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Gabriel India Ltd
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Ladies and gentlemen, good day, and welcome to Gabriel India Limited Q1 FY '23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Manoj Kolhatkar, Managing Director, Gabriel India. Thank you, and over to you, sir.
Thank you. Good morning. I hope my line is clear or audible.
Yes, sir, we can hear you.
Okay. Good morning all. This is Manoj Kolhatkar. A warm welcome to everybody who's joining on the call today. Joining me is Rishi Luharuka, who is our CFO; Nilesh Jain, our Company Secretary and our investor relation advisers, SGA. We have uploaded our results and this presentation for the quarter ended 30th June on the stock exchange and the website. I hope all of you had a chance to go through the same. So I'll come to the presentation slide by slide, but before that, I'll just send the context.
Briefly, I'll just tell you about the operations of the company for the Q1. So just to share that it has at least started on a good note after, I must say, 2 years of COVID, this first quarter has been very strong. And thankfully, for all of us, we have not seen any COVID pandemic wave hitting us. Yes, I mean, of course, you all know that it's not entirely behind us, but I think the vaccinations overall have helped the country at large. So we have seen a robust industry volumes, and that is reflecting in our results as well.
Also, we are seeing a lot of new models being launched and many more yet to be launched just before the festive season. So utilization levels also have been fairly good. Before we get into the numbers, I'll provide a quick update on the current environment. So Q1 FY '23 was, of course, much better than the last -- the quarter of last year comparable period because we all know in last year, we had the COVID second wave hitting us. So we had subdued sale in the month of May and also in the -- in June to some extent. So this clearly reflects in the results as well.
However, automotive industry continued to witness increases in prices of steel, aluminum and other metals. Semiconductor shortage also is not entirely behind us. But as you all have seen, the order book is very strong. And particularly the passenger vehicle players have been able to introduce a lot of new models in this rather euphoric environment.
Passenger vehicles saw improved performance in the first quarter driven by several of these new launches, easing supply chains. So some of the OEMs were able to manage the semiconductor issue a little better. We also saw in the first quarter after long, after, I think, almost 8 quarters of continuous price increases in commodity, we saw a little softening of the commodity prices. And yes, a shift in consumer preference moving towards SUVs rather than hatchbacks and sedans. With the upcoming prestige, this demand is expected to sustain.
The 2-wheeler segment was impacted due to significant increase in input costs, multiple price increases by the OEMs. And of course, yes, the running cost driven by the higher fuel prices. I think these have been dampeners in the 2-wheeler, which is kind of the bottom of the pyramid, particularly in the commuter segment.
The CV sales, commercial vehicle sales, they have improved year-on-year basis, and we are seeing higher infrastructure spending by the government, opening up of the economy and also increased freight movement. So CV segments have also been quite robust. While I said, 2-wheeler sales are still a little subdued, but it is showing signs of improvement ahead of the festive season. Retail demand still seems far from the brand levels of earlier as inventory at dealerships have remained a little lower the ideal level.
According to many experts, the festive sales are 20% to 30% higher than any normal month. Many dealers do not expect to reach the pre-COVID levels of this festive season sales yet, especially in the commuter segment. But according to dealerships, both the inquiries and footfalls have increased -- have reduced at the dealerships.
Coming to the semiconductor scenario, which I said is getting a little better. So we have seen better shipments from all OEMs. Waiting times or waiting periods in the SCV segment have remained still [ lending ], strong bookings for newly launched vehicles indicate a strong pipeline of demand.
EV, which is the electric vehicle segment, has witnessed massive surge as was predicted. EV sales across 2-wheeler segments, cars have increased significantly even in terms of buses due to the very aggressive push by all governments -- all state governments, we are seeing a good increase in the commercial vehicle buses as well. However that number is very small. But coming to 2-wheelers, that has been quite robust. And the fuel price, which is going up is adding to make this equation of cost of ownership even better for the 2-wheeler EVs, particularly.
EV industry can be expected to be consistent, demand for 2-wheelers, 3-wheelers is expected to be accelerated by massive demand from the B2B sector, which would also be aided by the gradual shift of 2-wheeler buyers to electric mobility. Though at present, EVs still account on the overall level, less than 1% of the total market in India, the demand is growing very strongly.
I mean, out of the total, almost 3 million PVs sold in '22 -- I mean the FY '22, I mean, only 21 -- only about 21,000 were EVs, which accounts for hardly 0.7%, but it is up from 0.2% in FY '21. And in fact, as we speak, in the first 6 months itself, we have crossed this figure of 20,000 electric vehicle passenger cars. So you can see the growth rate is really phenomenal in passenger cars as well.
In 2-wheelers, it is far more rapid. I'll share the figures also going forward. But just to mention the 2-wheeler EVs is clocking almost 50,000 number every month. We had 50,000 in the first few months of this calendar year, Jan, Feb, March, and then, yes, we saw some state of fires, battery fires, et cetera, which slowed down the growth, but it's now coming back again to almost 50,000 level. So in the month of July, I think the sale was -- the registration was about 44,000 in EV 2-wheelers.
