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Sandhar Technologies Ltd
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Ladies and gentlemen, good day, and welcome to Sandhar Technologies Limited Q4 FY '21 Results Call hosted by Axis Capital Limited. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nikhil Kale from Axis Capital. Thank you, and over to you, sir.
Thank you, Aman. Good morning, everyone, and welcome to the Q4 FY '21 Results Conference Call of Sandhar Technologies. From the management team today, we have with us Mr. Jayant Davar, Co-Chairman and Managing Director; Mr. Yashpal Jain, CFO; Mr. Narender Dogra and other members from the finance team. I will now hand over the call to Mr. Davar for his opening remarks, post which we can have the Q&A. Over to you, sir.
Good morning, everyone. And I hope that everybody is safe and their families are safe. I know many of us have our lost loved ones. And let me begin by conveying my sincere condolences to all, and wish that our families have the courage to bear the losses that we've all borne. We, as a company, have ended the year on a good note, I would say, on a regular run. And we are hoping now that although there are current slowdowns and lockdowns, these are only a bump in the road towards recovery. Delhi, I understand, is now limping back to normal. Mumbai, as a city, cases have gone down and things are getting back into being normalized to a certain extent. Of course, there are many parts of the country, which are still reeling under the shock, but we all have our fingers crossed that things go by quickly. In terms of Sandhar Technologies, I know several of you know the company. But for many who don't, we are a company in the area of manufacturer of auto components. We operate 41 plants -- 43, actually, if you look at the entities, manufacturing a wide array of auto components for the Indian market largely. And we also have plants overseas in Spain, in Poland, in Mexico. And now there is a new one that's coming up in Romania. So that's the introduction. I'm happy to -- I don't know if a copy of the results, Nikhil, have been passed on to everyone? Or do you want me or do you want Yashpal Jain to give you an idea of quarter 4 results first?
I think everyone would have access to the results. I think we can maybe move on to the question and answer, sir.
All right. So let's go to the question and answer. Please jump at it.
[Operator Instructions] The first question is from the line of Abhishek Jain from Dolat Capital.
Congrats to a strong set of performance for quarter 4. Sir, in FY '21, we have seen significant improvement in margin from Barcelona subsidiary. And in addition, we have won several new orders, including one of -- large order from the bus from Romania. So just wanted to understand what sort of the revenue and margin guidance for the -- your subsidy in next 2 years?
Well, thank you, Abhishek, for that question. And I see that you've started on the international subsidiary, first of all, which is perfectly all right. The margins you see when we bought over Barcelona, this was in 2006, the margins were very, very low, and we continuously have them go forward. This is with scalable business with us growing more relationship with the customer. So if you look at this year, the margins actually are now at a stage where they are higher than the Indian businesses, our Indian portion of the business. Going forward, I think they will be maintained and improved as Romania comes into the picture and as the overall business there grows while you're aware that the United States and -- or North America and Europe themselves are still not at their best levels. However, with our strategy of wallet share increase, that business is growing up. And as the business grows up, the margins continue to be better. And we do see that although there is a commodity increase that's happened, it has not affected us or impacted us in any manner. In fact, if it wasn't for the lag, the margins could have been even better. But that's both in our overseas operations as well as Indian.
And my second question is related to the cabin and fabrication business. You have shown a very strong growth around cabin and fabrication business, where you have shown a strong growth of around 14% in FY '21 despite washout in first quarter and also on the [indiscernible] orders. So -- but -- however, margin has been always a challenging factor for this business. So please throw some light on FY '22 margin and revenue guidance for this business, how operating leverage to benefit margin.
So this is new business for us. This is a business that we got into by acquiring a small company in Bangalore in 2012. Since then, we did another acquisition. And this business then, when we started out, the first year revenue was about INR 35-odd crores. We have closed this year at about INR 288 crores. And what has happened is because while we did acquire and put money in, there were several new units that had to be set up, so we put up a new unit in Jaipur. We put up a new unit in Chennai to feed the customers because the business, as you've seen in the last, let's say, 8 years or 9 years has grown almost 10x. Now as we've grown, we've also had investments going. So some of the capital expenditure does -- in a balance sheet and profit and loss account does spill over into the revenue expenditure, and therefore, you've seen the margins have been comparatively lower to what we were. However, now that we've stabilized, the margins have started to go up. And we do expect that in a couple of years, we will be operating at probably the same level of margin that we have for the other business, which has kind of stabilized at about 12%, 12.5%.
