Greaves Cotton Ltd
NSE:GREAVESCOT
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
115.7
253.95
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Greaves Cotton Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good morning, and welcome to Greaves Cotton Limited Q4 FY '22 Earnings Conference Call. From the management, we have with us Mr. Nagesh Basavanhalli, Group CEO and MD; and Mr. Dalpat Jain, Group CFO. [Operator Instructions] And there will be an opportunity for you to ask questions after the opening remarks are concluded. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nagesh Basavanhalli, Group CEO and MD of Greaves Cotton Limited. Thank you, and over to you, sir.
Thank you. Good morning, everybody. I hope you're all staying well and staying safe. I welcome you all to Greaves Cotton Q4 earnings conference call.
Let me begin by giving an overview of the business, and our CFO, Mr. Dalpat Jain, will take you through the financials of the quarter. FY 2022 has been a pivotal year for us for many reasons. In no particular order, it's been the turnaround in our EV segment, where the team has done a remarkable story in terms of building the EV line of business and building that to one of the top players in mobility industry. This is a clear outcome of our product diversification strategy.
In addition to that, I would like to reiterate that the non-auto engine segment and the retail segments have also bounced back and reaching pre-COVID levels. Other noteworthy mentions during the year include the addition of a new manufacturing plant and an experience center, for Ampere at Ranipet in Tamil Nadu. The inauguration of our multi-brand EV retail platform, which was the AutoEVmart in Bangalore, which sells us a lot of brands in clean mobility. These initiatives have consolidated our position in the EV segment from an ecosystem standpoint, where we offer vehicles, spares, service, financing for the entire EV ecosystem.
We are also pleased to announce that the performance of our auto segment has continued to reach the quarterly benchmark and CFO will get into some of the details on the numbers. The non-auto in the retail business, like I said before, are returning to pre-COVID levels, and we believe that will contribute to our top line growth going forward.
During the quarter, we've also incorporated a wholly owned subsidiary in Delaware, U.S. under Greaves Technologies Inc. i.e., GTL as it called or Greaves Technologies Limited. GTL is a dynamic innovation, technology-oriented global engineering services company with offices both in now in India and in the U.S. and with M&C customers doing engineering services.
We also did acquisition for -- we completed an acquisition in the 3-wheeler space under the brand ELE name, ELE for the E-Rickshaws, well, Greaves Electric Mobility now owns 100% of that brand and 26% stake in another electric 3-wheeler company called MLR Auto to expand our last mile ecosystem. This will get us into newer geographies and, of course, tap into newer demographies over a period of time.
We'll continue to work to build a comprehensive ecosystem, focusing on several areas, including green mobility, be it engines, be it vehicles, electric vehicles, et cetera, retail expansion through multi-brand retail as well as our Greaves Retail, finance availability through our Greaves Finance and the development of our core engines business as well over a period of time.
Let me now hand it over to the CFO to talk about the financial performance. Thank you.
Thank you, Nagesh. Good morning, everyone. Happy to talk about the financial numbers that company reported in quarter 4 of financial year 2022. After at least 6 quarters of COVID impacted business environment in quarter 4, company reported the highest ever revenue of INR 621 crores. And within the 3 main business segments that we have, engines, retail and e-mobility, we have seen significant growth in e-mobility with revenue growing 3.5x compared to last year's quarter 4, and the share of e-mobility in the group revenue has now grown to 38%.
Our consolidated EBITDA was at INR 41 crores. And if you look at the revenue growth, both year-on-year as well as sequential quarter, on a year-on-year basis, it grew by 19%, and sequentially, it was reported a growth of 28%.
If I talk about full financial year, company had a 14% growth in consolidated revenue and reported INR 1,710 crores. If you look at balance sheet, with the cash flow management, which company has been focusing on and also the focus on working capital, company's liquidity position has improved. The standalone net cash position is INR 416 crores as on 31st of March. At consolidated level, including the external debt that our subsidiaries have taken, the consolidated net cash position was INR 205 crores.
The company's focus on R&D and on increasing the operational efficiencies continued. The initiatives which were taken to consolidate plants at one location, the business restructuring, focusing on individual businesses helped companies save INR 45 crores -- close to INR 45 crores compared to pre-COVID annual fixed overheads. And that all goes well, as we go into normalized business environment, we expect margin to improve from where we have closed Q4 of FY '22.
The company has also strengthened its management team and with the appointment of some of the leadership positions. We will continue to focus on each of the business segments that Nagesh spoke about. With that, we'll be happy to open the session for interactive question-and-answer. Over to you, Lizan.
Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Ashutosh Tiwari from Equirus Securities.
Yes. Congrats on a good set of numbers. Firstly, on this 2-wheeler realizations, I think I see that there is a significant increase versus third quarter as well. Is it like around INR 95,000 per vehicle 2-wheeler realization in the quarter?
So Ashutosh, Let me take this question. If you look at the share of city speed or high speed portfolio in our e-mobility, that has now grown to 73%. And also share of 3-wheelers in the overall volume has increased.