Now coming back -- coming to the numbers, now I'll switch the presentation. So Rishi -- and since I'm at a different location, I would request my CFO, Rishi, to handle the presentation part, which I'm sure you are able to see, right, Rishi? Everybody is able to view that, right?
The presentation was already shared on Friday.
Yes, it's only shared, yes, yes. Okay. So we'll -- fine. So if you are referring to the presentation, and I'll slide -- the first slide is slide numbers -- should we start from the beginning, Rishi? Yes. Okay, yes. Yes. So this is the Slide #3. I'll tell the slide number so that you all can refer to that. This is our response to COVID. Why we still put it up is because, yes, we are still seeing some cases of COVID. Thankfully, the intensity is very low. It's normally a mild flu, but we should never think that is behind us. So we are taking all the necessary precautions. We have done the second dose. We have done even the booster dose to all employees. So we continue taking all precautions because safety is a paramount importance to all of us.
Next slide, Rishi. These are the support initiatives, which were so useful for us when the second wave, which was particularly devastating helped us see us through that wave. So we continue those initiatives.
Next, coming to the results update. I'm on Slide 7, which is the financial highlights for the Q1. So as you can see, revenue, we had the highest ever quarterly sales crossing INR 720 crores in 1 quarter. So that is really excellent work done by the entire team. And of course, thanks to our customers for having very robust pipeline of orders. The same figure you can see in the month of Q1, comparable quarter last year was just INR 450 crores, but as I said, it was a COVID impacted month. So we really should not be comparing. However, it is 60% higher than that particular quarter.
In terms of EBITDA, again, we clock back to 7-plus percent, we're at 7.1%. So about INR 51 crores of EBITDA compared to the quarter Q1 FY '22 of INR 23 crores. And even if you see the last quarter, I mean, the Q -- the preceding quarter is INR 37.7 crores. In terms of PBT, we, again, crossed the 6%, which we were doing earlier, it was 6.2%, which is significantly higher than 3.5% achieved in the comparable quarter for the last year.
And next slide, Rishi, yes, these are the same numbers, but you see the percentage growth over the last comparable quarter, which is Q1 FY '22. Revenue, as was mentioned, is 60% higher, but EBITDA is 120% higher and PBT is 181% higher than comparable quarter last year. We had a net cash position of INR 262 crores. And we incurred about INR 21 crores of CapEx during the period.
Next slide. These are again the same numbers, I've already gone through them, maybe we can skip, these are just the broad trends so that you can understand a trend from a trend perspective. But ROCE is again back to robust level of 29.2%, which is in fact among the highest that we have seen. So I would say, reasonably good set of numbers, thanks to a good quarter for the industry as well.
This is Slide 12, which shows the financial track record trends. Again, you can see after the dip in the COVID year and the last year, which again flowing back to better levels. These are some key ratios. As you know, we declared dividend of INR 1.6. So maintained our consistent dividend paying policy. And in fact, we have been consistently above 20%, this year in fact, there has been 25%.
In terms of segment mix, you see the last -- the first graph, the larger part, Q1 FY '23. You can see that 2-wheeler is still about 65%, which is the maximum chunk of business, passenger car is 22%, CV is -- CV is at roughly 12%. And in terms of aftermarket, just in terms of -- you can see the aftermarket percentage, which is, I think, the second graph, which is the replacement market is 13%, our export is still small. I'll come to that specific issue, but aftermarket has increased from 12% to 13%. There's a marginal improvement because we have, again, been able to really aggressively push sales in aftermarket.
Next, Rishi, this is the segmental performance. This is the first slide on 2-wheeler, 3-wheeler. So we have about 30% market share. Again, in terms of future development, again, EV is -- continues to remain our focus in terms of getting and improving our market share. So we have now brought on board of a new model of Okinawa, which is doing very well called praise. The SOP has -- the start of production has already started. So we are on that as well, and on several models. And as mentioned earlier, we have bought the LOI for the Hero Electric model as well. And that SOP is in October this year. So we have in Hero as well, that was the only thing that was missing. So we have gotten to Hero Electric PV 2-wheeler as well.
Coming to the story on EVs where I think Gabriel has done very well in terms of entrenching itself very firmly. So currently, as we stand in the month of June, 13% of Maharashtra sales in 2-wheelers have been EVs. So the penetration, as we call is 13%. At the country level, this figure is still just about 4.5%. But in Maharashtra, this figure, in fact, in July is even better. July, I think the figure is 16%. So it's Maharashtra, Gujarat, Karnataka and I think in Delhi are showing very good penetration levels of electric vehicles. But the important point here is that Gabriel's share in this is 60% compared to our normal IC engine share, which is more towards 30%, a little less than 30%. Here, we have increased our market share to 60%. In the last call, if you recollect, we have shown this figure to be about 50%, 51%. So that continues. And our growth in EV, while the base is still small, but the growth in EV 2-wheeler segment from -- in FY '21, '22 compared to 2021 has been 85%. And in fact, this figure keeps strengthening month-on-month.
