Greaves Cotton Ltd

NSE:GREAVESCOT

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Greaves Cotton's Q1 FY '25 Earnings Conference Call. We have with us today Mr. Nagesh Basavanhalli, Non-Executive Vice Chairman, GCL; Mr. Akhila Balachandar, CFO GCL; Dr. Arup Basu, Managing Director, GCL; Mr. K. Vijaya Kumar, ED and CEO, GEMPL; Mr. Narasimha Jayakumar, CEO, Greaves Retail; Mr. Chandrasekar Thyagarajan, CFO, GEMPL; and Mr. Atindra Basu, Group General Counsel and Company Secretary of the company.

We would like to begin the call with brief opening remarks from the management, following which we will have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier.

[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nagesh Basavanhalli. Thank you, and over to you, sir.

[Nagesh Basavanhalli, executive]

Thank you. Good morning, everybody. I hope everybody stays healthy. Welcome to the Greaves Cotton Q1 call this morning. At the outset, let me reintroduce Greaves Cotton, the legacy company that today caters to multiple businesses, multiple revenue streams, fuel-agnostic in nature, spanning products and solutions in industries, like automotive, non-auto, telecom and a lot of B2B customers. We pride ourselves in terms of our ability to move people and move cargo and also empower lives and livelihood through our engineering solutions.

A couple of years ago, we made our journey to be a B2B plus B2C player and get closer to the consumer and extract life cycle value. As part of that, some of our digital initiatives are well underway, and management will talk about it. In summary, we are an engineering house that engineers, designs, manufacturers components in separate industries, manufacturers 2-wheeler 3-wheeler and also into post-purchase solutions like Retail, Greaves Care as well as Greaves Finance, yes.

With that, let me hand it over to management, Dr. Arup Basu, who will talk about Greaves Engineering. Over to you, Arup.

[Arup Basu, executive]

Thank you, Nagesh, and good morning, ladies and gentlemen. My commentary will be on the Engineering business, which comprises Greaves Engines and Excel. We have started fiscal FY '25 on a positive note with a revenue growth of 15% over the corresponding period last year. Both Greaves Engines and Excel performed well, with the latter registering its highest ever first quarter revenue. In recent years, our efforts are centered on building a comprehensive portfolio that serves a diverse range of sectors and categories. While we maintain our leadership position in the Engine segment, we are actively working to diversify our revenue streams beyond the engine and automotive sectors.

As I have mentioned in our previous calls, our vision is to create a future-ready energy flexible portfolio. I am pleased to report that we are making steady progress towards this, strengthening our portfolio with products designed for the industrial, marine, energy and agricultural sectors. Over the coming years, we are optimistic about seeing greater contribution from our powertrain and motion control businesses. Additionally, we are developing higher horsepower generation solutions to meet the needs of specific growth segments, such as data centers. Within the internal combustion engine segment, we are also working on developing engines that use green fuels for both automotive and nonautomotive applications.

In addition to diversifying our product mix, we are also widening our geographic footprint by expanding the share of exports and by entering suitable alliances to build a global yet local approach. We anticipate that export share will grow as our lines of business scale up with greater revenue contribution expected from the U.S. and EU regions in the coming years. Going again to our Q1 FY '25 performance, we saw strong results across both automotive and nonautomotive segments. We introduced a range of cutting-edge, robust and environmentally friendly CPCB IV+ products during the quarter, which received a positive response primarily driven by demand from infrastructure, realty and industrial segments. We are optimistic about the potential in this space in the backdrop of the new CPCB IV+ regulations that is steering the industry towards a more sustainable trajectory.

During the quarter under review, another highlight that deserves to be mentioned is the equipping of Assam Inland Motorways, with over 300 Greaves Engines. During the quarter, our focused approach on improving efficiencies and better inventory management has also resulted in an improved working capital cycle for the business. Our emphasis will continue to be on innovation-led product portfolio renewal in the alternate fuels, electric components and motion control areas. Thank you.

For the next commentary, I now hand over to my colleague, Narasimha Jayakumar. Over to you, Narasimha.