So as a combination, the per vehicle realization, you are right, is now close to INR 95,000, which is combination of both 2-wheelers and 3-wheelers. If I look at standalone 2-wheelers, it is close to INR 80,000.
How much is it for a standalone 2-wheeler?
INR 80,000, close to INR 80,000.
INR 80,000 will not work out to -- because I think this quarter, we have seen a fall in 3-wheeler volumes quarter-on-quarter. So...
That's because of the festive season versus the peak was in the festive season of the third quarter. And then in the fourth quarter, it has improved.
What's the realization in 3-wheeler is particularly in E-Rickshaw?
Typically, E-Rickshaw will be anywhere between INR 110,000 to INR 125,000 depending on the model that we have.
Okay. But then also, I think INR 80,000 will not give this number of INR 240 crores.
So INR 240 crores is both combination of 2-wheelers and 3-wheelers.
Yes. So if you -- if I assume INR 1.2 lakh as well on 3-wheelers, that probably be INR 33 crores, almost INR 207 crores will be from 2-wheelers on 22,000 volume. I guess realization should display coming out to be around INR 91,000, INR 92,000.
No. So Ashutosh, to be exact, it is around INR 86,500 per vehicle realization. And then there is a sale of spares, which is also part of...
Okay, okay. Is that also growing well, spares sales?
That's growing now. Those numbers are not very significant in the overall 2-wheeler revenue. But as the time period is increasing, the spare sales is also increasing the overall portfolio.
And I think 73% share of high speed was for the full year. But in fourth quarter, will it be significantly higher?
In the fourth quarter, the same share was around close to 80%.
Okay. And one more thing. If I look at this balance -- consol balance sheet, there's other financial assets of INR 154 crores. Is it related subsidies which are due from government?
That's correct. So INR 154 crore includes close to INR 110 crores of subsidy, and that is part of it.
And generally, how much time it takes for government to give subsidies, like say, payment?
Normal cycle, it's between 90 to 120 days. But there were certain -- and this all goes through a tech -- through a portal. In the quarter 4, there were certain technical itches where government was also upgrading the portal. So a number of days were more as of the 31st of March. But in a normal cycle, between 90 to 120 days is the frame subsidy collection cycle.
This should come down with in the Q1 revenue?
That's correct.
And lastly, in terms of supply chain, especially battery sourcing, is there any issues right now or the cost has gone up? Any color on that?
I think I will take that. Ashutosh, thanks for the question. Supply chain like for the entire industry, right, it remains a challenge. Our supply chain team, fully aided by the Greaves Cotton supply chain expertise, has been working with our suppliers, who are localized, plus the source itself outside the country.
For example, you asked us a question on battery cells, right? And to look at 1 quarter ahead 2 quarters ahead. So that's kind of how we are trying to manage it, the situation. But clearly, supply chain is something that we continue to monitor very, very closely, and it's monitored on a daily basis.
But because that there will not be any margin issue like what the margin we delivered in this quarter, it should improve subsequently in the next year.
Ashutosh, now there are 2 parts to it. One, in the short term or in between because of right now, there are a lot of uncertainties considering the overall geopolitical situation. So there may be disruption in the short term considering the lag in recovery of the pricing. But if you see from a full year perspective, the overall gross margin should improve for E-mobility business.
The next question is from the line of Gaurav Chopra from Union Asset Management.
I just had 2 questions. First thing, this government PLI scheme, which was announced, our name was not there. Could you sort of report why we're not there?
So Gaurav, there are 2 parts of the PLI scheme, one which was at the OEM level, there were 2 criteria, either the group revenue should be more than INR 10,000 crores, or you should be a startup in the last financial year. And that's where Ampere did not qualify because as a group on the revenue criteria also, the qualification criteria was a higher number. And from a startup perspective, it was -- the company has already been started many years back and it was earning revenue from the E-mobility. The second part was on the component front. And there, there is a technical discussion, which is happening with the authorities on qualification criteria. So that's where the current status is.
Got it. Got it. Secondly, sir, from the perspective of these EV fires, what have been sort of reading about it. Of course, we haven't had any incidents so far. Just wanted to understand where do you secure your battery sales? Or do you have the BMS now. So probably wanted to get some sense on quality control from your side. That was the last question from my side.
Yes. So I think our technology team, starting with our CTO, right, we have a global CTO. Obviously, safety is of paramount importance and validation and focusing of the vehicle from the entire level from the cell quality all the way to battery pack design to like you're saying, BMS, right, are all things that the engineering teams are working on, point number one.
Point number two, keep in mind, we have been very fortunate. We have more than 130,000 plus customers working with them over several years the Ampere is a 13-year-old company now. So -- and understanding the duty cycles, right, at different temperatures. So our engineering teams are taking this very, very seriously and all the rigor of validation and safety and protocols are being looked at.
So is it -- is the BMS being sort of taken care of by MPL in-house by the in-house team or it is outsourced?
It's a combination. We have capability in-house, plus we work with strategic supplier partners who give us the BMS. So we do both.
