Greaves Cotton Ltd

NSE:GREAVESCOT

Earnings Call Analysis

Earnings Call Transcript 2024-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to the Greaves Cotton Limited's Q3 and 9 Months FY '24 Earnings Conference Call. From the management, we have with us Mr. Nagesh Basavanhalli, Non-Executive Vice Chairman, GCL; Dr. Arup Basu, Managing Director, GCL; Akhila Balachandar, Group CFO, GCL Sanjay Bell, CEO; and ED, GENPL; Narasimha Jayakumar, CEO of Greaves Retail; Chandrasekar Thyagarajan, CFO, GEMPL. [Operator Instructions] I now hand the conference over to Mr. Nagesh Basavanhalli, non-Executive Vice Chairman of Greaves Cotton Limited. Thank you, and over to you, sir.

[Nagesh Basavanhalli, executive]

Good afternoon, everybody. Thank you for joining the Q3 call of Greaves Cotton. At the outset, let me say a few words and then hand it over to management for the commentary. And I'd be happy to reports the details of which the CFO will be discussing shortly. At the outset, our diverse portfolio and the strategy over the years with a commitment to fuel agnostic solutions have played a pivotal role in driving our advancements.

We're also glad to report the synergistic collaboration with Excel Controlinkage bringing new capabilities and new avenues of growth for Greaves and Greaves engineering continues to expand its presence in engines and other areas.

Greaves Retail backed by its asset light high ROCE business, fortify it's presence in the aftermarket, aligning with our goal of continued expansion, both in domestic and other markets. Our enduring success is rooted in steadfast focus on capability building, our value proposition and our ability to fulfill the requirements of our diverse customer base.

With that, let me hand it over to Dr. Basu, the MD of Greaves.

[Arup Basu, executive]

Thank you, Nagesh. Good afternoon, ladies and gentlemen. My commentary is on the performance of Greaves Engineering, that is Engines and Excel Controlinkage. We continue to make good progress on our ongoing program to build a future-ready fuel agnostic portfolio to gradually wean us from a dependence on demand for diesel engines. As I mentioned during the analyst call on November 8, 2023, the IC engine and Jensen portfolio is being augmented with greener fuel agnostic variance that can use CNG, biodiesel and ethanol blended fuels.

In addition, we have commenced sales of fewer agnostic engine components. This new product line utilizes our current manufacturing equipment and will help us extract more value from our manufacturing infrastructure and other equipment. Additionally, as this new product line relies on our existing domain expertise in precision machining, the business can grow relatively rapidly.

Simultaneously, we are increasing our share of exports, which in Q3 FY '24 has increased to about 15% of our revenues. The integration with Excel Controlinkage has moved to the next stage with the initiation of cross-selling products and services. Simultaneously, we are continuing to augment our prevailing domain depth in mechanical engineering with mechatronics and electronic. The latter will also help accelerate in the growth of electronic sensors.

In Q3 FY '24, Greaves Engineering delivered an operating profit margin of 15.5% on revenues of INR 375 crores, higher than the 5.5% EBITDA that was delivered in Q3 FY '23, and higher than the 14.5% EBITDA delivered in Q2 FY '24. In the Engine segment, operating profit margin improved to 12.6% in Q3 FY '24 on revenues of INR 301 crores compared to 5.5% EBITDA in Q3 FY '23 and 10.5% in Q2 FY '24. Excel Controlinkage delivered an operating profit margin of 27.5%, on revenues of INR 74 crores in Q3 FY '24.

Overall, the prevailing tailwinds in the Indian economy, our increasing global customer base, the diversity of our platform technologies and application areas, combined with our brand Greaves makes us optimistic about the future.

Thank you. I now hand it over to Sanjay Behl. Over to you, Sanjay.

[Sanjay Behl, executive]

Thank you, Arup. I'm the I talk about the Greaves Electric Mobility business for quarter 3. Overall, Greaves Electric Mobility had an excellent quarter in 3-wheeler business with 37% Y-on-Y growth. While our L3 business registered a healthy 18% growth, the L5 business nearly doubled during the quarter with 94% year-on-year growth. Our new electric cargo 3-wheeler business is Ultra branded is now seeing subsidy eligible and listed on the [indiscernible] -- that quarter effective January 15, 2024. The selective passengers dealer vehicle business has also been a certified now, and we expect listing on the [indiscernible] over the coming few days.

