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Gabriel India Ltd
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Ladies and gentlemen, good day, and welcome to Gabriel India Limited Q4 and FY '24 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 a guarantee 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 of Gabriel India Limited. Thank you, and over to you, sir.
Thank you. Good morning, everybody, and a very warm welcome to the call. This call is for the year that we ended, I must say quite well, year 2023, '24. Joining me today on the call is Rishi Luharuka, our CFO; Nilesh Jain; and our Investor Relations advisers, SGA. So you must have seen the results that we uploaded yesterday post our Board meeting on the stock exchanges as well as the company website. I hope each one of you has had the chance to go through the same.
I'll give a brief overview of the company's operations and take you through the presentation briefly, and also share our views on the market, which for the last year as well as what we see for the year going at as far as the industry is concerned.
To start with, I'm pleased to announce that the Board recommended a final dividend of INR 2.5 per share, so taking the total to INR 4 per share, which is a payout of almost 31%.
Coming to our presentation, if we go to Slide 6 and 7, which basically highlights the quarter and the yearly performance. We can see that we had a strong quarter. Our operating revenue for Q4 surged 16.5% to INR 859 crores. And this growth, of course, extended to FY '24 and FY '24 for the full year was 12.5% growth and we posted INR 3,343 crores as a sale, which is, of course, the highest ever for Gabriel in its history.
The good part is our -- in Q4, we reached the EBITDA margins of 9% compared to 7.1% in the similar comparable quarter last year, which is thanks to our continuous focus on the margin improvement, which we have shared all along in the call, our initiative of Core 90 to drive cost control relentlessly all through the year across all our locations and, in fact, departments as well.
Now let me get down to the industry dynamics. Starting with passenger cars. On Q4 -- in Q4 FY '24, sales of passenger cars reached 13 lakh units, marking a year-over-year growth of about 9%. For the full year FY '24, we hit a sale figure of almost 4.8 million, which is the highest ever for the industry. In fact, if you add exports, the production figures are even higher.
The significant growth in passenger car can be attributed to various factors such as improved rural demand, favorable model mix, introduction of many new models, enhanced supply dynamics, meaning we came out of the supply constraints, which we have been seeing post-COVID for almost more than 2 years, better role infrastructure and a strong demand in the SUV segment.
Specifically, the total PV sales during Q4 FY '24 amounted to almost 1.3 million, showing an increase of 9.4% compared to the previous year of 1.2 million. The SUVs now account for more than 50% of the total PV sales in Q4, and this will be the trend going forward where we will see SUVs may reach even to the levels of almost 60% as a their share of passenger car vehicles.
Looking ahead to FY '25, which is '24, '25. The passenger vehicle segment is expected to grow at a single-digit rate in the range of -- while the figures vary. But as of now, the industry opinion is that they should be in the range of 6% to 7% mainly one due to the high base effect of the past year. That's obviously, we had several good years year after year post-COVID. There is expected to be some moderation in demand this year.
On the commercial vehicle front, in fact, we saw a decline in the Q4 with sales dropping to 2.8 lakh units from 3 lakh units in Q4 FY '23. And the FY '24 sales were at 1 million compared to almost the same figure in the past. It's been a flat year as far as commercial vehicle is concerned. And here, clearly, going forward for the year FY '24, '25, we see that there will be a little slowdown in demand, mainly on account of elections, which are currently underway and it will take some time for the CapEx cycle to restart. So expectation is that post the monsoon, this should come back to a healthy growth figure. But until then, clearly, the industry feels that there's going to be a slowdown in demand as far as commercial vehicle is concerned.
Coming to 2-wheeler, 3-wheelers. This is the bright spot. We saw 26% growth year-on-year as far as Q4 sales is concerned. So we reached 5.4 million for the quarter, which is very hearting to see that we had -- if you annualize this, this is more than 20 million for the year, which is where we were before '19, '20 when the 2-wheel industry was doing extremely well. So let's hope this continues.
The market sentiment is favorable. Obviously, people have taken in the impact of all the price increases that have happened. And the rural sentiment also has improved to a large extent, and we also are seeing -- and at least we have read that the monsoon is going to be above normal. So all this augurs well for the 2-wheeler demand. We hope this should be in double digits as far as -- double-digit growth as far as the year, '24, '25 is concerned.
