

[Anurang Jain, executive]

Already, the capacity in Los of $5.5 million I have mentioned. And I can only leave it at this that there are huge which not only potential but large requests for increasing the alloy sales. So we are looking at it in a very serious manner as far as alloy is concerned.

And your second question was on brakes. Brakes is the fastest-growing segment we have. And the requirement is just -- I mean, -- in fact, our head for brake was telling me, in April itself, we have crossed, I mean, the volumes based on our plan, which we had for our budget.

So because we have a huge requirement to fulfill the uptick in large number of orders. So brakes is really growing, I would say, very, very well.

[Operator]

The next question is from the line of Pramod Amthe from InCred Capital.

[Pramod Amthe, analyst]

So the first question is, if I look at your Slide 8, where you talk about EV order wins for India, there seems to have slowed down drastically in FY '24. I can understand it is a function of the industry activity also. So what are your customers looking at? And how are you planning to address this if the -- for the medium term?

[Anurang Jain, executive]

See the way we look at it is we follow the -- minor customers and their requirements. We ensure that we are connected with all the OEMs, especially in the 2 and freewill space and, of course, also in the 4-wheeler in terms of aluminum castings.

And looking at their plan, whatever is their business plan or -- so we basically do our best to take orders based on that. Definitely, the frame 2 subsidy in India where a large part of the subsidy went out was taken away, I think, in July 2023, has definitely affected a lot of 2-wheeler EV OEMs who were lead who were like in the top bracket in the head. But we'll see how it plays out in the future.

I can only tell you that we talk about, say, Honda and okay, I say we talked about any 2-wheeler OEM, which is going into its EV platforms. If we are not in the first, we are at least there in the future plan. with some, we are right from the first plant.

So I would say that if you see that the orders have lowered, it's a function of how the industry is doing. But nowhere are we going to lose any opportunity on the EV front because that's a very large growth area for us. And also our Maxwell business is a launch to do with EV.

[Satrajit Ray, executive]

Is there a question on India or Europe?

[Pramod Amthe, analyst]

Had on India, I wanted to follow up on the Europe also.

[Anurang Jain, executive]

So I can fully tell you that we are highly focused. We are connected to all the OEMS. And we are really doing our best. We have taken a good amount of orders. And of course, sometimes the LOI showed lower volumes as the volumes increase, the value will increase. So we'll see how it goes. But we are not leaving any stone unturned to take orders. So this is to answer such is a function of key industry and how it's functioning.

[Pramod Amthe, analyst]

And the second related to India business or stand-alone, if I just for incentives, still the gross margin expansion is pretty comfortable and it seems to be the raw material has come down for the first time from that 6% to 6%. Do you feel structurally you are back in that zone or it's a one-off? And hence, you still have to work on it to get the gross margins back to the olden days?

[Anurang Jain, executive]

See the whole question, which happens is that while I don't like to talk about the percentage of the gross margins or EBITDA margins is because it all depends, like I mentioned earlier, we are focusing on product technology and ensuring that the product mix is increasing in all the areas, and we are looking at new areas, which has helped a lot.

What work we did 1 year, 1.5 years ago has paid off in quarter 4. At the same time, also I mentioned about the volumes. As you know, we are 80% in India on -- with 2 2-wheelers, which I would say in the last 2 quarters has done very well. And what I -- and what I'm seeing in April doing very well.

So the question is the product mix and volumes will definitely help in our EBITDA margin, but I also mentioned there was INR 200 million onetime gain, which has come both on the vendor side and the client side. So that may or may not come in future. So I can only say that we will do our best to see that we do our best on the margins. We'll continue to do our best.

[Pramod Amthe, analyst]

And coming to the European side on the EV front, I think there has been a lot of recent noises about the slowdown in the EV penetration. So considering that, how are you looking at your order book wins to be consumed this year, one.

Second, do you see any opportunity for any M&A in this space in the medium term to add considering this confusion in the marketplace?

[Massimo Venuti, executive]

Okay. So Europe parting from September 2023, there was an important reduction of the registration of electrical vehicles due to the fact that a lot of countries stopped this moment on for without the incentive, it's very difficult to sell a car with leverage of price very high compared to the general market.

And this is the reason why they are waiting -- everybody are waiting the new election in Europe to understand which will be the situation in the future. As you know, a lot of OEM in the last period of time officialized that they will continue to invest also in the internal comms range.