The next question is from the line of Dhananjay Mishra from Sunidhi Securities & Finance Limited.
Just a follow-up on last question. So have you seen any impact on the...
Sorry to interrupt, Mr. Mishra, we are not be able to hear you clearly.
Yes. Can you hear me?
Sir, your voice is breaking up. Can you use a handset mode while speaking and not the speaker phone? Yes, sir. Please go ahead.
Yes. So just wanted to check, after these fire incident happened. So have you seen any impact on booking inquiries of late in last 2 months in our case?
So in general, demand has held up. I mean, as evidenced by our 25,000-plus sales in the last quarter, right, point number one. Point number 2, yes, there have been customer questions, customer education, customer discussion. So we are working with our sales partners, our dealer partners and a comprehensive training, awareness, education is in process. But no, we are not seeing any significant change as of now.
And you said this INR 110 crores subsidy is outstanding from government. So how much subsidy you have received in FY '22 full year?
So Dhananjay, in the FY '22, the total subsidy that we have received in cash was close to INR 60 crores. As you know, the high speed share started increasing from the October onwards and subsidiaries eligible on the high-speed vehicles. So out of the total INR 170 crores or INR 180 crores, close to INR 60 crores was collected during the year.
And lastly, where are we in terms of stake fill in terms of Ampere. Are we raising funds?
Sorry. Your last question was not clear.
So in stake fill in Ampere. When is it going to happen? Any development on that?
The process is on. And as we had spoken in the last year -- sorry, last quarter's con call, we expect the process to get completed by Q2 of this financial year, so the progress is being made accordingly.
And the only other thing I'll add is there is strong interest and interest continues. And I think let the process play itself out, we will announce as and when we are right.
The next question is from the line of Amyn Pirani from JPMorgan.
And congratulations on achieving the profitability on the EV business. My first question was on the EV gross margin. So can you help us understand that the improvement in profitability that you have seen, how much is operating level is driven and how much is gross margin driven? And hence, what is the kind of outlook given what we're seeing in the global side on commodities as well as on supplies on the sell side?
So Amyn, around 5% out of the EBITDA margin improvement is driven by the operating efficiency improvement. As we had said earlier also, we had built the scale for much higher revenue. And as the revenues have grown, 5% has come from the operating efficiency, close to 3.3% or 3.5% is from the gross margin improvement.
Okay. Okay, understood. And I don't know if you can share this number. I mean, gross margins right now would be what? Like in the range of 20% higher, if you can give an indication.
It's between early to mid-20s, in that range. And actually, those numbers we have in our consolidated minus standalone financials.
Okay. Okay. Second question was on the cost inflation on the non-raw material side because the commodity inflation is, I think, well understood. But I think we are seeing inflation across the board on employee -- at least in the economy. I don't know if you're seeing that in your company, as well as other expenses, there has been worries around power cuts and power costs going up. So can you give us some indication as to how things are looking for you and how you're managing that inflation going forward?
So on the first part, which is related to manpower, Greaves has the adequate or the overall compensation mechanism where according to performance and other criterias, the annual increments are given. And those are in line with the industry.
As you know, in the manufacturing industry, the overall increase is typically lesser than what you are seeing in the software. Maybe your question is more from the IT and other industries point of view. The second piece on the other expenses.
Overall, the weight in the total P&L, if you look at from other expenses point of view, it is less than 6% or 7%. So to that extent, we are not seeing -- going to see a significant impact. The main monitorable for us is now how the RMC behaves, and that is where the focus of the entire management is.
The next question is from the line of Bharat Jaiin from Ventura Investments.
I just wanted to understand that there have been recent incidents with products of other companies. So do we have any such complaints on our product line? And what are the steps taken to ensure that we get a good product on -- for a customer?
I thought we answered this question earlier. Basically, like we said, we are looking at everything from our battery cell, BMS, our testing validation process, we are in our Gen 2 of our products. So it's all of those steps that I repeated earlier, right? I think we are taking all of those steps, right? And obviously, Ampere as a company that's been around 13 years, we are in the Gen 2 our products and working with our customer base of greater than 1 lakh customers, so we continue to keep working on all the customer needs.
Great, sir. And also there has been recent movements on the like CXO level. So any guidelines on that, if you can share?
I'm glad you asked that. We have brought in significant leadership capability, both at the GCL level, Dr. Arup Basu who has joined us who was running a formal listed company before. He has joined us to lead the GCL side of the house, right? And on the GEM side, too, we've brought in a dedicated leadership, right, at the CEO level. So you will see a strengthening the portfolio focusing on talent, building capacity. In fact, we've already announced that we have gone up to the 250,000 mark, the 20,000 plus per month in Ranipet, higher than 10,000 per month that was last year, right? We will continue to invest in products, and we'll continue to keep focusing on some of this.
The next question is from the line of Chirag Shah from Edelweiss.
I just have a basic question. Given that your volumes on the EV wheeler is scaling up now, how are you...
Mr. Shah, we are not able to hear you clearly.
