VST Tillers Tractors Ltd
NSE:VSTTILLERS
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VST Tillers Tractors Ltd
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Ladies and gentlemen, good day, and welcome to V.S.T. Tillers Tractors Limited 1Q FY '24 post results conference call hosted by B&K Securities. From V.S.T. Tillers management, we have with us today Mr. V.T. Ravindra, Managing Director; Mr. Antony Cherukara, Chief Executive Officer; Mr. Nitin Agrawal, Chief Financial Officer. [Operator Instructions].
Also, may I remind you of the safe harbor. The company may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risk that the company faces. Over to you, sir.
Yes. Thank you. Thank you, Jayaraj. Good evening. Welcome to you all to the Q1 result meeting. I'm Nitin Agrawal. So I hope the slides are visible to you. Yes. So this is a confidential statement about the forward-looking statement. I'll first talk about the company and the network which we have and a glimpse of certain awards which we won during the quarter. And then we'll talk about the financials, the sales volume and then the results. So V.S.T. has a strong network across India. We have 3 manufacturing plants and 15-plus sales offices across India. And we also have strong dealer and distributor network for our tractors -- Tractor and SFM, both the businesses.
This is our global presence. We have reached in more than 40-plus countries. During the year, I'm happy to announce that we have won Indian Tractor of the Year Award for our 18 HP tractors and 16 HP power tiller. We have also received the best supplier award from Mitsubishi for -- in the criteria of new part development.
Moving on to the financials. So I'm happy to tell you that we have -- this quarter has been great for us. We have -- the company has clocked revenue of INR 246 crores, which is highest ever for any quarter 1 revenue for the company. Strong numbers, which has led to the PBT growth of more than 3x when compared with the last quarter same year. Correspondingly, increase in [ PAT ] and also earnings per share more than 3x.
The next slide is about sales volume. So -- and we have given the quarter-on-quarter comparison with respect to last year. So in power tiller, in this quarter, we did 9,125 tractors 1,471, power weeder 869; and reaper 67.
Now moving on to the P&L statement for the quarter. So revenue from operation is INR 246 crores, which is -- and in terms of EBITDA, the current quarter EBITDA is 18.86%, which is very strong compared to the last year same quarter EBITDA. At an operational EBITDA level, it is 12.88%, which is again a very good EBITDA when compared to the last year. PBT of INR 42 crores in the current quarter and PAT of INR 32.99 crores.
These are some of the pictures for our product and the customers using. Thank you. Yes, we are now open for any question and answers.
We will now begin the question-and-answer session. [Operator Instructions] Question from Mr. [ Rajagopal ].
Good performance indeed. I have 2 questions. One is with respect to your guidance that you had given, in fact, you had given a couple of years back about more than doubling your turnover. If I'm not mistaken, probably reaching a turnover of around INR 3,000 crores. And correct me if I'm wrong there. Or the profitability of INR 300 crores. I'm not 100% sure about what it was.
But given where you are, would that mean that you would need to significantly ramp up your presence in the tractor space? And looking at what you have been clocking in the past year or so, what gives you the confidence that you will be able to achieve your -- you would be able to move closer to your guidance? That's the first question.
Second question, which is more specific to this quarter. You seem to have made a significant increase in other income, which is around INR 18 crores as against the previous year number of around INR 2 crores. So it would be good to know what has driven that?
Yes. So coming back to the guidance first. So the vision statement that we had made in FY '20 is in the next 5 years, we will get to INR 3,000 crores, after which we were hit by COVID. And then we calibrated and we said we will be able to catch up INR 3,000 crores by the FY '26. So there could be a 1-year delay. So that is correcting the statement. So we never gave guidance on profitability or the profit number. That's one.
Second is -- second point is the -- achieving that vision statement works on very clear strategic direction, which does not involve tractor business alone. So one is growing our small farm mechanization business, which is power tillers and which has been considerably growing at 25% plus CAGR in the last 3 years. And in fact, in the last 3 years, we have doubled our business already from INR 540 crores in FY '20 to FY '23, we have done INR 1,006 crores plus. So in a way, we have achieved certain milestones that we had set out to achieve.
