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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 2Q FY '25 Post Results Conference Call. From the management side, we have with us today, Mr. V.T. Ravindra, Managing Director. Mr. Antony Cherukara, Chief Executive Officer; and Mr. Nitin Agrawal, Chief Financial Officer. [Operator Instructions].
Over to you, sir.
Good afternoon, everyone. My name is Nitin Agrawal, I'm Chief Financial Officer. I will start the discussion with a brief presentation, and then open up for the question-and-answer session. This is the safe harbor statement. In terms of content for today's discussion, we'll be covering first sales volume for this quarter, and financial results for the quarter. Then I'll also give you a view on H1 sales volumes and how the H1 results have been and then update on the October monthly number.
The first slide is about sales volume for SFM, which is Smart Farm Machining division, which is basically tillers as well as tractors. So in terms of power tillers, in Q2 financial year, we have sold 11,236 tillers, which was 10,729 in the same quarter last year. So there's growth of 5%. Tractor industry, we, have sold 1,306 tractors this quarter. Power weeders segment is giving a good growth, I would say, 1,779 power weeders we have sold in this quarter compared to 1,337 in last quarter, also 598 of reapers.
The next slide is the P&L for quarter 2. So in current quarter, we have revenue of INR 283 crores, which was INR 278 crores in the same quarter last year, at EBITDA of INR 64.55 crores. As a percentage, EBITDA is 20.81%. But in the EBITDA number, there's a major portion of other income also. So for operational tracking and operational performance perspective, what we track is operational EBITDA, which is calculated by excluding the other income completely. So at an operational EBITDA level, we are 13.33%. Profit before tax for the quarter is INR 57 crores, which is as a percentage of sales is 18.5%.
Moving on to the H1 volumes. For the power tiller segment for current half year, we have sold 17,000 units as against 19,800 unit in the last half year. Tractors are around 2,600 tractors, power weeder 3,490 compared to 2,200 in the last quarter, also 632 numbers of reapers.
The next slide is about profit and loss statement for half year. So for half year -- for this current H1, revenue from operation is around INR 474 crores and EBITDA of INR 99.25 crores, which translates into 19% of EBITDA. At an operational EBITDA level, we have INR 51 crores and in terms of percentage it is 10.8%. PBT is INR 85 crores for the quarter, which translates into as a percentage 16%. October numbers have been encouraging for both power tiller as well as tractors. In the month of October, we have sold 1,783 tillers as against 1,200 in October '23. Similarly, for the tractors, we have sold in a month 680 tractors, which in October '23, it was 289.
So this is a brief overview presentation. Now I -- we open the floor for question and answer.
[Operator Instructions] And our first question is from Mr. Ashish.
So sir, if you could kind of update us on the several initiatives that we've been taking over the last 2, 3 years on the tractor side and there's a certain guidance on the path to achieving certain growth that you had given for the next 2, 3 years. So where are we the softer aspects of it on the market development and acceptance of these tractors? And how you have fared till now and what's the picture like going ahead?
Yes. Ashish, this is Antony. Happy to share the details. So in tractor specifically, we had taken 2 to 3 initiatives. The number one being our entry into higher horsepower tractors with V.S.T. Zetor JV, where we launched the products in May of this year, May 2024. Very happy to state that the scale up is happening and it is going as per plan. This year, I had indicated we should be doing around 1,000 numbers. We should be around that number by the end of March this financial year.
The second big project that we have undertaken is consolidating our presence in Europe through the launch of new products in tractors. That is also going as per plan, and we are further launching products in the coming week in EIMA, Italy, where we are launching Stage 5, 30 HP tractor for the first time in Europe, and which will be very soon followed by a 35 HP project. These were 2 projects that we had planned for this financial year for Europe, and that is being launched as per plan. And this should give us the volume plan growth in Europe by the end of March this financial year.