Now there's -- I mean, now we, of course, cannot not discuss about EV. This is, of course, being the talk of the town. But yes, last year, we definitely saw a slowdown -- a bit of slowdown in EV. The growth rates early over 100%, 200%. So that is clearly not happening now. Particularly in the 2-wheeler segment because of the same policy change, we clearly saw a slowdown. And in the month of March, we saw a peak demand. But then again in the month of April this year, we are seeing the demand dropping down. So it's around -- for the 2-wheeler, it's around 60,000 to 70,000 mark, but we clearly hope that this should pick up.
On passenger car EV, we are seeing a flattish demand. It's about 7,000 to 8,000 range per month with TATA Motors leading the pack here, almost garnering 70% of the market share. And in 2-wheelers, yes, Ola leading the pack with very robust sales all through the year.
Now if we move on to Slide 16 on the revenue mix, which you can see here. We had -- for the full year, we had a 2-wheeler mix of 61%, passenger car of 25% and commercial vehicle of 12%. In terms of channel mix for the full year, 86% of OEs and 11% of aftermarket. And we -- I mean, we have also grown very well in aftermarket in the past year. And that continues to be our focus here as always.
Moving on to the next. I'll take you through the individual views. This is Slide 21, which talks about 2-wheeler and 3-wheeler segment. Here, our market share in the last year was 32%. So now we are looking at a slight drop 31%, but definitely, they should improve because we have had improvement in share of business at some of our key customers, plus some new models as well coming our way. And our traction in EV continues to be strong. We are almost on 100% basis with almost all the top customers, Ola, Ather, TVS, and Ampere, of course, is with us. So that will definitely hold us very well in this segment.
Coming to motorcycles. We have won the Piaggio - RS457, the very good motorcycle launch by Piaggio, which is the Aprilia brand. Here, we are single source and it's an upside down fork, the new inverted front fork technology, which we have successfully commissioned and launched on a production basis. And in 3-wheelers, we continue to remain strong with our customers mainly being, of course, Bajaj, TVS, and Atul Auto and as well as in electric vehicles, we are there with Mahindra, which is the leader in the segment.
Coming to passenger cars, which is on Slide 23. Our market share is more or less flat, but we have -- as shared last year, we are there on the Jimny platform and the Electric Citroen C3. We have also won some new programs from TATAs, which are -- 3 of them are on the electric platform. And we've also won the new MQB 2.5 platform of the Volkswagen and 1 platform of Stellantis, which I've already shared. So this should definitely help us improve our market share for the passenger vehicles. And as you have seen, there's a shift now. We have our passenger car percentage in terms of the total price is 25%, which used to be 23% in FY '23. So all those efforts that we took in terms of building the business pipeline is now yielding fruit, and we'll continue to work on this.
If you see Slide 24, the Utility segment, which is growing. Here, our share of business is quite strong. We are 35% of the market share is with us. In the growth segment, we are doing well as far as the passenger car is concerned. On commercial vehicles, yes, market share remains absolutely solid. So we are looking at exports in this segment. We are developing some new products. So our story with DAF as regard to exports is doing well. We have been given 2 new dampers. Earlier, we were only in the cabin dampers. Now we have been given the RFQ and the business is under finalization for the axle dampers as well. This should help us get a much larger share with DAF Netherlands. And then based on this, we expect to leapfrog to other global CV customers as well.
In the railways, I had shared last time that we are present on each and every requirement of the Indian railways right from the coaches to the electric locomotives. And also now we have won the Siemens loco where they're going to make the locomotives for the Indian railways. Aftermarket, I did mention that we had a good year. We crossed INR 400 crores for the first time in aftermarket.
Coming to the Slide 30, where we are sharing some pictures of our sunroof plant. You can see this is in Oragadam region of Chennai. The plant, as you can see, is looking beautiful now. In fact, we're doing a lot of greening now. There are some pictures of the assembly line as well and polyurethane holding line. And this -- we are currently doing almost 10,000 sunroofs per month from this plant. Glad to share that we had a good -- I mean, very good ramp-up from 0 to SOP and that we are -- we had also a fairly good quarter, the first quarter, where we did almost INR 58 crores of sales with positive EBITDA. That's the good news. So that's actually quite a good record in terms of getting off of the blocks.
The other important thing is on Slide 32, where we had shared that we started a European engineering center in Belgium. We have now taken a bigger workshop space, and we are doing our experimentation as well as fitting a new vehicle, which currently I can't name, a European vehicle with our semi-active suspension and the trials will be done in the month of June. And we should be able to offer the first concept to European customer in the month of July. The order, however, will take some time, but at least our concept will be definitely ready for the European customers. And for Mahindra, we are demonstrating revised prototype version in the month of June. So this is very quickly on the year that went by.