So coming back to what I was saying in terms of the strategic directions, so growing our small farm mechanization business was one. Working on our global combat leadership is another one, where we continue to clock very good growth in our international business. Third is we are looking at capacity utilization of our Hosur plant, where we are working with supplying to electric manufacturers in the U.S. and also some other aggregate supplies that we are doing to manufacturers. That was the third piece.
Fourth, we started working on our rural distribution business, wherein I'm very happy to say from where it was at INR 40 crores, we have grown in the last 3, 4 years to over INR 100 crores, and we will continue to grow that. We entered into the pumps business in distribution as well.
Then we said implements business -- precision implements we want to get into and grow that business. We have made initial beginnings in that business. We should be able to scale up in the next 2 to 3 years in that business as well. So -- and also look at technology opportunities, electric, autonomous and all of that, which we are again working on.
So the whole vision of achieving INR 3,000 crore is -- was the trigger for the company to start growing aggressively. So if you look at achieving a close to 20% CAGR in the last 3, 4 years and then now getting into the exponential phase of growth, while the quarter 1 growth definitely is only 4%, 5%, but we all know the monsoon wasn't great or it got delayed completely, but there has been a total recovery in July, as you can see from our close to 30% growth of the numbers that we have already declared in July.
So we are in line with the plans that we have set out for ourselves. So that is answering your first questions on the guidance. Coming to the second question, there is definitely an INR 18 crore other income. Most of it is coming from the mark-to-market valuations of our investment that we have done.
Okay. And one last question, if I can ask it now or should I join the queue subsequently?
You can ask it.
Okay. So I get what you're saying, but you have a capacity of roughly 30,000 tractors that you've already created. Am I right?
Yes.
And so currently, even if I were not to assume your current quarter numbers as your achievement, I'm saying that you're very confident that you should still be able to hit close to 60% plus capacity utilization in the next couple of years or so?
Sir, you didn't listen to what I am saying probably. I said capacity utilization need not be done only by selling tractors in the Indian market. It's also done by selling electric drivetrains, powertrains to various companies around the world. So capacity utilization is what we are focusing on. We will be completely utilizing the capacity to get to the vision that we have set for ourselves. Certainly need not reflecting in the tractor numbers alone.
And in the tractor numbers, definitely, we will try and grow, and that is something that for which the effort is continuously on. But we will not build channel inventory, and we will not build for the sake of billing, which we have stated earlier as well.
[Operator Instructions] In the meantime, I'll go through some questions in the chat box, sir. Can you please share the revenue for 1Q FY '24 for tractors, tillers and spare parts?
Revenue figures for Q1 FY '24 for small farm mechanization, the revenue is INR 138.80 crores, tractors is INR 69 crores and spare parts is about INR 26 crores.
Please, what is the outlook for 2H FY '24 for the tillers and tractors for the industry and for the company?
The tiller business, we have a market share of 70%. So we are looking to grow our market, I mean, our business at the rate of close to 15% to 20%, which I have said before. And in the tractor business, we should be at about 10% to 15% growth with the new launches that we will be doing in quarter 2 and quarter 3. So that is also a number that I've said before.
What is the progress and supplies to Monarch as Monarch have also given the guidance of 1,000 tractors we produced in FY 2023?
So the supplies to Monarch are happening smoothly, and we should be able to meet the guidance that Monarch has given.
Can you please share your thoughts on exports? Do you expect the same to improve in 2H FY '24?
Yes. We will continue to grow in exports last financial year. Despite the Ukraine war, we were able to grow the international business. This year, we are expecting to accelerate the growth of our international business and we expect to consolidate in Europe as well as enter new markets where we were not present in Europe and in markets like Mexico.
Okay. There is one more question. You have recently highlighted on 20% growth for the tractors in FY '24. Peers, on the other hand, are highlighting for a single-digit growth. What makes us so aggressive on this target?
15% to 20% is what we have spoken for the tiller business and 10% to 15% is what we have spoken on the tractor business. One thing that differentiates us is that we don't build channel inventory. So we purely focus on retail. And we expect the retail growth to minimum be at about 10% this year compared to the last year. So we don't have any channel inventory that we have to worry about. So it will all be driven by retail.
So this retail is expected because of the favorable demand drivers and also because of the product launches that we are doing in this quarter as well as the next quarter.