We are confident of a good retail offtake starting this month for our EV 3-wheeler business, both for ultra cargo and passenger vehicles. In our 2-wheeler business, while the overall volumes declined on a quarter-on-quarter basis, NPL registrations grew on 1 -- by 9% in quarter 3 and the brand continues to be amongst the top 5 electric scooters in India. As announced during the Auto Expo last year, we will soon be launching the much awaited NHG scooper. This new edge, high-speed fully connected scooter is 100% in-house designed by the Greaves design team and will be manufactured at our EV Megasite in Ranipet. This new scooter [indiscernible] portfolio is equipped with 1 of the lightest operating software and brightest touch screens, ensuring seen litigation and connectivity, elevating the driving experience to a new high.

With an objective to demonstrate and achieve impressive power performance and superiority, we have embarked upon an unprecedented 5,100 kilometers long Kashmir to Kanyakumari drive on January 14 of this year, just about 3 weeks back. And we started symbolically with [indiscernible], a source of the lithium fine in Jamu Kashmir. This is the first of its growth kind road travel challenge undertaken and that to in extreme climatic condition and vastly [indiscernible] growth range of the country by any electric vehicle of any format in India. With these vehicles halfway in their journey, the response from the fuel has been extremely positive thus far. We continue to stay invested in launching new products and variants, and we are hopeful of continuing profitable growth in the coming quarters. Thank you. May I now hand over to Narasimha from Retail.

[Narasimha Jayakumar, executive]

Good afternoon, ladies and gentlemen. This is Narasimha Jayakumar, CEO of Greaves Retail. Very pleased to give you an update for quarter 3. Greaves Retail recorded a revenue of INR 141 crores for quarter 3 FY '24, very strong EBITDA margins of 21.4%. We had higher spare part sales in all our core markets with much better product mix. Q3 EBITDA margins were up by 310 basis points on a year-on-year basis. And for the 9 months financial year '24, we recorded a revenue of INR 425 crores at 8% Y-o-Y. Greaves Retail continues to be committed to this strategy to be a fuel agnostic aftermarket player with a focus on multi-brand part sales.

During the quarter, Greaves Retail expanded its range of various products, namely our Greaves Power Raja Battery, various parts for the aftermarket featuring the E-Rickshaw segment. Greaves include motors, controllers, chargers, DCDC converters, et cetera, for the E-Rickshaw segment. We also did launched a number of digital and technology initiatives, including the launch of our new Greaves Care app for 3-wheeler and 2-wheeler customers that enables them to digitally manage their service bookings and get notifications when their service is due. Considering the growth of the EV population, [indiscernible] E-Rickshaw, the business continues to expand distribution and retailing reach. As I've stated previously in our calls across the country with a greater emphasis on Tier 2, 3, 4 cities and towns in the north and east of the country.

At the end of quarter 3, we had our retailing network at approximately 9,300 retailers, including 250 specialist stoppage for our EV parts and batteries, 130-plus distributors, and we are engaged with 21,000-plus mechanics in the country. Our recent launch of our Greaves Upahar, which is our mechanic loyalty program at and our other apps, strengthening our connections with our partners and customers.

I just want to reiterate that we are a very asset-light business and with a very high ROCE. ROCE for the quarter exceeded 100%. So we're excited about that. Just handing it over to now Akhila.

[Akhila Balachandar, executive]

Thanks, Narasimha, and good afternoon, everyone. We are very happy to report our consolidated revenue for the quarter of INR 665 crores, up by 30% on a year-on-year basis compared to INR 514 crores last year Q3. On a stand-alone basis, GCL has reported a revenue of INR 443 crores, up by 21% year-on-year. Excel, as already shared by Arup, reported a revenue of INR 74 crores and electric mobility has reported a revenue of INR 149 crores.

For the 9-month period, GCL has reported a standalone revenue of INR 1,297 crores up by 17%. Again, on a stand-alone level, GCL reported an EBITDA of INR 67 crores, which is a growth of 73% year-on-year. Our margins have improved by 450 basis points. That is we moved from 10.7% to 15.2%.