So we'll now open it up to questions, and we look forward to hearing from all of you. Thank you so much.
[Operator Instructions] The first question is from the line of Amit Hiranandani from SMIFS Limited.
Sir, once again, a good set of numbers. Many congratulations to the team for all the efforts. Sir, I'll club my question on the sunroof side first. Please correct me if I'm wrong, the sunroof production started from January 2024. If yes, then in total, how many sunroof units sold in Q4. Any new order wins apart from Kia? And continuing with the sunroof, by when the sunroof business need to incur CapEx for adding new production lines, by which year I mean? And possible to generate mid-teens EBITDA margin in the sunroof by FY '26? This is my first question, please.
Thank you. Thanks for the compliments. So yes, sunroof we have made in the first quarter. We made an average of roughly about 23,000 sunroofs. And now the hit rate is, in fact, 10,000 per month. And your second question was on whether we have got any more customers? So we have Hyundai and Kia, and I'm glad to share that, in fact, last week, we are also winning a new program from the Hyundai further to what we have. And our Kia volume -- Kia SOP, which is going to start from January of '25, the customer has already indicated a significant improvement in volume offtake. So with this, we are actually looking at adding some CapEx and in terms of a new line and molding machine in the year -- in this fiscal year itself -- towards the end of this fiscal year itself.
Sir, how much addition would be there after this CapEx? Currently, it's 2 lakh units per annum, right?
Yes, so that will be almost doubling.
And sir, possible to generate mid-teens EBITDA margin by FY '26?
Amit, before that. That's the target.
Okay. Okay. And sir, my second question is basically the 2-wheeler side. So can you just elaborate what is the reason for drop in ICE and electric 2-wheeler market share. I mean, as Bajaj Auto has been growing faster, so want to understand how much of this market share is sustainable? And just continuing with this, Gabriel supplies product to how many models of Ola Electric?
We supply to all models of Ola Electric. And in fact, we'll also be on the Ola motorcycle. So that's -- with Ola, it's really a very strong relationship. The market share, of course, if you can see the growth has been pretty good as far as Hero MotoCorp is concerned for the past year. Hero MotoCorp had really taken a beating earlier post-COVID. So now they have picked up quite well.
And as you know, we are not there with Hero. So in fact, we have already started our engagement with Hero, and we are in discussions where we have got at least we have got a couple of RFQs from Hero MotoCorp. That's all I can share at this moment. So that's the main reason for the little drop in the market share. Otherwise, with our engagement with TVS, with Bajaj, with Honda motorcycles, I mean, the 3 big players as well as Suzuki continues to be very strong, and we keep getting new orders from them.
And then how much was the revenue from electric 2-wheelers in FY 24?
Electric 2-wheelers, the total revenue was roughly in the range of INR 150 crores.
INR 150 crores. And sir, your outlook on the 2-wheeler EV industry after the subsidy cut for the next 2 years, please?
It's difficult to focus, Amit. Because right now, of course, there is a drop due to the subsidy cut. But the policy, we all know can undergo changes is pretty clear. So we will have to wait, so it's very difficult to take a guess. The government is clearly pushing on the electrification. So this, I think, is more of a temporary setback. The other thing is that the lithium prices are also down. So the battery prices are coming down. Thereby the ticket size of electric 2-wheeler, which is one of the biggest impediments is also coming down very closely in line with ICE engine.
And the running cost economics are -- we all know are far, far better. So this 2-wheeler bump, which we are seeing in terms of EV sales is very likely to be overcome in this year once there's a clearer policy on this. It's difficult to take a call right now.
And sir, any new wins for the FSD technology?
For the FSD technology, no, we have shown the model to 2 other OEMs, but still it has not translated into a win. There's a lot of interest for sure, but not yet translated into a win.
Okay. And sir, can you give me the CapEx outlook...
Sorry to interrupt you, sir. May I request you to rejoin the queue for your follow-up question.
The next question is from the line of Mumuksh Mandlesha from Anand Rathi Institution Equities.
Congratulations on the good margin performance. Sir, firstly, in August, you mentioned about the new Hyundai order win...
Sorry to interrupt you, sir. May I request you to please use your handset.
So just want to understand, this Hyundai new order win, sir, congrats on that, sir. When that order would start, sir, and what kind of volumes are they talking about, sir?
Those numbers, I really cannot share right now because it's a program of our customers, but this will be in the year '26-'27.