And what is the current capacity utilization of this business?
Well, there are -- while it is difficult for us to give you an exact, but in terms of large infrastructure, I can easily say that another 40% to 45% business can be added on to the [ same ] platform with an incremental capital expenditure.
Okay, sir. Sir, in aluminum and die casting business, your run rate has closed to INR 125 crores per quarter and we have seen a significant growth in last 3 quarters. So just wanted to understand what is the current capacity utilization in aluminum die casting? And how is the revenue mix in 2-wheeler, 4-wheeler and non-auto segment?
So let me talk about the aluminum business. Where the aluminum business is concerned, this is a business that's growing very, very rapidly for us. And this is a business where we believe that the growth -- so for example, if I was to give you -- this is again comparatively a new business with some new investments in the last few years. While our existing businesses were with, let's say, TVS Motor Company, Royal Enfield, but from last year onwards, new business has started to come in at a very, very high rate of growth. So if I was to give you examples, this year, we will be adding the new cylinder block. We will be adding hubs. And a large part of this is coming through a new customer, which is Honda motorcycle. So you're aware that Honda motorcycle was a small business for us. Now this is becoming a large steel business for us through aluminum, through sheet metal and as well as our automotive businesses. So as you go forward, you will see that Honda motorcycle is one of the mainstays as we have in terms of Hero or TVS or Enfield. That's, of course, diverging from the topic. But continuously, whether it's the frame, starter housing, brackets, we've got businesses from [ Value ]. We've got businesses from DENSO. We have businesses from Continental. These are all new customers. And we do expect that the rate of growth of this business is going to be much higher compared to probably the other businesses, which are more mature. Does that answer your question? Do you want more the specific details?
Sir, just one small query like that. I was trying to understand what is the current capacity utilization. And what is the mix from this business in auto and non-auto side?
Oh, from auto, most of it, I would say, is auto. Non-auto is extremely small. The customers that I have told you are all auto customers. There are some customers for medical devices or whatever, but I would say more than 90% business is auto and will continue to be auto.
And how is the revenue mix in 2-wheeler versus 4-wheeler in aluminum die casting?
In aluminum die casting, again, it is following: if you look at how this is broken up, I would say today, almost 80% is 2-wheeler and 20% is 4-wheeler. I don't know how it will stand in a few years, but I think for the next year, because the 2-wheeler growth that is coming in very, very quickly for us as an added wallet share, I think that will stay the same or, in fact, even grow.
Okay, okay, okay. Sir, in 4-wheeler segment, the company has shown impressive recovery. And quarterly run rate has around -- post around INR 140 crores. So what is the...
What is the one again? Sorry.
In 4-wheeler segment, company's revenue growth is quite impressive and quarterly run rate has post around INR 140 crores.
Yes.
So what are the key factors which are driving 4-wheeler revenues? And what is the outlook? And who are the key customers, which will provide an incremental revenue [ through the summer ]?
So if you look at it, while 4-wheeler customers -- so 4-wheelers for us is spread into 2 different categories: one is Sandhar Technologies Limited as an entity, and one is our joint ventures. So as we look at it from a perspective, most of our joint ventures only feed into the 4-wheeler space. So whether it is our AVN panels, whether it is our shocks and antennas, whether it's our sensor businesses, whether it's sun visor businesses or [ DOT ] businesses, they are all and completely 4-wheeler kind of business, right? But if you look at our own entity, our own entity has been gradually growing into this particular area, whether they be in the area of our locks, which is growing; whether it be our mirrors, which are growing; whether it is our sheet metal parts, which are growing. And like I said, there are several new commodity items which have been added on to our platform, which continue to grow. So 4-wheeler has been growing, you're absolutely correct. In our segment-wise revenue, 22% of our business came in from 4-wheeler last year. I would expect this number to gradually but incrementally keep growing as it goes forward. The margins here are also slightly better than the 2-wheeler business. And if you look at the rate of growth, if you are looking at the rate of growth, let's say, for next year, anywhere between 30% to 40% or 35% to 40%, depending on how COVID plays out, then I would imagine that this growth will always be higher than the overall growth.
