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Greaves Cotton Ltd
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Ladies and gentlemen, good day and welcome to Greaves Cotton Limited Q4 FY '23 Earnings Conference Call. From the management team we have with us, Mr. Nagesh Basavanhalli, Vice Chairman; Mr. Dalpat Jain, CFO; Dr. Arup Basu, Managing Director, Greaves Cotton; Mr. Sanjay Behl, CEO and Executive Director, GEMPL; Mr. Narasimha Jayakumar, CEO, Retail; and Ms. Akhila Balachandar, CFO. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Nagesh Basavanhalli. Thank you, and over to you, sir.
Thank you. Good morning. Good morning, everybody. Greetings, and a warm welcome to the quarter 4 and full-year FY '23 earnings call for Greaves Cotton Limited. I trust everybody is doing well and in good health. My gratitude for all of you to be present on this call today.FY '23 has been a good year for the company, both in terms of operational and financial performance. Greaves Cotton has experienced success and growth throughout the year, marked by significant milestones, strategic collaborations and our bench strength significantly increased by adding significant talent over the year. During the quarter, Greaves Cotton has recorded a stellar performance with the highest quarterly earnings revenue, reflecting our commitment for sustainable growth. The consistent improvement in profitability across our core business units be it the components of the Engines division or the Electric Mobility or Retail is also evident as part of our strategic vision and dedication to innovation.Very quick highlight in a -- Greaves Cotton got into a definitive agreement in the last quarter for the multi-tranche acquisition of Excel Controlinkage Private Limited. In the first tranche, Greaves Cotton has acquired a 60% stake in the company. This acquisition strengthened Greaves Cotton's position in the industry and the portfolio of offerings were all shared in the pretext reading material that was sent out. We are happy to take any questions on that at a later point.Our transformation, that journey that started several years ago, in terms of moving from a B2B to a B2B plus B2C and getting closer to the consumer has been driven primarily due to the strength of our main verticals, i.e., Greaves Engineering, Greaves Retail and Electric Mobility. Now, the B2C businesses contribute to almost 66%, 6-6 percent of the revenue.Coming to Electric Mobility, Ampere 2-wheelers, registered over 1 lakh retail sales in '23. It partnered up with Royal Challengers Bangalore as an official EV partner for the ongoing IPL T20 season. We also unveiled six new 2-wheeler and 3-wheeler products at Auto Expo in New Delhi in January. This caters to the diverse consumer segments and the different price points of the ever-growing 2-wheeler, 3-wheeler needs which forms more than 80% of the Indian population of vehicles in the last-mile segment.Greaves Retail is a leading distribution and a retail business in India, it specializes in last-mile transportation and the life cycle spanning over 2-wheeler, 3-wheeler, electric and conventional vehicles, as well as low-end commercial vehicles. And this is into multi-brand spares, multi-brand service and multi-brand sales.Now, from a overall perspective, when you look -- take a step back, we do thank our talented team, which has been strengthened significantly over the last 18 months. The consistent improvement in profitability across the various divisions is also a reflection of that. We remain steadfast in our mission to build new competencies in this era of disruption and accelerate our moment in terms of being a full stack mobility and a sustainable last-mile transportation solutions provider.With that overview, let me hand it over to Mr. Dalpat Jain. Dalpat?
Thank you, Nagesh. Good morning, everyone. To add to what Nagesh mentioned and put it in terms of numbers, during the quarter 4, company had highest consolidated revenue of INR827 crores, which was 33% higher than the same quarter of previous year. It had profit before tax of INR56 crores. The good part is, company's financial ratios are strong or, I would say, that business ROCE is at the highest level, we had stand-alone ROCE of 35% and consolidated ROCE of 18% for the full financial year FY '23. If you look at only quarter 4, consolidated ROCE was more than 30%.Cash conversion ratio of the company was more than 90% and that augurs very well in terms of working capital management, in terms of the balance sheet front. Company had consolidated net cash of INR1,142 crores, which can be used for the further expansion as we go forward. If I add Excel's revenue of quarter 4 and see, on a pro forma basis, the company's consolidated revenue for quarter 4 would have been close to INR880 crores, which is an annual run rate of close to INR3,500 crores. So overall a good profitable quarter, stand-alone margins have come back to double-digit and we expect, as we go forward, the industry continues to remain in a strong position and the diversification that Group has undertaken will help us in having a consolidated revenues that is stronger position.With that, Nirav, we can open up the floor for question-and-answers.