Okay. And so as you mentioned, Kia order is seeing a significant volume, higher outlook for the model. So can you share what kind of revenue for sunroof we can see for this year and next year based on these 2 orders?
Mumuksh, we don't share the outlook generally. Right now I can't. But I can only say that the model that we won, they are also planning to introduce an electric model on the same platform. So that's how the numbers have increased as far as our business is concerned for Kia, the SOP work for which will start in the last quarter of this fiscal.
Got it, sir. Sir, what will be the royalty charge by Inalfa for the sunroof business for this quarter, sir?
Those are sort of confidential document where we don't have an understanding with the JV partner to share it with you. But broadly, both the partners once we have formed the JV; currently, it is not formed the JV, right? We are still the 100% subsidiary of Gabriel. Once we form, well, it's in the range of 5% to 6% for both the parties, total.
Got it, sir. Sir, I want to check on the progress on the new product line business expansion. And is it fair to say the focus would be on tech-agnostic area. And we would look into new products where there would be large revenue potential opportunity like what we did for sunroof. Can you share any update on the new product business?
Yes. So on a new product line, there are 2 things: One is within the domain that we operate in terms of suspension. So here, as I had mentioned, we are looking -- we are exploring very deeply for 2 new applications, they're not new products, but there are 2 new applications, fully new applications. One is the e-bike and the second is a solar damper. So we have -- our team was in Taiwan for the e-bike exploration. So we are engaging some experts to help us guide because this is an area, which is not present in India. We are already engaging a couple of experts to guide us in this space. We have developed the product. It's come out well and appreciated by the customers.
And the second part is the solar dampers, which is needed for the solar panel trackers. So even that we had a customer visit, the first customer visit in this business and a lot of interest shown by them. So these are the 2 new applications as far as suspension is concerned. However, in terms of that getting translated into revenues for this year is difficult. We may -- we are still targeting some very minor sales in this year for these 2 products.
Now the second part is the product diversification like we have done for sunroofs. So yes, you rightly said, the diagnostic is the lens that we are looking at. And we are still exploring. Even in suspension space, we are exploring a -- I mean we are exploring some targets to add to our technology bouquet, and augmenting our technology strength from some experts in this field. So these -- as of now, we don't have anything to share, but hopefully, I would say, in -- as I said, in this year, definitely, we will be able to share more details on the same.
Got it, sir. Sir, can you share the -- Rishi sir, can you please share the CapEx of FY '25 for stand-alone and consol?
So Mumuksh, stand-alone, we are looking at INR 100 crores to INR 120 crores. Usually, we do INR 30 crores of routine CapEx. Apart from that, there will be capacity enhancement CapEx for de-bottlenecking and there will be some on the digitization and the IoT this year. And for Inalfa, well, we have yet not formed up. Looking at the orders, we'll have to decide when do we put the line, but give and take INR 40-odd crores would be sort of the expense on capacity enhancement over [ more ] line.
Okay, sir. And just lastly, sir, ...
Sorry to interrupt you, sir. May I request you to rejoin the queue for your follow-up questions. The next question is from the line of Viraj from SiMPL.
Nikhil, in place of Viraj. Congrats on good set of numbers. First, on the base business, sir, if we look at our gross margin profile, it's still in the 24%, 25% range, even though 2-wheeler, which is a better margin business as contribution has increased. So how should we look at this margin profile improvement. Even the product mix is improving while the gross margin is still the same. So if you can just share any thoughts over there?
So Nikhil, again, you've already seen improvement in gross margins in this quarter. Two prongs to that. One is the sales mix within the segment as well. So premiumization is definitely going to help us. And to that extent, the new orders that we are winning will help us improve that piece. While you are right that overall 2-wheeler business is better in terms of margin, that improvement in margins of passenger car will also improve the overall numbers.
And having said that, the cost reduction program, Core 90 that we run year-on-year, we have identified several opportunities, which we will kick -- which we've already kickstarted this year. And we still stand to what we had shared last time in terms of moving into a double-digit -- moving into the double-digit...
Okay. And on the export part, on the e-bike, you mentioned that we are still developing the product and probably the revenue kick in will not happen this year. But on the DAF, I think this -- the additional orders, we've been talking about for last 2, 3 quarters in terms of new products, which we have won. So where are we in terms -- what is the status over there? And when do they start commercializing? Some idea, like is it this year, next year?
Which one? You're talking about the e-bikes?
The DAF exports.