Am I audible now?
Yes, sir. Please go ahead.
Yes. Sir, my question was on EV 2-wheeler capacity, given that we are now ramping up the volumes, how are you looking at your capacity, one? And secondly, between in-sourcing and outsourcing, how are -- what -- how are you thinking about what stages of ramp up you would like to have more in-sourcing versus outsourced?
Good questions. So a couple of things. One is on the capacity. We have ramped up to about 250,000 units. So as we said, when we built Ranipet, we had built the brick-and-mortar that would go up to 1 million units, right, over 2 shares. Today, we are comfortably able to deliver 250,000 units, which we believe should hold us in good stead in the near term.
As we foresee the demand coming up, we will add more capacity in a very short time. We have demonstrated that. We went from 10,000 to 20,000 a month, we are already there, right? So you can expect us to go to the next increment of 250 to 500 in a very short order, anticipating the demand as and when is needed, right? Because the brick-and-motor is there. Now point number one.
Point number two, in terms of in-sourcing versus outsourcing. So we clearly work with the -- we have gone through a deep localization drive, and we have localized suppliers here. Now one of the things is we have strategic suppliers for our partners. And as the volume increases, just like we do in Greaves cotton on the engine side, we will look at it on a business case perspective, make versus buy certain components that makes sense and to bring it in-house. But it will be a purely commercial discussion and based on what it makes.
So for example, paint shop or frame assembly, right? Some of that, I anticipate over a period of time, we are going to bring it in-house. So things like that, we will do it based on commercial prudence. And as the volumes pick up, we will see some of that. But we will continue to keep working with our strategic partners.
So what would be the typical volume revenue that will exactly make you to have more of in-sourcing of paying shop and assembly length? It is 500,000 the right number or it could be a higher number?
Well, like I said, I think we can very quickly go up to 1 million units as the demand comes in, right? The brick-and-mortar is ready on plant 1. And right now, like I said, we have gone up to 250 and we're running in one shift, right?
And as and when we need to, we will increase the capacity by adding incremental conveyor lines. So I think that in-house capacity from a manufacturing, I'm not too concerned about. Like I mentioned earlier, I think our global supply chains and the challenges that we have in chips, the challenges that we have in cells, right, globally, I think it's the challenge that we're all facing as an industry.
So to us, we need to manage that very, very closely. And as and when that situation improves, we will add capacity based on demand as needed. That won't be a constraint.
Second question was on the engine side. On the non-automotive engine, if you can add some color, how should we look at the growth from here on?
Yes. The non-auto engine business did about, if I look at it, right, the non-auto products did about totally 12,000 plus in terms of volumes, right. Units and [indiscernible] in the deck. When I look at it, I think the non-auto business post-COVID is coming back because of the onset of construction, infrastructure, farm equipment. So some of the engine usage, we expect it to grow.
Obviously, our non-auto small engines are Genset engines, we are seeing good traction post COVID, and we expect that to continue. The challenge, again, same thing here with the supply chain and the commodity price, there has been obviously an RMC challenge. That is something that the team is monitoring, both by taking internal efficiency measures as well as price increases. That's how I look at that.
Yes. And if I just add numbers for this, in the quarter 4, the nonauto share in the consolidated revenue was close to 30%. And that share, we expect to remain or grow from here on as you go forward.
Sir, can nonauto stabilize at a much higher level, the current 30% number? So like 40%, 45%, can it become -- can it go to those levels, given the near-term tailwind on the demand side?
See, one part is on the share side, where we have e-mobility also growing quarter after quarter in overall revenue. So share would may not be a right indicator. But from growth perspective, we definitely expect non-auto business to grow in a healthy -- at a healthy rate.
The next question is from the line of Jodie Singh from Arham Capital Markets Limited.
Yes. Sir, if you can throw some light on Ampere and [ West Bay ] sales for the current year and how much we are expecting going forward on FY '23, '24 basis?
So the -- I'll start with the Greaves Electric Mobility. Greaves Electric Mobility roughly did about 25,000 vehicles in '22. This was against 10,000 vehicles in '21. So that was roughly about 150%, I'm rounding off numbers, 150% growth year-over-year.
When you talk about Ampere, Ampere is a 2-wheeler brand, Ampere sold more than 22,000 vehicles in '22 and versus 8,000 vehicles, roughly 170% increase. So when you -- and again, please what I'm giving you is the Q4 numbers.
When you look at full year, Ampere sold 50 -- roughly 52,000 vehicles versus 22 the year before. EV or our 3-wheeler sold 10,400 versus 4,000. And total GEM sold about 62,000 vehicles versus 27,000. So all in all, I think it's a significant growth aided by a good acceptance of our product, the Magna Ex that was launched on the 2-wheeler and our ELE products. And I think that complements us because ELE is at the bottom of the pyramid, giving lives and livelihoods both to the B2C and the B2B customer, right?
And B2C, I mean, in terms of the people carrying capability as well as a cargo carrying capability. And then when you look at the Ampere, it's both the B2C customer, the retail customer as well as the institutional customer.