The last box, you can see, we have shown the models. You can see all those models where we are there. So these are the top-selling models from it. So we are there on -- I mean, on 5 of the 6 top selling models, so Okinawa praise, Ampere, Ola, Ather and TVS iQube. So everywhere, we are, Gabriel is single source and the list of the customers is displayed on top.
Next slide, Rishi. Coming to passenger cars. Here again, we have had a marginal improvement in market share. The good news is that we are on several of the new SUVs that are being already -- that are in the phase of launching, but they have already been displayed. As you know, the Maruti Suzuki brand Vitara, the new Brezza, and the Toyota Hyryder. All of these are with Gabriel shops, and they're completely feature loaded. So we expect them to do very well in the marketplace. Pricing is yet to be announced, but we are sure that should also hopefully be good. So our share in SUVs will, in fact, further improve. And as I mentioned earlier, now SUVs sell more than the passenger sedans and hatchbacks. So in fact, India is moving to become an SUV market. And our presence there is quite good.
We are there, as I said, on the Suzuki 3 platforms and one more, the new Alto is going to get launched shortly. We are also on that. We are right now in the midst of just scaling up production for that as well. We are also on the Stellantis, or the Peugeot, Citroen CC21. We have also been awarded the eCC21, which is the electric vehicle on the same platform. So that will also hopefully come through in this financial year. And we also got the Volkswagen, the MQB 2.0, which is you're seeing the vehicle today, the Volkswagen Virtus, the Skoda Kushaq and Volkswagen Taigun and of course, the Skoda Slavia. So these are the 4 platforms. So we have started production on a couple of them, and we'll shortly be getting on the SUVs as well.
So this is the story in passenger cars, coming to commercial vehicles, which is on Slide 18. Here, we have 89% market share, in fact, almost very, very dominant position. And here, due to the increased spending in infrastructure by the government, and also increase in buying of buses because the movement has started in terms of people going back to public transport, the schools, et cetera, so we are also seeing a good improvement there. So here, we have a very good market share.
Next, Rishi, aftermarket. I did mention already, we had an excellent sale of INR 331 crores in the highest ever sales that we had in years that went by in '21, '22. And if you see the first quarter, we are almost at INR 100 crores sale in 1 quarter itself. So again, this has been a good story to share in terms of our penetration in terms of improving our brand Gabriel right at the Tier 2, Tier 3 cities as well and also continuously introducing new product lines even beyond suspension. So that also is helping us in gaining more traction and becoming a one-stop shop for our customers in terms of the distributors and leaders.
And exports, as I did mention, I'll come to the slide. This was doing very well. Last year, we crossed INR 100 crores sales. But this year, unfortunately, we have had a setback because our sale was to Volkswagen of Russia, and we all know the conflict that is happening in that geography. And Volkswagen is actually shutting down that plant. So we'll have to see on that particular aspect as to -- they had indicated they'll restart in Q3 of this financial year, but that might get deferred a bit more, and we actually don't know, to be honest, we don't know what is the future. We are discussing with Volkswagen, clarity yet to emerge.
So that has been a little bit of a setback, but our orders to DAF of Netherlands, they are very strong. As I said, we got validated on DAF of Brazil as well. So that continues to grow. So we'll have to be realistic work on how to make up this Volkswagen Russia exports.
Yes, the next slide, Rishi, you want to take on the balance sheet?
Yes. This being a quarter, the numbers on the balance sheet are per the previous full year. In terms of cash flow for this quarter, again, because of the increase in volumes, we've had an increase in the working capital, but we continue to maintain 17 days of net working capital as against 19 of the previous year ending. So over to you for the...
Yes. So if you see -- if you map the last 7 years in terms of how the market has moved and how has Gabriel moved in terms of growth, you have mapped it down this on Slide 23 on segment-by-segment, 2-wheelers, 3-wheelers, pass cars and commercial vehicles, while the market has been either negative or marginal growth over this entire block of 7 years, which also includes, of course, the COVID period, Gabriel has grown by roughly an average of 7%, 7.5% in each segment, which clearly shows that we are actually improving our market share. This has been mainly enabled by the strong R&D and customer focus and our focus towards customer satisfaction.
Next, Rishi. Core 90, we have mentioned on this, this cost reduction drive that we have, we have continued with that term because it's caught on with every employee. So we are continuing that focus in a renewed fashion. And we -- I mean, all the teams are really working hard on each and every aspect of this, trying to reduce cost and eliminate waste to the best possible extent, which has yielded us a little bit of profitability as well.
Our vision, we had defined as being amongst the top 5 manufacturers of shock absorbers in the world based on domestic dominance and technology and, of course, exports and M&As. So we continue to work on each and every prong that is mentioned here. Yes. That's come to the end of the presentation, but that's pretty much the end of the presentation that I had to share.
We also have -- we'll formally be inaugurating it. We already started working in this picture that you see on this slide -- Slide #38, if you refer your presentation pack. Slide #38 shows a picture of our new tech center in Chakan, which is [indiscernible] capabilities, and also, we have made a small noise track for this particular -- the test center. So this is coming -- come up very well, and I'm sure this will go very well with simply our [ domestic ] customers and also helping us develop more and more reliable and robust, and high technology products to offer to them.