[Narasimha Jayakumar, executive]

Yes. Thank you, Arup. Good morning, everyone. This is Narasimha Jayakumar, CEO of Greaves Retail. We've had a good start to the financial year with revenues of INR 148 crores for Q1, up 7% Y-o-Y. I would like to talk a little bit about the highlights for our first quarter. Our diversification into new business segments leveraging our core competencies are yielding results. During the quarter 1, we expanded our [ part lines ] getting into 2-wheeler multi-brand parts, electric vehicle parts and construction equipment parts beyond our traditional 3-wheeler parts.

Specifically on the electric vehicle parts, we have a full range of motors, controllers, chargers, et cetera, and we have signed several new OEMs in quarter 1, including one prominent player. Our construction equipment parts have now expanded fully to include the Excel portfolio catering to the domestic market in India. Our Greaves Care outlets have expanded to 163. These are on a franchisee-owned, franchisee-operated model. They now service a full range of multiple brands, vehicles, small commercial vehicles, which include increasingly electric 3-wheelers and electric 2-wheelers and other small commercial vehicles.

Leveraging digital and digital technologies remains the key strategic focus area for us, and we continue to invest here. Our Greaves Upahar app, our mechanic loyalty program, which we launched in the previous quarter, has now scaled up substantially to include more than 7,000 scanning mechanics on a year-to-date basis. We are very optimistic about Greaves Retail. We continue to be an asset-light, cash-generating business and a high ROCE business.

Now I'd like to hand over to my colleague Vijaya Kumar, Chief Executive Officer of the Greaves Electric Mobility Private Limited. Thank you.

[K. Kumar, executive]

Thanks, Narasimha. Very good morning, ladies and gentlemen. Thank you for joining us today on our earnings call. I will briefly talk about the performance of Greaves Electric Mobility to begin with.

We are very pleased with the way we have started the year. Our 2-wheeler volumes have increased by 10% and our 3-wheeler volumes by 19% quarter-on-quarter. One of the highlights for the quarter under review was the introduction of Ampere Nexus. It's India's first high-performance family scooter, equipped with the safest LFP chemistry battery and hybrid swing arm with twin suspension, starting at a very attractive price of INR 109,900 ex-showroom. We are very pleased to say that it is designed, developed and manufactured entirely in India.

And we are also very pleased to report that the product has garnered a very positive response in terms of inquiries, in terms of bookings, and it continues to hold the customer preference. We continue on the 2-wheeler to be among the top 5 players in the E2-wheeler segment with a market share of 3.4% in Q1 of FY '25. Furthermore, we are also revised our -- on the 3-wheeler side, Greaves ELTRA City pricing very aggressively to an on road price of INR 370,000 with our enhanced efficiency on our bill of material.

Let me talk a bit about our near-term objectives. So we intend to capitalize on the highly fragmented L3 E-Rickshaw business by leveraging on our pan-India network and synergies offered by our well-established value chain. We are looking to scale up meaningfully over the years within the L5, and our focus remains on ELTRA, the electric scooter, electric 3-wheeler, which has a 10-kilowatt hour battery and which delivers the highest mileage of 160-kilometer today in the industry. We are already working towards expanding our dealer network and enhancing our financing partnership in this category.

On the subsidy front, our 3-wheelers, ELTRA City Passenger and ELTRA Cargo are already eligible under the MHI scheme and are receiving subsidies. We are very happy to share that MHI has communicated that our 2-wheeler electric vehicles under Ampere brand are eligible to be tested by the relevant testing agencies for EMPS registration and any other future schemes of MHI and secure subsidies. That -- this is happening as we talk, and that is one of the good news, which we foresee for our coming quarter.

That concludes my opening remarks, and I would like to now call upon our CFO, Akhila Balachandar, to discuss the financial performance in detail. Over to you, Akhila. Thank you so much, ladies and gentlemen.

[Akhila Balachandar, executive]

Thanks, Vijaya. Good morning, everyone. I'm delighted to share that we started the year in a very positive mode, delivering strong financial performance in this quarter. Our consolidated revenue for Q1 stands at INR 640 crores. On a stand-alone basis, Greaves Cotton saw a revenue growth of 12%, reaching INR 445 crores. Our recent acquisition of Excel has proved to be value-accretive deal, contributing INR 63 crores in revenue and achieving a growth of 13% year-on-year with robust margins of approximately 28%. Combining the performance of GCL and Excel, we witnessed exceptional financial results, reflecting the success of our strategic efforts to diversify our product portfolio over the past few years. Both our Engineering and Retail businesses recorded impressive growth at 15 percentage and 7 percentage, respectively. Our Electric Mobility segment reported a revenue of INR 127 crores, driven by a strong focus on new product launches and a clear path to profitability.

