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Olectra Greentech Ltd
Earnings Call Analysis
Q1-2025 Analysis
Olectra Greentech Ltd
Olectra Greentech has shown remarkable growth in the first quarter of FY '25, with consolidated revenues climbing to INR 313.9 crores, representing a substantial 45% increase year-over-year. In addition, the EBITDA grew by 22% to INR 50.5 crores. The profit before tax (PBT) surged to INR 31.8 crores, which is a 26% rise from the previous year, while net profit after tax (PAT) reached INR 24.3 crores, up by 34%. Stand-alone operations also saw impressive numbers, with revenues of INR 304.2 crores, an increase of 48%, and PAT at INR 20.7 crores, which is an 11% rise compared to the previous year.
The company continues to maintain a strong order book of electric buses, currently standing at 10,818 units. In Q1, Olectra successfully delivered 156 electric buses and is targeting an ambitious total of 1,500 to 2,000 deliveries in the current financial year. The management had previously indicated that they expect to more than double Q1's output in the next quarter, projecting deliveries of around 500 units in H1 and over 1,000 in H2.
A significant shift for Olectra is their transition to a new, state-of-the-art manufacturing facility in Seetharampur, which aims to enhance production capabilities. Currently, the plant has the potential to produce about 200 buses per month, with plans to ramp up to 5,000 per year by the end of the financial year and even further to 10,000 by FY '26. This increased capacity is crucial as the demand for electric buses continuously grows, especially given governmental pushes for electrification.
In the past year, operational challenges due to stringent battery compliance norms had hampered production capabilities. However, these issues have been largely resolved. Moving forward, Olectra is optimistic about meeting its delivery targets, confidently stating that they can exceed their guidance of 1,500 units for the year. The top management expressed a strong belief in consistently high operating margins, projecting a range of 10% to 12% in the longer term, given favorable market conditions.
Olectra faced a minor setback related to a INR 2.2 crore penalty imposed by a customer due to non-delivery. However, this is being negotiated and is not deemed a substantial risk to future orders. The management emphasized that such penalties are not expected to have a long-term negative impact on customer relationships or future business. They also believe they can keep their edge in the market through the high quality and performance of their products.
While the current focus is on electric buses, Olectra has hinted at the potential for future expansion into different electric vehicle categories, albeit no immediate plans for hydrogen technology have been established at this time. They aim to strengthen their position in the electric bus segment before diversifying into other areas. This cautious approach allows them to allocate resources more effectively towards enhancing their existing product lines.
Olectra Greentech finds itself in a favorable position within a rapidly growing electric vehicles market. With strong revenue growth, an impressive order backlog, and plans for expansion, the company is well on track to capitalize on government initiatives pushing for electric vehicle adoption. Although challenges remain, management's confidence and the ongoing developments at their new facility suggest promising outcomes for investors.
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Ladies and gentlemen, good day, and welcome to the Olectra Greentech Q1 FY '25 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amar Kant Gaur of Axis Capital. Thank you, and over to you, Mr. Gaur.
Thank you, Siddanth. Good evening, everyone. On behalf of Axis Capital, I welcome you to the Q1 FY '25 Post Results Conference Call of Olectra Greentech. From the management team, we have with us Mr. B. Sharat Chandra, CFO, and Mr. P. Hanuman Prasad, Company Secretary and Compliance Officer, along with teams mates from finance and strategy.
I will now hand over the call to Mr. Sharat Chandra for his opening remarks, post which we can have the Q&A.
Over to you, Mr. Sharat Chandra.
Thank you, Amar. Good evening, everyone. Thank you all for joining in for the earnings call for Q1 '24,'25. So we are taking as read the presentation, which is put on our website along with the safe harbor statement there on.
We are pleased to report strong growth in our consolidated revenue and profitability for the quarter 1 financial year '24, '25. We have till date -- till 30th June cumulatively delivered about 1,851 electric buses and 51 electric tippers. I would like to present the key highlights of your company at a glance. So Olectra buses have successfully covered more than 25 crores kilometers across the length and width of the country. Strong demand continues with the company's net order book of electric buses stands at 10,818 numbers after delivering 156 buses in Q1 FY '24, '25. Our focus continues on increasing our capacity and enhancing our technology capabilities. The construction work of the new state-of-the-art plant at Seetharampur is in full swing, and your company has transitioned to the new facility and commenced the plant's operation partially in quarter 1.