Yes. So that's at the [indiscernible] and of course, we've continued to win several awards. We got an award from Ashok Leyland just a couple of weeks back. We already had won an award from Tata Motors, Suzuki and also from Honda Motorcycles. So that also continues to go on strongly.
So yes, that's pretty much the end of the presentation that I had to share. And now I'll, yes, I think I'll leave it to open for questions from you, any suggestions from you, and we look forward to hearing from all of you. Thank you. Thank you.
[Operator Instructions] First question is from the line of Viraj from SiMPL.
Am I audible?
You are, sir.
Congratulations for a good set of numbers in such a challenging environment. I just have 3 or 4 broader questions. First is on the growth part. So if you look at sequentially and even on year-on-year basis, so the growth has been quite strong. And if you -- one was to kind of better understand the volume versus price mix in this, what would that be?
And a related question is on the aftermarket growth. You've seen the highest ever growth of quarterly sales in aftermarket. And if you look at the mix in terms of, say, the core ride-sharing, ride control products vis-a-vis the other products, the mix has largely been the same. So just trying to understand what is driving growth, if it's a distribution, how much of a lever further we have in terms of the potential distribution where you would like to be. So any perspective on that?
Thanks, Viraj. So do you able to hear me?
Yes, sir.
Yes. Okay. Yes. So in terms of growth, you've rightly pointed out. Some of it is, yes, you have to factor the commodity price revisions that have happened. But even if you factor that, there is still a reasonable amount of growth in terms of if I knock off the commodity effect, it would be you can reduce about 10%. But our growth has been far in excess of that. So obviously, there is a clear improvement in market share, which we shared already.
We -- you can see each and every segment, passenger car has moved to a better market share. 2-wheelers has grown to 30%. EV has grown from 50% to 60%. And commercial vehicle, of course, we are 89%, so that's more or less in line with the industry. So growth has been quite good. Aftermarket also the growth has been better than the industry. So I would say, on the whole, except exports, there has been a good growth in the [indiscernible].
Sir, on the aftermarket business, can you just provide some color on the elements that are driving the growth?
Well, I think -- I mean, basically, our penetration in terms of all the Tier 1, Tier 2 to Tier 3 cities, that does so well and also the new products that we have launched, we had a little issue with the tires. So we have relaunched that with better quality. So that has taken off well, better aesthetic quality and even performance. So that has also helped the brake pads that we have launched that is gaining traction. So overall, I think it's a mix of aggressive push, better branding, better reach and new product basket. So all this is helping the aftermarket gain.
We have taken also a price increase in the market, obviously. There, we can't take it exactly in line with the commodity or do it in a creeping fashion, which we have been doing continuously and it is being well received by the market.
Viraj, do you have any more questions?
Yes. Sorry. Second question was largely on the gross margin and the operating margin. So if you look at our mix by and large, you've seen a very strong increase in share of aftermarket, CV and even passenger vehicles. And these are typically the categories, where -- which come highest in the pecking order for margin for us. So still our overall gross margin is still around, say, 23.5%, which is lower end of the historical bank. So is bulk of the RM cost now in the books? And how should we understand both the movement in terms of gross margin and operating margin for us in the next few quarters?
Yes, Rishi, you want to take that?
Sir, it looks like Rishi sir's line is dropped, he's just trying to...
Okay. So just to mention while Rishi comes on, there has been, yes, of course -- there has been a commodity recovery. But the effect for the quarter, the softening of the quarter will happen only from next quarter because -- and then moreover, it has to sustain. We have seen April, May, June also softening, particularly in steel, but that has to sustain for us to really start getting better margins.
So when the market is continuously increasing, we did share with you that there is a clear arithmetic impact in terms of the margins going down because your price goes up only with the customer as regards to RM, raw material component. The rest of the part, the customer does not compensate. So once you have a continuously escalating kind of scenario in commodity, the margins do take a beating, which is what we saw happen over the entire last year. Now we are hoping that this -- if the softening continues sustains, we should see the reversal in track.
Okay. And in terms of operating cost, I mean, is it -- are we at a threshold level because we've seen a good amount of efforts -- efforts which are put in the last couple of years, you've seen a good amount of benefit out of that. So do we see any further more improvement from that or that will only be incremented?
We still see further improvements in that. I mean our efforts in terms of as we call the VA/VE, value engineering and value analysis and waste salination efforts to our Core 90 that continues. So we will continuously look at improving our margins. We have just crossed 7%. Our target has always been in the double digit of EBITDA. We had come close to that button, a down market in '19/'20 and then followed by COVID has taken all the steam of that. So we still -- I mean, yes, 10% looks difficult, but we'll still aim to get as those as [indiscernible] as possible.
Okay. Just last question, and I'll come back in queue. Any update on the new product, which we were doing the feasibility and you're looking to design by this quarter?
Which new product?
So we have applied under PLI along with the parent and...