In terms of profitability, our consolidated EBITDA reached INR 27 crores with PBT at INR 15 crores. On a stand-alone basis, our EBITDA for the quarter was INR 50 crores compared to INR 45 crores in the same period last year, making a year-on-year growth of 12% and resulting in healthy EBITDA margins of 11.3%. As a combined entity, GCL and Excel achieved an EBITDA of INR 68 crores with margins at a healthy 13.3%. Stand-alone EBITDA stands at INR 49 crores. Our commitment to improving margins has been accompanied by a focus on effective working capital management, ensuring that our ROCE remains extremely strong, over 30%.

On the balance sheet front, we continue to maintain almost 0 debt position with stand-alone cash of INR 550 crores, which will support our future expansion and investment plans. As we look ahead, we remain steadfast in our commitment to growth and transformation. We are confident that our strong foundation and unwavering dedication to excellence will drive our success in the upcoming quarters and help us seize the exciting opportunities and future goals. We are also keeping a close watch on the current geopolitical situation and its potential impacts. Despite these external factors, we continue our internal efforts to enhance profitability.

With this, I open the floor for Q&A.

[Operator]

[Operator Instructions] The first question is from the line of Kunal Sharma from SP Capital.

[Unknown Analyst]

Am I audible?

[Operator]

Yes, Kunal. Please go ahead.

[Unknown Analyst]

So three set of questions I have. And first of all, congratulations on a good set of number. So first, I wanted to know about, there is a negligible loss on the consol level, right? And so what drives the growth in the bottom line despite there is no support from the PLI and government-related scheme. So what strategy that the company has adopted, and what would be the driver ahead to become profitable on a consol basis?

[Akhila Balachandar, executive]

Yes. Thanks, Kunal, for the question. Over the last 4 quarters, we have taken this as a commitment to be on the journey of faster profitability. Constantly and consistently our losses in the subsidiary has shrunk. At the same time, at Greaves Cotton, we have worked on our own commitment to improving the margins. If you take our journey from the last 3 to 4 years, we have now reached our pre-COVID levels of almost 11 to 13 percentage of EBITDA margins. And this is a journey we keep continuing on. All our efforts at an internal level are to ensure that the subsidiary moves on a path to profitability. And at a consol level, therefore, we ensure that we will have far superior EBITDA results over a period of time.

[Unknown Analyst]

Okay. So can we expect like in the coming quarter, we can be profitable on a consol level?

[Akhila Balachandar, executive]

Honestly, Kunal, as a corporate policy, we do not give future guidance. But let me assure you that this is the directive of our Board, and this is what the management team is fully committed to.

[Unknown Analyst]

Noted, noted. Second question on that -- during the quarter, there was something different we saw on a consol basis. We did -- like we did way better on a sequential basis, but which I can understand, thanks to mobility, I guess. But on a stand-alone basis, actually, we have degrown sequentially. So what cause behind the stand-alone numbers, which used to be -- always used to be our star performer until now?

[Arup Basu, executive]

Akhila, do you want to take that?

[Technical Difficulty]

[Operator]

The line has dropped. I'm just joining it back. Participants, please stay connected while we reconnect the management line.

[Akhila Balachandar, executive]

Hello.

[Unknown Analyst]

Yes, am I audible?

[Akhila Balachandar, executive]

Yes.

[Unknown Analyst]

So I hope -- like my second question on, during the quarter, there was something different that we saw on a consol basis. So we did quite better on sequential basis. I would understand that, that would might be because of the mobility business. But just wanted to understand the stand-alone level that we have degrown sequentially. So can you please throw some light on that, what causes behind the standalone numbers that I would say always used to be our good performance until now?

[Akhila Balachandar, executive]

Yes. Essentially, there is some amount of cyclicality in our business, where Q3 and Q4 being the season always do much better. And therefore, it could be much better to see the growth on a year-on-year basis rather than the quarter-on-quarter basis. And if you look at the year-on-year performance, at a stand-alone level, we have grown 12%. At the same time, we have managed to improve our EBITDA also.