Okay, sir. There is a question. What is the internal margin target for FY '27? And what are the drivers for the same?
FY '27, we don't have a margin guidance yet for FY '27.
Okay, longer term, so they have put FY '27...
No, we don't have a margin guidance yet for FY '27.
Okay, okay. But generally, the thing is what will be the drivers of margin in the future?
So margin in the future will be driven by the competitive advantage that we will have in the market based on innovation of products that we are doing, based on the pull the brand that create -- can create for itself. But these are all theoretical answers that I am giving, but I don't have a guidance for FY '27 yet.
And next in the [ Mukesh ].
My question is, firstly, on the tractor business. Like you had mentioned -- Okay. So on the tractor business, like you had mentioned that you're having product launches coming in. So if you could give some more details on what HP category we'll be launching now and what will be the pricing that we are looking at for these products? And probably which states are we going to start off first with?
Yes. So the first set range of launches that we are doing for the V.S.T. 9 series tractors, which will happen on August 9th, which is only a few days from now. This will be in the combat range starting from 18-horsepower going all the way up to 39 horsepower. So it will be a new series of combat tractors, which has been our forte in the tractor business.
So we will be launching a full range of combat tractors. It will be followed by the V.S.T. Zetor launches that will happen in September. Yes. So in -- it will be followed by the V.S.T. Zetor launch in September.
Does Zetor ones any color -- yes. So I was wanting to check on the Zetor side of it, if you could give some more color on what HP are we starting off with and which state are we going to be supplying first in?
Yes. So we are looking at 42, 45 and 49 HP to begin with the V.S.T. Zetor, which will be followed by future launches with various drive options. This will begin in Maharashtra, and it will also be foraying into the Northern markets.
Okay, okay. And should we also assume that we'll immediately also start exports of Zetor branded products for global Zetor requirements?
That will take some time with the launch of the various drive options like 4-wheel drive we are expecting the exports to increase. However, we have already started supplying our combat tractors to be sold through the Zetor channel in Europe and rest of the world.
Okay. Okay. Any timelines on this, the new launch of 42, 45 49, any timelines for that exports? Or will it be next year or, say, even further down, maybe not even next year?
No, no. It will be definitely next year.
Okay. Okay. All right. All right. And secondly, on the tiller side of it, last few -- I mean, last year or so, we've been mentioning about how -- we are now selling a lot of tillers without the subsidy angle and farmers are willing to buy it. So any more color there on what proportion of sales now we are selling without a subsidy? Any improvement there at all?
Yes, I'll repeat what I had said before that every single farmer applies for subsidy, but they do not wait for a subsidy for their buying decision. So if you see that way, almost 90% of the market has shifted to not waiting for a subsidy to come to buy. So that definitely that shift has happened. That is why you are seeing the figures even in the month of July with the rainfall coming in, we could register more than 30% growth.
Got it. Got that, sir. Right. Right. That makes sense. And on that -- the Pubert tie-up that we had, any updates there on how that's going to kind of develop?
Yes. So the power weeder business is definitely growing. So like I've said before, this year, we should see, again, doubling of that business from the previous year's numbers. And we will be manufacturing power weeders. By next year, we should be able to launch power weeders, which are manufactured from V.S.T.
Yes. I'll read some questions from the chat box sir. When it comes to technology, how are we placed? Is there any area that we think we need a partner? What are the plans for the same?
Yes. When we look at technology, there are 2 areas that we are looking at immediately. One is the area of emission norms, which is moving in the coming years to Stage 5. So there is no definitive declaration from the government in terms of when exactly it will happen, but we are definitely ready for that. Up to 27 horsepower, our tractors are already Stage 5 compliant and upwards of 27 horsepower, we are already getting our 30-horsepower tractor compliant for Stage 5, which will be sold in Europe very soon.
Then we have the higher range tractors, which is the 42, 45, 49 HP tractors we would be launching, and we will be ready well in time for Stage 5 norms for that engine because we had already started that base design of those engines, keeping in mind that Stage 5 will have to be implemented. That is one techno shift that is happening, and we are very much ready for that.