Okay, PLI. So we are still evaluating -- I mean the report is ready. So we are trying to, I mean, get more details and flesh it out even more. I mean you've got the entire, I mean, market map, the kind of parts that we are looking at in great detail segment-wise that has been done. So it is still work in progress.
Our next question is from the line of Shashank Kanodia from ICICI Securities.
I just wanted to check. So 7.1% capital margin should be a base margin for us going forward. So we're building upon this given the fact that RM costs have softened up?
Yes. If the RM trend continues, I mean, softening, then we'll definitely see a better margins than this. However, having said that, there is -- there is immense pressure from the OEMs as well to keep producing cost. I mean that we are seeing a little more heightened push from the OEMs. So we'll have to find a way to negate that. But if the RM trends continue, as I said, surely this should be the base.
Okay, fine. Secondly, sir, in terms of new product launches, so are we present with M&M types of kind of XUV700 and Scorpio N, which were launched recently?
Yes. So we are there with XUV700, we are there in new thought of both these models. And Scorpio historically has been with the competition. Even the earlier Scorpio was with them. So that is not with us. Having said that, Thar is a new addition to Thar and XUV700, both are doing extremely well and both are the [ gateway. ]
Okay. And we are 100% supplies in the...
I got a...
100%.
100%, yes.
And sir, lastly, did we have any board deliveries upon the professional fee that we paid to the parent? So any thoughts on that?
I couldn't get that. Can you repeat?
Sir, we paid 2% of our revenues as professional fee to the parent right? So were there any deliberations on this on the board meeting? Any outlook?
No, we do not have any deliberations on that because we have -- we take -- we have done that, it's a completely arms strength pricing that we do. These kind of services we take from the parent are quite varied and right from human resources to finance to taxation to, of course, the brand not to mention to forget that. Customer relationships, we do leverage. So we have not taken that up...
As what Mr. Kolhatkar has mentioned, there are a host of services which we are actually receiving from Anand Corporate, which if we were to sort of post it from a vendor would be equivalent to what we are actually paying. Yes, there are challenges with regards to the margins and the top line going up. So the perspective, which was shared in the previous meeting, is an interesting way of looking at it. But just to share in terms of what services we are sourcing from Anand Corporate, of course, it's the brand first and foremost. Second is the human resource development part. We also have Anand University, which is basically responsible for training and development of all employees. We have the corporate business development function. We have the aftermarket logistics function, all the [indiscernible] facilities sourced from them.
We get a lot of support in terms of legal and taxation from them. Internal audit is a completely hosted function by Anand Corporate. Insurance because of deleveraging of various companies are coming together and getting better rates, that's handled out of Anand Corporate. Upward communication as well as the CSR activities, these are handled out of corporate. So if we take your point, but with regard to services, I just wanted to mention that what all are we forcing for.
Sure, sure. And sir, one last thing. So what kind of production ramp up are we seeing with Ola Electric? So any thoughts on that? So are we getting a 10,000 per month mark any time soon?
Well, the volumes are, as you know, currently down. The host of factors like including the component availability. So that is -- we've seen a little slowdown in the ramp-up. But we are sure it will get there. It's a great product and [indiscernible] myself. Really one of few products. I'm sure it will get back to those volumes, which they have already been telling.
Our next question is from the line of Amar Kant Gaur from PhillipCapital.
I have a couple of slightly longer-term questions. So what I would like to understand, first of all, is in terms of our current margins, what kind of RM impact is embedded there and which over time, if it gets corrected, what kind of benefit can we see on our margins from the RMs itself? Hello?
You mean this will get a complete back to back?
Yes, yes, yes. So...
If you look at the whole of the last year and this quarter as well, roughly give and take, the commodity impact because of timing differences and others where sort of compete back-to-back is not there, say, for example, in aftermarket as well as some of the proprietary items where we don't want to disclose the chemistry and can't be indexed. Though that impact would be roughly in the range of 0.8%. However, we must also remember that close to 2%, 2.5% is the denominator impact that has come by virtue of pure mat.
Okay. Okay. So if -- tell me if my understanding is correct. So in case these things get normalized, we would be closer to maybe 9% plus kind of margins in the current quarter. Has this not been there?
Assuming the whole commodity cycle reverses and goes back to where it began, the answer will be yes.
Okay. So -- and would there be any other drivers to these margins going up to, let's say, our target levels of double digits? Is there anything else that we are working in?
Yes, yes, several things, Amar, on that. It's a product mix also. Pricing is -- margin is a big factor of product mix. So that's why you want to push more of aftermarket and exports. Certainly, these 2 will help us improve our margins infinitely. While aftermarket, we are seeing that happen, exports, I mentioned due to some unforeseen uncontrollable issues, you've got behind a bit.
Yes. So I'll come back to exports later on. But within the current trends that we are -- that you also talked about and the industry is also seeing, SUVs are gaining more and more traction versus sedans and hatchbacks. And definitely for those SUVs, would the margins be slightly better than hatchbacks or sedans for us?