The DAF exports. The DAF, we are already exporting to them. We are selling cabin dampers to Europe and they extended us to Brazil as well, so that is happening. Now we were always looking at adding a new product, which is the main damper in the truck, which is the axle damper. So even that is now -- they have already sent us RFQ and we have almost finished our commercial discussions. So that SOP will definitely not happen next year, but it will be in '26, '27. Yes, in '25, '26.
'25, '26.
And as far as e-bike is concerned, you should understand that it's a totally new area. So our, let's say, there's no commonality of customers or commonality of markets for us. So it's a completely, what you call, new area for us. So that's why we have now narrowed down on some global experts who have been in this business. We have finally found -- located a couple of them, and this should help us streamline our efforts and convert our product into actual sales. That we are targeting some sales this year. Some marginal sales to just kick off the journey.
Okay. And last question from my side. So our stated ambition was to reach the double-digit margin. And now if we look at the industry growth -- auto industry growth, the numbers are more like gradual versus what we've seen in last 2 years. Would you say that there is still a lot effort -- lot left in our P&L to move to the double-digit margin? Or is it we have to sustain at 15%, 18% growth to move to that double-digit margin? So is it more operating leverage driven? Or do you have enough leverage to pull probably and reach that closer to that double digit margin. So how should one understand here?
Yes. So one thing, of course, Nikhil, is that if you look at the sunroof business, clearly, it is going to be margin-accretive. So that is as far as sunroof business is concerned. But now on the core business and on the suspension itself, there are several levers like exports and aftermarket, which we are pushing.
And yes, you have seen the improvement now we've come to 9%. Obviously, tailwinds and let's say, leverage based on volumes will help. But nevertheless, we are looking at improving our own efficiencies through automation, through the Core 90 program and take this up further. So we are not telling that we have to -- we are stopping here as far as EBITDA, our commitment remains on double-digit margins.
The next question is from the line of Nishant Chowhan from Elara Capital.
Sir, most of my questions have been answered. I just wanted one clarification. So did you call out the revenues for sunroof business in this particular quarter? Because I think I missed that number.
We said it's about INR 60 crores for the quarter that went by, Q4.
Okay. So INR 60 crores revenue in Q4 and a positive EBITDA is what you mentioned?
Yes, yes.
The next question is from the line of Abhishek Jain from AlfAccurate Advisors Pvt. Ltd.
Congrats on a strong set of numbers. Sir, you have won the business for the new Swift. Your SOB is around 30%. So how much incremental revenue are you able to generate in FY '25 because of this and will it help to increase your market share in passenger vehicles, which is now around 24%?
I had some difficulty understanding. Can you repeat it once?
Hello sir, are you going to hear me?
Yes, yes.
Sir, you have won the business for the new Swift where your SOB is around 30%.
Repeat just once.
New Swift.
New Swift. Okay. Okay.
Yes. And so how much incremental revenue are you able to generate in FY '25 and will it help to increase your market share in the passenger vehicle, which is now around 24%.
Yes. So definitely the new Swift, we have been -- we have got the business, which is traditionally has been our competitors. So we have got the business as second source. The SOP is to start in the next fiscal, not in this fiscal, somewhere in Q2 of next fiscal. And yes, we are expecting close to almost INR 90 crores to INR 100 crores of sales from this.
Okay, sir. And sir, in the Sunroof, you have mentioned around INR 58 crores revenue. So how much volume is supplied in the fourth quarter?
23,000.
23,000. Hello sir, you said 23,000. Right?
Yes, yes.
And this business is right now 100% subsidiary and later, it will be under JVs. So what would be the stake in the JVs and CapEx?
Abhishek, can you repeat the last part? What would be what?
What would be your stake in JV? And what would be the CapEx?
So we are waiting for some approvals post which the partner can induct the capital in the entity and then the JV will get formed. As of now, it's difficult for us to target a date.
And the next question was CapEx, right? As we mentioned, we would be looking at a line -- a new line end of this year, early part of next year. The estimated CapEx would be around INR 40 crores.
Okay. And sir, in your Sunroof, you told about that this quarter volume was 23,000 units. But you are saying that for monthly, then it would be around 10,000 in the coming quarter. So I'm not able to understand that.
That's per month.
Yes. So see, 23,000 is for the quarter. In fact, not for the quarter. To be precise, we started SOP in the month of December. So about 23,000 from December, which was a very nominal figure, but Jan, Feb, March of '24, right? But we were hitting a production of 8,000 per month in, let's say, February and March. Now that has gone up to 10,000 because the Hyundai new Creta is doing well. So this is 10,000 [indiscernible].