The second one is the shift to electric. Like I have briefed before, we are already in the forefront of it. We are already supplying to the world's first electric autonomous tractor company in the U.S. We supply the drivetrain to them. And we are also working with another manufacturer for developing of electric tractors who is placed outside India. I will not be able to mention the name now because the deal is still work in progress. So that is definitely happening.
And we are also exhibiting our first electric tractor in Hanover, Germany, which will be the Agritechnica exhibition that happens in Hanover in November. So V.S.T. is fully ready in terms of electric tractors and electric technology in farm mechanization. So these are the 2 shifts that we expect to see in the coming future, and we are fully ready for that.
Next call will be from [ Arjun Khanna ].
A few questions from my side. First, just on the power weeder side of it. I did hear where you mentioned that potentially, we could double for this year. But in the first quarter, we are actually down. So is there any seasonality to this business? And anything that impacted us for this quarter?
Power weeders and power tillers are a bit down in the first quarter of the month, primarily due to delayed monsoon and the rainfall definitely did not happen. And definitely, from July onwards, these numbers have picked up. We expect to double the business of power weeders that we did last year, which was close to 3,000 numbers. We should be able to cross those numbers this year and grow much faster.
And the power tiller business also has seen growth in the month of July. We expect that to continue. Unless and otherwise, there is something very determined like total stoppage of rainfall, which we do not expect to happen.
Sure. And what is the capacity of the power weeders that we are developing for next year?
So we can go up to 6,000 power weeders. That is what we are looking at right now. But we should be able to double that volume because if required, because it's about building capacity through our suppliers, which means. It means it's basically tooling that we will have to look at, which can be done in a very short time.
Sure. But we would start with 6,000 capacity for power weeders?
Correct.
Sure. Sir, the second question is in terms of the Zetor. We were expecting it to come probably in the first half of FY '23. Has there been a delay? The fact that you're saying it will come in second half of FY -- sorry, first half FY '24, it seems to be coming now in second half of FY '24. Is there a delay, sir?
No. We are launching in September. So yes, there has been a months delay. We were expecting to do it in August, but it has moved to September. So the launch will happen definitely in the first half itself. The volume ramp-up will happen in the second half.
Sure. And in terms of Monarch, when we supply them kits, do we accrue it as a volume for tractor or it comes in our spare parts business or the distribution piece. Where do you accrue the revenues?
We look at like the previous gentleman who asked me about capacity utilization. So this entire drivetrain is assembled in our wholesale tractor facility.
Just in terms of communication on the monthly updates. So when we supply a kit to Monarch, where we are potentially supplying maybe 1,000 units in a period of time, would it be accrued as a tractor? Or is it just we don't include it in the monthly business declaration?
We are not including it in the monthly business declaration.
Next will be Marshall.
A good number of results for this -- last quarter. My first question is, like I remember that in some time last time, you mentioned that this geographical cover is within India. So are we now fully covered within India? Or like still we have to -- some states we have to cover or maybe some like deep district or like the village we will be able to cover?
We have a long way to cover the gaps in our coverage, especially in the Northern part of the country. So with the launch of Zetor, we expect to go ahead and appoint many more dealers in the Northern part of the country.
In the small farm mechanization segment also, we are at about 680 dealers right now. We should be able to increase that in the Northern market. So in the next 2 years, we expect to be more than 1,000 dealerships in small farm mechanization, which is the power tiller, power weeder business. And in the tractor business, we will be more than 500 to 600 dealers in the next 1 year or so.
So like what is the target for this year for the small like -- for the small farm equipment?
We should be close to 750 to 800 dealers this year in the small farm mechanization. And in the tractor, we should be close to about 450 to 500 dealers.
And like how much you said, sir, about the tractor?
Tractor should be around 450 to 500 dealers, I said.
Within this year. And like by next year, by FY '25?
Close to 600 dealers.
And currently, how much we have?
370 odd.
Okay. Okay. I missed this first year especially in regarding capacity utilization. So what is our capacity for like -- for this -- for the tiller and the tractor? And how much we are currently -- yes, the first year...
Currently, our installed capacity for tillers is about 60,000 units. 60,000, for which we will be -- last year, we did close to 40,000 manufacturing. This year, we will be very close to our installed capacity.