[Unknown Analyst]

Okay, okay. Understood. And last question on the Excel segment, the margin has been contracted. And if I'm not wrong, that we are supposed to maintain a guidance of nearly 30% plus margin. So there were like there is a two-parter question. First, wanted to say -- what impacted during the quarter, which is related to the margin contraction? And then second, are we like maintaining the guidance of 30% margin for the Excel Controlinkage?

[Akhila Balachandar, executive]

Two parts to your questions, and let me take it that way. On the revenue, we have -- if you remember, we took over this business in FY -- May '24 -- May '23, I'm sorry. And when we took over the business, the business was at a run rate of around INR 187 crores annually. We have grown the business last year, and we exited roughly INR 264 crores. We have a very long-term plan for this company, and we are working on this internally. In terms of quarter-on-quarter, if you take compared to Q1 last year, we have done extremely well. We have grown substantially. If you take sequential quarters there has been a flat kind of a performance. And I think that's a blip, and we will bounce back in the coming quarters. In terms of margin, there has been change in the product mix. And this will happen over a period of time as we grow the business. But yes, we are committed to a 30% range in the long term.

[Operator]

[Operator Instructions] The next question is from the line of Subahu Sanghvi from Winshine Financial Services.

[Subahu Sanghvi, analyst]

Am I audible?

[Operator]

Yes, please go ahead.

[Subahu Sanghvi, analyst]

Yes. My 2 questions is on EV only. The first question is on distribution network. Actually, I'm from Mumbai, and I'm also a shareholder of the company, and I had a very bad experience of reaching out to the dealers. It took me 6 days to reach the dealers because all the numbers were unresponsive whatever given on site or maybe I got from the company. So I just want to understand what management is doing to review the distribution network? Because you can understand that good distribution system is required to distribute the good product, to sell the good product.

[K. Kumar, executive]

Vijaya Kumar, this side. So I regret the experience which you had with our product, and I understand you are from Mumbai. So in the last, I would say, 2 years, we had issues with our distribution network, especially the dealer network, where we had gone through a revamp. So as a corrective process, we are reestablishing our complete distribution network, predominantly in the larger cities. And the centralized service back up, which we are creating from here, we will be able to take it -- all consumer companies, we are handling it directly from here in terms of reaching out the customer. And we have been able, in the last 1 quarter, to bring down our consumer complaints by 95%. The way which we track it, whether it is service center wise or the customer-wise details, which has been done. We have -- so that has been one of our key strategies in terms of improving our response time to customers as well as to the dealers. And that is showing results in terms of growth in the first quarter results, which we had just published.

[Subahu Sanghvi, analyst]

Sir, you -- the question was there that when a prospective customer is not able to reach the distributors, how we will test drive the vehicles or anything? So the consumer complaint is a secondary. Once we buy a key product, then the consumer complaints comes into the picture.

[K. Kumar, executive]

So we have various actions, whether it is a direct call center or the website. So what I suggest, I'll take your number and then I'll reach out to you post this call and we'll take it from there, if that is okay.

[Operator]

The next question is from [indiscernible] from [ Nassar ] Investment.

[Unknown Analyst]

Am I audible? First of all, let me congratulate the management on a turnaround set of numbers. Like last quarter, the management said that quarter-on-quarter, you will see improvement. I think we have started seeing that ultimately. Sir, my first question would be on the Excel front. Now Excel, this consists of 10% of our business right now. I would want to know whether this -- what is the headroom for growth on this? And would this extend to factory floor automation and futuristic stuff like that?

[Nagesh Basavanhalli, executive]

Arup?

[Arup Basu, executive]

Yes. Thank you. So I think there is -- Excel is focused on certain niche areas in terms of specialty sub-assemblies. And I think the headroom for growth is quite substantive across the applications because at the end of the day, Excel's products are those 6 -- 5, 6 items with which one controls a vehicle or a construction improvement. And they will always be relevant irrespective of the technology that keeps changing. That's point number one. In terms of the manufacturing excellence and all the other aspects that you mentioned, they are equally applicable for Excel as in any other manufacturing company so far this year. Thank you.