The next question is from the line of Ashutosh Tiwari from Equirus Securities.
So on this diesel 3-wheeler volumes, it was around 15,000 last quarter. How do you see it ramping up in subsequent quarters, are you seeing improvement versus Q4 now?
Yes. I think we are definitely seeing with the advent of schools and colleges that have been opened, offices being opened, the last mile connectivity, especially the shared mobility is coming back.
And as we all know, this industry was very badly hit, almost 70-plus percent down, right, during the COVID era. So we do definitely see when you look at Q4 versus Q3 numbers and when we are going, I mean, clearly, we can see the numbers, right? Auto engines did about 15,000, 15,000-plus units, right?
And so we see the trend line, especially month-on-month, the industry size, when I look at diesel plus CNG, was roughly about 600,000 pre-COVID, had gone down to 200,000 in the COVID era. We see that creeping back up to 400,000-plus. So I think we definitely see signs, and CNG is coming back up. And I think our OEMs, depending on the success of our OEMs, we anticipate that the auto engine business will continue that recovery.
Can we go to the 25,000 number, say, or maybe 24,000, 23,000 number over the next, say, 1 or 2 quarters? Is that possible?
I don't want to give you future guidance on this. The reason being this is, as you know, purely OEM-driven. But what we working with the OEMs, we are realizing this, there is optimism Month after month, we are seeing the difference. The order book that we are seeing, 30 days, 60 days, there is optimism. And so we have capacity, we can build it.
Now the question is can the demand come back to that level? I think it's a question of time. But what we are also seeing is, obviously, the mix is changing. Diesel is coming back, but CNG is coming back stronger, right? And I think over a period of time, we see electric also in this business going up, which would help our MLR business as CNG and electric come up.
What is share CNG in our volumes as of now, like last year?
Sorry, come again?
What is share of CNG in our volumes?
Dalpat, do you want to take that?
Yes. So it was close to 20%, Ashutosh, in Q4.
Before 20%? Okay. And non-auto engines, like we did very well last year. This year, we've seen almost 10% decline. So how are you seeing this business? And what are reasons behind this decline in this current financial -- last financial year?
So Ashutosh, in the FY '22, the 2 segments which contributes to the volume for nonauto engines. So there are 3 parts of overall nonauto business. One is the light equipment, which goes for farm equipment business. And then the power Gensets, which have high value, and that's where in the overall revenue once every unit contributes to higher revenue.
And then there are small engines, which gets used for purposes in the industrial places and also in the small locations. There, we saw a little bit of, we can say, weaker market situation. But in the overall broader scheme of things, we expect these volumes to come back, and that should not be a problem.
There is no fundamental shift. It is only a timing gap, which we saw between last year and this year. Last year, the lockdown being of a longer period, the growth was mainly in the third and fourth quarter. This year, the volumes were also in second, third and fourth quarter. So overall, on a full year basis, if you look at it, yes, there's a 10% reduction, but we don't expect it to remain at that level on a permanent basis. The volume should go back towards where it has been in the pre-COVID period.
You mean to say this is maybe small engine use in industrials where the demand is particularly weak?
Exactly. So these are basically small engines used for the purpose of Marine, for the purpose of some of the industrial purposes. And that's where we saw the quarterly spread being different than what it was in FY '21, I'm saying the overall COVID situation..
On a long-term basis, we don't see a permanent reset in the volumes.
And the Agri-related products that we supply, are we seeing some pickup over the last 2, 3 months because this is again a market which is not doing well. So is there an improvement over the last 2, 3 months in that?
So here, the main issue was -- so there are 2 parts. One is relative to overall industry. And there, the pickup is going to be more driven by the cycle. The second piece, which was specific to Greaves was the product that was earlier being imported from China, and we have now localized it. The new product is being registered with various government authorities.
As you know, farm equipments have subsidy element and the products need to be registered various state governments. So many of the state governments, it has got the permission and registration. Some are still pending. And that is where that part is a temporary or the short-term factor in the volume.
And lastly, on this electric 2-wheeler is Magnus EX now a long range product?
Yes, that's correct. On the 2-wheeler, yes. .
Okay. So people are tapering that long range rather than lower range. So Magnus, basically, EX is doing better with it now.
Yes, we're yet to see that higher premium for that range.
Yes, EX is doing well. But keep in mind, though, as part of our strategy, we were very clear. We operate at the lower end as well as we operate in the what we call the city speed. It's our hypothesis that it's in the city speed that a lot of customers prefer and of course, with the [indiscernible] subsidy. And the petrol price is going up, right?
The unit economics are very favorable. Hence, there is a lot of pull for that product.
The next question is from the line of Sonal Gupta from L&T Mutual Fund.
Yes. Just continuing on the non-auto, the farm, the light equipment, I mean, isn't that largely power tillers? Or is there some other equipment?
These are mainly pump sets and power tillers.
And just in terms of on the EV side, could you sort of indicate what sort of price increases have been able -- you've been able to put through in terms of -- given the commodity cost pressures?