And then in the tractor business, we are at about 30,000 tractors installed capacity, but this will include our work with Zetor. This will include our work with the supplies to electric manufacturers. This will also include our higher horsepower entry. So all these put together, we should be able to in the next 2 to 3 years close the utilization gap in tractor as well.
And current year, how much is the target for the tractor?
We don't give out target numbers, but definitely, we are looking at 10% to 15% growth in the tractor business.
And sir, you mentioned about power tiller. How much you mentioned like you mentioned to cover the entire capacity or what this year?
Not this year. We should be getting close to that. So we are looking at tractors 10% to 15% growth and tillers 15% to 20% growth.
Because tiller, like in the last 4 months, we did [ 14,146 ]. So if I extrapolate this comes around INR 42,500 capacity. So this almost 70% we are utilizing. So how much you aim, 90%, 95%?
Yes. We are working on it. I can't give you a specific number at the moment.
No problem. And sir, regarding this Monarch, I mean, what is the target for the Monarch to supply in this year?
The Monarch, I believe, has given a guidance, which I have not seen it. But I believe they have given a guidance of 1,000. So we definitely will be meeting the requirement that Monarch raises with us.
1000, at this year?
Yes.
And sir, you mentioned about implements. That's a very good thing. And I again congratulate you that like you are adding new -- like new verticals to grow the turnover of the company and to grow the business. That's very good. So in this line, like what is the target? Like how much we are done for the implement last year and how much -- like turnover we are targeting for the farm implement for this year?
See, in the last few years, it is not very significant. It is close to around INR 4 crores, INR 5 crores only. But in the next 5 years, we want to do a business of about INR 100 crores in implements. And we are very focused on precision implements supplying to our international dealers and our dealer network to begin with.
And sir, like since you have diversified into different verticals. So why don't we consider starting the business for distribution of pesticide also. Because like it goes hand to hand like the way, for example, cement companies are now diversifying in paint because the same dealer is selling the cement can also sell the paint, like Grasim, JSW everybody is going to [ head to toe ]. So what I'm saying, since you have gone very deep in this farm supply, so maybe we can also add pesticide of some renowned or like some other brand as a distribution?
We'll take your input and definitely study about it.
So sir, like we don't like present any presentation because I think presenting the DSC announcement as well as website also.
We had a very simple presentation today. We never used to give presentation. We will post it on our website immediately.
Okay. So like we can't see it before the conference?
You understood posted before the conference. Certainly, we will look into that.
So in the case, we may be like knowing more and we will not ask many questions to you, which are already are already there.
Definitely, we'll look into it.
And sir, what is the life cycle of this power tiller?
It is definitely between 5 to 7 years. Depending on usage, if it is rice, paddy growing area, it will be slightly lesser. If it is pure horticulture application, it will be 5 to 7 years. So it depends on the application.
So are we recycling it or not?
Right now, we are not recycling it, but we are selling engines to the farmers who wants to repower their tillers.
No, no, that's okay. But what I'm saying is suppose like since we are the market leader 70% say there's still like very much like very pleased to know about this one. So what I'm saying, since we are market leader and having this lion share, so if we can also have this backward integration of this buying like, for example, their used tiller at throw your price and then they just refurbish and just like -- or maybe like a cannibalize the parts and so on, so which can also have some cost reduction.
Definitely, it's a good idea. We'll study that.
Okay. Thank you, sir. And like you have been always very kind to give reply in detail. And like -- entertain all the questions of the investors, analysts, not limited to 2 questions. So hats off to you, sir.
Next is [indiscernible].
So my first question is on CapEx. What is your CapEx plan for FY '24 and FY '25?
We are -- FY '24, we have a CapEx plan of about INR 50 crores. And in FY '25, also, we will have in the similar line. And most of it will go into 2 areas, which is setting up our global tech center, which is a global R&D center that we are developing and also into product development.
Okay. And you don't fancy any CapEx for tiller segment in the next 2 years?
In the next 2 years, no. But beyond that, definitely yes.
Okay. Okay. And the global R&D center when do you expect this to commence?
By next year, it will be ready.
Okay, okay. And what would be a percentage of exports as a percentage of sales being FY '23 in Q1?