Here, I would like to share that we continue on our EBITDA improvement journey. This quarter, we have reported EBITDA at 15.2%, which is possibly the highest in the last 8 to 10 quarters. And if I were to look at GCL Excel as a combination margin stands at a healthy 16.9%. This now puts us back on track of our historical trend of 13-plus margins of pre-COVID levels. On a YTD basis also, our EBITDA for the 9-month period stood at INR 175 crores. Same period last year, our EBITDA was INR 100 crores and hence, a growth of 76% year-on-year.

Our improvement in margins has also been by 450 basis points for this period, up from 9.1% to 13.5%. Along with the margins, we have been very focused on capital efficiency, both at the CapEx level and at the working capital level. And this has ensured that our ROCE today stands at a healthy 50-plus percentage level. In terms of balance sheet strength, the company continues to be almost at a 0 debt level. And we have a consolidated cash position of INR 600-plus crores, which we can be used for our expansion as we go forward.

Looking forward, we remain steadfast in our commitment to our growth strategy. We're also confident that our strong foundation and unwavering commitment to excellence to sustain our success the forthcoming quarters and the exciting opportunities for future holds. One area that we had seen a lot of compression in the early part of last year was the overall commodity cycle and that led to increase in the raw material cost for some of our product segments. I'm happy to note that the commodity cycle softening having a positive impact. And as we go forward, we're expecting the raw material prices and raw material cost as a percentage of revenue to remain stable in the coming quarters.

I would just like to take a step back. We did receive a number of questions over the last quarter regarding same subsidy. And I would like to point out to the note #6 in our consolidated financials and would like to share again that [indiscernible] has submitted its response to the notice that it received from MHI within the prescribed time lines, the management has complied with the scheme, duly considering and supported by legal advice. However, keeping in mind the interest of the consumers and without accepting any of the allegations, contentions or statements in the notice and without any prejudice [indiscernible] October 27, 2023, offered to amicably resolve and could acquire us to the matter refund an amount of INR 140 crores towards the subsidy reimbursed by the MHI to-date, which is INR 124.9 crores and an interest of INR 15.1 crores. The amount refunded and the subsidiary receivable of INR 337.3 crores net of provisions have been fully provided for as an exceptional item in the statement during the second quarter from the financial year.

With this, there is no further liability which rests on the company regarding this matter. Again, this is explained in the last quarter. But given a number of questions, I'm just re-clarifying the entire position.

With this, I now open the floor for any Q&A. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Amyn Pirani from JPMorgan.

[Amyn Pirani, analyst]

My first question is on the EV business as well as more specifically on the 2-wheeler. You mentioned that you are going to be soon launching the NXG, which was shown as the last auto expo. I just wanted to get a sense from you in terms of how we should think about pricing given that a lot of the start-ups as well as legacy companies have launched a lower-priced product. And we, in an extreme case, at least 1 company has started launching extremely low-priced products almost taking the price of smart EV to the price of a very basic EV more recently. So how should we think about pricing and profitability going forward? As you embark on new launches and try to regain some of the market share?

[Sanjay Behl, executive]

I'll take it. Sanjay Behl here. Look, you've seen the philosophy of pricing that you, in fact, over the past 4 years, if you look at our electric portfolio, we have adequately [indiscernible] cost and price in this category and will continue to stay the course. Our core philosophy is to balance growth, market share and profitability. So you -- and if you look at the overall numbers, we still are even without subsidy double-digit gross margin positive business in EV. And I'm specifically talking to 2-wheelers that you referred to.

So what is to be expected is in the new scooter that we are launching, the price will be competitive to make sure that we stay in unit economics positive, and this subsidy will restore going forward, which we expect, I think it will be a healthy margin. That's what we should expect.

[Amyn Pirani, analyst]

Okay. Okay. That's good to know. And as a corollary to this, how much of a benefit are you already seeing or are expecting to see from the fact that sell prices have fallen. So is this double-digit gross margin helped already because of the decline in cell prices? Or this is something that can get some more benefit going forward?