So have you any on any -- what I mean...
[Operator Instructions] The next question is from the line of Amyn Pirani from CLSA.
My question...
Sorry to interrupt, Mr. Pirani, but may I request you to please take the phone off speaker because there's a slight disturbance on your speaker.
Is it better now?
Yes, sir. Thank you very much. Please continue.
Okay. Yes, sorry for that. Actually, 2-part question. Actually, my question was actually on your working capital and cash flows. So if I see you've given detailed disclosure on inventory holdings, receivables and creditor days, so it appears that the increase in creditor days has been more than receivables and inventory. But I think in your cash flow, working capital is still a negative. So just wanted to clarify, first of all, why is that happening?
Okay. Let me just pass this on to Mr. Yashpal Jain, who's our CFO, and he would be able to give you a much better analysis of this than I can, with your permission. Yashpal, please?
Yes. So basically, if I have to say, we had a positive cash flow from operations. As you can see that we have achieved the highest-ever turnover in quarter 4, right? So what I think is that when we are having a higher turnover in quarter 4 it was more of a -- I mean more of our receivables are in the -- are from the company, at the same time, compensated by the higher trade receivables, 30%. So if you see, if you work out the average, there is -- yes, there was a slight decrease in our inflow from operating assets because in the month of March, we have -- in March, we had a good billing, which is converted into cash in the subsequent months of April and May. This is how payment should release [indiscernible]. So because what I think when we start moving from Jan to March, largely the turnover takes place into Feb and March, including Jan. And as for the payment terms, the payment terms are now realizing in first week of April or the month of May. So we had already been receiving that. Secondly, we had a little switching our way of funding also. As you can see that our borrowing cost has actually come down. So we are adjusting the product mix. And sort of going forward in some of the -- I mean, the large share of vendor discounting, we have moved on to working capital levels, which was quite cheap. So that has also given a rise to the rate -- I mean the whole increase in the holding period of the creditors. This is how it has been.
Understood, understood. And my second question, which is a slightly more larger question, which I think you have answered to some extent, is that this year, we have seen almost all OEMs across the board having a lot of working capital savings. And obviously, part of it has to come from either Tier 1, Tier 2, Tier 3 suppliers because, as a system, not everybody can have a working capital [ phase ]. So going forward, do you think that could balance out a bit? I mean you could have slightly better -- like in FY '20, you had a release in working capital, but maybe that was also because FY '20 was a bad year for revenue. How should we look at it going forward?
Well, like as far as the working capital limits are concerned, we are using all the profits, as I told. Like our primary focus is that it should be cost effective. And we have a timely release of funds for our receivable -- I mean from current asset also as well as to repay our current liabilities also. So based on the monthly requirement, weekly requirement, we are regularly having a watch over there. And we are planning around according to that. So going forward, depend how the banks and lenders will be responding to us, what proportion will be giving us a cost-effective capital. And we will be choosing in that manner. Largely, OEM payments they have been well on time. So we don't issue a [ forfeit ] issue.
The next question is from the line of Sreeram Ramdas from Green Portfolio.
So I have a couple of questions regarding the ADC, the aluminum die casting segment. And these electric vehicles and the upcoming hybrid vehicles, they're going for economical weightage. So they're trying to replace steel with aluminum, zinc or magnesium. So this 40% run rate growth, I think, you've just specified, will this [ accrue ] to these new types of vehicles coming maybe from Tata Motors or Honda? And they're being used for, I think, the battery casing as well in the EV. So do you see any demand from this side? And do you think we can produce goods -- produce these ADC items which can be utilized for these types of workings?