And I mean we understand that the battery prices, et cetera, and all these things are going up.
So Nagesh, would you take the pricing part? Sonal, before that, if you look at the realization increase and when we were talking about in the earlier question, the per unit realization on a full year basis has gone up from INR 60,000 to close to INR 81,000. And for the quarter 4 towards, INR 86,000. That's a combination of increasing share from slow speed to city speed and high speed.
And with the increase of our higher-end model, Magnus EX. Within that, at the price increase part, it has been corresponding to the inflation that we saw. Though there has been time lag, maybe of 1 month or 2 months, but the team has been able to get the price increase corresponding to what we saw as the inflation in the commodity price increases. Maybe Nagesh you want to add more on it?
Yes. I can just add to that. So overall, I think like Dalpat said, we have been very conscious that at this segment with our price value proposition, we continue to look at the market. And we have taken price increases appropriately.
Yes, we have taken price increases because the commodity prices have gone up. But when you also look at our history, and that's one of the things I'll leave you with, our average ASP has gone from the traditional INR 30,000 plus a couple of years ago, where we were traditionally playing to now like the CFO was saying about INR 86,000, INR 87,000, right?
So I think we've continuously believed in understanding the consumer, adding the value that the customer cares for, or customer wants, and taking price appropriately, right? In fact, on a like-to-like basis, our model is slightly more expensive than probably the top 2, 3 competitors in that space. I'm talking about like-to-like model that is city speed to city speed, yes.
Yes. Got it. Got it, sir. So basically, to understand, I mean, you have been able to pass on the increased supply chain costs, I mean, primarily on battery and some of these sites to the consumer?
Yes. Yes.
And just in terms of, I mean, like a broader question in terms of what would be your key objective in terms of next -- for FY '23 growth on the EV side? I mean what are the key milestones you're looking to achieve here?
So clearly, like we've said, obviously, we've taken up the capacity to 50,000 units. We have the Magnus EX that's doing well, and we continue to keep investing on new products. At the appropriate time we'll talk about it. So investing in plant capacity, investing in the people, investing in products, new products and technology, right?
And gaining market share or gaining a scale because this is a scale-driven business and also working on the customer centricity, right? I think those will be the priorities for this year.
And clearly, right now, we are in an investment phase. This is a growing business. We do see the traction coming in and we will continue to focus on that, both in the 2-wheeler and then the 3-wheeler side.
Right. And just last question. I mean, like on the 3-wheelers, I mean what portion would now be still lead acid?
EV 3-wheeler on the lower end E-Rickshaw, it's still an attractive market, right? It's also moving towards lithium on as we move towards the L5 category. So the L3 category, which is the E-Rickshaw, we're still in our case in lead acid, but I expect over a period of time that the play is beginning to move.
We're already seeing early signs of lithium. Keep in mind that's a very price-sensitive segment. Because like I said, it's lives and livelihoods, people did that with their own livelihoods at that. And so we have to be very sensitive to what the customer wants in that segment.
And on the L5 segment, which is a typical auto, which is electric auto, there I see if we're moving very heavily towards lithium.
Got it. No, so I was just because your presentation shows 10% share of lead acid. So I'm just trying to understand like is...
That's only 2-wheeler side.
The next question is from the line of Akshay Kothari from Envision Capital Services Private Limited.
Sir, I wanted to understand like in the e-mobility space, where are we seeing traction from geography-wise, either Tier 1 cities or Tier 2 cities. Could you give a sense of that?
Sure. The good part is, Ampere which traditionally started out with South India base a couple of years ago, right, 30 months ago. We are now very equally distributed. I think when you look at our North and our West and our South, it's almost equally distributed, right? And East is coming up very rapidly, point number one.
So our customers are coming from all the regions. Customers are definitely coming in from both Tier 1 and Tier 2. And so I think I anticipate that from big towns. Obviously, the town like Bangalore, Bombay, Puna, obviously, are obvious choices to lever. But we also see the second-tier towns coming up quite strongly. So in our case, we are seeing that traction happen on both sides.
And with our dealer network growing, we are capturing some of that.
The next question is from the line of Yashwant, a retail investor.
So I have a couple of questions. One is with respect to the models that we are planning for the future -- coming future. So that is first question.
And the second question is with respect to aftersales income. So name it like the Saudis or otherwise as spares. So how much as a percentage do we see on overall revenue?
So I'll answer the first question and maybe, Dalpat, you can take the second question. So in terms of the overall -- Dalpat, do you want to take the second question aftersales as a percent of revenue.
Sure. So Yashwant, as you know, in the -- if you look at our overall volumes, they have been growing in the last couple of years, and most of the vehicles are in the initial period.
So right now, the income towards payers and services is in early single digit as a percentage of the overall Ampere revenue. But as we look at the future and if you go by the trends, what has been in the ICE industry, maybe in electric mobility, we will not see those kind of percentages considering the moving parts are lesser. But still we expect in our business plan, that number to be closed in the early double digits.
Okay. Nagesh, on the new model?