[Sanjay Behl, executive]

Yes. So partly, you're right. In fact, there has been a globally softening of cell prices that we've seen over the last 2 quarters. And part of the benefit is being passed on by the industry in the -- that is helping us also. So that is there. And we expect that with overall scale going up in electric vertical industry and across all the formats there, we expect the sell prices to continue to stay where they are. And if that happens or it's going to continue to come down slightly. And if that happens, you will find us also becoming more price competitive and margins healthy, as you go forward. That's right.

[Operator]

[Operator Instructions] The next question is from the line of Jyoti Singh from Arian Capital Markets.

[Jyoti Singh, analyst]

And sir and [indiscernible] to the congratulation on a really good set of numbers in this Q3. And sir, my question is on the growth side. So like what are the expectations going forward for the '25 and '26?

[Akhila Balachandar, executive]

Jyoti, can you repeat the question, please?

[Jyoti Singh, analyst]

Yes. Mam, my question is on the growth side, what are the expectations on the top line side going forward?

[Akhila Balachandar, executive]

So you're are talking about the future?

[Jyoti Singh, analyst]

Yes. So Jyoti, we will not be -- as a policy, the company has not been giving any forward guidance, and that is the policy that we continue to have but if you have been -- I mean, you've been tracking for the past so many quarters there has been a transformation journey, which is now in place for more than 7 to 8 quarters. And whatever has been talked about and committed by the management is a lot of things work in progress, and a lot of things are continuing now to play out. So that is -- what I would be able to share about it. And it will be very helpful if you can guide segment-wise, like which segment we are seeing more traction, that will also helpful for us?

[Akhila Balachandar, executive]

When you say segment, would it be Retail and the Engine business? Or is there anything else that you're looking forward?

[Jyoti Singh, analyst]

Yes, mam Retail and Engine.

[Akhila Balachandar, executive]

Sure. So if you were to look at both the business performance over the last -- this quarter as well as a journey over the last 7, 8 quarters, let me go back in time a bit, the [indiscernible] incomes business, if I were to take [ Q3 FY 20 ] -- Q1 FY '23 and that were 7 quarters, we've really moved from INR 253 crores on a quarterly run rate to now INR 300-plus crores and an EBITDA improving from 2.9 percentage margin to 12.6%. On the Greaves retail, we moved the needle from INR 121 crores to INR 141 crores, and the margin improvement has been significant from 16.5% to 21.4%.

On a quarter-on-quarter basis, we have done a growth of approximately 21% compared to same period last year. And as Greaves [indiscernible] and this has been the journey of the company. Given that we acquired Excel in May of 2023, this also allows has been a bit our overall business performance. And if you note, Excel has done extremely well, there were results of INR 74 crores top line and an EBITDA margin of 27.5% of GCL plus Excel hence gives me a very good combined results of INR 517 crores for the quarter with a margin of close to 17% -- 16.9% to be very precise. So -- this is the journey that we've now gone through.

[Operator]

[Operator Instructions] The next question is from the line of Himanshu Duke from Safe Games.

[Unknown Analyst]

I would like -- if you could just give us an update around the cash deployment plans on your CapEx on time on land acquisitions? And what are you looking at right now?

[Akhila Balachandar, executive]

Sure. Thank you, [indiscernible]. So [indiscernible], as you are aware, we currently have close to INR 400 crores plus of cash at a stand-alone level and close to INR 600 crores plus at the consolidated [indiscernible] , which means our subsidiary Greaves Electric Mobility has INR 200 crores approximately of cash on their books. Both these companies have very strong CapEx plans going forward. Greaves Cotton, our CapEx plan is approximately INR 100 crores for this year. Greaves Electric Mobility has got its own plan of another INR 100 crores CapEx in the current year.

All these investments are towards development of newer technologies and improving the existing product portfolio. This is core to the business, and that is where we are currently investing. Apart from that, we are also actively looking for opportunities where we can acquire stakes in businesses, which will be additive to our core businesses, which is both the Engines, Retails and Electric Mobility businesses. So we do have enough strength in our balance sheet today to do some really good acquisitions. I hope that answers your question.

[Unknown Analyst]

Just a follow-up on that, especially on the electric side. Could -- what is the current capacity levels and utilization in this new CapEx, are you looking at design-related CapEx? Or is it again going to be towards the amount of capacity.