Bigger amount Endurance from my point of view, we are in a strong position due to the fact that we have already in standard production propose for the PI project. So starting from April of this financial year, we are already to reach more or less 50% of the total peak capacity of the business already acquired for the electrical vehicle.

And please consider that in the previous financial year, we did EUR 62 million of investment in order to sell this product capacity Mantel, the cash free, so it means that we invest. We spend this money with our cash profit.

Speaking about the future 12 months. In this moment, we have seen an important increase in internal commotion relies -- in the first quarter of this financial year, there was an increase of 2%, also in the diesel technology and 5% in the IB technology as -- but as you know, we are seeing about a range of products where we have product.

So let me say, in this moment, we are seeing which will be the situation on the back. And please consider that a lot of our business, we have taken contract with our we are protected from potential slowdown of volume in the electric pared to internal one.

My personal opinion is that it's only a period of time in the future when the government will invest in important war infrastructure, the electric vehicle will continue to grow in the general market. Speaking about the opportunity at this moment, unfortunately, there are a lot of companies in bankruptcy due to the fact that the strategy of the OEM in the last period of time, the last 5 years was to focus in a fuel supplier for the electric development.

And so there are a lot of opportunity. And speaking, we are considering possibly a possible acquisition in order to continue to grow also because we can't continue to go from greenfield. We need to enforce also our team, our knowledge, our people. Otherwise, we can't be -- we can't grow in an important way in the future years. So we are ready for potential acquisitions.

[Operator]

The next question is from the line of Vimal Gohil from Fecon Family Office.

[Unknown Analyst]

Solutions on the bid betonumbers. So I just wanted to know about the brand in the aluminum prices and the outlook going ahead in the aluminum backup.

[Anurang Jain, executive]

See, what is happening in India. Unfortunately, or fortunately, the aluminum alloy prices are not dictated by LME, in the London Metal stage. It is dictated by the availability of the scrap, which has required the air with quieting is also important.

Now I believe that because of what I hear is because of the sea going up because of this crisis of Israel and Hamas, the rates keep going up and down. So the way -- so for me to say that exactly how the trend will be, I mean, my answer would be that it should go down.

[Satrajit Ray, executive]

Aluminum die casting?

[Anurang Jain, executive]

No, it is on the aluminum alloy pricing, right? Is what you're saying?

[Unknown Analyst]

No, no. I was saying on the aluminum back asking part.

[Anurang Jain, executive]

Sorry. So what was the question again?

[Unknown Analyst]

The prices of aluminum right now and the outlook for the entire aluminum diecasting segment for our company.

[Anurang Jain, executive]

Yes. So in fact, aluminum diecasting is, I would say, one of our strongest segments. And that's the segment we started with in 1985. We are very strong in terms of engineering, our tool room, our plants as well as opportunity. We are taking in ORIC and Aurangabad to go into 4-wheeler, EV and nonautomotive businesses.

So I would say that as far as 2-wheelers, 3-wheelers or 4-wheelers, the customers which are concerned, when we deal it. Generally, we are amongst the first or the second choice for getting new orders. And that's what's been happening.

So the opportunity is huge. Our focus is to do more and more machining, take orders with machining because your value add is much better than. That's our focus.

We are also getting into structural castings, like swing arms and subframes and structural parings, which are complex, which need technology, where even pricing is better. We are getting into large motorbike key castings for like crime cases for example.

So the outlook is very good, and we are growing. The question is that diecasting requires a higher CapEx. So we keep a balance. We are very mindful of the financials. So we don't like to lose any good opportunity. Sometimes we have to say no to some of the opportunities we feel that the other opportunities are better than we have a certain budget for CapEx.

We are willing to spend more than the budget. We have required if there's a great opportunity, organic or inorganic. But sometimes we do also say no. So I think 1 question opportunities are huge because we are one of the leaders and known in this industry.

So the answer is we are getting a lot of opportunity. The growth potential is excellent. And fortunately, what's happening even in the EV space like I mentioned earlier, because of lightweighting, aluminum castings is a material when number of parts are increasing.

And so instead of like I've said in the past, you have prime tastes, your covers, your cylinder heads, selling the blocks in an ICE vehicle. Here, you have case transmissions, you have battery houses, your motor housings, the different types of places, modules. So the number of parts are tremendous. So the opportunity is huge. The question is how much we would like to take in future?