[Unknown Analyst]

No, what I would want to know is sir, as factories get automated and things like robotic arms and all that come into play, would Excel's product be used there?

[Arup Basu, executive]

Excel's products are used in vehicles in terms of the control, so accelerator, brake, clutch, steering wheel, gearbox and park brake. These are the items used to control any vehicle. So that's their portfolio. And that will be relevant as all of these grows across all the applications.

[Unknown Analyst]

Okay. And sir, point number two, see, stand-alone Greaves products are doing extremely well. I mean it's a robust P&L account. But it seems to be sucked in by the EV business. Now is there a broad thought on the terminal value versus sustaining value of this EV business, sir?

[Akhila Balachandar, executive]

Yes, sure. We are -- the EV business is a very long-term business. We are extremely bullish on the prospects of this business, and it's growing. There have been a few blips that we have seen in the last year, and the management has stayed very focused and committed in working with the government and resolving all these issues. Parallelly, at the internal level, we have been working on R&D, developing new products, strengthening our supply chain systems, improving our systems and processes, distribution network, we'll have to refocus that I heard someone earlier in the call today.

So macro, we are very bullish on the EV story for India. And therefore, we are focused -- as a product portfolio, we're focused on both E2-wheeler and E3-wheelers. We are not restricting ourselves to one category. Two, at a company level, we are focused on adding to our product range, not 2-wheeler, 3-wheeler, we are focused on improving our internal efficiencies and therefore, on a path to profitability. Given both these, I think the Boards of both these Electric Mobility and Greaves Cotton, the parent company, stay committed to this business. And therefore, I'm not really sure about the terminal value point that you are raising. We, as a company -- both the companies are committed to do this business is what I would like to share.

I hope I answered your question.

[Unknown Analyst]

Sir, EV thing, turning around during the next few quarters?

[Akhila Balachandar, executive]

Sorry, can you repeat your question, please?

[Unknown Analyst]

Would the EV business have a definitive turnaround in the next few quarters?

[Akhila Balachandar, executive]

Sir, that is the agenda. And if you take the trajectory of the last 4 quarters, 5 quarters, the management, as I said, has been focused externally on resolving the issues that have been raised by MHI and internally on improving the product portfolio, improving the systems, process, working on cost efficiencies. And the results are coming to show, right? But in terms of guidance, I would not be able to share any guidance.

[Operator]

[Operator Instructions] The next question is from Ritu Kumari from LK Investments.

[Ritu Kumari, analyst]

I have 2 questions. So the first one is, how large do you believe the nonauto segment of the Engineering business can become in the next 2 years? And what will drive this growth? If you could just help me with this?

[Akhila Balachandar, executive]

Yes, sure. First, let me -- we will not be able to share any guidance. Second, let me just throw some light on the big picture. Essentially, the nonauto segment is fairly large, comprises of gensets and applications of the engines for other purposes, like industrial engines, it could be marine and so on and so forth. In terms of the application of the gensets itself, the use cases are increasing. We have a lot of infrastructure projects. Railway has launched with ambitious plans, and therefore, there is a use case out there. We have the telecom towers, we have malls, commercial complexes. So the use cases are growing, and the industry of each of the use cases is also growing parallelly. There is also a good potential for exports. Of course, we have to be very careful and selective given the current geopolitical situation. So I would like to share this at a macro level, and therefore, the industry we are playing in is fairly large. We have our own growth [indiscernible], and we are progressing on the same.

[Operator]

The next question is from Saket Kapoor from Kapoor Company.

[Unknown Analyst]

Firstly, if you could give some more color on the Cables & Control Levers segment. What are we alluding to in terms of the Cables part? And also on the utilization level across the verticals of Indian, EV and cable?

[Nagesh Basavanhalli, executive]

Arup?

[Arup Basu, executive]

So on Cables, essentially, the product has 3 configurations. One is rod type cables. The second is push-pull cables. And the third are electronic sensor-based applications, which does the same job. Like I mentioned a little while ago, the accelerator, brake, clutch, steering wheel, gearshift lever and park brake are the elements used for controlling commercial vehicle or an excavator or whatever it is. So these undergo changes in technologies in terms of how one utilizes them. And that's the portfolio. So all the sectors where these are used, including, say, marine. For example, the boat throttles are also used to control the engine while you drive a boat. And the applications are across geographies because anywhere where these are used and these are applied, get you. So that's really the Excel Controlinkage portfolio that we are talking about.