So FY '23, our exports in total was about 5% to 6%. I don't have the exact Q1 figure in terms of percentage. So can I get back to you on that?
Right, sir. So another question would be in terms of your INR 3,000 crore target. So this is a very steep target considering the industry we are in, right? So because of being a monsoon-dependent industry, growing at such a fast pace is always difficult. So can you just help us more in detail of what would be the product mix in your mind, say, by FY '26.
So what can be the growth from export farm equipment, tiller? I think we have grown very recently over the last 3 years, but considering our past, the growth generally tapers also, right? So what kind of growth do you expect from each of the segments, which would be the growth driver for product mix? Or if any other details you can set for that.
Yes. So FY '20 to '23, as you see, we have doubled the business from INR 500-odd crores to INR 1,000-plus crores. And this was considering we had in between 2 years of COVID, where a lot of physical activity could not be done while the machinery industry would not have dropped so much, but a lot of physical activity could not be done. So wherever growth projects were wins and envisage, we could not get it executed. That is why there is a delay. That's why I said 2025 may get delayed to 2026 in terms of achieving the INR 3,000 crores. That's point #1.
Point #2, I've said before, and I will reiterate, we are looking at 6 clear strategic directions. One is growing our small farm mechanization business and rapidly growing. And we expect that growth to continue in this for at least next 5 years, simple reason being 70% to 80% of farmers in India are small and marginal, which is 2 to 3 acres, and the only affordable mechanization they have is a power weeder or a power tiller. So it will continue to grow. And it is very unlikely that it will taper off if conditions are normal. But if there is a drought of -- if there is no rain at all, it's a very different situation. But otherwise, for a given normal situation, I expect the growth to continue.
Second is growing our combat tractor business, which I have reiterated before, that we are looking at a global play with our combat tractors. We are getting good success in Europe, which the business was about 500 to 600 tractors. We are over 1,400, 1,500 tractors last year. We expect the growth to continue. And so the combat tractor business is as per our strategic direction.
Third is capacity utilization of the Hosur plant using supplies to electric tractor companies, using it for our higher horsepower, using it for our international business. So that is definitely in progress.
Building the rural distribution business, I already spoke about. We are looking at pumps business. We are -- that has also started growing. We have digitized the entire business that is giving us results. Then we are looking at the implements business that I spoke about. And then we are looking at technology innovations, which is getting ready for Stage 5 emission norms, getting ready for electric, getting ready for the opportunities that will come up in terms of technology with our global tech center.
So all of these 6 strategies that I spoke about is what is -- what will drive the growth. And what we have seen in the last 3 years is it is yielding results.
All right. Sure. That was helpful. And with respect to our Zetor launch. So you mentioned it got delayed by 1 month or 2. Are we on track to maintain our volume guidance? I think this was earlier, I think around 1,500 to 2,000 tractors, if I remember correctly?
Yes. So the first full year operation, we will be able to meet our guidance. But if you look at the financial year, we might not be able to do that 1,500 number. But if you take a 12-month period, we will definitely hit that 1,500 numbers.
The next I have unmuted Devanshu.
So just a clarification I wanted, you mentioned that we did around 3,000 power weeders last year, which you're looking to double in FY '24, right?
Yes.
And the capacity you mentioned is how much that we can manufacture?
We are setting up a capacity of 6,000.
So that will be 6,000 total after the expansion or 6,000 plus what we have right now?
No, the 6,000 is the manufacturing capacity we will set up. We will also be looking at trading some models. So going forward, beyond next year, we will be selling more than that 6,000.
Okay. Okay. And so when you say this tie-up with the Pubert, is that for domestic only?
Yes, it is currently for domestic only.
Okay. And there have been chats in the past about possibly manufacturing for them in their -- in Europe, right? So any developments on that yet?
No conclusive development has happened, but we are in talks with multiple players.
Okay, okay. And secondly, I have a question around your dealership for the higher horsepower. You mentioned we plan to go a little slow as compared to our original envisaged plan, and we want to go on a cluster-based approach. I think if I'm not mistaken, you said the first state we're targeting is Rajasthan, right?
We're starting Maharashtra, Rajasthan, Gujarat, Karnataka, these are the first wave states that we will be looking at.