Now I will begin with you providing the key highlights for Q1 consolidated financials. On a consolidated basis, the revenue from operations for Q1 was at INR 313.9 crores, up by 45%. The company's EBITDA for Q1 reached an impressive INR 50.5 crores, marking a growth of 22% compared to corresponding quarter of previous year. The PBT surge to INR 31.8 crores, an increase of 26% versus the Q1 of previous year, which was around INR 25.3 crores. PAT stands at INR 24.3 crores, up by 34% compared to Q1 previous year's number of INR 18.1 crores.
On a stand-alone basis, the revenue from operations was at INR 304.2 crores versus INR 206 crores of the previous corresponding quarter, up by 48%. The company's EBITDA for quarter 1 reached an impressive INR 43.6 crores, an increase of 13% compared to corresponding Q1 of previous year of INR 38.6 crores. The PBT surge to INR 28.1 crores, an increase of 13% versus previous year Q1 of INR 24.8 crores. The PAT stands at INR 20.7 crores, up by 11% compared to previous fiscal corresponding quarter of INR 18.7 crores.
Thank you, and over to the Axis team for the Q&A.
[Operator Instructions] The first question is from the line of Bala Murali Krishna from Oman Investment Advisors.
Could you please tell us how many buses you have delivered and e-tippers in this quarter?
Yes. We have delivered about 156 electric buses in this quarter. We have not delivered any tipper in this quarter.
Okay. And I think we have order book of tippers, what could be...
We have actually till now cumulatively delivered about 51 electric tippers. And we have an order on hand of about 41 numbers, which we are in discussing this delivery schedule which we are targeting in the H2.
Okay, sir. Understood. So regarding the execution, I think we have target of 2,000 buses for this year, we have delivered 156. So do you think that we are on track, and we can complete that balance quantity in the upcoming 3 quarters?
So basically as per the said target what we have provided guidance in the previous earnings call, we have delivered about 156 numbers in Q1. And we are in -- we are actually well set to meet our targets, which could be in the region of 1,500 to 2,000 numbers in this year. We expect the quarter 1 -- the quarter 2 numbers to double than the quarter 1, more than double. And then the H2, we are expecting about 1,000 plus numbers.
And -- we will be short of the 2,000, that's fine. So what is the monthly production rate, sir, as of now?
See, as I think you are aware, we have transitioned to the new plant in this quarter. And whatever initial feeding issues were there has been resolved. And now we have the capacity to do about close to over 200 numbers per month. And by the end of the year, we are targeting to increase the capacity to about 5,000 numbers which is approximately 400 numbers per month.
Understood, sir. So regarding this any pipeline in the PM e-Seva second tender, I think we have participated so any outcome of that. And U.P. tender whether it's came for any rebidding?
So basically, the tenders, which are in the pipeline. U.P., the CSL tenders, which are coming up in the next 2 months. I will ask my colleague, Ramesh, to answer this question.
The CSL to PME, e-Seva tender is yet to be bidded by all the participating participants. And U.P. tender was MCC and the due date has not yet come.
Okay, sir. And any other intercity tenders coming? I think in Hyderabad, JBM Auto is supplying those intercity tender.
Which was the old tender in -- it is a part of CSL 2 tender, which they have received almost 1.5 years back, they are supplying for that. Like we -- and we -- as we told and as we have presented in our presentation, we are the first OEM to cross 10,000 plus orders.
Understood. And sir, lastly, on the presentation, I think in stock exchange we could not see your presentation, I think you missed [indiscernible] that one. And lastly, on order book, we have a good order book, but being 10,000, 11,000 order book, so the belief now this will take more than 2 years. So do you think that when we participate in tenders now, government or STUs will be -- maybe need a little bit earlier deliveries, which other players are delivering very quickly. We may not be able to deliver any buses for the new tenders before 2 years. This could be a risk for us in winning tenders? Or how do you see that?
See, as we have told, we are actually increasing our capacity to about 5,000 numbers by end of this financial year. And going forward, next year will be the biggest year, as we have mentioned in the earlier call also, so there, we are targeting more than 5,000 numbers. Next year and the following year, we are planning to complete the existing order book. And in case of new tenders, definitely, we are participating, and we are participating in all the new tenders. And according to the order book positions, we will be in a position to increase our capacity.
The next question is from the line of Venkatesh RJ from Motilal Oswal.
My question is that now from almost -- from last 2 to 3 quarters, companies assuring that you are going to have a production capacity of more than say, roughly around of [ 800,000 ] buses in a quarter. But if you look at last 3 quarters or 4 quarters, all the quarters, you are only roughly manufacturing around 150, 160 buses. And in the next 18 months, you need to supply more than, say, 7,000 to 8,000 buses. Can you just kind of elaborate on this and how the company is going to do this, handle this case?