[Operator Instructions] The first question is from the line of Aashin from Equirus.
Sir, my questions are on the E-Mobility side of business. So we reported highest-ever volumes during the quarter, despite that the margins continue to remain subdued because of lower gross margin and higher employee. So could you please reflect on that?
Dalpat?
Yes. So, you are rightly absorbed, if you look at our overall volumes have been highest-ever, the revenues are at INR383 crores of a quarterly run rate. But at the same time, company has been set up for a far higher revenues and the volumes as we go because the industry is going to see huge penetration in favor of electric and that's where the management team has further been strengthened. We have filled in key positions at the senior level plus overall head count has reached more than 500, so that's what has led to the employee cost being higher.In terms of the gross margin, some of the changes which have been done to bring in AIS 156-related compliances, that price has not been fully passed on to the consumers and that impacted margin -- gross margins marginally, but mainly it's the fixed overhead, which have been built for a much higher scale as you go in future.
Sir, my next question is on the subsidy front, where are we on -- as on March '23, where is the -- how much subsidy left? And now there is news that few players are in the final stages of approval, so where are we on that?
Sanjay?
Yes. So, as you aware, the Ministry of Heavy Industries is conducting a review of the FAME II compliance. And for most of the EV players, including Greaves Electric Mobility, now, we understand and I think you also picked that string up. We understand that review is still ongoing and then partly it's completed, but it's still ongoing, and we are currently fully cooperating with MHI and all the authorized agencies appointed by them, and we are awaiting any further communication from that. I just want you to note that we are -- while this is ongoing inquiry, we are the first few EV players to receive the CMVR and ARAI certification even for AIS Phase 2, which started on 1st of April, new compliance for all the top vehicle models, every single model has been cleared for AIS Phase 2. So I'll [Technical Difficulty].
Okay. And, sir, any word on the remaining subsidies, which is there?
[Technical Difficulty].
The subsidy amount which is in receivables for us?
Dalpat, do we...
Yes, so net receivable in the consolidated financials is close to INR350 crores as of 31 March.
Aashin, I'll request to join the queue again for a follow-up question. The next question is from the line of Jyoti Singh from Arihant Capital.
Congratulations on the good set of number. And sir, my question is on the E-Mobility side, as in this quarter, performed very well. So what are expectation going forward? And if you can comment on the margin front and also on the top line front, what we're expecting going forward?
Sanjay?
Yes. So I think probably much for commending the results we've had in quarter 4. And I think while the forward-looking statement we will not make because they are still speculative in nature. But overall, just to reflect on the last 12 months, where industry has closed tripled in [indiscernible], which is I'm talking about electric 2-wheelers, which went from about 253,000 to about 727,000. Now, if this rate of growth continues, Ampere, is the third-largest selling electric vehicle in country today, in fact, in April it inched up to #2. So there is every reason to believe that we will be a significant leading position in this fast-growing market and that's what would be as best I can say.Electric 3-wheelers also we've seen, both in E-Rickshaw, as well as in the L5 segment, the contribution of electric vehicles in the overall pie is continuing to grow very rapidly. Last year, if you see, again, more than 0.5 million electric vehicles, almost 700,000 electric 3-wheelers got sold and if this, again, growth rate continues, with our addressability in both segments increase in size, we can see now the growth is coming forward. So that's, let's say, there is some echo coming, so if you can mute [ from your side ].
I request all the participants, please restrict to 2 questions per participant. The next question is from the line of Amyn Pirani from JPMorgan.
First question is just a clarification, if I look at your financial snapshot, then there is still a small negative gap between stand-alone and consolidated EBITDA and PBT. But when I look at your business division-wise disclosures, all of them seem to be in the green, including E-Mobility, which has a small PBT profit. So just some clarification as to why is consol still lower than stand-alone.
Yes. So, Amyn, good question. Two companies that Greaves Finance and Greaves Technologies, these are our new businesses, and the difference is basically the margin -- revenue and the PBT of those 2 entities.