Okay. Thank you for that question. You mentioned ADC segment growth, and you mentioned the EV growth. So ADC, of course, this is aluminum die casting, of course, is lightweight products compared to, let's say, steel and compared to zinc. However, there are certain areas where it's now moved from -- even from aluminum to magnesium. So you'd be happy to know, and I think this group will be happy to know, that we were amongst the first ones to move into magnesium 2 years ago and that portfolio is building. In fact, this year, we've also broken into the 2-wheeler market there with Enfield being our first customer for several items of magnesium that will roll out from our plants onto their platform. So that's point one. The point two is where EVs and other powertrain makers are concerned, let them be whether it's hydrogen or whatever, you would be happy to know that Sandhar has been a supplier to almost everyone who's been producing these vehicles in the country; plan to produce it in the future on a small scale, large scale or even in an established form. You may also be aware that we have been supplying this through our international operation to probably the best-known people around the world. So that's point one. Even in India, all motorcycles, like I said, or all vehicles that are being produced carry our parts. While we don't directly do powertrain parts, but all the other parts that we do -- or let's say all the parts that we do, which are agnostic as so far as the powertrain is concerned, will continue in the same abatement and manner as we have for the main OEMs. So if you were to name all the EV players that exist to date or are coming up in the next few months or years, we are already supplying to them. So that should kind of suffice you from that perspective. However, from a company's perspective, is this a large plate? We, like I said, are already in there to our fullest extent. However, in terms of significance of these revenues, we still are at a stage where we believe that even by the end of this decade, which is by 2030, almost 80% of the vehicles in India will continue to be IC engines. Two or 3 reasons. One is that the efficiency, the efficacy, the pollution norms within the ICE vehicles have improved and continue to improve. That's point number one. Point number two is the 20% of which will go into alternate powertrains, they may not all be EV. Like I said, there could be electric vehicles which could constitute half of that portion or there could be hydrogen fuels or several other fuels that are being discussed as we speak today. So as a company, I'm happy to say we are fully entrenched in this. But for the company, this alternate powertrain will still be a small part of the revenue. So let's say, if what we manufacture today is almost 98% or 99% meant for ICE vehicles, this going to 2030, that number will change according to the Indian scenario. If the Indian scenario is 80-20 at that point of time, we will possibly be 80-20 as well. Does that answer your question?
Yes, absolutely. That was quite elaborative. So like you said, so you're transitioning as it comes. Whenever the real transition happens in the market, you will transition the company accordingly towards the ICE.
Well, our transition happens very, very -- it's an evolution that happens automatically. You see all the parts that we manufacture go into electric vehicles, go into ICE vehicles, go into every kind of vehicles, right, because we don't make any engine parts. So to that end, yes. But one thing that is going to add to our KPIs that we've gotten in a big way to auto electronics. And in some of the alternate fuel vehicles, the alternate -- or the electronics portion is higher. So to that end, our joint ventures will definitely benefit as we go forward in terms of battery management systems and so on and so forth.
Okay, okay. Great. And you mentioned this emission control components. So about that, it's part of the assembly segment, right?
What did I say? I said we don't contain any engine parts. We don't make any engine parts.
The emission controls. I mean the emission controls that we developed for, let's say, Hero Motor Corp in 2020 and the TVS.
Yes, yes. There are evaporators and stuff. So those are something, which are generic which will continue to grow at this point of time, like I said. These things will start stabilizing probably 5, 7 years from now, where they will stabilize. But my overarching opinion at this point of time is even by 2030, the volume of vehicles from the Indian sector will 80% still be IC. And you have to remember that between today and 2030, the number of vehicles will almost be 3x. So if the number of makers are going to be 3x and there is only 20% of which will be alternate powertrains, the number of IC engines continue to grow.
Okay, okay. That are my main questions I had. I'll come back in the queue if I have more.
Yes. Okay.
[Operator Instructions] The next question is from the line of Nikhil Kale from Axis Capital.
Yes. Sir, my question was more on the demand side and what you're learning from the OEMs. So obviously, May was -- May will be kind of a washout with many of the OEMs kind of shutting down the facilities. But like recently, Hero has announced that they are starting all their plants. So for the coming couple of quarters, what are the OEMs talking about in terms of production chain, if you could just throw some color on that?