The third project was the long-term plan, which we had announced in terms of entering into the U.S. market for tractors. That is going as per plan. The company has already been registered as already informed to you product development, which is a completely new platform, wherein we are launching 6 variants and almost -- sorry, 6 models and almost 16 variants, which we'll be launching in the next 2 to 3 years, all in the compact tractor space. This should give us the volume growth and the plan of achieving the aspirational financial figures that we had announced.
So all the plans are as per plan, execution and monetization is happening with full server, and that is a brief. And just one more addition I would like to make that we have made our entry into the northern markets. This is something in terms of the new markets that we are entering. So in the northern markets, very happy to say that in the first half of this year, we have been able to appoint 56 dealers, and majority of the sale of V.S.T. Zetor as per plan is happening as per seeding plan in progress is happening in the northern markets.
Okay. Good to hear that, sir. So I think the distribution recruitment for the Zetor products, there's been -- I mean, we've spoken I think last year, we've spoken on the calls. So what is the expectation? I mean, given the numbers that you had shared on the number of dealers and stuff, even if one were to do certain basic calculations, the numbers that would be required for sales would be much higher than probably the 1,000 numbers that we are achieving this year. So anything to suggest the path of how this is going, given you have the feelers now of how the acceptance by the customers or the farmers is happening. So some qualitative aspects would help us to appraise the progress more so that if you could share on that, it will be helpful.
Yes. So like I said, we unveiled the tractor in the last financial year. So we took a lot of feedback from farmers, giving them a few tractors for usage in various markets to test and kind of finish the tractor based on the customer requirements. So based on which we launch the product in May of this year. And since then, we are in the process of ramping up volumes, we started with very little production, 10 numbers in the first month, second month, we increased it to 15, 20 then. So we wanted to take it step by step because as you know, it's a very competitive segment. And we intended to ensure that every single customer of us is satisfied, and very happy to say that the performance of the product has been absolutely splendid and the feedback that we are getting is tremendous.
We are having repeat purchase 1 or 2 issues that we had in terms of the product has been rectified during the seeding phase. So that kind of gives us the confidence to now ramp up production and increase the number of dealerships that we will be serving. So right now, we are at 56 dealers which are doing V.S.T Zetor in the north. By the end of this year, we want to consolidate that at about 75, 80 numbers. We will consolidate that figures ensure that these dealers are able to perform with a certain unique number of volumes so that they are profitable. And hence, from then on, we will then scale up in the next financial year. So the plan is build, consolidate and then build again. So that is the approach that we are taking. And I hope that clarifies your question.
Yes. So sir, given the competitive nature of this industry, I mean, how would you put our right to win the customer versus what already is? So how does that work? Because I just wanted to understand that.
See, I will tell you very plainly that in terms of product differentiation, we are focusing on rough, tough and reliable product, point number one. Point number 2 is we are looking at how the customer can benefit in terms of productivity. But having said that, what we know very clearly in the market that there is very little that differentiates one product from the other. So that is where the importance of the dealership and the network comes in where we believe that a profitable dealership will be able to service and value the customer much more. And hence, we said that we will not push inventory to the dealers. We will ensure the dealers' profitability. Hence, we are saying that we will build, consolidate, build. So we believe that the dealers win is what can be converted to the brand or the product win in the marketplace. Because as you -- and in the industry knows product differentiation is very little in the segment.
Right. So sir, at what numbers a dealer becomes profitable with your product?
At around 30 to 40 units.
Okay. Okay. And as of now, across India, how much numbers would it be? I mean you said North is around 56?
Yes, 56 dealers to 60 dealers is what we have now, and we are consolidating now and getting them to 4 to 5 units per month so that they can get to about 40 to 50 numbers per annum. So that is a work going on. And after that, we will build further.
Got it. Got it. Got it. And sir, lastly, on the numbers that we had shared some targets of around INR 3,000 crores in maybe '27 -- FY '27. So there's still a long way to go till then. So we're at about INR 1,000 crores. So you see that with all these 3 engines that we have started on the tractor side, that still looks somewhere achievable.