Okay. And on the E-Mobility side, it's quite commendable that you're already back to -- after having a difficult Q3, Q4, you're already back to PBT, which is all positive. But when I look at your launches. So when we look at your upcoming E 2-wheelers, as well as the E 3-wheelers, I'm guessing that obviously the realizations for these will be higher because they are more features and they are the new vehicles. But how should we think of gross margins? So compared to how it has been for you, say, in the last 1 or 2 quarters as these volumes go up, realization could go up, but would it be positive from the start for margins or could there be a period where margins could be negative on these new products and then they start to improve?
Sanjay, let me start. Sanjay, I'll start and then maybe you can add. Good question and I'm glad you mentioned that. If you look at the Greaves Cotton philosophy and how we have done business, right, in terms of approval approach over the last couple of years. And looking at the contribution margin, looking at how we run our business, how we introduce products, how we have brought in the plans and at what level we have automated or capitalized the products, meaning we spend the CapEx where it's needed in terms of both design and the process areas, some of you have visited our plants. So I think that tells you a little bit of story of how Greaves Electric Mobility and Greaves Cotton in general runs its business. So I will leave you with that overarching stuff. So whatever we do, we'll look at overall road map to profitability, overarching view.With that, Sanjay, you want to add something specific?
No, in fact I got dropped for 2 minutes. But I think just to say that, Ampere has traditionally been operating in a competitive market, but always has had cost leadership as one of the very strong philosophy, which drives our products. Now, while the point about the 2 new products will increase the realization is right. It also needs to be understand that both these products are 100% designed in-house, engineered in-house, manufactured in-house. And with the scale efficiency is now building in, in terms of sourcing, localization and co-location of some suppliers. I have every reason to believe that margins are only going to be accretive in the overall portfolio as we go forward. So I will just stop there.
Okay. That's helpful. If I can just maybe add sir, because as we move into these categories. Now these categories are areas where there are some other companies which are already operating and selling decent volumes as well, and they seem to still struggle with hitting even EBITDA profitability. Now, obviously, you mentioned the things that you mentioned about cost leadership, as well as efficiency and in-house design. What I was trying to get that, is this segment inherently high on cost because the BOM cost can be high because the kind of features that you have to put in are high? Or is it just a temporary thing and gross margins on this category eventually should be better than your existing categories? If you can give some understanding on that?
Traditionally, you're right in a stable matured a reasonably penetrated markets, the high-end products with more features typically end up bidding higher gross margin. So that's the logical kind of continue on that, you will see as the market matures going forward. Now, initially, there could be multiple reasons why the margins can get challenged a little bit in terms of trying to pass on incentive to get higher adoption rates for electric vehicles. There could be some higher level of cash burn overall in the industry and all that stuff. So -- but those are very temporary phenomenon. But I think inherently, if you see the gross margin profile, I think it's going to be as good, if not better than the belly of the market as we move up the value ladder because customer is ready to pay more premium. So I would not go with immediate what's happening in the competitive context, but I would look at a 12- to 24-month horizon on this one. And I feel confident that they could be reasonably strong double-digit gross margins coming in these products.
Next question is from the line of Gunjan from Bank of America.
Just couple of clarifications. I mean, you usually used to give this EBITDA margin on E-Mobility, which is seems to have disclosed on PBT level this time. I'm just trying to understand is the -- is there some treasury income because we raised funds there. And if you could just give us operating EBITDA? I mean, EBITDA margin this quarter, which was, if I remember, Q2 was around 2%, 3% levels. Q3 was loss-making. So where are we now?
Dalpat?
Yes. So, Gunjan, at EBITDA level we are breaking even, so we are at the marginal appropriate, I would say, 1% kind of margin in E-Mobility and because those numbers are available as a consol minus stand-alone, we disclosed at the PBT level. And PBT, while it has a bit of treasury income, it's mainly the operating PBT, that we have disclosed.
Okay. Got it. And Dalpat, do you mind sharing what is the contribution margin of the business right now in the E-Mobility?
Close to around 20% to 22%.
Okay. That's good. Okay. And the second question I had was on the AIS Phase 2, if you could just share what was the -- I mean, AIS Phase 1, I remember which was done some INR3,000 crores, INR4,000 crores. What is the incremental cost we've had to incur on the AIS Phase 2? And has that been taken through price hikes -- drop through price hikes? And maybe then I'll take on the extension of this question later.