I think we have clarified earlier that because of the battery norms, last year numbers were impacted. And accordingly, we could deliver about 507 number buses last year. And we have transitioned to the new plant in this quarter. And whatever teething initial issues were there with regard to building up the new plant has been resolved. And as per our guidelines, guidance given in the last call, we have done about 156 numbers in this quarter 1, and we are targeting to do about close to 500 numbers in H1 and followed by 1,000 number in H2. And we are targeting more than 5,000 numbers in next year, wherein our capacity will be fully available. And next financial year, we would like to basically increase our capacity to over 10,000 numbers to meet the existing order book.
Next question is from the line of Rishab [ Gung ] from [indiscernible] Family Office.
Sir, am I audible?
Yes, very clear.
I have -- I wanted to ask what do you think about the opportunity for EVs in the pickup trucks and commercial vehicles, especially the light commercial vehicles in India?
As for Olectra's view, there is a huge scope for the especially in the tippers and dumpers and other markets. When it comes to LCVs, as of now, Olectra doesn't have any view on that. And -- but we are concentrating mainly on the heavy commercial vehicles. And we are getting a huge inquiries, and we are in the process of getting it close.
Okay. But does these segments -- are these segments interesting for you?
So basically, our motto and focus have been to actually expand our portfolio in the buses itself. So we have a very, very strong R&D team of 50 plus numbers. And we have been actually working on building up alternate platform and beginning new product portfolio within the buses itself. In addition to that, we are focusing on electric tippers and trucks. So these are the 2 main products where we are concentrating. And as of now, we don't have any other plans for -- on other products.
But would the success factors be very different in this segment versus the one in which you are presenting, or would it be like similar one, just a broad idea on that, sir.
Basically -- see, EV, as you are aware, is in a very, very nascent stage in the country. Though we have been there in for the past 7, 8 years. Still when we talk about the maturity of the industry, it is very, very nascent. And overall, I think the population of buses is about 1.8 million and almost less than 1% is electrified as of now. So -- and then this EV industry has taken off and then when the government has been pushing for adoption of EV, and it was easier to start with electric buses, and it is very important for public transportation to get converted into EVs. And so one of the major constraints will be recharging infrastructure. And for electric buses, we have charging infrastructure being build in the depots where already there's a space for parking of the buses. So that was a reason why it is a little easier compared to other products to implement and bring the EV adoption.
All right. [indiscernible] it won't be so easy and it would be an impediment, all right. Got it.
Next question from the line of [ Gaurav from Utility Unifi ].
So recently, there was news about Olectra importing lithium battery for developing electric tractor for export market. So can you give us an update on it? And apart from that, are we developing more EV products like an electric double decker bus, so that's my question number one.
And my second question is, I just wanted to know the update on automation of the new factory. Are the robots in place for automation?
So coming to question #1, we are not aware of any such news or nor we are in the process of any exporting any products in the near future. So -- and coming to your automation, yes, we are in the process of analyzing. We have identified the vendors, and we are finalizing -- in the advanced stage of finalizing, and hopefully, in the next 2 to 3 months' time, we are going to finalize the automation.
Okay. And are we developing an electric double-decker bus as of now? Because there is a tender from Thane Municipal Corporation for 10 of those.
No, actually, we are not in the process of developing double-decker as of now. Since the quantities are very less. We are not seeing a great future in double-decker.
Next question is from the line of [indiscernible] who is an individual Investor.
Congratulations on a good set of numbers. My question was related to the private electric bus opportunities. Are we seeing any traction in that segment? And do we have any orders at the moment other than STUs?
Yes. Thank you. So the private segment is slowly opening up. And as far as we are concerned, we have delivered last year about 90 numbers to a private party. And in the recent past, we have delivered about 5 numbers to Microsoft. So the market is scattered to take the traction, and then we hope this market will open up soon.
Next question is from the line of Aditya who is individual investor.
So I have a question related to the new plants, are we operating at full capacity and [indiscernible] 200 buses. In that case, why did we not able to achieve around 1,800 electric buses either [indiscernible] if we have started operating [indiscernible].
Sorry to interrupt Mr. Aditya, can you please repeat your question? Your voice was not audible.
Yes. My question was, are we operating at full capacity in our plant that is 200 buses? And if yes, since when?