See tractor is only one piece of that big strategy. So one is tractors. Second, I have spoken about the Small Farm Machines, how we are growing the Small Farm Machines. The launch of the products are yet to happen in the Small Farm Machines. You will find some disruptive products coming from the Small Farm Machine segment in the coming quarters. I had spoken about it earlier. It's too early to give the specifics of it, but I think we will see that happening in the next coming 2 quarters.
Okay. Okay. So what's -- so I asked those numbers that you target that still remains sacrosanct is it.
Absolutely. See, we lost 2 years to COVID. I was -- the effort of the company has been to ensure that we don't give further 2 years try and do it in FY '26. That is 1 year. But then we currently have, like in the last quarter, I shared with you that we have a visibility of around INR 2,000 crores, that looks very much there. So to get to that INR 3,000 crores number, it looks like we will have to move to FY '27. But definitely, that milestone is not something we'll give up on, and we will definitely chase it down.
Next in the line is Mr. Shreyas.
I just want to understand why has your receivables increased to 70 days and payables reduced, like what are you doing with your working capital? Can you please explain that.
Okay. So payables -- I mean, so receivables have gone up purely because of the government orders we have received and the supply, which is in process. So I would say that by the end of Q3, it would normalize and come back to the normal levels of around 45 to 50 days of receivables. Payables is purely a function of when the payment is due, especially we are focused on clearing MSMEs on time. And it has got nothing to do with a particular management strategy to control payables or shorten the cycle of payables.
Okay. Got it. Got it. And can you share a few bookkeeping questions. Can you share volume of Zetor tractors in Q2 and October?
See, we don't share specific tractor volumes of Zetor. But what I can tell you, it is going as per plan. But eventually, once we discuss with our JV partner, in the next financial year, probably we'll start sharing the numbers on Zetor separately.
Okay. And the revenue breakup between tractors, the SFM distribution?
For Q2 or H1?
For Q2.
Yes, Q2, the SFM is at INR 185 crores, tractor is at INR 74 crores, distribution is at INR 26 crores.
And can you give the same for H1 as well?
H1, we don't have that right now?
Maybe you can reach out to us on the email. We'll share you maybe those details.
Yes. Okay. One last question, we have taken a short-term debt for INR 7 crores. So why is that?
Yes, better capital management, better working capital management. We had looked at see how to use some debt when it is usable instead of looking at kind of taking funds from our treasury.
Got it. Great. Just one question. Can you share like what is the -- okay, power tillers you are saying that new launches will lead to the growth and current product is just leading to stagnant growth for the past 2, 3 years. So all the growth will come from new products. That's correct, right?
Not really. There is expansion of market also happening only. If you see 2 years back, we were at 38,000 last year, there was a drop 36,000. But before we did 38,000, we were at about 32,000. So last year was an abnormal year with the monsoon playing kind of problems with the farming segment itself, and we saw industry dropping all across. But I strongly believe that this year with the rainfall monsoon and spatial and timely distribution of the rainfall, it is all looking favorable, and I expect a strong growth this year in the power tiller business because H2 of last year was abysmally low. And this year, you will find that completely the opposite.
[Operator Instructions] Next question is from Romil Jain. He's not able to answer. I will go to the next person. Next, we will -- Mr. Saket Kapoor, you can unmute and ask your question.
Sir, when we look at your presentation part, as you yourself alluded to the fact that the H2 was very big for power tillers last year. So what are our expectations for the current year? I missed your comment on the same. Since H1, we are lagging by 13% in the power tiller segment. What should be the expected number?
So this year, like I have said in last time we spoke, Saketji, we are looking at a 20% minimum growth in the Small Farm Machine space.
Right. And sir, when we say small farm, you are including all the 3 power tiller, power weeder and reaper all combined?