Well, Nikhil, there are 2 aspects to this. One, of course, is the bullishness that the OEMs are talking about. They are saying there's now that May has been shut and April wasn't working throughout, the likelihood of a big demand is going to spill over and it will come into effect as soon as these lockdowns are over. Some people are saying that there is a reiteration of the fact that with the second wave having made people more insecure, we run on individually owned vehicles is largely going to grow. There is another train of thought which says that in the rural areas now this COVID has spread, and therefore, the economy there could suffer, and therefore, demand could be lower. So there is a piece that needs to be balanced as to what the scenario is. As a company, we believe that, of course, May has been a washout in some respect. But even so, it is still much better than what it was in last May when we were absolutely at 0. Today, let's say, we are working at about 40% capacity where our output will be about 40% compared to what it was in the last year. And this quarter, we'll probably run at about 50% or 55% of last quarter. But last quarter, if you actually come down to the numbers, then the last quarter had -- we had almost INR 40 crores of losses. So this year, in terms of financials, if I was to link it up to our financials, we obviously will have a much better scenario. That negative thing that comes up in the first quarter takes a period of time for it to be brought back to 0, which will not be the case. However, as an industry, if you ask me, the OEMs, if you ask me, it is a mixed bag. Some of them are very bullish on it -- in fact, most of them are bullish on it. But there is cautious optimism is the word that I would want to use. And that is the indication that we are getting. On one end, we are developing new parts at a speed that we've never done before. On the other hand, in terms of volumes and how those deliveries will pan out, we'll have to wait and see. Nikhil, I don't have a clear answer to this, honestly, because we are getting mixed signals as well.
Okay, okay. Great, great. So -- and then secondly, on the JV performance, obviously, I mean the revenues have kind of grown with kind of the JVs ramping up. So if you could just give us some more color on how is the performance shaping up at some of the larger JVs in Jinyoung Sandhar or Amkin and Winnercom. So just some more color on that will help.
Yes. So you are aware that most of our JVs have a large dependence on Honda and Kia Motors. And Honda and Kia Motors continue to grow. And even in these periods, they haven't really gone in from major lockdowns as some of the others have. So this particular year, we expect that the joint venture revenues, which, of course, is not a part of what you see in our results, will almost kind of be triple of what it was in the year that we closed. In the year we've closed, we've had losses. And Nikhil, what we are looking -- and those losses, of course, come into our main balance sheet and profit and loss. So we are hopeful that this particular year, we'd be able to stem those losses to a very, very minimal level compared to what we had. Last year also we had thought that the losses would be lower, but the first quarter, especially in the context of new plants and new joint ventures, could not take that closure for 3 months. These were not mature businesses. But this year, we are very hopeful the plans that we have for the joint ventures, like I said, talk of a revenue of almost 3x and losses going down to minimum level. So whether it is Jinyoung, whether it is Amkin, whether it is Whetron, whether it is Kwangsung, all our joint ventures are on the move and up.
And sir, on the Amkin side, I think we have received approval from all the OEMs.
Yes.
But what is your status on the aftermarket piece? I think we were expanding a distribution from there.
Yes, we are expanding. But at one point of time, it was decided by us, which is a couple of months ago, that because the aftermarket with different lockdowns that are happening, it is unfortunate that when you want to grow your aftermarket, the availability of your dealer networks and so on and so forth needs a lot of engagement with them. Like I said, unfortunately, that is kind of slow in this current lockdown periods and so on and so forth, different states closing at different times. COVID spreading through is a risk and debate on how that is. In the meantime, what has happened is that we are probably the only ones who have approval from every OEM in the country. We are the only ones who have approval from Europe and the U.S. So based on that, our exports are kicking off. Our OEM businesses are growing by the month. And we should be at breakeven very, very soon. So this year, we are not looking at any losses coming up from the Amkin business, and it's ramping up very, very quickly. So today, we would be happy to know for most of this group that our rejection rate or our quality performance here is at a level of 00 with every OEs. So you can imagine that the OEM quality levels are at 00. Our products are extremely robust in every possible way and [indiscernible]. And if you were to total up as to how the OEMs are doing, those businesses in themselves are going to be large enough for us to be able to move into the area of profitable.
Okay. And just lastly, on the inorganic part, I think a few days back, you had also kind of put out a press release talking about the possibility of considering the acquisition of a company called Unicast Autotech.
Yes.
So if you could just throw some more light on the product profile, customer profile of this company.