[Unknown Analyst]

So to make it understand engines and cables are -- we are selling the same to the same set of clients and the portfolio are same. Does that along -- the engines are sold along with the cables part, the clientele is same, as you mentioned about the marine part also?

[Arup Basu, executive]

So it's the similar type of ecosystem. We don't necessarily have to sell all our items to the same customer. But overall, they are complementary customer sets. So all the large OEMs and anyone who's buying an engine potentially is a customer for this. Not all applications require push-pull cables. Many of the applications require just one cable, which is a pull cable. So the client -- the customer base, particularly the OEM customer base, has a lot of overlaps and complementarity, which is where we get our synergy benefits. Globally, there are -- the aftermarket ecosystem works with all of them, and that's the other area of synergies because the global large aftermarket ecosystem buys all the portfolio that we have, and that's the other area of synergy we are looking at. Thank you.

[Unknown Analyst]

Utilization levels, sir, can you throw some light?

[Arup Basu, executive]

We are working on a fairly high level of utilization in terms of if you see the kind of growth that we have had in the last couple of years. So they are in the 70s and 80s percent, I would say, overall. Since this is a sub-assembly, there isn't a very keen measurement that can be done. But by and large, there is a fair amount of -- we have also kept the manufacturing system modular so that we are able to respond quickly to spikes in demand without creating a huge overhead in terms of capacity.

[Operator]

The next question is from Sourabh Arya from Oaklane Capital.

[Sourabh Arya, analyst]

Can you hear me? Yes. So my question is actually on non-auto side, and it's related to CPCB IV. Number one is, can you tell me what is the price hike which is happening with CPCB IV? And number two, can you tell me what is the market share company has in this business?

[Arup Basu, executive]

So we will not want to discuss price hikes and price changes because that's quite dynamic and that is done customer to customer. By and large, because of the changes in regulations, there has been a certain increase in the overall cost structures, particularly given that the configuration of the new gensets have changed. That's one side. And in terms of market share, we are -- we have a relatively low market share as of now, which is why we see significant headroom for growth in this area.

[Sourabh Arya, analyst]

But low means, how much, less than 10%? Or...

[Arup Basu, executive]

Yes, it's little than 10%.

[Sourabh Arya, analyst]

Okay. But do you believe I mean to say there is a scope to increase this? Or it's a very competitive market, that increase would be very tough?

[Arup Basu, executive]

There is a lot of -- there is space for growth, and it is a competitive market. Industry itself is growing because all applications require a backup genset facility because we don't have that kind of reliability yet. There are technology changes also coming. There is also the efforts to have a lower carbon footprint options in terms of these. So all taken together, the demand side is good because it's linked to the overall economic growth of India and any geography. And linked to that, any industrial growth that's happening, whether it's in manufacturing, whether it's in retail, these requirements are there. And like our CFO just mentioned, whether it's railways, telecom, all of them require backup power. So the pie is growing. And I think what's happening is the companies with the good products will be able to garner better market share as we go forward and who are investing in R&D and innovation and technology like we are.

[Sourabh Arya, analyst]

But just one thing. On CPCB IV side, you have made changes in 500 only. So we will not be able to sell 500 to 800 anymore because our product portfolio has gone through changes in 500 only. Is that right?

[Arup Basu, executive]

We have a continuous review on our portfolio in terms of KV ratings. So we do have higher ratings, and it depends on what's the application and what's the customer ask. As I said...

[Sourabh Arya, analyst]

For CPCB-4, you have said 500 only, right?

[Arup Basu, executive]

There is a change in the sizes that customers require and also the portfolio that we are offering. So we are also continuously looking to build on our portfolio and look at the application and supplies.

[Sourabh Arya, analyst]

Sure. Maybe if I can just -- connected question to this. So were you selling from 500 to 750 MV earlier, and that business was how much proportion of overall non-auto in this...

[Arup Basu, executive]

We don't maintain this kind of granular breakup and share.