[Unknown Analyst]

Got it. Got it, sir. And my second question is on the U.S. market. So are we seeing some traction from the U.S. customers? And if yes, are we seeing a traction from the U.S. customers, how is the demand and supply situation there in terms of aluminum casting segment only.

[Anurang Jain, executive]

See, from India, we are not exporting anything to the U.S. yet. But I will ask Mr. Venuti to answer regarding this question as far as Europe.

[Massimo Venuti, executive]

More we have sporting with Marcel for sure and also -- but let me say that the U.S. market for pressure the casting of living conference interest in market in this moment, but we have seen an important reduction in the last 3, 4 months. So -- we are very careful about the improvement potential growing. In this moment, we are following the growth of the European market for this is the focus of the company.

[Operator]

The next question is from the line of Jinesh Gandhi from AMBIT Capital.

[Jinesh Gandhi, analyst]

Some clarification on this onetime gain, which you're talking of. This is over and above the incentives of EUR 200 million? Or is it 1 in the same?

[Anurang Jain, executive]

Sorry.

[Satrajit Ray, executive]

Over and about the inset. Just 200 million and of sales and yield.

[Anurang Jain, executive]

Yes. Yes, it is separate from the incentive.

[Jinesh Gandhi, analyst]

Pit from the incentive. Got it.

[Anurang Jain, executive]

That customer and the vendor side.

[Jinesh Gandhi, analyst]

Right. Got it. And second question pertains for CapEx for our European business, we were investing quite materially for the orders on hand given that some of these orders were for EVs and we have seen some slowdown in the EV side, is there any change in our CapEx spend for the European business? How much do we plan to invest over and above EUR 51 million, which we invested in FY '24?

[Massimo Venuti, executive]

'23, '24, we invested EUR 62 million, as I told you before, of which EUR 8 million for gross margin, EUR 234 million at and EUR 10 million for sets. The last is 100% of the investment hybrid segment, speaking about the end of life 20 203 Volkswagen, I said is 100% from the electric project because, as you know, they stop the investment in the nonconsent today in the last 3 years.

So we are electrical thing about 2024 the budget is to implement the total production capacity to more or less EUR 40 million amount.

[Jinesh Gandhi, analyst]

Okay. So sorry, I might not have got the number, right? You're saying for FY '25 budget of CapEx is EUR 40 million. SP999 46. Got it. Got it. SP38303594 And secondly, on Europe business, can you share the revenue EBITDA impact in euro terms for FY '20 over full year or first quarter, whatever is handing.

[Massimo Venuti, executive]

Okay. Total year, we closed with EUR 263.3 million for other compared to EUR 145.6 million with an increase of 7.2% compared to the previous financial year. EBITDA EUR 42.3 million compared to EUR 35.6 million, an increase of 18.9% compared to the previous financial year.

The percentage of EBITDA of the year was 16.1%. Net results, EUR 14 million, 5.3% compared to EUR 2.1 million in the previous financial year, that was 4.9%. The increase in net profit was 15.4%.

[Jinesh Gandhi, analyst]

Got it. And last question to Mr. Jain. So on the ABS side, we are expanding our capacity in a meaningful way given the opportunity size -- but we haven't talked about any new order wins on the ABS side. So what are you seeing there on the ABS side? Also, if you can talk about the revenues, which we are doing today. And any new order wins beyond the additional orders?

[Anurang Jain, executive]

See, right now, we had a run rate of 400,000 with a single channel. We have added a capacity of 240,000 per annum further for the dual channel, which is starting in July '24. It is starting from the 2 existing owners we are planning to.

But let me tell you that we are at with the other 2-wheeler OEMs also to get new orders. That's why our plan in half of FY '26 reached 1.2 million of CapEx. But definitely, we are going step by step is looking at how the market is also growing.

So we're going step by step. But the opportunity is -- I mean, is very good there. And I'm also hoping that ABS are used in 125 cc and lower bikes for in the future. But the brakes business is seeing a huge use tractor.

[Jinesh Gandhi, analyst]

So this is -- the expansion is based on the res and not any order in. That's the right understanding?

[Anurang Jain, executive]

Yes, yes. Absolutely. Absolutely. Correct.

[Operator]

The next question is from the line of Nishit Jalan from Axis Capital.