Again, this is a part of what -- you see, the most of the organic stuff that we do is done at the behest of our customer. In this particular case, this was done at the behest of Honda motorcycles who wanted us to get in there. So we walked into that company. We ran it for about 20 days. Unfortunately for Honda and unfortunately for us, the company, as it was disclosed later, had liabilities much higher than what had been given on paper in the beginning. So it became callable for us that taking this would become a liability going forward. We did, of course, talk to them and say that we will only buy assets which hasn't gone through. In the meantime, the good news is that Honda decided to give us that business, pick up toolings from there and pass on that business to us for our new Hosur plant, which is how it happened. So we will, in fact, get that business and perhaps more than that business without spending any acquisition cost. So it will add to our top line and bottom line with marginal investment compared to the total amount of investment that would have gone in to buy that entire infrastructure and asset.
Okay. And these will be aluminum die casting [ performance ], right?
Yes. Aluminum die casting.
[Operator Instructions] Next question is from the line of Abhishek Jain from Dolat Capital.
Sir, as we know, the company has a very strong set of business in TVS and Hero for locking and vision system. But presence in scooter segment is low. So have you won any new orders from other OEMs or in scooter segment?
We're very happy to announce, I don't know whether you got this news, this was probably 1.5 years ago. At this point of time, in the areas that we operate in, we are the largest supplier into the scooter market. Whether it is locks, whether it is mirrors or whether it is whatever for the scooters, we are the largest player. From being 0 at one point of time where we did not supply the scooters and only to motorcycles, now we do to everyone. All the new models are with us.
Great, sir. So can you -- great, sir. So can you provide some incremental revenue opportunity from these new orders for FY '22?
I could have broken it up. Let me -- I don't have a breakup here with me, but whether it is for the scooter segment, I could, of course, provide it to you, Abhishek, subsequently. In terms of which item, for example, let's say, the new Jupiter is coming out or the new King Song is coming out, all of these have our locks, our mirrors, our sheet metal parts, wheels in some instances. So not only are we present now in all these scooter segments, but our wallet share there is growing as well in the addition of new parts that are coming in. So I don't have that number with me right now in terms of a breakup as to locks for this scooter and how much and what the total thing is. I have an overall conceptual numbers here, but we will be able to provide. If you get back to me or contact me, I'll be very happy to send it to you.
Okay. And sir, what is the reason for the fast growth in the sheet metal business? We have seen a strong growth -- in sheet metal business, we have seen very strong numbers in quarter 3 and quarter 4 both. So what is the reason for that fast growth in the sheet metals business? And what is the revenue mix for the sheet metal, 4-wheeler, 2-wheel and CV?
Okay. Sheet metal business last year, there are other sheet metal businesses. For example, even to some extent, there is a lot of sheet metal business which is done by our cabin and fabrication business. Besides cabins, we also do that. But we -- remove that aside if I had to only for what is supplied to us, print to manufacture, for the 2-wheelers and 4-wheelers -- or the 2-wheelers and 3-wheelers, it was INR 232 crores last year. What has happened is this last year has seen a lot of opportunity come to us in terms of new orders, which have come in as a replacement for many companies in the automotive supply segment, which are in different kind of stress. So whether it is a Hero that has given us new businesses, the swing arms, for example, have come to us on a 40% basis, which will be effective in this year. You will see a very, very fast growth in the sheet metal business. The same has happened with TVS. The same is happening with Royal Enfield. And the same is going to happen with Honda motorcycle. So this element is going to grow much, much, much faster than what we would have grown from an evolutionary incremental front. Like I said, even in the business plan that we have made for this current year, that we are running on this current year, we have not taken any incremental increase in the market of 2-wheelers. That we said we don't know. Only astrologers can tell us what is going to happen. There is a lot of -- but for us as a company, the incremental wallet share growth will make certain that whether the industry grows or not grow, we will continue to grow.
[Operator Instructions] The next question is from the line of Basudeb Banerjee from AMBIT Capital.
Yes. Just wanted to understand a few things. Can you highlight which are the e-scooter manufacturers whom you have already tied up in order to supply down the line with rising scale?
With what?
E-2-wheeler manufacturers, so like 2-wheeler EVs.
All of them. All of them, whether it is [indiscernible], which is -- I mean, you name anyone and we are doing it. I don't think there is anyone we are not doing it with.
Okay. So including the ones like Ola Electric or Okinawa, everybody?
Everyone, everyone, everyone.