[Sanjay Behl, executive]

Most of the CapEx till now, if you know the Ranipet, which is the EV Megasite capacity for your 2-wheeler business, [ a quarter of a million ] already existing with 1 shift and going to [ 0.5 million ] scooters in 2 shifts there. So there is a very limited capacity. Most of this is growth-related CapEx, which is working into product development. That's really the number 1. And capacity is minimal in the current financial year. We already have adequate capacity. Those are [ 2 and 3 ].

[Unknown Analyst]

Sorry, I'm not able to follow up with this INR 100 crores that you're planning to spend in the coming year like what are [indiscernible] ?

[Sanjay Behl, executive]

Most of it is on product development. Capacity is limited because both our 2- and 3-wheeler businesses had adequate capacity and head space for continued growth for some time to come.

[Unknown Analyst]

Okay. Any insights on your product pipeline in terms of what are the kind of products you're planning to launch or some other gaps in your product portfolio? Because I understand given the recent launches also you're kind of covering most of the gas are different types available. So what whatever you think is pending or where you want to introduce more products?

[Sanjay Behl, executive]

So in Electric Mobility side, 1 segment where we wanted to represent and that's what I talked about in my opening commentary also was the high-speed fully connected IoT segment, right? And that's getting filled up with the launch pending launch of [indiscernible] as it gets into, we'll launch sometime in the first half of this year. So that is the 1 that is getting filled up in electric 2-wheeler.

That will make Greaves Electric Mobility of strong player across all the 3 segments in slow speed with Rio, which we launched last week -- and last quarter, City speed, we have anyway been a very strong leading position there with [indiscernible] and coming to high speed, 1 with [indiscernible] now in completed with [indiscernible], we would have a representation across all the 4 segments.

On the 3-wheeler side, 1 segment where it's not been represented is an electric 3-wheeler [indiscernible] format, and that we launched an electric cargo lost last month and passenger, we should be launching any time over the course of this quarter itself. So that will be electric 3-wheeler both cargo and passenger segments. So that will now give us if you look at Greaves Electric Mobility, a full representation across all the customer [indiscernible] both 2 and 3 wheelers and both for B2C and B2B plan.

[Unknown Analyst]

Got it. Thanks for elaborating explanation. Just 1 last question on the Electric Mobility side. Then I mean, now that the same thing is kind of getting settled. And are you looking at some aggressiveness to what you are campaigning or the marketing or some changes in the model? What are you kind of trying to gain market share here? What are you working on?

[Sanjay Behl, executive]

Yes. So because our current position as we get into this 3 basic facts and 3 initiatives that you see. The 3 basic facts are that even without subsidiary now running for 8 months in a row, Greaves Electric Mobility continues to be amongst the top 5 electric scooters in the country in terms of its market share. Second, our YTD market share, it's close to the 7%. I'm talking about YTD as of now. It's close [ 7 ] -- and that's -- and we can -- we [indiscernible] hopefully, it has enough residence because subsidy will be to the tune of about -- and added 15% does make us more competitive in our product price proposition in the market. So that would be 1 key thing. And specifically to your question about regaining market share, so that gives us resilience in the market there.

Added to that, there are initiatives on products. One new variants have been launched and second new products have been launched. One variant that has just got into the market is variant of management or the flagship product members, that's management scale. This is still in the City Speed segment, but it attracts a different kind of a customer. And the second one, which is a new product and will attract a new set customer settlement altogether is the launch of Xtrem, which is a high-speed scooter. So these are some of the things specifically in 2-wheelers, if you see, these are the products that we are launching, and I already talked about 3-wheelers will be filling the product. I think there is -- and the point that you made on additional marketing spend and all that, I think we will continue to stay extremely capital efficient in our marketing right now, given that it's still [indiscernible] category with low penetration. So we will do a lot more digital and direct marketing focus, and we will evaluate from quarter-to-quarter as to when is the time to go and really start increasing our marketing [indiscernible] so that the ROI in terms of marketing will remain very, very high priority for the company.

[Operator]

[Operator Instructions] Our next question is from the line of Rishikesh from Robo Capital.