Yes. Thank you, Mr. Aditya for the question. See, we have build the capacity. We have transitioned to the new plant. And by quarter 1 end, we have an installed capacity of about 200 buses per month. So we have not achieved the full capacity. They're working at lesser than the full capacity. And no OEM will be able to operate at 100% capacity. Generally, the efficiency levels are about 80%, 85%. So -- and we have built the capacity. And as we have mentioned, we are targeting about 1,500 numbers, though we have -- we will be building the capacity about 5,000 numbers.
Yes. Okay. So are we operating at the 80%, 85% capacity which you mentioned now?
In H2, definitely, we are planning to operate at 80%, 85% capacity.
[Operator Instructions] The next question is from the line of Pradeep Patel from Infinite Wealth Advisors.
Sir, what do you think about margin in the next couple of quarters? Will it be improved?
Can you repeat your question?
Sir, margin for the next couple of quarters, it will be about 14%, 15% or it will be improved?
Yes. So Mr. Pradeep actually, we have been operating at a very healthy margins. The operating margins have been consistently good for all the quarters. And because of the product mix in some of the quarters, the margins could vary. And over the long term, we expect the margins to be in the region of 10% to 12% keeping in mind the market dynamics, the volumes. So that is what is the guidance we could give at this moment.
Sir, EBITDA margin?
Yes, correct, operating margins.
Next question is from the line of Varun Poduval from Yes Securities.
My question is in 3 parts. One is with respect to understanding that we would be reaching the capacity of 8,000 by the end of FY '26. So is there any further plans of expansion post that, that's question #1. The second is with respect to the capital that has been invested through short-term debt and internal accruals to the extent I think INR 700 cores, just want to understand what is the breakup of it being deployed till date and the sale of it being different in the future? Continuation to that would be that I would like to understand when you would think of going debt free on that -- on net positive.
So with regard to your first question, capacity of 10,000 and more. Yes, you're right. By financial year '25, '26, we are planning to expand our capacity to 10,000 numbers. As of now, we have -- we will have the flexibility to increase it based on the demand and based on the supply requirements. So as of now, we have planned to do about 5,000 numbers by the end of this financial year and increase to scalable to 10,000 numbers by next financial year. That is your first question.
Second, with regard to term loan, we have actually -- we have -- as we have mentioned, we are in the progress of the plant completion by end of this financial year. So as of now, we have taken a sanction of about INR 500 crores for term loan and about balances from internal accruals. We have deployed close to about INR 200 crores till now.
And sir, 1 more question is with respect to what is the biggest risk that you are looking at in the coming few quarters in this year?
So as of now, we are not forcing any major challenges because if any new thing comes up, we are not aware. But last year, we had this battery compliance norms, which came up, and it was very stringent. So if you ask me today, we don't have any major challenges to meet our targets.
And sir, just what is the duration of the short term loan that you have taken and when are you planning to repay it...
About 5 years period.
The next question is from the line of Aditya Chheda from InCred Asset Management.
First, my question is on finance costs. There is an element of bank charges and commissions, which is quite significant. Can you highlight what is the nature of these finance costs that you report?
See, we have been availing new facilities. Total working capital facilities, including term loan, we have about INR 1,517 crores. So initial processing fees and upfront fees is one of the components. And the -- and whatever commission we incur, this is on the letter of credit and loan guarantees, which we issue to our vendors. And the third component on the interest our finance cost is the healthy discounting, which we incur, it will be one of the major costs which we incur.
Got it, sir. My next question is we have a slide on the subsidies in the presentation. Is any of those going to accrue -- going to accrue to us? And if yes, can you describe the nature or quantify them?
We don't have any subsidies outstanding because as an OEM, we don't get the subsidy. It is as per the [ same ] to guidelines, the operating company, the owner of the bus will get the subsidy. And all the subsidies, which were due to us in the beginning of the initial 2 contracts have been realized.
Right. And my last question is if for any delay in the delivery of the contracts which we would have. Would there be any penalty that would be levied on us because of the mismatch in the timeline of delivery of these buses?
So as of now, there is mutual discussions and agreements and with the customers and end customers. We do not have -- we have not encountered any issues, significant issues relating to late delivery finances. So our team continued to maintain very strong communication and relationship with all the stakeholders to ensure smooth and on the execution. And I think we have clarified in the past that it is mutually the adoption and transition to anything e-mobility, it's very, very renovative to STUs.
And there is a scope between the end customer, which is STU and us, and they have to provide the depot space and power connection. And we have to set up the infrastructure and then start delivering. So for example, these major projects like Mumbai and MSRDC, there's a need to open up of over 150 to 200 depots. So the STU's has to provide the depots and the power connection. And accordingly, we will be billing up the charging infrastructure and card manufacturing and supplying buses based on the depot availability. So because of these reasons, if there are any delays, the timelines gets extended accordingly.