And at a full capacity of the 2 [ labs ], what would be EBITDA margin and ROC?
Well, we don't share that. But yes, clearly, this is EBITDA accretive. So we will have a clear double-digit EBITDA margin at the full sales.
My last question is how much current content per vehicle in the Ola and how much share of business is that?
How much what in Ola?
Content per vehicle.
Sorry, again, we don't share the figures of content per vehicle. But suffice to say that Ola, I mean, both the front fork and the shock absorber is 100% with Gabriel.
The next question is from the line of Kunal Sabnis from Nine Rivers Capital.
Congrats on a good set. Sir, on the Sunroof, the first question on Sunroof, it translates to about 25,000 per unit, the numbers you have shared. And you are running at about 60% capacity, I mean 10,000 run rate per month and a 2 lakh sort of capacity, currently. By when do you expect to hit based on your expectations, when do you expect to hit full capacity in -- on the first line?
Once we have this KIA platform starting in Q4 of this year, we should be somewhere near hitting our capacity.
And that should translate to about INR 500 crores of revenue run rate going forward from there if you hit like 2 lakh units?
Well, yes, I mean the pricing, again, while you did some quick back of the envelope calculation, the pricing is not exactly that. And there are obviously some considerations of the customers based on property gains, et cetera. But yes, I mean, I would -- again, as it is obvious, the guess would be INR 400 crores plus, yes.
Got it. Got it. Got it. And how much time will you take to add the second line?
One year.
One full year, you will take to just add the line, right?
[indiscernible].
Got it. And secondly, sir, on the margin bit. So you were at 9%, right, it's a great scale up from what we have seen a year or 2 ago. And with the 2-wheeler mix going up, you have Sunroof margins, which will be accretive and PV is margin improving. I mean, is it good expectation too that you'll do sort of 10% EBITDA this year?
Well, I can say it's a good expectation. Yes.
The next question is from the line of Mahesh Atal from Atal and Associates.
Sir, my question would be on your actual damper. What's the kind of market size in that particular space, which is a future product? I think you have mentioned it as a future development in your presentation. What is the budget for this?
It was accident of opportunity that we are discussing, is not a very big one. But yes, looking at the commercial vehicle, it definitely is significant. So it's almost INR 25 crores per year sales that we are looking at. But the important thing there is that we are not looking at only this. This will open up the axle damper as a product for us for the global customers. So it's more important from that point of view.
And my second question is on Railways. Sir, I think when you -- in the last con call, I remember that you told that the top line is not that -- I mean, that great, but it adds to the bottom line. So how are we looking at Railways as hitting our top lines going ahead? Because there's a lot of traction coming from Railways like wheels. So how do you see Railways panning out for you?
Yes. So Railways, definitely, I mean, we still maintain that while the top line is not very good. And growth, while it has been good last year, post-COVID, there has been some recovery as far as production is concerned. But these are, Indian Railways being a government entity, rate of growth is very slow. So I mean, let's say -- I mean, if you talk about the coaches LHB coach production, which last year was about 5,000. And this year, it's 5,600. Total coaches is going from, let's say, 7,000 to 7,600 or 8,000.
The rate of growth is not -- the absolute size also is not very big. But yes, as I already shared, the good part is that we are now there on LHB, we are there on EMU, we are on loco, we are there on Vande Bharat. So every need of Indian Railway is catered to by Gabriel. And this is a tendering business. So yes, I mean, obviously, we cannot expect more than a 25% share becomes difficult.
Okay. And coming to Sunroof, sir. So basically, when you say that you're already in Creta now. Are we also targeting other brands like why are we waiting until our fourth quarter just to -- I mean, when the Kia's electric, whatever version is going to come. If you hire a world with them, whatever it is. So why are we not targeting other than the capacities are already in line and why to wait until fourth quarter? Because I think there is no -- I think you are the one Indian player I think. And who are you competing with in India, if you can throw some light on that particular segment?
Yes. So the first player in Sunroof actually is Webasto of Germany. They have a fully owned subsidiary in Pune and they're also putting up a plant in Chennai -- they've put up a plant in Chennai. And the second is Golde, was earlier CIE Golde. We have a third player. And second, even if we wish to, we have to wait for the customer to launch the product. So we have won the business of Kia. Now the SOP of the customer is in the month of January. So obviously, we'll have to wait till then.
Now the second -- the other part is, yes, with regard to other customers, we have already had very detailed discussions and meetings with all our customers because we have -- I mean, as you know, we have excellent relationships with Tata, Mahindra, Volkswagen, Maruti and all customers. So we already had several discussions.