Correct, correct. So the power weeder segment will grow more rapidly. Power reaper is a seasonal business. It will grow, especially in the Q3, Q4 space. And power tiller growth will be seen more in second half of this year because Q1 was down. Q2 has picked up, and we see from the October trends that Q3 is going to be pretty big.
Correct, sir. And sir, if you could give the reasons why power weeder have outperformed also on a base of 2,000 -- the numbers are 3,500 for H1. So what are the factors that have led to this increase? And what should be -- what are we eyeing in terms of the number of units and also the top line breakup, if you could provide us for the small farm equipment breakup between power tiller, reaper and power weeders?
Saketji, we will not be able to give you a breakup in this, particular reason is simple that it is very strategic to us. What I can tell you is power weeder typically sells a unit up to about, let's say, 60,000 units -- INR 60,000, okat, to a unit, roughly, power weeder. And the reason why it has been growing is the base is large. Like I've said before, we have been late entrants to this segment. We are growing rapidly in this segment. This year, we should be upwards of 8,000 numbers this year within just 2 years, and we expect in the next another 2 years, we should be 3x that volume, minimum. The good news I can share with you, which I had announced earlier also, we will be manufacturing power weeders in India. With the scale-up of volumes that has happened, we are rolling out the first power weeders this month onwards.
Okay. And sir, which category of crop are we addressing through these power weeders?
More than category of crop, it is the farmer segment, which is less than 2 acres of farm.
Okay. Small that is...
Small and marginal farm, yes.
Okay, sir. And sir, about our -- if you could give the split between this spare business, what we have done and also we were also inclined to do some trading business with pumps, electric pumps, so where are we in terms of the inroads we have covered in that?
Yes. So we should be -- last year, we had INR 10 crores of business in electric pumps. This year, we are growing that business. Now the interesting part about electric pump business is when the rainfall is extremely good, the pump is rarely used. So you will find a bit of a slowdown in the electric pump industry as a whole, especially for the agri segment. The domestic segment is very different. But in the agri segment, you will find that the pump usage reduces and hence, the sale reduces. But we expect a growth because our base is very small.
Last year, we had done INR 10 crores, we should be able to do upwards of INR 15 crores this year. That is what we are looking at. And we are operating in only 6 states at the moment, and we will consolidate that as we move forward. And the distribution business also is expected to grow at about 20% this year. Last year, we added about -- we had done about INR 100 crores of distribution business.
Distribution in the spare part, spare business?
Spare parts oil.
Oil. Okay. And sir, about our -- I think the precision unit at Mysore, how -- what is the contribution there from that.
Yes. So I had spoken earlier about the precision distribution business. Looking at the China Plus One opportunity. Very happy to share that we have garnered a few customers in the railway segment, also precision components supply to metro rail kind of projects also precision component supplies to few engine manufacturers. So we can see good growth, but I wouldn't want to share the numbers at this moment until we scale up and -- but I think it is working out to our strategy.
So sir, a ballpark number of what we did H1 at INR 474 crores, what will be the contribution from the precision part in terms of, I think, so the alignment.
See Precision Component division has both businesses, which is internal supplies to VTTL and also the external business. Currently, the external business is very small. That is why it is too early for us to give out any numbers. But as we grow, I will definitely share with you. Probably end of this financial year, I will start sharing the numbers.
Okay. Sir, as 2 small point. Last year, as you mentioned, H2 was a small quarter, it was very bleak, last year H2. So this year, we are starting on a very low base. So what should we anticipate in terms of H2, in terms of the revenue profile? And also, sir, for the treasury book, what steps are we taking to further invest money in our business and lower our treasury component?