Okay. So how many dealers have we appointed so far for the higher horsepowers?
So the first launch will happen at 25 dealerships. So you're not appointing supra dealers for this. We have currently about 380 dealers of our tractors. We will be using the same channel. And in the North, we will be appointing new dealers. Rajasthan, we already have a network where we are launching first. And in the other markets, we will launch phase by phase.
Okay. So is this number much lower than what you had envisaged earlier, if I'm not mistaken?
Which number, the dealership number?
Dealership number, yes, for the higher horsepower.
No. There is no change in plans on the higher horsepower launch. Eventually, the higher horsepower will get launched in every dealership.
Okay. Okay. And just to clarify this, are we looking at also exporting this higher horsepower or it will be domestic focus initially?
Initially, it will be domestic focused with certain variants that we will be building in the future in terms of drives, 2-wheel-drive, 4-wheel drive. So we will be looking at those variants for exports internationally, so which is -- which should be happening within the next 1 year.
Okay. And just a final question. Of course, the cash buildup that we have, we have been talking about this for a while, and you always mentioned that the Board will take a decision now. But clearly, from the cash flow that we do, if I take a normal cash flow, we are generating a healthy amount of cash, which will keep accumulating.
And if your CapEx plans are INR 100 crores for the next 2 years, is there a concrete plan in terms of using this because it becomes a sizable number of your balance sheet now? So just is there any clarity on what can be expected about this cash usage?
So we are looking at strategic inorganic opportunities. So we are evaluating a few opportunities that is coming our way. We will be definitely utilizing the cash in the next 2, 3 years.
Next caller will be Saket.
Firstly, if you could give the revenue breakup. I have missed your earlier comment, the revenue breakup between power tiller, tractors, spares and the trading part.
Yes. Just a second, I need to -- yes. So just a second. Yes, the small farm mechanization revenue is INR 139 crores, INR 138.8 crores to be precise. Tractors is INR 69 crores. The spare part business is about INR 26 crores.
Okay. And for that trading, the pump business, which we are doing -- trading, what is that -- now the size?
The pump business roughly is around INR 3 crores.
Okay. And sir, the other income component, is it the treasury part only that gets accumulated here INR 18 crores?
Yes. Yes.
Okay. But sir, we've discussed earlier that it will be routed through the OCI route. So when can we expect that to be below the PBT line item? Is that feasible, sir, under the other comprehensive income?
I don't think that is feasible at the moment. And yes...
Because that gives a clear picture on how the operational numbers look like because other income is now also a significant portion.
But if you see the presentation that we are loading on our website, operational income is very clearly given and the operational EBITDA is separately even.
Okay, sir. Sir, now coming to this, the raw material basket answer, I missed your earlier commentary. Last year, sir, we did INR 1,000 crores revenue. And this year, I think the quarter 1 has been a big quarter in terms of revenue also and definitely the profitability. So taking into account. What should be the likelihood trajectory if we are hitting 3,000 revenue for FY '26. Where should our -- the ball should stop for this year, sir, in the ballpark number?
So we are looking at 15% to 20% growth in our power tiller business and 10% to 15% growth in our tractor business. We also have other businesses, which like -- I have said that we are supplying to other manufacturers and all of that. So we are looking at exponential growth this year. Last 3 years, we grew at a CAGR of close to 20%, we should be able to exceed that percentage this year.
Correct. And sir, I think so for the Mysuru plant also the precision one, you did mention -- I missed your comment on the same. How is that aligning to our current setup...
Definitely, the Mysuru business is supplying 5C components to our business currently. And especially during the COVID period, it was a big advantage. So it will continue to be within our system. We are also looking at growing the business externally using our Mysuru precision manufacturing factory, looking at supplying precision components to other players.
Sir, what is the current dependence and what kind of intersegment sale or interplant sale is there from the revenue from this unit?
So we don't count as a revenue from this unit in declaring our revenue because it is internal stock transfer. But external sale that we do roughly is about INR 10 crores a year.
Okay. And what is our target there? So what should we anticipate depending upon the capacity and also the market, what can we aim going ahead from Mysuru unit?
So in the next 5 years, we should be upwards of INR 30 crores, INR 40 crores from Mysuru.