[Unknown Analyst]

My question is with respect to our EV 2-wheelers and 3-wheelers volumes. So how do you see the volume growth going ahead from Q4 onwards and for coming 1 or 2 years? For about 2-wheelers as well as 3-wheelers?

[Sanjay Behl, executive]

Again, I think it's a question about forward guidance, both in terms of market and a specific portfolio. And as Akhila have clarified, we don't have a policy. As far as per our policy, we will not be able to give you a forward guidance. But I think the current trends are indicative, as we've seen in 2-wheelers slowed down a little from the earlier kind of [indiscernible] growth trading, but we expect this continued kind of a growth there. And in 3-wheelers, you've already seen that market is at about pre-COVID levels. And from here on, I think we will have to see as to how depending on many other variables, which are yet unknown, like in some tires being some government things and tie a delay. So we are in no position to give any speculative proper guidance on this.

[Unknown Analyst]

Okay. But I think if I have to see quarter-on-quarter, would 2-wheeler as well as 3-wheeler numbers, the growth has -- they have been the numbers. So how do you see them going ahead? Like do we see them bouncing back to our previous numbers from next quarter onwards or from coming after coming few quarters? Can you please indicate?

[Sanjay Behl, executive]

It's no forward guidance in a way in a different place, you're asking the same question then. I do see the numbers that you are talking about, which is that in the 3-wheeler segments, you are seeing play range of numbers, all both in [ L3 ], actually, there has been a decline quarter-on-quarter. I'm talking about the industry numbers. And in [indiscernible] again, there is a very marginal low single-digit growth that you see in [ quarter 3 ]. So that's the current trend there. if you look at the January numbers, there are no better rates pretty much a flattish kind of a trend. So I guess the published numbers of January, which I can talk about. And even in 2-wheelers, the market has been pretty flattish. If you see the January numbers, if you look at the trend converting into [indiscernible] about 81,000 registrations in electric 2-wheelers, which is almost equal to the 340-odd trend that we've seen in quarter 3. So the publish number is the best guidance I have at this stage.

[Operator]

[Operator Instructions] Sonal Minhas your line has been unmuted. Please go ahead with your questions.

[Sonal Minhas, analyst]

This is Sonal Minhas [indiscernible].

[Operator]

Sir, your line is not clear. May I request you to use your handset, please?

[Sonal Minhas, analyst]

Is it better now?

[Operator]

Yes, sir. Please go ahead.

[Sonal Minhas, analyst]

Sir, I had a question on the EV mobility business. Given the EBITDA loss and the cash burn in this business, hoping it's going to improve from here on. But from a financial prudence perspective, and maybe some internal workings, I'm presuming so like what is the level to which this business can bear the losses given the cash balance. And from a time line perspective, what is it that they are near-term milestones you want to have for this business to breakeven and current EBITDA losses.

[Sanjay Behl, executive]

Yes. So again, a very strategic kind of a question in terms of -- look, the first thing is to will be subsidy getting restored going forward. We need to start showing resilience in our market share. That's going to be the first [indiscernible] that the management team will look at as to how can we come back and start showing a rebound back in the market share. And as I had mentioned in the earlier answer that we still continue to be having a strong position in our electric scooter segment with good traction for our products. So that would first [indiscernible] there.

Second is going to be some of these new products that we are launching, we'll have to have that metric in terms of looking at how they can contribute. And given that there will be addressing largely a new customer segment. That's going to be a delta on top of the existing rebound that we are likely to see going forward. So that's going to be delta sitting on top of it. And all this with a double-digit gross margin and good contribution, healthy contribution margin even without subsidiary today is only 1 in a and show a role to profitability, specifically that you are mentioning about.

So I think these are the 2 initiatives that are currently there. Beyond that, there is a strong improvement in our overall cost position over the last 3 quarters, and that will continue to keep adding few and have profitability on. So I would just [indiscernible] at this stage.

[Operator]

Our next question is from the line of Kapil Agarwal from Doug and Associates. [Operator Instructions]

[Unknown Analyst]

I just wanted to know what is the status of a subsidy for NPS number one. And number two, what kind of a.

[Operator]

Please use your handset -- Sorry to interrupt you, your voice is muffled sir.