Yes. So 2 parts to the question. One is you are asking how would be the outlook of Q2 -- sorry, Q3 and Q4, which is H2. I think H2 should be like given the good monsoon, given the good situation in terms of reservoir, water availability and the crops. I think H2 should be pretty big this time. And interestingly, last year, the H1 was pretty big and H2 was very bad. This year, I would say H1 was kind of flattish, except for the Q1 drop that we had about INR 30 crores, INR 40 crores. But if you see Q2, we have caught up, and in fact, we've got a slight growth. And in Q3 and Q4, we should be able to grow at the rates, we always wanted to grow at about 20% to 30% kind of growth, we should be able to achieve.
Okay. And lastly, sir, on the margin part. I think so earlier, you did alluded to the fact that in order to grow the business, we will be sacrificing margins, addressing more needs on marketing and on the R&D part to develop more products and be more relevant in the market. So where are we in that journey, sir.
Thank you for that question. Very important question that you have asked in terms of the long-term perspective. See, the margins have been maintained, as I said, at 13.33% on an operational level. And I had said, we will always be on the higher side of 11% to 13%. We'll be closer to 13%. So that is where we are. And of course, the money that is being spent is on product development. We have cruised up our R&D further and we have enhanced the number of people working in our R&D. Today, we are 80, 90 strong R&D personnel.
We are working on multiple platforms, including our entry into the U.S. market. developing platforms of various kinds of engine. We are talking about developing disruptive products in Small Farm Machine segment. And in the next 2 to 3 years, you will continuously hear from us about launch of products in various segments and various markets. So extremely important step that we have taken in terms of investing our money, which is the money that the company has managed to accrue in terms of organic growth. And in terms of using our treasury money, we will -- we are also looking at good opportunities that may come up in the inorganic growth opportunity as well.
But there's nothing in the annual, sir, which we are working currently?
We have a couple of things are on the annual, but nothing to announce at this moment in time.
Okay. And lastly, sir, we -- what investors has always been looking for the land value. When can we expect that unlocking, sir? Do we find a case currently for that to be realized or we can continue to hold on and ride on the same?
See, we won't -- like I've shared this before, we will not sell the land just for selling the land purpose. What we are looking at is the appropriate opportunity for which we will need to generate cash, at that opportune time, we will look at the best resource of raising funds if that the option -- the better option if it is to sell the land at that point, we will look at selling the land. Otherwise, we will monetize that. So we have not -- the board has not taken a decision on that yet. So I think there is nothing to announce at this point in time.
Correct, sir. And sir, this time in your opening commentary, I missed your point about how is the raw material basket behaving? I think so the prices for some of the engineered products, especially for the steel prices have gone up. So how well are our margins protected? Or if you could give us some color what is the RM basket currently shaped up?
Yes. So the RM has not been influenced through commodity pricing in Q2, but it has more to do with our product mix. As our higher horsepower volumes are growing and especially when it is a new product, there is a bit of a margin pressure when the product is new for a few months before it normalizes. And hence, the material cost is looking up at a percentage or so at the company level.
Other than that, there has not been any commodity pressure to say, in Q2, but looking forward to Q3, it is hard to predict, but all around, the demand doesn't seem to be growing. And hence, I don't see any commodity pressure in terms of pricing or the cost to go up in Q3 as well. That is what everybody says, but you guys should know more than me as you're talking to many, right?
But sir, can you provide the mix, then it would help us out better. What are the key components of RM?
Yes. So steel, you have your castings, your forgings, your sheet metal, your rubber, these are the larger items. And in steel, you have cold rolled, hot rolled, CR, HR.
Correct, sir. So the prices there have moved up?
Slightly. In Q2 quarterly settlement, it hasn't played much of a role. That's what I was trying to tell you.
And lastly, sir, I joined the queue. For the pump part, sir, where are we sourcing those pumps and what is the range horse pump?
So we are launched -- we are sourcing up to 10 horsepower, both domestic, centrifugal and bore well. We are sourcing mostly from Coimbatore and Ahmedabad.
Okay. Sir, any branded concern or we are developed -- we are co-developing only for us?
They are not really branded players, but what I can tell you is they are supplying to various brands.