Okay. So that is not a big potential. It will be more towards aligned to our internal requirement?
Exactly.
Right. Sir, in your press release, you mentioned about in the domestic market, V.S.T. has launched 929 EGT models in this quarter. Sir, if you could elaborate what are the differentiation, and you have also mentioned about receiving good response...
Yes. So I will talk about it. August 9th, we are launching the entire 9 series. 929 is part of this 9 series that we are launching. So 918, 922, 927, 929, 932 and 939. So these many models we are launching on the 9th of August.
So specifically talking about 929 tractor, this is a fully ergonomically designed tractor which is very comfortable. At the same time, maintaining the very low turning radius of 2.1 meter, which is expected from a combat tractor. So excellent hydraulics. It will also have an optional feature of electrohydraulics in this tractor. So it comes with electrohydraulics, which comes with extra space for the operator at the same time maintaining the same turning radius. So it makes one of the most advanced combat tractors meant for grape farmers in this country.
So similarly, there are various models, and we will be sharing more in the coming days. The launch is going to happen on 9th of August. You're all welcome to kindly register to the launch. It is -- the link is made to all of you. And I will also post it on my LinkedIn and on the V.S.T. web page as well. You're all welcome to please attend the launch, which is going to be the most advanced combat range of tractors that will be launched in this country.
And sir, what should be the horsepower range for this? It will vary from what -- which range?
18-horsepower going all the way up to 35 horsepower, 35, 36 horsepower.
And 2 more points, sir. Firstly, in the change in inventory part, we see inventory built up for this quarter. If you could explain how is this going to liquidate and what is the reason for inventory built-up here? And how are the raw material basket behaving? And what kind of price changes have been done for the first quarter and are anticipated going ahead?
So the commodity prices have cooled down and there definitely has been an advantage in terms of the costs coming down in the first quarter. And I think it will continue in the second quarter as well. If you look at the inventory built-up, we use the supply chain methodology of theory of constraints to control our inventory and as well as our supply chain.
The last few years, we had lost sale during the June, July peak season for our power tillers, which we didn't want to repeat. So we increase the norms of inventory for June and July, and the norms are controlled, as I said, through TOC methodology, which will be reduced and automatically, the inventory comes down.
The demand is anticipated, whatever you have anticipated in the demand that is happening for the month of July, I think the numbers are there for a volume number?
Yes. You saw the numbers of July, we have grown almost 30% in the month of July.
But June versus July, what was the percentage gain, sir, month on month?
I don't have the mathematics right now. But definitely, we have gained very well from June to July.
Correct, sir. And the last very small point, sir, also this medium [indiscernible] is very -- is good to communicate. But sir, in many cases, our bandwidth does not support the connectivity. So if the teleconferencing is continued, I think so, that provides us greater connectivity and the call drops are also lower. So kindly...
So last -- so this time, we actually tried to better ourselves by giving a presentation in the beginning, although a very simple one. So the idea was to make the presentation available because most of you demanded it earlier. So we wanted to meet that expectation. And this presentation also will be loaded on the website.
I was looking for not...
I got your point, but do you understand go back to tele call because most of you want us to do the presentation.
With the presentation, if you upload before the con call, as our earlier partner mentioned, it distributes more merits so that we can go through the same, and that is made available.
Okay. So we'll look into it. We'll look into it.
Through the stock exchange along with your results sir...
Okay. We'll look into it.
Yes. Please look into it. So Q-on-Q, also, we can look forward for the growth momentum to continue. We don't have any seasonality impact for the second quarter?
See things being normal, we should be able to grow. But all of us know that there is talk about El Nino, rainfall. I mean the business depends, of course, on rainfall. So these challenges are in front of us. But things being normal, definitely, we'll see a Q-on-Q growth.
But the flood situation has affected our line of business in any way. The floods have been across many parts of the country, especially I think the Northern part, we are not very well present there. So how is that?
So it has not affected as much. Only a little bit in Gujarat, it has affected us.
Due to time constraint, that was the last call. On behalf of B&K Security, we thank all the participants for joining the call, and thanks to V.S.T. Tillers management for taking time out for the call and giving us the opportunity to host the call. Have a good day. .
Thank you, everyone.