Sure. From that perspective, just wanted to understand the conceptual thing. So for example, today, if a high-speed e-2-wheeler price is somewhere around, say, on an average INR 1,20,000, ballpark, one can assume price of battery within that will be roughly INR 50,000 to INR 60,000, somewhere around that, INR 50,000 roughly?
Well, you see the kilowatt-hour rates for battery, at one point of time, we're looking to go down much faster than they have. So it's kind of stabilized today. So if a battery today, if you have a battery which is 6 kilowatts and the cost of that is, let's say, $200 or $250 per kilowatt, that gives you the number, right? And you need at least 6 kilowatts to be able to have a sustainable vehicle, which is fast enough. I'm not talking of commuting, but I'm talking of if you were to bring it in the spirit of whether it is a motorcycle or whether it's a fast scooter, that is what you require. So to that end, that is the breakpoint. So that works out to something around INR 60,000 to INR 70,000. For other scooters, the kilowatt-hour utilization is at a level of 2 kilowatts, 2.5 to 3, which then makes it anywhere around $500, right? $500 typically gets you a scooter, which is going to be in the range of about INR 70,000 to INR 80,000. And if you take it up to 6 kilowatt-hour, which then makes it something like $1,200, which is INR 85,000 or INR 90,000, the value of that vehicle will go up to INR 135,000, INR 140,000, INR 150,000. So in terms of motorcycle comparison, anything which is going to raise up to that motorcycle agenda will not be less than INR 130,000 to INR 150,000.
So which can only come down through localization, if at all, down the line?
Well, you see battery prices are prices, which are not about localization from an Indian concept. I'm talking about the international pricing. So the international pricing, and at the same time, the commodity prices for these battery elements is going up. Whether it is lithium or whether it is cobalt, all of these special commodities are limited to certain countries. So you have China, which will come up with cobalt. You have Australia, which will come up with lithium. So all these -- because there is so much of demand for batteries that is happening around the world, that the prices of these are now stabilized to a certain point, and from now, if there is commodity play and commodity prices go up, these prices are likely to rise. So in India as well, unless and until people start seeing the benefits of electric vehicles compared to the price that they have to pay for them, it will be some time before it becomes a standard thing or people get used to those prices.
Sure. So what I was trying to understand, sir, like if I look at the overall prices being anywhere between, say, INR 80,000 to INR 1,30,000 and battery prices being INR 40,000 to INR 60,000, so the scope for value addition from Sandhar per unit at current juncture is at best how much, sir?
So for us, whether it is an ICE vehicle or whether it is an EV vehicle, our contribution or wallet share for the parts that we supply to these vehicles at this point remain the same. So if I was -- let's say, to a typical TVS motorcycle, we supply anywhere from a minimum of INR 2,500 worth to INR 10,500 worth of material that goes into any motorcycle, right? It could be in any range depending on what parts they're using from us.
So you are saying that INR 2,500 to INR 10,000 is agnostic of the powertrain?
It's agnostic of the powertrain, absolutely. Well said.
Sure. So that's what I -- because where I was coming from that few players are saying that their supply per vehicle for an e-2-wheeler can be as high as INR 30,000. So with scaling up of e-2-wheelers down the line, that can get commoditized.
No. I don't know where you're hearing that unless it has to do directly with the battery.
[ BMS ].
Or an element of a battery with a battery management system. So if that's not to be the case, I see no individual suppliers who will supply INR 30,000 of vehicle parts to -- because that's not even the value addition that the OEM gets.
Understood, understood. That's very useful.
The next question is from the line of Amar Kant Gaur from PhillipCapital.
My question is on the outlook for cabin and fabrication business, sir. How is the demand you're seeing? And how is it holding up?