The good part is we received RFQ from almost all of them for a new program. But yes, the start of production dates were completely impossible. So we obviously could not meet them. But yes, this is just a start. We will definitely be there for the next RFQ. That point is made. And we will hopefully see us winning business beyond Hyundai and Kia and other customers in -- somewhere in this fiscal.
My last question would be...
And this part of production, we have to find the customer and their SOP, yes.
Yes, fair enough. My last question would be, sir, if we are looking at getting good business in the Sunroof segment and when you say that it will take you 1 year time for a new CapEx to come in. So why are we not looking at -- because you said that there is only INR 120 crores of outlay of CapEx this year. Don't you think it's good for us to look into the expansion side also from now because [indiscernible] fourth quarter, I think will be off our capacity?
So let me explain. So what is more important in this is to ensure that we have a facility which can accommodate 2 lines. So that is what we have done. That's why we took a facility, which is pretty big, 170,000 square feet, where we had only one line, but we have provision for more. So that we have already done.
Now coming to the other part, the manufacturing of these lines -- these lines are imported, even the machine is imported. So that takes -- there's a lead time for that. That is why I said we have already taken the decision, and we'll be going ahead with the expansion to new lines in this year itself. But the ordering and the physical line to come will take 1 year.
So basically, what I understand is that you will be placing an order, but that delivery will be after a year if my understanding is right.
Yes, correct. Yes.
The next question is from the line of Akshay from Anand Rathi.
Congratulations on a good set of numbers. It is happening to see margins ranging up to the double digit set of, eclipse 10% to 11% in the next couple of years. Really sir, the trend of minimization has helped and you in your opening remarks, you mentioned about the European business where you would be selling -- that will be commencing by the month of July. So just wanted to know who is the customer for the same? What type of volume they're expecting? And also in the earlier comments, you talked about the INR 26 crore revenue that you will be generating from the FSB dampers. So just if you could talk about this business?
I think we have some confusion. So what I mentioned was INR 25 crores revenue we are expecting from the DAF Netherlands, which is a leading commercial vehicle manufacturers of Europe and the world. So that for the new product that we are discussing, which will happen -- the SOP for which will happen in early '25. That will be about INR 25 crores peak annual sales per year, okay?
And just similarly...
[indiscernible] there's some confusion.
Got it, sir. But what will be the European business be. OEM that we will be selling to? And so let's say, if this translates to better margins. Similarly, you would be developing the same for M&M. So how would this work out in the domestic markets and the European markets? What type of business you would be expecting for the long term?
Exports, our exports is just about INR 100 crores. So yes, this figure could have and should have been much better, which we have been telling all along. But a positive way of looking at it is the upside is much higher. And with this axle dampers, we'll open up a new product line. So that will be very important as far as commercial vehicle is concerned.
We are in discussions with two other global passenger car OEMs. I mean when I say discussions, advanced discussions of getting some new business and new opportunities as pure exports but that will fructify. In terms of getting the order, we expect them to fructify in this fiscal. But the sales will be at least 2 years from now.
Got it, sir. And sir, my second question on the Sunroof part. Again, in your comments, you mentioned that the -- so by F '25 post KIA coming up with better volumes. So we can expect revenue of around INR 400 crores for F '25 or was it one spread over the next 2 years?
Yes, we were talking about FY '25 annualized.
The next question is from the line of Amit Hiranandani from SMIFS Limited.
Sir, can you please explain more about the new upcoming product, which is solar dampers. The market size and who is currently making it, revenue and margin potential for this?
Amit, I'll just [indiscernible] will come back later -- speaking about that later. So essentially, this product, what happens in the investment world is that with the change in some direction, the [indiscernible] needs to be aligned to it so as to get better utilization of the heat. Now with [indiscernible], there is a damper that is being put which effectively helps in [indiscernible].
Now in that situation, these are large dampers, much bigger in size. And while the utilization will be very smaller, but the weight that they carry is pretty much -- is pretty high. The close product for us would be sort of a railway damper. We are yet -- so we look at the market, we have looked at who are the people who are buying. They are largely those who are doing the insulation of these panels in the country and outside. The question was with regard to solar damper for the market.
Yes. So it's a very, very big market size, the solar dampers. So -- and it's a good -- I must say, good price product as well. Margins also expect to be quite good. This is quite similar to our railway dampers. So that's where it gives us an edge to actually meet the customer requirements.
Okay. Sir, any new order wins in the Railway business? So how much Railway is now contributing within that CV and Railway segment?