Next question is from the line of Anil, who is an individual investor.
Sir, you mentioned that term loan of INR 500 crores have been sanctioned and INR 200 crores already deployed. Do you expect the balance INR 300 crores to be deployed in next 1 quarter?
Yes.
And is this -- will be deployed for the purpose of construction of new facility?
Yes, yes. See, it may not happen in 1 quarter. It may spill into 2 quarters and its entire amount is for the purpose of new facility.
Okay. And so this will be sufficient for us to reach to the capacity of 5,000 buses per year.
Correct. You're right.
And may I know like what's the increment in the number of employees now because of this new facility?
See, basically, we have been continuously increasing our headcount and very senior people have joined in various functions to take care of the growth operations of the company. So as far as the new plant is concerned, when we talk about the manufacturing the buses, we outsource 2 reputed third-party operators. And we'll be able to increase the work force as and when it is required. So we have a mix of very skilled, skilled, semi-skilled, unskilled labor workforce. So accordingly, based on the need, we increase our headcount.
Yes. But what is the approximate headcount you are expecting on our payroll by end of this year?
As of now, I don't have any number. We have about 800 numbers as on today. We may extend up to 1,000 plus by the end of the financial year.
Just one more question, like I'm the person who was trying to visit the factory. And -- but I didn't get any approval to visit the factory. I'm not sure why you have shied away from not allowing me to go and visit the factory, which is state-of-the-art facility. You're building it up first of its kind in India. It should be a proud factor for us to share and show to the world that this is how we are executing the best of the best facility, and we are developing a world-class company.
Mr. Anil, Hanuman is here. Actually, we have been receiving multiple requests from the multiple shareholders independently on different, different days. It is because now works are going on significantly. It is difficult to accommodate that's the reason we couldn't accommodate individually. At appropriate time, maybe a group of requests, we may respond or else, in any case, in final inauguration definitely people will be get invited. We are proud to be announced and -- nothing to be shy there. At appropriate time, we'll come forward and definitely we'll accommodate to your request. You kindly bear with us.
Yes. I look forward to visit the factory and meet all of you.
I'm sure whoever are going to request, whoever are interested, we will accommodate, but problem is since the work is going on, accommodating individually for different different days to different different people is a little difficult. Please, kindly understand. And finally, when the factory construction is completed, inauguration, everything, you all people would be invited. No doubt in that. Please bear with us.
We'll wait for the invitation. And just one more -- last question, like, why we are shying away from increasing the capacity at a rapid pace, like this question I've been asking for last 1 year, like we can see -- foresee a demand of 20,000 buses per year delivery kind of the thing coming to Olectra it self. So why we are going so slow, like again, entire this year, we'll be reaching only 2,000, next year, we will be reaching 5,000 of the capacity, whereas we have 11,000 buses orders right away now. Don't you think that we should speed up because it's a technology driven and anything can happen. So we should make sure that we should take the first mover advantage and developing the capacity of 20,000 buses per year at least in the next 2 years.
Yes. See, we have plans, as we have mentioned very clearly, 5,000 numbers, which is expandable to 10,000 numbers and increases. And we have been very, very prudent in actually spending of CapEx. And so if you have seen in the beginning, we have been getting orders and executed from a lease facility now that the production. The order book has ramped up significantly and then we are seeing a huge opportunity. We started building up new plant. And so you're right. So we will definitely try to expand once we complete these phases of 5,000 numbers, actually, the milestone of 5000 numbers by end of the financial year and scalable to 10,000 numbers. It is -- further expansions will be easily possible with a little bit of investments with regard to balancing equipment.
Next question is from the line of Mayan Gupta who is individual investor.
So my first question is about the CapEx. Are you planning any CapEx in other technologies like hydrogen because Indian government is very bullish on hydrogen also. Nitin Gadkari has already said that they have future plans for hydrogen. So this is my first question. Do you have any CapEx in the future for hydrogen.
Secondly, there was a news that there was a penalty of INR 2.2 crores from Mumbai STU because of nondelivery, so which part of balance sheet covers that penalty if it's already been paid? So how do you look at it on the future prospects? Like do you think it is a threat to the order book -- future order book by other [indiscernible] because you always do by the reference of the last deliveries and penalties. So because this is almost 2.5% on our EBITDA, so INR 2.2 crores is a huge number.