[Unknown Analyst]

Now can you hear me. Okay. So my first question is what is the status of frame subsidy for Ampere? And the second question is regarding what kind of response we are getting from the Nepal market in terms of volume and pricing over that?

[Sanjay Behl, executive]

Okay. So to the first question, and as you have clarifying the subsidiary clarification that we get, do we funded the subsidy amount to MHI 27th of October, per products are taken up by the authorized testing agency immediately after that for same [indiscernible]. And the other flagship scooter [indiscernible] already been recertified for fame eligibility in December month. And now we are expecting other models to get certified so and so. We are waiting the MHI approval at this stage would be registered right on the same scheme soon, and this will happen by actual acquisition of the electric 2-wheeler products on the [indiscernible]. So that's the status number answer to you, number 1 question.

Number 2 question on Nepal, we have sent 80 [indiscernible] vehicles in the last quarter to Nepal and that's the 1 partner dealer that we have, 1 of the largest firms in Katmandu. And we've already started retailing the scooters there about 20 and then have already got retailed out in the last about 3 to 6 weeks that the scooter has checked the shares of Nepal there. And we expect this to continue going -- as we go forward. The pricing is extremely competitive. In fact, it's the same pricing converted for Nepal currency that was [indiscernible].

[Unknown Analyst]

Okay. So approximately by when we can say that our sales subsidy will be -- you can say started for [indiscernible] any timeline if you can.

[Sanjay Behl, executive]

We've been in no position to give the time line. We are just as I told you, we [indiscernible]. So we are not in a position to give any time.

[Unknown Analyst]

Okay. And any other plans or you can say any other overseas market to tap and other overseas market [indiscernible] future.

[Sanjay Behl, executive]

Like at which point of time we are in talks with some markets there, but at this point of time, nothing form for me to comment at this stage.

[Operator]

Our next question is from the line of Anubhav from [indiscernible] Capital.

[Unknown Analyst]

Am I audible?

[Operator]

Yes sir. Please go ahead.

[Unknown Analyst]

Sir, are there any fund rate plans for GMP in like the recent which have given like cash has gone lower and like still an outlooking business and forest -- so are there any near-term funds plans or are we even considering sort of an IPO for this year?

[Akhila Balachandar, executive]

Thanks for the question. Akhila here, let me take this one. So Greaves Electric is obviously here for the long haul, they are currently in the process of developing various new products, both in the 2-wheeler and 3-wheeler categories. And the management and the board, essentially, the Board will take an appropriate decision as and when required. I hope that answers question.

[Unknown Analyst]

Just as a follow-up, like, do you see enough running given the cash on growth and given [indiscernible] quarter development spending and all. And given the losses like do you see enough runway for the cash [indiscernible].

[Akhila Balachandar, executive]

As of now, we do have sufficient runway and the Board is actively seized of this matter and will take an appropriate decision.

[Unknown Analyst]

And did we apply for the PLI scheme for the EV business?

[Akhila Balachandar, executive]

Sanjay, you want to take that?

[Sanjay Behl, executive]

Yes. So we're not part of the PLIC [indiscernible].

[Operator]

[Operator Instructions] Our next question is from the line of Faisal Zubair Hawa from HG Hawa & Company. [Operator Instructions]

[Faisal Hawa, analyst]

Sir, in the repeated question about the Electric Mobility, the business of our power generators and then gets loudly ignored. So how are we doing in that business? And what is the kind of R&D we are trying to do to be much ahead of competition and because [indiscernible] seems to be doing very well. And how are we placed against them now.

[Sanjay Behl, executive]

So let me take that question.

[Faisal Hawa, analyst]

What are the kind of ROCE and ROE that we have in that business?

[Sanjay Behl, executive]

So in terms of the product and the offerings, first of all, we have a diverse set of applications where we are selling our engines as well as our components and the applications range on the way from auto to pumps to genset and now to the components of various engines were irrespective of the fuel which is used for the engine. That's 1 line of growth. In terms of the others, we are looking at enriching our product mix through new product development. So fuel-agnostic engine designs is a new product area because of the changing landscape on emissions. So our entire genset portfolio, for example, is CPCB4 compliance, which is the latest compliance norms on this application. Similarly, all our engines for the automotive applications in 3-wheelers are also compliant to the latest norms that are [indiscernible] in India.