Well, honestly, I personally am very bullish on this business, extremely, extremely bullish on this business. And you'd be happy to know that we, at Sandhar, are probably the most diversified player in this field in the country. And we thought we had almost everyone, but this particular year, we also have the additions of Hyundai, which used to manufacture cabins, for example, from a Korean supplier based in their plant, which has been outsourced to us. Same with Sunny, same with Cooper, same with -- so all these guys have now given the orders to us. So according to me, this will continue to be a very, very fast-growing business for us not only from a perspective of acquisition of more customers but also from the growth in this sector, in the construction sector in the country. Whether it is the government spend, and you are aware that last year the [ stats ] that were thrown by the government said they are to create more employment and to create flexibility and economic growth in the country. This was one area, which was a low-hanging fruit. So a lot of new projects have been announced. There were a lot of pending payments from the government to several in the construction sector. Those have been now released. And therefore, we see a lot of enthusiasm in this market. Of course, there has also been a change in the emission norms for these vehicles. So from the 1st of April, I understand that now the norms have changed from Euro 4 to Euro 5 or something to that extent or Euro 3 to Euro 4. And therefore, there might be some resistance. But having said that, this is an unstoppable area. So this according to me is an elephant walking. It could walk slow, but you cannot stop it. And we are very, very bullish of this business.
Yes. And follow-up on that is could you please quantify, if you could, the kind of order wins that you have had and what kind of CapEx would you expect in this particular business in FY '22.
Well, we closed this last year, if I -- one second, let me just have a quick look in value of that in case of cabin fabrication business. Yes. So we closed last year at INR 288 crores of business. This was higher than the previous year, although it was done in a period of 8 months, not even 9 months, right, compared to a full working year the year before. We were closed from April till July, and we started operations only in August. So we lost out 4 months and yet we had almost a 12%, 13% growth. This particular year, although our expectations are the new business that we've added -- that we've got in terms of pure orders are about INR 50 crores and, of course, there is the growth in the industry. Having said that, of course, there are lockdowns, so we will have to review the scenario. But suffice to say that irrespective of what it is, it is going to be significantly higher than what this year closed by. So the way we are looking at it, like I said, from previous year to this year, there are 2 ways of calculating. One, of course, is a temperate business, which means that we don't know where this is going, so we did some calculations on a pessimistic stage -- or style. We believe that the business could be about 35% higher. If you were to go by a comparative chart and say, well, we did INR 645 crores of consolidated sales in the last quarter. You multiply that by 4, which will then take you to INR 2,600 crores, which is more than 40%. Add to it the growth in the new businesses, the new businesses that we have got for this year are in the region of about INR 280 crores to INR 300 crores of confirmed orders. You could add that and then discount it. But like I said, the important thing right now is for us to get clarity on how COVID is going to play out, what portion of this particular quarter is going to be affected and is there going to be a third wave or fourth wave or whatever is being said. So those are uncertainties. If you were to remove those uncertainties, then the way we are positioned today, the way we have the orders in hand, whether it be in the fabrication business or whether it is in the business of aluminum or whether it is the advantage that we got on account of higher prices when the Indian market moved from Euro 4 to Euro 6, those advantages will continue to grow. And that's the reason why we believe now we are more -- at a more mature level of our EBITDA or our margins, which are now at over 12.5%.
That's very helpful. The other question I have is on Honda car. So their volumes domestically also, I mean even globally, they have been pretty disappointing over the last year.
Yes.
Any sense that you're getting from them about any prospective new launches or how their India business is progressing now?
Well, obviously, I will not be able to give you details of their launches because it is confidential information that they will keep to themselves. Suffice to say for me at this point of time is that they had plans to do close to about -- so last year, they did about 80-something or 1,000 vehicles. This year, their initial plan was to do 1 lakh, 35,000 vehicles, which has been moderated down to 1 lakh, 16,000 vehicles is the information that I have, which would mean that the revenue of this will be that much higher. For us, again, because we've taken wallet share and added some new parts to it, the business for Honda cars for us will go out by over 40% -- 40% to 45%.
Thank you. Ladies and gentlemen, that will be the last question for today. I now hand the conference over to Mr. Nikhil Kale for closing comments. Thank you, and over to you, sir.
Thank you. On behalf of Axis Capital, I would like to thank the Sandhar management team and all the participants for joining the call today. Mr. Davar, any closing comments from your side or should we end the call?
I just want to close by wishing you all a happy year especially with where the circumstances are. I pray to god to keep you and your family safe. And if we are safe and vaccinated, then I think the only way for us is to be healthy not only in our bodies but also in the economy that is likely to spill over onto each one of our business and prosperity. So that's all I have to say. Thank you, Nikhil, and thank you, Axis, for organizing this for us.
Thank you, sir. Thank you, everyone.
Thank you very much. Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.