So I'll comment that, Sanjay Behl here. The [indiscernible] AIS Phase 2, the cost increment is almost in the same ballpark of AIS Phase 1, because there is some amount of additional layering you need to do in terms of thermal coating, you need to do IP67 ingress. So it's almost in the same ballpark. Now, what we, at Greaves have done is, we've taken a price increase on 1st of April in our flagship products, Magnus. And that takes care of most of the increase is being passed on to the kind of hopefully to the customer and it's met up with good response. In fact, we continue to do very good secondaries after the price increase even in month of April and even continuing in May. So that has been taken, which is going into the products already, most of it is got covered there.
Okay, sir. Since December, we would have taken almost INR7,000, INR8,000 sort of price increases on the key models, right?
We've taken INR4,000 that time, yes.
Gunjan, sorry to interrupt you. I'll request you to join the queue again for a follow-up question. The next question is from the line of Amish Kanani from JM Financial.
Congrats on a good set up for numbers. Sir, 2 questions. One, if you can give us some sense of secondary versus primary sales trend in Q4 and say, first a couple of months of this quarter? And also if you can give us some sense of our pricing strategy, you did say we had taken some price hike. But market share versus pricing strategy, how are we kind of looking at that? And how is the competitive intensity of the industry in that context?
Sanjay?
Yes. So overall, if you see in the quarter, we did about close to 14,000 Ampere, and if I take only 2-wheelers there, within that level of numbers in terms of our primary, but the secondary was actually very good, 13,300 was the total secondary number. So almost the entire thing we put in primary actually. I'm talking about March month. And if you take the overall quarter, that was close to about 36,000 primary and about 33,000 to 34,000 secondary. So some part went into channel because when we opened the quarter, the channel was a little low in terms of stock, given AIS Phase 1 switch over. So -- but 90% of what primary went into secondary. And even the registration, as you know, continue to grow up from about 4,500 in January, we almost touched 10,000 registrations, Vahan registrations in the quarter in exit month of March. In April, in fact, we have improved it further, and we've crossed 13% market share. We are #2 electric scooter registrations in the month of April. So that's the first part in terms of primary, secondary correlation.Now, go ahead with the next part of your question, please?
And sir, the question is, how are we looking at our pricing strategy versus market share? And how is the competitive intensity? How is the, say, I don't want to name, but say, Tier 1 players who have their own offerings and also the new players who are very aggressive in the marketplace? How are you looking at our pricing strategy and our market share versus theirs? How would we typically -- I don't want you to, of course, give me the marketing strategy in a sense. But what will be prioritized market share versus pricing versus market -- our margins?
We're going to prioritize profitable growth. And whatever trade-off you have to make, we will have to really keep that as the right presence there. But coming specifically to pricing strategy, look, we -- unlike a lot of competitors you talked about whichever Tier 1, Tier 2, Tier 3, we actually have a very clearly spelled out strategy to democratize electric mobility in the country on the back of 2- and 3-wheelers. Now, why I'm taking you back to this is that, we will have products in each of the customer segment and not a few price point segments that you operate in. So we will have a mass marketplace. We will operate in value segments. We will operate in the mass segment. We will operate in the premium segment in the price ladder, and we'll operate in every use case segment there.Currently, if you see we have 4 products, and this will clarify the pricing strategy to you. Our entry product is Zeal EX, which talks to an individual millennial kind of customer who has a typical use case about 70 to 80 kilometers kind of a run over 2 or 3 days and at about a 40 to 50 kilometer kind of a speed. Then there is Magnus EX, which is the flagship, which is a different price point completely. Then there is Zeal CA, which caters to the fleet mobility where it's a very different kind of an offering in terms of price bundles that we make along with service to some of the lead fleet mobility players. And then there is Primus, which is priced at INR110,000. So our range really starts from INR70,000 and goes up to INR110,000 with about INR10,000 gap at every price point. So our market share really is going to be share of the segment, and that totals up to the total market share of the company rather than trying to compete on price with one of the other players in the market. That's going to be our strategy.