And second thing is these kind of penalties, how do you think that -- will it benefit our competitors like Force Motors and Tata going forward that like our future order book can go to these competitors, how we as a company looking at these things, these penalties and protecting our order book. And [indiscernible] one of the last investor [indiscernible] plant visit. So we definitely want to visit the plant, which is a big plant you are already setting up and the capacity will be 10,000 buses in the future.
So these are my 3 questions. Question on CapEx on other technologies like hydrogen. Second is about the penalty, which was in the news of INR 2.2 crores and third is about the plant visit, which you already answered, you don't need to answer the third question.
Yes. See, as of now, we don't have any other CapEx plan for other technologies as like hydrogen. We are now, as we think I clarified in earlier questions, we are now focusing on completing the delivery of the existing order book of electric buses and then introducing various platforms, various products within the EV -- e-buses segment, and we are focusing on the electric vehicles.
So coming to the penalty, which you are referring to. So our customer, which is EveyTrans is in negotiation and discussions with the end customer to wave off these penalties. And as you are aware, as I clarified earlier, because of various constraints and supply issues in the last year there was delay in deployment of the electric buses. Now that we have discussed and agreed and started delivering more number of buses.
Okay. And how do you see this...
The amount involved, it's not a material amount in terms of when you look at the overall numbers.
Okay. And how do you -- do you think this is a threat on the future order book these kind of news, which when it comes in the public from the competitors, like they will be bouncing on these kind of new customers or order books. Will it be a threat on our future order book when these kind of news comes out that we are not delivering on time, and there is a delay and STUs are planning to put penalties though we may negotiate with them in the future?
See, one important basically, the advantage of Olectra product is we have demonstrated our strong technology product and our product in terms of performance has been way ahead compared to any product delivered by the competitors. We have done trials across length and breath of the country with various STUs. We operate in about more than 11 states and more than 30 cities. So our product speaks about -- we deliver a very, very high-quality product and our performance has been demonstrated. So this is the main advantage we have. So -- and our end customers will be very happy to actually pay the product from us.
And also, when it comes to deliveries also, we are leading in the market and also if you see when compared to any of the competitors, none of them having this much large facility of 150 acres, which only for electric buses, especially for electric buses. We are in the face of building that. And once it is done, so we will be delivering the buses in a much faster way and you will witness the same, and none of the competitors, as you know, are planning for this much big facilities.
Next question is from the line of Vinit, who is an individual investor.
I have primarily 2 questions. One being you guided to deliver about 300-odd buses this quarter, am I correct?
Coming quarters, yes, correct. Yes, you're right.
So you passed half the quarter. So -- I mean, you might have already sort of delivered 150 buses in the quarter, in the 1.5 months, right? We've already passed almost halfway through this particular quarter. So I'm assuming that you've delivered half of that already, correct?
See, day-to-day or month-on-month breakup, we'll not be in a position to provide, it's been price sensitive also.
No, I understand. Where I'm coming from -- I mean, I'm sorry to hop on the same point, but I mean, again and again every quarter, you guide for a certain number and you always under-delivered. So I'm just trying to sort of gauge if this number holds too, that was my question number one.
Question number two, is if you go and deliver as per your indicated guidance also, which is 1,500 this year, you said 5,000 next year and a couple of thousand after that. You're developing a 5,000 to 10,000 bus capacity at our new plant, which is spending a lot of money for. If you can give us some visibility of what you do after 2027? Where do you see these orders coming from? How big can these orders be because if you can just relate or rather help us understand the quantum of these orders pertaining to how much you've got over last year, we'll be able to get something in terms of how this demand is going to come, where this demand is going to come from, so that your capacity is busy.
As far as the immediate tenders, which are in pipeline, about almost 10,000 number of buses tenders are in pipeline. And going forward, we will see more number of tenders coming up. And the tenders which we have quoted as a company is about 1,100 buses, where MMC, not just Karnataka and Metropolitan Transport Corporation, these are 3 tenders where we have participated. And the new tenders which are likely to come up is about 10,000 change in numbers. This is the immediate visibility. But as you have -- Ministry of Heavy Industries, they have announced conversion of about 8 lakh buses to E or clean technology buses by 2030. So in the next 10 years, we are going to see big significant jumps in the conversion of the traditional ICE engine buses to EV and other clean technology buses.
So I understand that the macro is great. And I mean you definitely have a tailwind. The government intention is to do that. But I mean, going by how it's been over the last 3, 4 years, how do you see that ramp-up coming through? Because if tomorrow these tenders get delayed, your factory becomes empty to that extent because, I mean, as per your guidance, you finish your deliveries in 2027, what I'm saying. And if you bid for 1,500 buses over the next 2 years, if you don't get a 10,000 bus order, then you are technically going to be at sub-utilization, which is going to cost to your margin, right?