[Operator]

The next question is from Rahil Shah from Crown Capital.

[Rahil Shah, analyst]

Can you hear me?

[Operator]

Yes, please go ahead.

[Rahil Shah, analyst]

Yes. Just one question. Do you have any plans for demerger of any of the businesses in the future, particularly for the e-mobility since you are very bullish on the whole market and the growth prospects? So any thoughts on this?

[Akhila Balachandar, executive]

Sorry, can you repeat the question? I did not understand.

[Rahil Shah, analyst]

For any of the businesses that Greaves Cotton has, let's say, Retail, Finance, technologies across all the businesses, for any of them, do you plan to demerge? Particularly I'm asking for the e-mobility.

[Nagesh Basavanhalli, executive]

I can take that question. So I think as the Board has said in the past, this is a Board-related matter. They're exploring all options for both GEM and GFL, right, in terms of options. And as and when there is any other movement, we will explore that. But right now, the commitment is to continue to help build these businesses.

[Rahil Shah, analyst]

Nothing concrete as of now?

[Nagesh Basavanhalli, executive]

Yes. As and when it develops, we'll answer that, yes.

[Operator]

The next question is from Nilesh Joshi from Property Wealth.

[Unknown Analyst]

Sir, my question is related to Electric Mobility. Generally, the Engine business, Retail business and Excels are making a good amount of profit. And in this quarter, particularly Q1, Electric Mobility has reduced the EBITDA loss. But surprisingly, the volume of the 2-wheeler has increased by 9%, 3-wheelers by 20%, but revenue grew only by 5%. And company succeed to reduce the EBITDA loss by 20%. It means the cost has been reduced by much -- more than the 20%, then it is possible. Which cost and is the cost -- current costs are sustainable for the next quarter also?

[K. Kumar, executive]

Yes, I'll take that. So you are right, actually. What we have done in the last, I would say, a couple of months, we have worked aggressively on our bill of material in terms of key components, and we've been able to make considerable inroads in terms of our costing of e-components and products on one side. The other side is, broadly, we have a little bit our cost -- sort of a cost rationalization, wherein we are getting closer to building our efficiencies much higher than where we were. Overall, to answer your question, the answer is, yes, we will be able to maintain these cost efficiency levels in the coming quarter and onwards to the year because these efficiencies will start showing better results as the numbers keep improving further from here.

[Unknown Analyst]

But the revenue grew by 5%. It means that some of the cost benefit has been passed to the ultimate customer. Otherwise -- because 2-wheeler grew by 9%, 3-wheeler by 20%. And the cost of the 3-wheeler is higher than the 2-wheelers. So have we passed the part of the cost benefit to the customer?

[K. Kumar, executive]

It depends. The answer is again yes and no. It depends on the product and the segment and the competitive landscape of each product. Wherever we had our margin secured and competitive intensity high, we have passed on some portion of it. The other portion, we have retained it. So that's the complete and comprehensive work, which is happening on all products and product portfolios.

[Unknown Analyst]

So can I say that because of the cost optimization, we could reduce our EBITDA loss?

[K. Kumar, executive]

Yes, the answer is yes. And that it will continue, that effort will continue. And next quarter, you will see the results in the right direction. And hence, that is sustainable.

[Unknown Analyst]

Okay, sir. And my next question is related to the Engine business. Sir, this quarter, the EBITDA margin is less than the double digit. Earlier in the quarter 2 and quarter 3 of the '24, we have reported a double-digit EBITDA margin. Can we maintain on a sustainable basis the double-digit EBITDA margin for the Engine business?

[Akhila Balachandar, executive]

So on the Engine business, we have -- again, if you take last 4 years, been consistently working on improving our [ RMC ], the cost and also the product mix. As a result, we have been able to improve our EBITDA margins. If I take even last year, the margin was 6.7%. This year, quarter 1 year is 9.1%, clearly a 3 percentage plus improvement, correct? Now this is a journey. There will be on a quarterly basis a little amount of ups and downs depending on product mix, cyclicality. Long range, I mean, if -- as I said, if I look at the last 6- to 8-quarter journey, whether it is Engines, whether it is Retail and therefore GCL as an overall company, we are now back at 11 to 13 percentage. And this is the range that we would target our EBITDA margins to stay at.