And if I can just add, Sanjay, this is a good question. We've always believed in our strategy of playing in the belly of the market. We started with where the price-volume relationship that was INR80,000 to INR1 lakh. Now, to Sanjay's point, we are moving more towards that. We're also moving towards the right and with products like the Primus, which is launched and a product like NX, the next-generation that was introduced in the Auto Expo, which is yet to be launched, you will see our expansion bodes to the left, but specifically going after a different customer and different market segmentations, looking at what those customer needs are, what those unmet needs are and how can be satisfied. So I think it's a much more broad-based strategy than just pricing or a one-off strategy. And that's where I want everybody to keep that in mind. Yes.
Amish, I'll request you to join the queue again for a follow-up question. The next question is from the line of [ Saurabh ] from Sunidhi.
Yes. And sir, related a number -- volume number for non-auto products, which includes genset and light equipment for the quarter, the...
Saurabh, sorry to interrupt. Your voice is coming muffled. May I request to speak through the handset?
Yes. Hello. Am I audible now?
Yes, yes, much clear.
Yes. So I just need this volume number for non-auto products, which include genset and light equipment for the quarter, this is missing in this quarter's presentation.
Yes. So basically, the [indiscernible] number that we have over there, that gives the total engines both for the non-auto small engines and industrial parts. Farm equipment is something which we have not included considering the overall [ divert ] at the total non-auto level. Farm equipment would be a similar number that we had in the same quarter of last year.
That was INR12,000, right?
Yes. So it will be close to around that between farm equipment and the power genset. So that's the similar number that we have had.
Okay. So now onwards, this won't be given separately, right?
Total -- idea is that, now if in fact, Nagesh would also like to add, broadly, we have 3 businesses: Engineering, Retail and Electric. And then there are 2 new businesses, which are to create the -- and power the overall Mobility segment. Within Engineering, we are going to have auto and non-auto as the 2 disclosures, for auto purpose, not industrial purpose. That's how things are going to be as we go forward.
Yes. Dalpat, if I can just add. I think with our evolution of the company, right, Greaves Engineering now has engines. They also have other end equipment, which is, to your point, the gensets or some of the other application engineered end products. More importantly, with the Excel acquisition, they have all the other areas like levers, push pull cables, sensors, et cetera, et cetera. And more importantly, so this is -- if I can look at it, is the component part of the business. And this component part of the business, and we included some of the exact components in the presentation, it caters to some of the small and light commercial vehicles. It also goes after the heavy truck and the bus industry. So when you look at the play, the play has expanded. So now, hence, from a bigger picture, you're going to start seeing us speak about the Greaves Engineering, which is more component-based and which is more in these several areas, and they are primarily between auto and non-auto.And then, of course, the other 2 verticals are basically Electric Mobility, which is a 2-wheeler, 3-wheeler end vehicle player and Retail, which is also we have separated it out to bring in more clarity is post-purchase solution, where we sell multi-brand spares, multi-brand service and multi-brand sales of several different electric vehicles. So when you look at it, from a value chain extraction, you have the company in the component space, you gave the company in vehicle space, you have the company in post-purchase solutions. So from an end-to-end life cycle management, right, that's the big picture.
Okay. So what would be the capacity utilization in this quarter for engine division roughly? And how is the trend looking for next 2, 3 years?
Yes. If you can see, the engine volumes have gone up. Arup, you want to give that capacity number?
So our capacity utilization is hovering around the 60-odd percent range, and we've done about 180,000 plus engines. And with our portfolio using our manufacturing facilities around both engines and motors, et cetera, we see a healthy line going forward.
Next question is from the line of [ Rushabh Shah ] from Emkay Capital.
Am I audible? Hello?
Yes, your voice is coming a little muffled.
Am I audible now?
Yes.
So my question is regarding the acquisition of Excel, not many companies make an EBITDA margin of 25% to 28% in a cable business. So what different that this company do? And how you are interested in this kind of business? And what [indiscernible] the Excel business in our company?
Sorry, the question was not clear. Can somebody repeat the question?
My question was regarding to the acquisition of Excel, not many companies make an EBITDA margin of 25% to 28% in a cable business. So what does the company do that with a different that makes such a great margin? And how does this company can help in Greaves Cotton?