No, there's -- there is no much difference in terms of margins. But however, if we are able to introduce new technologies, which is what we did in XUV700, the Mahindra model, we produced a new model, a new technology called FSD, frequency selective damping. There, we are able to improve our margins a little bit. So if you are able to bring that some additional technology, that's what we are trying to do. That's why this new tech center, we have hired an ex-pat as our Chief Technology Officer. So with that, we are hoping that we should -- but it will be more over the longer term.
Okay. Okay. And sir, on the technology side also, with Scorpio and Mahindra talking about something called a penta-link technology, is -- what are your views on that? And is that something that we can also try and develop and maybe introduce in some of the other products that might be in the market?
That's the overall suspense in geometry, that's not entirely with only the shock absorbers. That is more a product of the vehicle manufacturer. In that, we only have our play is only suspension. So in fact, what we have offered in XUV700 as a technology, I would say that itself is quite good.
Okay. Okay. And my second question is on the Core 90 program that you have. Could you quantify what kind of benefits have we achieved so far from it? And what kind of benefits are we looking to get in the future? If you can quantify in some way like fixed cost reduction or something else?
Yes, yes, yes. Rishi, you want to take that?
So Amar, the overall benefit would be in the range of 1-odd percent period till date that we would have received under the various initiatives we have taken. So there are some challenges also that we have faced during the course of last 6 quarters or 8 quarters actually. So net of net, we clocked that kind of 1% order.
All right. And sir, a couple of clarifications. That 60% share of business that you talked about was for the whole of the 50,000 odd numbers that we are seeing for electric vehicles? Or was it for specific...
Yes, yes. We are talking about the registered market, of course.
Yes, yes. The city speed or high-speed models.
Yes, yes, high speed. Because the low speed, it's still a kit from China that people assembled and we have no clue on the numbers. So the industry speaks only of the registered -- registered vehicles.
RV, so that means we would be around 25,000 to 30,000 kind of vehicles will have our products on in EVs.
For sure, like I mentioned those top -- the top 5 -- out of top 6, we are there on top 5.
Yes. And going forward, the...
Each is selling roughly INR 5,000 crores, each is selling roughly INR 5,000 crores, INR 6,000 crores to [ INR 25,000 crore, INR 30,000 crore ] a year.
Understood. So basically, with that new addition, this would further go up maybe north of INR 30,000 crores.
Absolutely. Absolutely.
Are we doing anything on the low-speed side of this electric 2-wheelers? Or is that something we are not interested in?
No, we are not doing an -- these assets, they are buying the kits from China, it is impossible to -- and my view is they may in fact, they want the restrictions, all these quality issues or recall policies come in place, it will become difficult for them to continue with those.
All right. And then finally, on the export side, you said it was to Volkswagen in Russia. And what percentage of our exports would be -- would have exposure to Russia? Or would it be 100% was to Russia only or...
No, no, no, not 100%. I mean, it was per month, we were selling about, let's say, or on the whole year basis, it was about INR 25 crores, INR 30 crores.
Okay. Out of INR 100 crores.
Out of INR 100 crores, yes.
[Operator Instructions] The next question is from the line of Jayesh Gandhi from Harshad Gandhi Securities.
Congratulations on a good set of numbers. So my question is, when we supply shock absorbers to say electronic 2-wheelers is the price extension that we enjoy vis-a-vis say a 2-wheeler IC engine. If you can spell out in terms of, say, 1.2x or 1.5x or whatever is that is?
Well, Mr. Gandhi, I can't spell out the figure. But yes, I can tell you that the margins are better.
Are the margins better than existingly which... I mean... which should get into 2018 or something like that?
Yes, they are better than that.
Okay. While you were talking about your aspiration of being into top high shock absorbers in the world, you're talking about yourself or the Gabriel -- entire Gabriel. So I think Gabriel is already...
We are -- I'm talking only Gabriel India. So if -- well, like you rightly pointed out, if I add all the Gabriel's that are present in the world, we would be in the top right. But I'm talking only of Give India. So we're right now in the top 10 for sure. It's difficult because many are not published figures, but we should be around #8 around that figure.
So what kind of sales would that be, sir, if we are looking -- I mean if we lost to top 5, say last 5th?
Well, top 5, we'll have to get into $1 billion.
Which you are aspiring to do by 2025 according to your last call, right?
Yes, we had -- just to clarify that we had done that Vision 25 before the COVID, okay? So obviously, COVID has taken 2 years away from all of us, but we have not changed the vision in terms of the aspiration because we felt let it still be aspirational. So it may get...
It may be delayed by a couple of years, maybe 2 years.
Yes, that's right. Because those COVID years, as you know, we are back to currently even this year in '22, '23, we'll not even reach '18, '19 figures.
Okay. And one more question on 2-wheeler sales. So in 2016 or '17, if I remember the numbers correct, we were -- we had hit a $20 million mark on total sales on 2-wheelers and post that, I don't think we have touched that mark. Do you think the industry has matured even if we go to, say, EV 2-wheelers, there will be a cannibalization we won't be hitting that 20 million mark in say...