Yes. So we shared last time. I mean, we are there on all platforms. There's no particular new order win. But yes, we won the order from Siemens for the loco. They've got the contract to manufacture the electric locomotives. So we have won 50% of the business from Siemens.
And then how much it is contributing now to the CV and Railway segment?
This -- again, this SOP will start later in '25, '26. It's not now. But again -- and the size of this is still, I mean nowhere near what we have. It's a decent size, but not very large.
No. I mean my question is basically how much Railways revenue is as a percentage of your CV and railway segment.?
Of CV and Railway segment. That's still a small -- I mean, I would say...
Sir, it's a small number. We really don't give a split of Commercial Vehicle and Railways. So sorry, we will not be able to share that.
Okay. Sir, my second question is on the aftermarket business. So from where the growth will come in this business for the coming 2 to 3 years? And are we still aiming for the mid-teens growth in the aftermarket?
Yes, certainly. So the growth will come by penetration into all the interiors. India is a large market and is definitely there's a good -- I mean, good offtake of aftermarket products. We are also launching new products. We had launched last year. And over the last 2 years, the tires, the brake pads we launched, we also launched cone sets, we have bush kits. Several products that we are launching and content adding to this basket, whereby we leverage the Gabriel brand. So that way, we will be able to definitely stay in double-digit margins as far as growth is concerned.
If I can just add, with the improvement in the overall passenger car sales and the models therein, there is going to be a cascading effect in the aftermarket piece as well.
Great. Great. And sir, just last quick, small 2 questions. Just on the export side, it has been doing on a Y-o-Y basis since last 3 quarters. And secondly, on the margin side, basically, on a Q-on-Q basis, we have seen EBITDA margin has improved. So what has led to that? And how confident you are to take this margin to low double digit by FY '26?
Two parts of the question, Amit. First is that while mix plays an interesting role, it is not at the level that we were banking on. These were tangible cost reduction and profit improvement projects. So -- and we've not fallen short of the forward-looking projection internally in terms of export. So that was already dated.
In terms of being confident, yes, we were -- we've stated this during the course of the whole year, and we've delivered the Quarter 4 results, and we are fairly confident of continuing this and taking it to the double digits.
And sir, on the export side, actually you're on degrowing since last 3 quarters? That's it.
Yes, one obviously the Russia piece has played out from the previous year to this year. But if you look at the numbers, the numbers are almost flattish for the quarter -- for the last 3 quarters. But yes, some impetus on DAF that we have mentioned and some improvement in the aftermarket exports is certainly going to help.
The next question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. [Operator Instructions]
Yes. So I just want to understand, sir, next 2 orders. What type of Sunroof will [indiscernible] for next 2 orders, sir?
It's currently both [indiscernible].
Great sir. And I just want to understand on the industry, you mentioned 3 players. So broadly, what kind of market share would all the 3 players would have in the market, sir?
Well, Webasto is #1, clearly, because they were the first mover advantage. So they clearly are #1. And I would say in terms of volumes, with Kia -- with Hyundai and Kia, we should become #2.
Okay. And sir, would now industry still depend on the imports of the sunroof or now the industry is localized industry in terms of volume side?
Can you repeat that, Mumuksh?
So I mean is sunroof now, so we localized in India with the 3 players? Or there is still a lot of imports happening?
It's a long way for localization. So localization levels are still very low. But yes, it will definitely improve over the next 2 years.
The last question is from the line of Nikhil from SiMPL.
Just 2 clarifications. One is on Inalfa. The current quarter margins, which we have reported is after the payout of the royalty? Or as of now, we are not paying?
So it is after the payout of the technical fees.
Okay. And secondly, Rahul (sic) [ Rishi ] you mentioned that we should be able to reach double-digit margins in Alfa. Would it be even at like 60% to 65% utilization, which we are running currently? Or would that Kia order and everything comes in, at optimal utilization, we should be reaching that?
The Hyundai program itself, we should be able to reach that.
As there are no further questions, I would now like to hand the conference over to Mr. Manoj Kolhatkar for closing comments.
Thank you. Thank you once again for all the questions. Clearly, we are seeing a lot of interest in Sunroof, which is very good to know. And hopefully, as I said, as we go along this year, we definitely hope to add -- I mean add some more interesting news as well.
And yes, nonetheless, thanks, once again, for the support and for the year that went by and look forward to an equally exciting year and a good pickup post the elections. So thank you and all the way best to everybody. Thank you.
On behalf of Gabriel India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.