Next is a follow-up question from Mr. Shreyas.
This is Romil Jain here. Unfortunately, I think there was some disconnection. Can you hear me now?
Yes, yes.
Sorry. So sir, first question from my side is just to understand the October month, we have seen a very sharp recovery in the volumes, right, on the tractor and tiller side. So just wanted to understand whether it is more related to our distribution network and the acceptance of the products and all? Or it is more prevalent in the industry, but the industry also has picked up well. So a little sense on that.
Yes. So definitely, the industry growth has helped. I wouldn't deny that. But the effect is also so pronounced for us because we have been working consistently on growing the network, growing the number of products that we have in the offering and also our entry into the new horsepower, higher horsepower segment. So as I said, as we increase the number of high horsepower production and ramp up, you will see the sales figures growing for us. So that is one segment that we have never been present seriously, which we are now, and you will see as we ramp up the volume, sales volume also increasing.
Okay. And sir, so far this year, I think on the volume side, now, we are much more flattish in terms of tillers and tractors. I think tillers will be down by 8%, 9%. But -- so what kind of growth do we see for the whole year in both of these segments?
So tiller, we would expect -- I would expect at least 20% plus growth by the end of the year.
For the full year?
Yes. And tractors, I think we should do much, much better growth than because considerably low base we have from last year.
Okay. This is excluding the Zetor, I just wanted to understand.
It will be including Zetor because see larger horsepower segment will play a larger role in terms of increasing our volume. Because as we can see in Q1 and Q2, if you see the less than 30 HP segment, it has not grown across the industry.
So this number that we have given also includes Zetor, right? The tractor one.
Yes, yes. Whatever we have given includes Zetor, but in Q1 and Q2, the volumes are low comparatively.
Okay. Just on the tiller side, I think we are expecting very strong growth. So market share earlier was about 65%, 70%. Is it going to remain so or maybe increase from here? Or you are seeing competitive intensity increasing in tillers as well as overall SFM space, the weeders and everything.
Definitely, more and more players are entering that segment, but we don't see too much of effect in the power tiller space, but you can see larger competition in power weeder segment. But what we feel is the market share is not the key here because we -- once we are at 70%, what we are looking at is how do you gain more volumes, how do you create the industry, and that is what we are doing. So that is why we are saying Q3, Q4 should be much higher than last year, and hence, we will end up at around 20% growth.
Okay. How much would be the penetration of financing this tiller product, tillers?
Penetration overall currently is upwards of 4%, 5%, which was 0, 2 years back or rather 1 year back.
Okay. So that is also helping the growth of the tillers?
Yes, definitely, in some markets, it is definitely helping in -- I have seen dealers who are doing retail finance up to 30% of their volumes now, which was never the case earlier.
Okay, okay. And the reliance on subsidy, as you have earlier also alluded to, is no more very important element.
See, subsidy will always play a role. Like I have said, I don't deny that, that subsidy will not play a role. What I have said always is subsidy becoming the key factor for decision-making to buy power tillers will not play a role. Because see, if it is like this, if some government declares a subsidy, every farmer wants it, right? But that doesn't -- earlier what was happening was only when subsidy was declared, people would come to buy. Now that has changed completely with DBT happening.
Okay. Just one macro question to understand your growth trajectory over the next 2, 3 years, and reach the targets that we have given. So broadly, I think we have 4 segments, so tractors, tillers, SFM and the distribution part of the business.
Tillers is part of SFM, tillers. So we have 3 segments, tractors, SFM and distribution.
And distribution. So just -- can you just give us a sense of the growth trajectory in each of them? Where do we see over the next 2 years, 3 years, which one should grow faster and some sense? And how much would these segments contribute in terms of overall top line?