Okay. I'll take that question and then -- so one of the reasons we acquired Excel was exactly what you just mentioned, it's got a very high profitable business. And in fact, as the CFO has mentioned in the past, this should be margin accretive going forward, right? So you will clearly see that add to the Greaves Cotton portfolio also. Point number 1. Point number 2, they are a very cost-focused, profit-focused company, and they operate 40% of their business comes from international markets. They are both in the OE business and in the aftermarket business. And they are, like I said, pretty much suppliers to all the heavy truck manufacturers, the bus manufacturers in India and also globally to certain manufacturers. They pick and choose their orders. They work very closely upfront with the OEs. So hence, a strong engineering, supply chain, cost control. And they also "find areas where the profitability is high and where they want to participate". They have a very strong order book. And Dr. Basu and his team in the Greaves Engineering division will continue to work with them with the same philosophy of profitable growth going forward.
The next question is from the line of Samraat Jadhav from Prosperity Wealth Advisors.
So my major questions have been asked. One only thing was about this 9,000 retail network, which we have. So do you have any kind of division like how much are for EV-specific? And what is the expansion plan there?
So at a high level, the dealerships are across various units, both -- and electric mobility is the area that's growing. Let me bring in Sanjay, and then maybe Narasimha can comment on the network. Yes, Sanjay, first?
Yes. Okay. So in terms of the dealer network for Ampere, we have more than doubled our network and expanding across all tier towns over the last 1 year. And I think this growth will continue at this pace as the industry continues to grow in penetration, more people adopting for electric vehicle as their preferred 2 wheeler. The similar kind of a growth is evident even in the electric 3-wheeler space now with exclusive and multi-brand 3-wheelers, both kind of channels seem to be maturing now in the market. And in fact, Greaves Retail, which is our own in-house channel and AutoEVmart, which Narasimha can add after me, I think now becoming the prime platforms for both electric 2-wheeler and 3-wheeler industry kind of options that are there for the customer. So yes, you're right in picking up that 8,000 to 10,000 kind of point of sale already of electric there, and these are only vehicle points of sale. If you add to that the service, spares and accessory, this number is going to multiply very, very rapidly is our view.Narasimha, you want to add?
Yes. So on the Greaves Retail side, we have, as of now, as of April 30, 150 stores for AutoEVmart, which is our multi-brand retailing dealerships for covering 3-wheelers, electric 3-wheelers and 2-wheelers. On the Greaves Care, which is our multi-brand servicing network, we have a Pan-India network of about 170 care centers where we service multi-brand electric vehicles and also traditional fuel vehicles. And we have about 8,000-plus retailing network, which distribute our multi-brand spares. So overall, that's how we come up with this 9,000-plus number, actually more closer to 10,000 as of now. So that's the scope.Another important, of course, distribution is also our -- the mechanics that we have all over [indiscernible] as well. We engaged with over 20,000 mechanics, which basically use our spares to service multi-brand 3-wheelers and 2-wheelers. Increasingly, the focus is getting to electric.
Next question is from the line of Pankaj from Affluent Assets. Pankaj, may I request you to unmute your line from your side and ahead with your question, please.
Am I audible?
Yes.
Okay. Sir, I have compared this year's results with pre-COVID levels. So we have beaten the top line by a very good margin, but we are not at par with even -- not even in vicinity to the EBITDA margins versus pre-COVID levels. So my first question would be what is the internal road map, if you could share for us to reach the EBITDA margins to the pre-COVID level?Second thing -- second question, we have a partner with us in E-Mobility, who has global presence. So in our earlier interactions, you have mentioned that they would be helping us explore the export market. So I just wanted to understand what is the plan for that?And third question, if I may [ ask ], we have a CNG-based engine. And as I understand, a lot of the CV makers are launching the CNG-based vehicles in India, do we have any plans on that lines?
Dalpat, first question, Sanjay, second.