Yes. So Mr. Vinit, basically, this is the STU market, which we are talking about with a huge private market, which is opening up. Okay, if you look at that opportunity and we started delivering assets to private players. And once the private things picks up, then we have been also working on other applications like the start and other buses and the orders will not be a concern at all. And because the tenders keep coming in, and as we have demonstrated by way of delivering a very, very high-quality product, we expect definitely advantage. We are pioneers in this E buses. We have an advantage of getting orders. And we -- keeping in mind the future order potential is what the reason why we have acquired 150 acres of land and starting building a new plant.
Sure. And like I asked my first question, if you could give us some sense about the confidence of delivery sir? Because you mentioned again and again every quarter, but you always under-delivered. I mean, as investors, we would just want to be assured that you're going to stick to your guidance because I mean, like you said, eventually, of course, there are battery norms, et cetera, which hurt you last year. But if it's all behind you, then I mean, if you stick to 1,500, what you're saying on this call, we would be sort of appreciative of that side.
Definitely. Thank you very much. We are definitely confident of exceeding 1,500 numbers this year.
The next question is from the line of Sanjay who is an individual investor.
First of all, congratulations on a great set of numbers. But you have guided for subjugated quarter last time. So it's a great work and you guys are really doing amazing work, I mean the kind of what you are doing it. I understand there are some challenges in maybe starting a new plant, and that's why the delay in picking up delivery of buses. I just want to understand exactly what -- are you running now parallel, is the old plant still working, or you completely shifting to the new plant? That's the first question. And as of August now, August 2024, are you now -- the capacity is now already 200 buses per month or it will be starting from next month?
To answer your first question, we have vacated our lease premises. So we are operating only from the new plant now. And from next month onwards, we will have the capacity ready for which [indiscernible] 200 numbers.
That's great, sir. From the next month from the September month, you will be having the 200 buses capacity delivery, that's what you're targeting on that.
Yes.
And just one observation in your presentation, I mean, the Slide #14, number of vehicles sold. So there is probably slight error, it is showing 156 buses for last Q1 '24 and 78 buses is shown for Q1 '25. So you may want to just correct on that.
Sir, actually, it's mentioned Q1, '25 only 156.
Yes. There's a color code shows 78 buses for Q1 '25 and 156 buses for Q1 '24. So maybe, I mean, that's a small thing.
Yes, sure, sure.
Next question is from the line of Sunil, who is an individual investor.
So my question is regarding what is our plan on the QAP for raising the funds?
See, as of now, we are yet to decide at an appropriate time when the management decides to raise funds, we will come back to the investors and inform accordingly.
Okay. So there's no plan as of now like in the coming quarter or coming financial year we'll be raising the fund?
Yes. As of now, there is no plan.
Yes. And my second question is regarding -- previously you have answered this, but regarding the hydrogen vehicle like the previously we tied up with the Reliance Industries right now to develop the hydrogen vehicles. So is that R&D going on, or we are not doing any R&D part of developing the hydrogen buses or something like that?
As you are aware, this technology is at very, very nascent stage. We have decided now not to pursue this hydrogen fuel for immediate future, considering the current economic liabilities. And as we are having a huge order book of electric buses, we are now focusing on completing the deliveries. And this pause also will allow us to focus on more economically viable solutions while making a commitment to innovation and sustainability.
Next question is from the line of Ritwik Ram, who is an individual investor.
In the Q1 of FY '25, you can hear me, sir?
Yes, yes, very clear.
Yes, sir. So my question is regarding the composite insulator business, any plans to sell the business in the next 5 years to focus on the new e-bus business, the manufacturing of e-vehicle business?
So as of now, we don't have any intention to divest insulator business. Insulator business as such, we treat it as a cash cow. So it is -- and we are market leaders. We are pioneers in introducing the technology. We have about close to 45% to 50% market share. And we are introducing new products, and we are targeting a turnover of about INR 200 crores this year. I guess ...
And what is the profit. What is the path you're targeting from the composite insulator business?
We have very, very high operating margins, more than 15% operating margins.
Okay, sir. And you have answered my question regarding the fines. So hopefully, MSRTC will waive off the INR 2 crore fines on the order of buses. My question two is, sir, so you've got an order of 10,000 buses. So by FY '26, you'll clear all the orders, right?