The third area of work is new customer acquisition because our portfolio across Excel and Engines opens up a larger landscape of potential customers for our products. That's the other dimension we are looking at. And all of this is also linked to a growth in exports where we've got customers across EU as well as U.S. where we are selling both engines as well as engine components. And this is underpinned with our capacity utilization of our current asset base, which is now up in the high 80s and 90s. And that is also giving us decent amount of operating leverage.

We have a fairly high degree of ROCE in the business as a result of all of these actions. Needless to say, the cost focus is also very intense in terms of both the design of [indiscernible] and the design of engines and components that we are doing.

[Faisal Hawa, analyst]

Sir, do you mean to say that our capacity utilization is around 85% to 90%? And how are we doing on orders is the industry revival and the CapEx cycle also boosting our orders?

[Unknown Executive]

So the CapEx, we are -- we have a complex set of manufacturing facilities, which is a combination of assembly lines as well as manufacturing. So the bottleneck areas now have -- there was a lot of work done on debottlenecking and increasing capacity utilization, which has happened internally, which is why we have created a fair amount of additional capacity, which we are able to cater to the next tranche of growth. So we are very thoughtful about how we spend our CapEx. And so we don't have a challenge in terms of making spikes in orders or increasing orders, and we have enough of our asset base to be able to do that without incurring a very, very heavy CapEx.

[Faisal Hawa, analyst]

And sir would it be a right statement to make that most of our divisions are like firing on all cylinders and it's only subsidy is causing some kind of problem for us. And also sort of on many concerts previously, you have referred that you would like to build up an entire ecosystem of ancillary suppliers for our electric scooter. So how far progress you have made on that? And are there people ready to invest money for us on a stand-alone basis to supply to us so that our capacity will move up substantially as and when our profitability becomes in?

[Unknown Executive]

Okay. So let me start. I think there are multiple questions there, [indiscernible]. So I think the first part is multiple businesses [indiscernible] I think that was the first part of the question. If you look at our strategy, several years ago, right, we went from a single fuel, single customer, single industry to multiple revenue streams, which is Greaves Engineering, which is components, both in the auto, non-auto as well as construction of higher equipment now with the addition of Excel. So the addressable market increase there, right? And yes, both on the engines as well as on the Excel side, you're seeing the margin improvement and the revenue growth, aided both by domestic and some exports.

Now coming to Retail, you have seen the spares and services part, and that's again the CFO talked about the margin growth in both of these businesses. Greaves Electric Mobility, obviously, Mr. Behl has shared a lot of the details into that and the short-term challenges that, that business face. So clearly, the businesses have moved from a single business, single fuel to multiple businesses, multiple revenue streams and both between B2B and B2C, thus moving towards a strategic focus of getting closer to the consumer, doing both B2B plus B2C and leveraging life cycle value extraction the value chain. And I think that's kind of what you're beginning to see, which is part of your next question, which is the ecosystem attacks. When you look at -- while the component play is done out of engineering, high-end engineering precision component manufacturing supply chain capability exists out of the first core.

Retail is [indiscernible] solutions, which have the spares, the service, the aftermarket sales. In between, of course, you sell the vehicles through Electric Mobility. Then of course, we have 2 small enabler businesses the Greaves Finance, which enables the financing of EVs and technologies, which helps develop advanced technologies into some of these engineering divisions. So when you look at it by 20,000-odd mechanics, 10,000-odd retailers and India presence and growing capability between mechanical and mechatronics to electronics, sensors, that capability expansion. We are moving from an industry, which is a metal [indiscernible] to over to a lot of the mechatronics and then the software part. So I think that skill set addition is also happening as part of this transition.

So I think that's kind of what you are seeing. Hopefully, that shows why it's multiple revenue stream. It's a diversified across fields, across industries, across geographies. Hopefully, that addresses your question.

[Operator]

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

[Nagesh Basavanhalli, executive]

Thank you all for joining. Much appreciate you taking the time this afternoon. Obviously, our management will be available for answering any questions off-line our respective coordinators. Thank you so much. Have a great day.

[Operator]

Thank you. On behalf of Greaves Cotton Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.