Yes. So I've said this before also. These are very different and very unique industries. Tractor serves a segment of customers which are more affluent, who can afford INR 5 lakhs to INR 10 lakhs, INR 12 lakhs of investment, whereas the tiller segment is a marginal farmer who is less than 2 acres of land or 1, who can definitely not afford a tractor. And distribution is all about getting closer to the customer irrespective to what segment you're operating.
So these are very key distinct segments. The bases are different. For example, the distribution base, it is at an INR 100 crore base, the SFM base is INR 600 crores, INR 700 crores base, and tractors at around INR 300 crores base. So you will find and necessarily, the tractor will grow based on how you can expand more into the northern markets with the higher horsepower and the compact tractors in the Europe and the U.S. market in the long term.
And SFM, you will find growing based on competing against nonconsumption that is making first-time buyers or introducing people to mechanization for the first time. So that is a very different way of working, very different way of converting the customer. And the third aspect is distribution, which I've already shared the number of counters you opened and how closer you are to the customer will ensure your growth. So there is no uniformity in this. So there is no particular percentage, I can attribute to each one of them. But what I can tell you is all the 3 are getting significant importance, there is no particular segment that we will focus more or less.
Okay. Okay. And lastly, sir, just exports is also a part of our strategy. So to reach that INR 2,000 crores and then subsequently INR 3,000 crores kind of top line, how much would the exports contribution be embedded in this?
Absolutely. Thank you for that question. So 2 years back or 3 years back, we were at about 3% of international business. Last year, we closed at about 13% of international business. We are going to take it to about 25% to 30% of our business.
Okay. By -- in the next 2 years.
Next 2 to 3 years, yes.
Okay. And that would be largely at the similar ROCE levels?
Yes. The ROCE should be good. The profitability is good because the pricing opportunity in the international market is better.
Next in the line is Mr. Arjun Khanna.
Sir, the first question is in terms of the facility for power weeders. You mentioned we have started manufacturing. So this is the 6,000 unit facility that you're referring to, sir?
Yes. So we have the power tiller facility, where we have installed capacity of about 72,000 tillers that we can do in a year, which we can take it up to 1 lakh, power tillers. Using that same facility, we are looking to produce the power weeders as well. So initially, it will be limited production. This year, we are looking at, let us say, 100 to 200 units from the plant per month, very little numbers. But in the next 2 to 3 years, we expect the plan to do at least 1,000 to 2,000 weeders per month.
Sure. So effectively -- so power tillers, we still understand it was 60,000 units. Effectively, you're saying through debottlenecking, it's 72,000, and with further debottlenecking, you think that can be 1 lakh units, which is fungible between power weeders and power tillers.
The third is 1 lakh will go through an extra shift. 72,000 through bottlenecking and 1 lakh through a third shift.
Right, sir. Right, sir. This is helpful. So if we talk about -- we also talked about earlier that potentially signing a JV with the Japanese blade manufacturers, Kobashi. Is there any update on the same, sir?
Yes. So what they can tell you is that the project is on hold right now. It is not drop, but because a JV partner, Kobashi is taking more time in terms of moving certain technologies in certain products, which we wanted in the JV. That decision is not yet made, and unless those products are moved to India, we don't believe that we have a real scale-up model with blades alone. And hence, that project is on hold.
Sure. Helpful. Sir, just on the Zetor joint venture, could you help us understand in terms of the international bit. So while you talk about the domestic bit where you see us reach maybe 1,000 units for this year and maybe 1%, 2% of the market over the next couple of years. What is the international agreement with them? Are we allowed to export the production that we make in India?
Yes. Yes, we are allowed to export. So we are allowed to export to the V.S.T. channel as V.S.T. brand or other V.S.T. field track. That is a brand we use abroad and as Zetor brand through the Zetor channel. So the V.S.T. Zetor joint brand will be only for India.
Okay. Sure. This is very helpful. Sir, my final question is just in terms of growth for this year. So while we are forecasting a very strong second half, is it related to release of some subsidy? Or is it just the market growing? What are the key drivers for this very strong forecast for the second half of FY '25?