We have actually timeline of about 18 to 24 months, depending on project to project. We are targeting to complete this existing order book by '26, '27.
Yes. And I've gone through the online -- one of the online website, which publishes the monthly orders of e-buses by e-manufacturers. So -- and as for their details on the third-party website, Olectra has manufactured 65 buses as on July '24. And whereas Tata Motors has manufactured to over 250 e-buses in July '24. Any comments on that part, sir? I got this information from a third-party website.
I think maybe you're referring to the Vahan Portal. So as far as Vahan Portal is concerned, some of the states are not updated to which we have supplied. And the other thing is there is a timeline. As an OEM, we manufacture and deliver the bus to the operating company and the operating company takes some time to register the buses. So there's a time line between delivery and registration. So obviously, the numbers are not very accurate. And some of the states are not registered in the Vahan Portal. So this could be the 2 reasons why you're not seeing the numbers.
Okay. Because Tata has a higher manufacturing capacity because our [ suppression of ] Tata manufacturer over 250 e-buses last month. And my last question is in the news, it came in Bangalore, so that JBM Auto e-bus bursted because of the Bangalore flooding. Any opinion on that, sir? And is Olectra prepared to overcome such future measures in case of flooding. The battery become -- will explode because of instability due to monsoon rains, the rainfalls. Any opinion on that, sir?
We are not aware of that and we cannot comment on -- based on one incident. Any kind of incidents can happen in any technology, not only EV. In ICE engine buses also there are many incidents. So -- and we are actually manufacturing using the technology, which is the most... And -- our technology is LFP, LFP battery and in LFP batteries are the most safest batteries available in the current world. And we have not seen any such incidents with Olectra buses.
Okay. So rainfall also the battery is safe in midst of heavy downpour because there has been heavy downpour across Mumbai and Bangalore cities.
Most of our buses are operating in Mumbai, okay? And then we have delivered our first buses in Himachal, which is in terms of very, very difficult terrain about 25% in the year 2017, '18. Till now, we have not faced any incident nor issue. And since 2017, we are operating our buses in Mumbai through the floods and other regions also. And also, we are the only OEM who have operated during the COVID days also in Mumbai in the floods also. We haven't faced any issues with the batteries in rains and other things also because all the batteries are certified with the IP65 and 66 standards. So there will be no issue.
And it's LFP battery, right? You mentioned LFP.
Yes, LFP.
What is the full form, sir?
Lithium ferro phosphate.
Lithium ferro phosphate. And one last question, sir. So nothing -- when are you trying to -- are you going to do a physical AGM instead of an online AGM sir, at the new facility, sir, we would like to visit the facility, any chance that you'll do a physical annual general meeting at least for this financial year?
We are yet to decide on AGM date and venue. Maybe we will consider this.
Can we do it physical, that's my request, sir.
I think it should be virtual only because virtually with the one have advantage to everyone can participate. Right now, we have approximately 5 lakh shareholders. Everybody can't come to the meeting physically. We understood you want to see -- you want to visit the factory. At appropriate time once the factory is constructed, we will announce that, that obviously, the shareholders are invited for that.
[Operator Instructions] The next question is from the line of Chandra Mohan, who is an individual investor.
I would just like to ask as with a practice in auto industry. Why can't we have these monthly figures.
Can you repeat the question?
Yes, as with the practice in auto industry, why can't we have the monthly figure, sale figures?
Noted that maybe in the coming future, we'll consider that.
I think you need to consider that at the earliest.
Okay, yes.
Next question is a follow-up question from the line of Sanjay, who is an individual investor.
I just want to know about Q1 numbers. So what percentage of the Q1 FY '25 revenue is coming out of maintenance of the vehicle and what percentage is coming from the sale of the vehicle?
With that, give me a question, second.
You wanted me to repeat the question?
No, no. See, basically, 1 minute, I'll tell you the maintenance part, maybe about -- if you look at the INR 313 crores, it's about 5% to 6%.
Sir, 36% of the revenue is coming from the maintenance of the vehicle.
No, no, 5% to 6%.
Okay. Because you already sold more than 1,800 buses. And so its maintenance will be generating some revenue, right, per quarter?
Yes, maintenance also will generate for the entire product -- project duration.
Right. So is that going to be only 5%, 6% of the revenue, or it would be more as 1,800 buses already delivered?
Overall, the progress, it could increase to more than 10%.
That was the last question for today. Sir, would you like to give any closing comments?
Yes. So we thank all the shareholders who have participated and have been very supportive in your company's growth, journey and the patience and the faith reposed in the company. And thank you all.
Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.