Yes. looks difficult. I mean, we had, in fact, gone higher than $20 million as an industry. But yes, going back to that is looking difficult. I mean even if you add the EV 2-wheelers, it still is not coming close to that. We are looking at maybe '18 at best. It will take some more time. And the issue has been the continuous increase that has happened in the basic price of the vehicle in ICE 2-wheelers, of course. So -- and the COVID also has played a [indiscernible] in terms of the psychology of the rural buyer. I think it will take a year or 2. We -- my view is, we can definitely cross 20 billion as a country, maybe in 2 years' time.
So our strategy would be focusing more on PVs or 2-wheeler or how... We are like just looking?
EV 2-wheelers, of course, is a focus, and that's helping us. The base is still small. But it's obvious people are going to convert to EVs.
Sorry sir, my question was, our strategy is more looking towards passenger vehicles now or it's still towards 2-wheelers, EV and...
I don't know. Our focus is -- again, our focus is on all segments, to be very honest. That's why we did this segmentation of the business. We have a PCBU, we have a 2-wheeler BU, we have a commercial vehicle and railways BU. So focus remains on each segment. Having said that, the passenger car is something that we want -- we can see a much better upside. We want to do more in passenger cars.
Coming to 2-wheelers, so there are some, let's say, market dynamics by which we cannot be much in IC engines. So we have taken the focus on EV tellers and it's bearing us fruit. So these will be the key strategies, and that's what we're working toward.
And the third, as I said, is the exports, which is a more longer-term strategy.
Okay. And one last question, sir. We are sitting on say, INR 250 crores plus of cash other than the routine CapEx or the CapEx which we have spelled out. Are we thinking of doing something else?
Yes, we are actively scanning for opportunities of acquisitions. We did actually even did a visit to a couple of them, but we did not find them to our standards in terms of all the practices. But that search continues. So certainly, we would look at our inorganic growth for sure. And that's -- as you saw in the vision, one of the key basic fundamentals by which we can achieve that is through an acquisition.
See, in India, we would be #1.
Overall, yes, overall, definitely #1.
So just to the moderator and Jigar and Rishi, I unfortunately will have to drop out of the call today because there's a customer visit and the customer has already come, which is why I have come to Gurgaon plant. So while I'll drop of, Rishi, you can certainly take the questions. Sorry to do this because I had scheduled it up to 12 and he's arrived a bit early, and I have to be with them. Nevertheless, thank you. Thanks for this opportunity. And I just take this opportunity to wish all of you a very, very happy, safe and joyful festive season. So that's all from me, and thanks for your support. Stay safe, stay healthy. Thank you. I'll sign off now. Rishi, you can take it forward. Thank you.
We'll take the next question from the line of [ Pankaj from Affluent Assets ].
Am I audible?
Yes, Pankaj.
Well, most of my questions have been answered. Just wanted to understand what is the scenario as far as CVs and railways is concerned?
Pankaj, why we have shared this view many times with railway what happens is essentially it's tender-based business, and it's getting quite competitive there. In order to increase the focus as well as the bandwidth there, we've actually sort of tied up with some experts on the industry. We are seeing some fruits of that now. And with regards to the current year budget, we are on track.
As far as commercial vehicle is concerned, again, we are pretty much aligned with the industry given that we hold such a large part of the market share and as well as the export fees stood up, that is also running on the budget.
So going forward, as CV segment is expected to do well, do we expect to gain market share or maybe increase our kit per -- value per kit -- value in the vehicles?
So again, in the commercial vehicle, it's a little sort of a typical way. Most of these commercial vehicles at the moment is bought, they tend to remove the shock absorber and put in an additional leaf in order to be able to load the vehicle with a higher capacity. So in terms of increasing the content, well, I don't see that much happening. Yes, there are -- if the overall volume goes up, we are deeply entrenched in it, and corresponding to that, our volumes will as well go up. In terms of the pipeline, whatever is being floated, none in the last quarter, actually. But for the previous year, what RFQs have come, we've been able to win that.
Sir, my last question, do we have any plan to enter into any other product, which is exclusively for EVs other than shock absorbers?
Exclusively for...
EVs other than shock absorbers?
Passenger car you said right?
Sorry.
Other than passenger car you asked or other than electric?
Other than shock absorbers in electric vehicle, either 2-wheeler or 4-wheelers?
Well in terms of the overall basket of Anand Corporate, we are managing with one product of shock absorbers. Having said that, we won the PLI scheme. In the PLI scheme, we are progressively looking at sensor as a product. MD just mentioned in terms of where we are on that. So if we are able to go ahead with that, then the next product, which will get added to the -- including electric vehicles on 2-wheeler as well as passenger side would be sensor.
So what is the tentative time line for the same?
Well, right now, we are -- we've done the market mapping. We've done the understanding of the product, what's there, what's been there? What's currently the volumes being clocked as well as what's the supply chain and what typically the OEMs are looking at because there are various categories of sensors which are there in the market as well as which are gaining more and more sort of content per vehicle. The next phase of the study is to start looking at the sort of filtering down to the product that we would like to venture and look at in terms of technology, in terms of capacity, in terms of the other financial parameters. So give and take, I think a quarter or a little more is what we would take to kind of arrive at a conclusion.