Yes. So subsidy, I don't think will increase. I mean last year also, it has not increased, year before also, it was almost the same. Last year, what really happened was that demand went down because the rainfall affected agriculture as a whole. So it has nothing to do with subsidy. Again, this year, I don't see the subsidy amounts increasing. So subsidy playing a role in terms of growth is very minimal now. But having said that, like I said to the earlier person who is raising the same question. If a subsidy is announced, there is no farmer who says, "No, I don't want it". Everybody wants it. But the question -- the real reason that remains is that the purchase decision of buying a machine is no more dependent on subsidy. So subsidy really doesn't play a role in terms of increasing or decreasing demand per se, number one.
Number two, why second half will be buoyant is because of the same fact that I told you that acreage has gone up, monsoon has been great, reservoirs are full, minimum support prices are better. So in every sense of the world, it looks positive. And that is seen in October, and we hope that, that same sentiment continues through to November and December.
Next in the queue will be Mr. Adab.
As you spoke on the demand front and how things are playing out with the new product launches and all. So everything as per the new product, the demand is -- the response has been so far good as per expectations. The monsoon is coming in our favor. So what one thing is -- which according to you would be worrying or you would be seeing? Any one thing which should be a bother or a cause of a concern maybe which you are looking at?
So the one concern that I have is on the bottom line. So what -- while I'm saying to the earlier caller that the commodity prices shouldn't come under pressure in the coming quarter, which doesn't look like because demand has slowed down almost across markets. I hope that doesn't reverse itself and the commodity prices shoot up because of an extended war or the Gulf war or whatever reason. I hope that doesn't happen.
The second aspect that I would say is -- which is not a worry, I would say, but I would put it as a challenge in front of us to accelerate our execution. So that is something that keeps us up all night and every day. So we have to accelerate our executions. Our projects are all in monetization phase. We have to consolidate the dealerships that we are opening in the northern markets. We have to consolidate the products that we are launching in the European markets. We have to accelerate on the product development for the American markets. So this is something of a challenge, I would say, or rather which enthuses us to come to work every day.
Next in the line is Mr. Siddharth.
Sir, could you give us the bifurcations of revenue for tillers, tractors and spare parts? Sorry if I missed it out earlier.
Yes. Just for information, I will definitely give you the revenues, but just for information, it is all uploaded on our website as well, just in case anybody wants to take a look at it later on as well. While I'll just give you the H1 revenue figures as well, somebody had ask for H1, and after that, I will give you Q2. So H1 tractors is at INR 130 crores, Small Farm Machines is at INR 274 crores, parts is at INR 53 crores, and yes, then others is about INR 17 crores, INR 18 crores. And Q2 -- can you just put it up, yes. Just a second. Yes. Q2 Small Farm Machines is at INR 185 crores, tractors is at INR 74 crores, distribution at INR 26 crores and others at INR 4 crores.
Okay, sir. Sir, and just one more thing. On the tillers part, particularly, I mean, any sort of discounting or something you're seeing or it's at same realization levels what we saw earlier?
No discounting.
Okay.
No discounting. I mean, are you asking that we will push volumes through discounting? The answer is no.
Okay. Okay, sir. So there is enough demand so that can be absorbed without any sort of...
Yes. The issue in tillers is not pricing or what clearly is, like I said, creating first-time buyers, it's industry creation. So we have -- we are taking these machines to first-time mechanization users.
We can take one last question.
Due to time lack of time that was last question. And do you want to make any closing comments, sir?
Yes. So thank you so much, and wish all of you a very happy Diwali. I should have done this in the beginning, happy Diwali, seasons greetings to everyone of you. Thanks to have taken the call and look forward to being in touch in the next quarter as well. Thank you.
Thanks. On behalf of B&K Securities, we thank all the participants for joining the call, and thanks to the management for taking time out for the call. Have a good day.