[Operator]

The next question is from Anubhav from Prescient Capital.

[Anubhav Mukherjee, analyst]

Am I audible?

[Operator]

Please go ahead.

[Anubhav Mukherjee, analyst]

So I have a question on the like participation in the subsidy scheme. So like what is happening on that front? Did we like try to participate in the EMPS scheme? Because there was a news item that [ Revolt ] motors, earlier it was part, but then subsequently paid the subsidy back and it was again allowed under the EMPS scheme. So for us, have we paid back the earlier subsidy claims by the government? And did we try to participate in the EMPS scheme? Some color on that will be useful.

[K. Kumar, executive]

I'll take that question. So as mentioned in my introductory speech in the beginning of the call, we are already on ELTRA L5 3-wheeler, we are eligible for a subsidy. And on the 2-wheeler side, we communicated that we have got the communication from MHI that we are eligible for the subsidy on the EMPS scheme, and they have instructed the relevant testing agency to onboard us, wherein we are waiting for the further communication within next week from the government.

[Anubhav Mukherjee, analyst]

Okay. So we'll be like eligible from...

[K. Kumar, executive]

Yes, we are eligible. So we have already got the confirmation, and it now is in the government process.

[Operator]

The next question is from Nishant Shah from Moneybee Investment.

[Nishant Shah, analyst]

Am I audible?

[Operator]

Yes. Please go ahead, Mr. Shah.

[Nishant Shah, analyst]

Just wanted to understand -- so my -- part of my question has been answered in the previous questions. So just wanted to understand, as far as the volumes are concerning in your 3-wheeler business, can we assume that the spreads are higher in 3-wheeler volumes?

[K. Kumar, executive]

Sorry, can you just repeat your last line?

[Nishant Shah, analyst]

So just wanted to understand, can we assume that the spreads are higher in the 3-wheeler business compared to the 2-wheeler business, the spreads and the margins?

[K. Kumar, executive]

As of today, yes, the 3-wheeler margins are relatively better than the 2-wheeler as we were eligible for the subsidy on the 3-wheeler. But going forward, the outlook for -- I mean, it will be quite similar, and it will be -- it's all on the positive side.

[Nishant Shah, analyst]

All right. No, because my question was, is the business planning to focus more on the 3-wheeler side given that the margins are higher compared to the 2-wheeler business? Because I see that your volumes in your -- on a year-on-year basis, your 2-wheeler volumes are reduced. But your 3-wheelers have improved and your revenue for the E-Mobility business is not reduced by a substantial amount. So given that the 3-wheeler has a higher margin potential, will the business be focusing more on the 3-wheeler business? And what is the outlook of the industry as far as the 3-wheeler industry is concerned?

[K. Kumar, executive]

So you have multiple questions in the same question. But as an overview, overall, the organization will be focusing on profitable growth, as you have seen in terms of improvements on our negative EBITDA. That continuous focus is on. And so it's a 360-degree approach. There is work happening on cost, there is work happening on bill of materials, but ultimate focus will be where we can drive higher revenue and bottom line towards the organization.

[Nishant Shah, analyst]

All right. And just one more question. Is there any company guidance on being eligible for the FAME III subsidy? Anything around that news?

[K. Kumar, executive]

No. That's what I just answered, that we have got written confirmation from MHI that we are eligible for the subsidy. This is just -- this is happening as we talk. So we are eligible for subsidy on the 2-wheeler. But now we are in the last leg of the process of certification, which should happen next week.

[Operator]

Thank you very much. That was the last question. I would now like to hand the conference back to the management team for closing comments.

[Nagesh Basavanhalli, executive]

Yes. Thank you. Thank you all for joining. Just to summarize, I think based on the questions, as you can imagine, there are multiple streams of revenue, auto, non-auto, the target market has grown, management is focusing on profitable growth. We also have adopted a fuel-agnostic strategy, which means it's no longer a diesel engine company, the diesel, plus CNG, plus electric. And that spans across components and vehicles and post-purchase solutions like retail and financing, right, i.e., the entire ecosystem.

We thank you for your time and attention and your interest. Have a wonderful day. Thank you.

[Operator]

Thank you very much. On behalf of Greaves Cotton, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.