Yes. On the new model, like I said before, I think on the 2-wheeler side, we're working on actually 2 new products, but we are not ready to announce it yet, at the right time. And as we get closer, we'll talk about it, right.
So rest assured, I think we've introduced several new products, the Magnus EX was the last one last year, and we continue to keep working on that as and when we are ready, we'll talk about that. On the electric 3-wheeler, I think we are working on the L5 and as and when we are ready to launch that, we will talk about that. So clearly, product development focus will continue. And as we get closer to the launch, then we'll talk more about it.
Okay. Are we targeting any specific numbers that we would want to do each year going forward? I mean the number of models with respect to new models?
No, it's not categorized by that. I think we would rather focus on the customer, what the customer needs are and focus on kind of growing our volumes and our market share. That's kind of what will drive that.
So we will continue to -- we're going to continue to see some of that.
Just a follow-up question now on the new models also. Are we considering a bike segment as such in near future?
I think it's a little premature to talk about that. Like I said, when it comes to product strategy, I would rather talk about it as we get closer. Not for anything else, but the team is working on a myriad of product strategy-related stuff. And from a competitive advantage, we would like to get -- talk about it as we get closer.
The next question is from the line of Chirag Shah from Edelweiss.
Sir, just a follow-up on the profitability of the subsidiary. There is the improvement that we have seen in the quarter, can be attributable to the ramp-up in EV business, right? That is the current EV 2-wheeler volumes? Is that right understanding? So around INR 12 crores of EBITDA that we have generated versus same time last year it was about largely flattish. So the question, sir, as you ramp up this revenue, this INR 242 crores of subsidy revenue, how should we look at this operating leverage benefit?
So Chirag, I'll start and maybe Nagesh can talk on a broader part. But company's focus, as we have spoken in several of the last few quarters calls also, profitability. And Greaves has been talking about it that we don't want to burn too much of money. But at the same time, our focus will remain on also continuing the market leadership and being in the top 4 or 5.
So in the short to midterm, the focus will not be only on improving the margins or increasing the profitability. It will also be to reinvest those profits and build the brand, reinvest on the marketing activities and some of the other fundamental things that we are working on.
So from a margin point of view, yes, this quarter, we have seen close to INR 11 crores in the E-mobility business, as you saw from our financial results, the EBITDA, and that was a result of operating efficiency and also the gross margin improvement.
But going forward, company will also do investment in the marketing activities.
Okay. So directionally, the operating leverage that we generally look at, you have still not hit the sweet spot to focus on operating leverage. That is the right way to look at it. The reinvestment will be reasonably hatched.
If we view it from a fixed expenses point of view, it's there and that is kicking in, and we are going to continue building on that. But on the expenses, which are going to drive the revenue, that is where we will continue to invest. That's an area where we have to do a lot more as we go forward.
And sir, what are the areas that you are looking to invest, if you can just broadly indicate?
Yes, I can take that, Dalpat. So clearly, one area would be the manufacturing capacity and which we continue to grow, like I said, going to do [ 50,000 ] in that. [indiscernible] is the localization of working with our suppliers and bringing better new products, right? So product technology would be the second.
Third, and probably most important, would be the talent. We continue to keep adding talent, both from India and global, and building a strong team of professionals who have not only got us here, but also will take us to the next level. So we will continue to invest on all of this and keep investing in the GEM, it's an electric mobility business as you know.
The next question is from the line of Aditya Joshi from Alchemy Capital Management Private Limited.
Congrats on a good set of numbers. My question is with respect to the dealer network, where it is right now and where do you expect this by the end of year in mobility 2-wheelers?
Yes. I can take that. Overall level, we have over 600, and let me explain that. That includes the 2-wheeler network, right, under the brand name Ampere, which are Ampere exclusive; plus, the EV network, which is E-Rickshaw; plus the Greaves Retail Network that is [indiscernible]. And we'll continue to keep adding that. Every month, we are continuing to add that, the good part is we're getting a lot of interest from dealer partners across the country, point number one.
Point number -- and so that will continue. And we will add -- we are very cognizant of 2 things. We will -- we want to make sure our dealer partners are viable, are successful. Hence, we will add as and when the demand in that particular city exceeds, right? Point number one.
Point number 2, in some cases, what we are doing is we are taking existing dealers whom we are very grateful because they've been with us from day 1. But they may not be -- may not have the bandwidth to grow to the next level. So they, along with a local partner, right, how do we expand the data?
So we are using various strategies as there are 2-wheelers side to grow it, either through the exclusive Ampere network or through the multi-brand Greaves Retail Network. So that's one thing.
And MLR through the 3-wheeler network, it's just beginning to ramp up. From almost nothing, we are growing to 50 plus now, and it will continue to. So you will see us ramp up on 2-wheeler, Ampere, E-Rickshaw, ELE and on the 3-wheeler MLR product. On all the 3, you will see the network going across.