Sir, just wanted to understand, are we not -- are we tying with anybody else for the product or we are going on our own as the sensor are already present and competition is already present and has forayed into this market long back.
Yes. So your question is right. We would be tying up with somebody for technology. So within Anand Group, we do not have that technology available. And that's all -- that valuation also is a part of the project.
We'll take our next question from the line of Chetan Gindodia from AlfAccurate Advisors.
Sir, wanted to -- firstly, I wanted to understand on the passenger vehicle side, you mentioned that we are adding new models with Maruti. Also on Mahindra side, also, we have orders from Stellantis and Volkswagen Group. So if you can share some continuity data on, what kind of annual revenue can these new orders bring us? Or are most of these replacement orders? Just some colors on what is the annual revenue that we can generate from new orders?
I'll give you a broad perspective, while because we are not sort of supposed to share volumes of these new programs based on the contract that we signed. Give and take, currently, we are at 22% of the total top line. We aim and target to reach in the range of 25%. With regards to replacement, Maruti, some of the programs that is going to get launched in this year and the first quarter of next year, they are replacement. But for Volkswagen Stellantis as well as for Mahindra, they would be new program.
Okay. Okay. And secondly, I wanted to understand on our EV market share. So currently, our market share in 2-wheeler EVs, as you said, around 60%. So given that we understand a lot of established players did not participate in the market earlier and now going ahead, we'll be doing. So do we expect some moderation in our market share going ahead? Or do you feel given our strong customer relationships and our product technicality, we'll be able to maintain our market share?
The endeavor is to maintain, if not improve. Yes, there will be competition, but we already have the first movers advantage. And now with Hero Electric coming in as well, it's going to actually improve our market share as far as EV is concerned.
Okay. Okay. Sir, just lastly, I wanted to understand, you said we are also looking for acquisition. So what is our intention behind the acquisition? Is it a product diversification? Or are we looking at incremental higher market share in the same shock-absorber product? And what is our ROI? And are we -- will we be open with even EPS dilutive acquisition? -- some guidelines on acquisition side, if you can share?
So we have sort of a range of what we call the cornerstone or decision-making factors when we look at any targets. The broad ones being that it has to be in the mobility space. Can it be a different product? The answer is yes. Can it be suspension and allied products? The answer again is yes. We are open to that. It can also include backward integration, one of the targets that we evaluated and had also had a visit last time was towards that, which unfortunately did not fructify. But -- so we are open to that. Upward obviously can't happen because we have OE. So downward is quite possible. Domestic as well as international is an option that is available.
If you have any specific -- with regards to the sort of the financial numbers, obviously, it has to make sense when we're going to buy. We don't want to be a financial investor. We want to be a strategic partner in that acquisition we would be running. So a lot of synergic value needs to be present when we are looking at such acquisitions. Otherwise, just for the purpose of buying and product diversification, if we are not able to add value, that currently is of less interest.
Our next question is from the line of Sonaal Sharma from HDFC Securities.
So just want to understand that, I mean, what is your expectation for FY '23 volumes for 2-wheeler -- electric 2-wheeler? Because last time I think you have guided for 600,000 units, just post the fire incident. So how are you thinking that for full year, how it will pan out?
Well, a, given that we already have the capacity in place and for the Hero Electric, we'll be sort of adding something more to that. In terms of volume, it's a little difficult right now to gauge given some recent developments. But the previous number that you mentioned, we continue to believe that we will be able to clock that.
Okay. And just adding to the previous participant's question that regarding to the first mover advantage that you have in the shock absorber, so other than the size, is there any technological advantage or any sort of patent or any sort of moat that you have that no of your completion can copy?
No competition copy, no that advantage is not there. But in terms of technology, specifically for Ola, we've developed an inverted front fork as well as the shock absorber is a monotube shock absorber. So that's a unique proposition that is there with Ola. These products and programs have a long sort of a validation cycle. So given the fact that we have partnered with them along with their own journey, the possibility of getting replaced with some other organization apart from Gabriel is low. But yes, I mean, obviously, these are all driven by cost and performance.
Our next question is from the line of Viraj from SiMPL.
My questions have been answered. Sir, just a suggestion on the service charge, which you talked about for parent charge asset, and actuation was quite comprehensive. Just a suggestion instead of charging a percentage of sale, why not charge a percentage of profit. I mean, that's what the approach a lot of other MNCs and other domestic companies in the similar space they have. So kind of more aligned to the other minority investors. And just a suggestion.
Suggestion noted. We also need to evaluate when we are thinking on these lines, whether these [indiscernible] dividend or not. But nevertheless, suggestion was noted last time also. We are -- we'll think clear.
Ladies and gentlemen, that was the last question. I now hand over the floor back to Mr. Rishi Luharuka for closing comments. Over to you, sir.
I take this opportunity to thank everybody for joining the call. I hope we've been able to address all your queries. For any further information, kindly get in touch with us or SGA, our Investor Relation advisers. Thank you. Stay safe, stay healthy.
Thank you. On behalf of Gabriel India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.