Yes. So, Pankaj, if you look at the margins, and now let me talk about the Greaves stand-alone, where you alluded to the pre-COVID margins, which you were rightly identified were in the close to 13%, 14% kind of a range. If you look at our quarter 4 stand-alone results, EBITDA margins have already reached near 12%. And if you take Excel and do a pro forma, then the margins will be upward of 13%. Having said that, one thing which fundamentally has changed from pre-COVID period to now is the overall auto volumes because the fossil fuel, particularly diesel had its own disruption in the COVID period and then now post-COVID, things are recovering, volumes are coming back, but there is going to be some shift in the industry towards electric and others.Having said that, as a company, we are now going closer to the pre-COVID in the new mix of the businesses at the stand-alone level. And with the addition of the component, motion sensors to Excel, maybe stand-alone margins will even improve beyond what it used to be in the pre-COVID period. So that's the direction that you can see versus the quarter 4's result without giving any forward guidance from our side.Now, from an Electric Mobility point of view, Sanjay, I would request you to add in terms of the direction that we are looking at?
Yes. So I got the third part of the question. Second, some partner name you said you can tell me later. But the third and last...
Sanjay, the question was with ALJ. Is it -- does it give us added advantage in terms of our global expansion?
Okay. Yes. So I think coming to the investor, you spoke about, which is ALJ and what is the added advantage [Technical Difficulty] we have actually mentioned in earlier investor calls, but let me repeat this. ALJ is a strong investor with a long-term view on clean energy in the world. So India, this would be...
Sorry to interrupt you, we are losing your audio.
Hello. Can you hear me better now? Hello?
No, sir, it's still the same.
Hello? Hello?
Yes, this is better, sir.
Yes. Okay. So I was saying, ALJ is a long-term investor, invested in clean energies on the planet. In India, this is the first investment they've made with Greaves, but they do have similar investments across the world, including Rivian, which is one of the top electric companies in U.S. So that gives us huge advantage to us in terms of understanding the already penetrated capability they have in, not just electric mobility OEM space, but the entire ecosystem. So we get a lot of know-how in terms of technical, engineering, R&D to working across the globe. So that's the first advantage we get, capability know-how and the maturity of the different parts of the world, I think the learning curve gets better for Greaves.The second is market linkage. ALJ is also one of the top distributors for Toyota across the world, and they have similar partnerships both in many regions across the world. So Greaves will get benefited as we go forward and into international forays on both our 2-wheelers and 3-wheelers, we will get an advantage of market [ focus ] with ALJ as an impact of that. So these are the 2 that I'm specifically spelling out. If you have something else in the mind, you can ask.The third point was on CNG 400 or CNG specifically as a growing kind of a component in the overall scheme of things, [Technical Difficulty] 3-wheeler, CNG has been a dominant [Technical Difficulty], and we do have our play through MLR Auto space, where we have a CNG 400 engine, actually doing extremely well in the market and actually growing quarter after quarter. So we will continue to have this play as the protocol [Technical Difficulty], and we have already spelled out our strategy to be fuel agnostic and given the fuel of choice of the customer as we go forward, and CNG being a much more cleaner protocol than the earlier fossil fuel, we are continuing to stay invested, and we will see as to how the protocol really goes, but we do have a product to solve that part of the market. Over to you.
I request all the participants, please restrict to 1 question per participant. The next question is from the line of Jiten Parmar from Aurum Capital.
Yes. So my question is basically on when are we expecting the new launches, the NXG and the NXU and Aero Vision?And also, second is, can you throw some color on what is happening at Excel? And ELE, what was -- how was the Q4 for these companies or the subsidiaries rather?
Okay. So I'll start. So I think in terms of the launches, as we had announced in Auto Expo and the previous analyst calls, we had said the first launch will be -- we had announced 3 on the 2-wheeler, 3 products on the 3-wheeler, right? We had said the Zeal and the Primus would be launched, which we did to schedule. So the -- Sanjay Behl talked about both the Zeal product, which is a sub INR70,000 product, then he touched upon the Primus, which is the greater than INR1 lakh product, right? So 2 done. The last product on the 2-wheeler, which was the next-generation, NX. We had said in Auto Expo that it would be sometime this fiscal year, and it's still on track for that. And as we get closer, we'll discuss more about it.Regarding the question on the new company, Excel, that was acquired, they had a relatively good -- actually a very good order book, and they had a good Q4, and that's why the CFO did mention on a pro forma basis how that would be accretive going forward and how that would happen. I mean, that was already discussed before. Happy to kind of give the details at a later stage. I think those were the questions.
Next question is from the line of Rishikesh Oza from RoboCapital.in.