[Nishit Jalan, analyst]

Yes. I have 2 questions. Firstly, on the domestic 4-wheeler side, I just wanted to understand how much of that concern to revenues and you have the project on revenue from here. So that's -- which the customers have you been able to produce. I would assume that India will be -- and what kind of components are you supplying to these for braking.

[Anurang Jain, executive]

Actually, the voice is breaking. I could not get the whole question.

[Nishit Jalan, analyst]

Sorry, the network is bad from my side.

[Anurang Jain, executive]

So 6.5% was the share of our India business in FY '24. That is the quarterly presentation also, which we have put on our website is 6.5%. But this is a figure which we are focusing on, on really increasing by 530 -- and the total value was no, no, that is a value on is 6.5% of IPR sales, what we did -- was the 4-wheeler business mainly for aluminum bicarbon to and Kia, Mahindra and Tata Motors.

And -- but there's -- and of course, some exports to -- but now we are going to, like I said, with our focus, capitalize opportunities in the aluminum casting space, even in the aluminum forging where we have won an order of about INR 250 million from Jaguar and Roger. -- which will be starting in this financial year.

And we'll be looking at getting more OEMs on the aluminum forgings. And of course, we are looking at proprietary products, like I said, by way of acquisitions. -- or it could be by way of T agreements, technology. So this 4-wheeler is a very large area. We are still a very timing part of our India sales. So we have a long way to go, but our focus is very high on this.

[Nishit Jalan, analyst]

Got it. Sir, what kind of capacity do you only have for castings, aluminum coating is a new business area for us in India, right? And so any other domestic OEM also where you have started making ones on the aluminum forging side?

[Anurang Jain, executive]

Yes. So we have got order fee. Aluminum forging, like I mentioned earlier, was a backward integration for the as well as other OEMs actually mainly for the KTM and Bajaj inverted front forks, but we found other opportunities with our customers approaching us like Jaguar Land Rover, we have won the order.

We have also got order from Harley-Davidson. And we're talking to other OEMs also rather than a backward integration. And now we find -- we learned from Jatinder that forgings will be a very I mean, an important part, aluminum forgings in the 4 wheelers.

So we are looking at new opportunities now also in aluminum forgings. We have a technical collaboration with FGM in Italy, for both process as well as on the product technology areas. So we are very, very optimistic on both. And we have the technology at no issue to this at -- and we are really about plant in Annaba, and we are planning to expand that actually an immediate plans for.

[Nishit Jalan, analyst]

Good to hear that. Lastly, on Europe, I just wanted to understand, when you are winning orders for hybrid with them, what are the kind of components we will be supplying to those vehicles? Will it be different from the components that we supply in oral.

[Satrajit Ray, executive]

For the components for hybrid vehicles, how are they different from I from common or they are similar.

[Massimo Venuti, executive]

No, no, similar thing about the process in pressure beating machine. For sure, in the machine from the machine side, we need important automation important machining investments compared to the previous technology due to the fact that we have to respect quality request very tough compared to the previous part of -- of powertrain engine and transmission.

The quality request of the customer in this component due to the potential problem, as you know, electrical component linked to the battery are very, very tough. And for this reason, investment in terms of automation is higher compared to the past. But the process, the component in terms of process are absolutely the same.

[Nishit Jalan, analyst]

Okay. And just one follow-up. We are doing aluminum castings in Europe. Any plans to get into alumina forgings in Europe as well? Or you will just focus on putting from India?

[Massimo Venuti, executive]

In this moment, we are producing only high pressure the casting component in Europe. We sell some gravity component, but we buy from the market. The strategy is to focus in this moment in the pressure easing volume.

[Operator]

The next question is from the line of from Fiona.

[Unknown Analyst]

Just wanted to for the capacity plan or and, what will be in a in segment?

[Anurang Jain, executive]

I think it's 900 million -- so 900 metric tonnes a month is what we are putting up, 900 metric tons a month into '12.

[Unknown Analyst]

Okay. So this is for the new project right? I was talking about the existing plus the new product? So what would be the final...

[Anurang Jain, executive]

Where I know that we had more than 100,000 metric tons from what I remember. I mean units more than 100,000 metric tons, excluding Lo base.

[Operator]

That was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.

[Anurang Jain, executive]

Yes. No, I have no further remarks. I already mentioned them in the building and I'd like to mention again that we'll keep doing our best. And thank you for your support, which we are getting from everyone. Thank you.

[Operator]

On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.

[Anurang Jain, executive]

Thank you. Thank you.