Last but not the least, we are a firm believer, especially in 2-wheeler. That not all the business happens just by an old brick-and-mortar store. It's a phygital showroom, meaning our experience is showing that the customer is almost doing 50%, 60% plus of the work online before and doing the research. So how do we also have access to the online and what we call the phygital, the physical plus the digital stores, right, is, I think, also the focus kind of where we want. We believe this business will need a combination of both to make it successful.
Got it. And sir, second question with respect to your recently announced tie-up with Bounce Infinity. But can you please explain the tie-up in detail? And any financial this time?
Yes, at a high level I can cover in the interest of time. So we have been very clear from day 1 that in some of these faster-moving technology areas, whether it was fast charging or battery swapping, especially in the case of battery swapping, where it could be asset heavy, that we would go with partners, right?
So our -- we've been working with the series of partners, both of those companies that you talked about, right? And our products, as you know, we were one of the few people who got a removal battery from our space from an innovation standpoint. Now battery swapping is a logical next step, and we are obviously willing to offer that to customers who want that, right? So you will see us more and more working with partners like that in certain areas, where we may not want to take on the investment ourselves, right, from an asset standpoint, right?
So I think you will continue to see that. So for us, it's a strategic way of making sure that our B2B or B2C customer, if that's what they want, we'll deliver it to our partners.
Got it, sir. So then the capital will be invested by bond and not right assets, correct?
It could be individual, yes. Our model is -- it could be a combination, but let us see how it develops, yes. We've got a lot of discussions on the way. But yes, our principle is in some of these areas, we would not be capital heavy. Let's put it that way.
Okay. Okay. And this would be for both 2-wheelers and 3-wheelers?
Yes. Ultimately for the both, yes, it will probably start with 2-wheelers first.
The next question is from the line of Mr. [indiscernible] from Boyan Capital.
I hope I'm audible.
Yes.
Okay. So just a quick check. On the electric mobility business, we've done in the quarter ended March 22, as per the segment numbers, INR 237 crores of revenues, right?
That's correct.
And so what kind of -- I know this is across various products, various lines at more than one location, but still a rough ballpark of what kind of capacity utilization does this or load on the lines does this correspond to? Are we at 50%, 60%, 80%, 100%? Where are we?
This is made up of 2 main product segments, 2-wheelers and 3-wheelers as we have spoken, right? In the 2-wheelers, if demand is higher than the supply, right? So that is the capacity utilization, and that's why the company has been ramping up from 10,000 to now close to 20,000 a month, that's what Nagesh was talking about.
So there -- and when I'm talking about capacity utilization, it is not only the element of what manufacturing capacity we have. It is also linked with all the supply chain partners.
Yes, the vendor capacity.
Exactly, with them we are able to take it. So there, I would say that we are at the maximum level of capacity from a supply side point of view. Where there, the issue is more with the demand. Similarly in ELE also, the supply is at a higher end in terms of the overall utilization.
Right. So this corresponds to an annual run rate. Now I know I shouldn't be doing this. But just theoretically, this is -- this corresponds to an annual run rate of about INR 1,000 crores of revenue, right? And earlier in the call, somebody mentioned that the simplest way to look at the EV business is to just look at consol minus standalone. And when I do consol minus standalone on your balance sheet numbers, okay, the net block, which I would assign to the EV business, is just about INR 40 crores, INR 45 crores. I think it's about INR 40 crores, if I just take the difference of the 2 net block numbers. So you mean to tell me you can run INR 1,000 crore EV business with a INR 40 crore net block in the EV business?
Yes. So there are 2 parts there. One, as you know, this was an inorganic acquisition in 2018 and close to INR 200 crores were paid, which as you know, in consolidation gets eliminated. And as part of that, there was a lot of R&D and the machinery technology, etcetera, which has come as part of that.
Yes. So a lot of IPR, which was capitalized on the balance sheet, which doesn't trigger a net block. But I'm just looking at it from a manufacturing perspective.
No, there is a second part also. The second part is related to Ranipet plant, which was, as you know, the Greaves had that and Greaves had sold it to GEMPL. So when you are doing standalone minus -- sorry consol minus standalone, this transition also gets eliminated into intercompany. So close to INR 100 crores would have been the right number if you look.
So still 10x gross block to revenue? So after all, how much of value-add can you achieve by being that intensive in manufacturing?
So that is where there is a lot of new investment, as we were talking in the earlier call, right, which is going to go into expansion of capacities, bringing some of the strategic parts in-house, and that's where the investment is being planned as we go forward. So that investment piece for the e-mobility will continue. .
Lizan, we can close the call with this. Maybe we can hand over to Nagesh for closing remarks.
Sure, sir. Mr. Basavanhalli, can you give your closing remarks.
Yes, yes. Thank you. Thank you all for your continued interest, and would like to thank each one of you. In case you have got additional queries, you can always reach our teams. Thank you so much. Have a great day.
Thank you.
Thank you. Ladies and gentlemen, on behalf of Greaves Cotton Limited, we thank you once again. Stay safe. With that would conclude this investor call. Thank you for joining us, and you may now disconnect your lines. Thank you.