Sir, my first question is what kind of growth are we looking at E-Mobility business in the next 2 to 3 years?
So I think we should be growing in line with the market. Now there are varying market estimates that are there. Current market penetration in two-wheelers is about a little under 5%. And then if you take different estimates from Bain to Mackenzie to any other industry, they're talking about more than doubling of the market over the next 2 years. So you can expect Greaves to sustain to improve its market share in this market -- growing market. So you can calculate versus that. That's how it is going to be. The other segment, 3-wheelers is going to be a little more aggressive because we have a starting position, which is just getting firmed up now, and I think you will see us growing even more faster in that segment over the next 12 to 24 months.
Okay. And my second question just in recent for company aim for [ early in ] EBITDA margins in medium term. So like how are we going to achieve this? And can you see a year-on-year improvement from FY '24 onwards?
Dalpat, you want to touch up with the margins?
Yes. So Rishikesh, as I was talking on the stand-alone side, which is clear from the quarter 4 results onwards. As far as E-Mobility is concerned, obviously, it's evolving very fast, right, how industry will shape up, what are the kind of technologies which we'll get into it. Having said that, if you see from a long-term perspective, there is no reason why EV 2-wheelers or 3-wheelers should not have margins comparable to what the IPOs have been having. And IPOs have been having in the range that you spoke about. How would that be achieved? Obviously, with the operating leverage, if the kind of penetration numbers that are being talked about, if they are achieved, then there will be a natural benefit of the fixed overhead getting allocated to a far higher revenue. There will be advantage of operational scale in sourcing, which will give gross margin improvements. And in the long-term, eventually with the battery cells getting produced in India and with the PLI-led incentives coming to industry, that will also further add. So these are the 3 broad drivers which, as the industry settle, should lead to stable margins in E-Mobility.
Next question is from the line of Jaydeep Bothra from Subh Labh Research.
[Technical Difficulty].
Jaydeep, sorry to interrupt you, you're sounding little distant. Can I request you to speak through the handset?
Yes, now audible?
Slightly better.
Yes. My question is on expected time line for completion of current expansion on capital expenses. And second question is the plan, is there any planning for -- have done a bit for the electric EV 2-wheeler, the Ampere?
So I think I'll start. If you're taking a question on the CapEx, obviously, we have said in the past that we have committed significant capital on the Electric Mobility side. We have also committed significant capital on the Excel acquisition side and some of the regulatory upgrades on the engine side, whether it is the CPCB 4 on the gensets or the BS-VI or the OBD 2 on the genset. So that's -- so we have used a judicial blend of capital utilization across the areas where technology is a differentiator, where we can get a competitive advantage. Obviously, Greaves Retail, which is one of our profitable businesses, tends to remain asset-light. That's the big picture.Dalpat, feel free to add.
No, I think Nagesh, you have covered it. So if there's any unanswered question, where Jaydeep maybe happy to take that up separately.
Next question is from Niteen Dharmawat from Aurum Capital.
So I have a couple of questions -- rather 2 questions. The trade receivable numbers, if you can give me the same to subsidy number out of this and with [ aging ]? That will help me.
Yes. So Niteen, trade receivables are all receivables. And as you know, in our business is mainly we are into cash and carry in E-Mobility and Retail and also in Engineering, major part of the receivables is secured. So that's the part on the trade receivables.Now, coming to the subsidy, subsidy comes under the other financial assets. And there, as I mentioned earlier, the total outstanding is close to INR350 crores. Half of it will be less than 90 days, half of it will be more than 90 days.
Thank you. I now hand the conference over to Mr. Nagesh Basavanhalli for closing comments.
Well, thank you. Thank you all for your continued interest. And again, just reiterating what was in the highlights of the quarter. Our transformation to a B2B plus B2C is an end-on-end strategy. Based on our 3 main verticals: Engineering, Retail and Electric continues. Contribution is now 67%. Excel 60% is done. Greaves Retail continues to expand its footprint. Product that was committed to be launched, the 2 products, Zeal and Primus have been launched. And the next generation to follow. And we continue to focus on our strategy and our game plan of being an end-to-end value chain player, building a sound profitable business for the long-term future.Thank you all for your attention. Thank you for your time. Have a wonderful day.
Thank you very much. On behalf of Greaves Cotton Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.