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VST Tillers Tractors Ltd
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Ladies and gentlemen, good day, and welcome to the V.S.T. Tillers Tractors Limited fourth quarter FY '23 post results conference call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala and Karani Securities India Private Limited. Thank you, and over to you, sir.
V.S.T. Tillers Tractors Limited 4Q FY '23 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.I'll now hand over the call to the management for the opening remarks to be followed by the question-and-answer session. Over to you, sir.
Yes. Good evening, everyone, this is Antony Cherukara, CEO of V.S.T. Tillers Tractors Limited. Very happy to be with all of you to share the results of Q4 FY '23 and the annual results for FY '23.With me is Mr. Nitin Agrawal, who is the new CFO; and MD, Mr. V.T. Ravindra. Now I hand over this to Mr. Nitin Agrawal to take you through the results. And for your information, the presentation is also loaded at the websites of both the exchanges.So over to Nitin, please.
Yes. Good evening, everyone. Nitin Agrawal, and I welcome you all on this call. I also request you to go to the BSE website and check the presentation which we have uploaded there as an investor presentation.I'll first talk about the volumes for this quarter. Yes. So in the Q4, power tiller, we have done -- yes, in terms of volume, in power tiller, we have done in the quarter, 12,813-tiller, power tillers as compared to 9,282 in same quarter last year. In tractor business, volume are 1,0963 for the current quarter. Corresponding number for last quarter -- last year was 1,575.I'll now talk about the annual number. In power tiller, it is first time when we received the highest number of sales, which is 38,247 numbers. And in case of tractor, it is 6,875.I now move on to the financial performance for the full year. And I'm very happy to mention this to all the people on the call that it is first time when we crossed the milestone of INR1,000 crores of revenue. Our revenue for this year is INR1,000 crores -- [Technical Difficulty]. EBITDA number in terms of rupees crore is INR152 crores, PBT of INR123.95 crores and PAT of INR92.37 crore. On a quarter-to-quarter basis, this quarter, our revenue is INR322 crores with an EBITDA percentage of 18.23%.With that, I now open for your questions.
[Operator Instructions] Our first question is from the line of Saket Kapoor from Kapoor & Co.
Congratulations to the team. I think the PBT numbers are the highest maybe per my memory. INR50 crore PBT number would be the highest in the near future. So if you could elaborate more on the factors that led to these numbers and also some color on things that are shaping up because we hardly got any time to go through your numbers. They have been just being uploaded at the exchanges and the call was delayed for 45 minutes. So if you could give us some more color on how things are shaping up, some more color on how well are we prepared for the INR3,000 crore revenue top line? And then I will continue with my follow-up questions.
Yes. Thank you, Saket. This is Antony again. So definitely, the results on the bottom line is specifically an effect of the top line growth, which is at INR1,006.43 crores. And the top line definitely has helped us to increase the bottom line. Apart from this, there is definitely a cooling down of material costs compared to Q1 of the financial year. Towards Q4, definitely, there has been cooling up on the material cost. And thirdly, you will see that the power tiller business, we have been able to accelerate the small farm mechanization business, we have been able to accelerate and which has grown almost 29%. And tractor has almost been flat. But with the new products that we have launched in Q4, that also looks positive going forward in the year. The distribution business also has crossed a milestone of INR100 crores, which 3, 4 years back was at about INR40 crores. Now it has crossed the milestone of INR100 crores. These are some of the key achievements.Now coming to our achieving of the vision of INR3,000 crores by 2026 is what I said in the last call, considering that we lost some time in terms of the project delays that happened during COVID. So we would be achieving the 2026 projects. Multiple projects have been in place. The V.S.T. Zetor joint venture will come into revenue mode this year. The Monarch supplies that we have started is already onto the ramp-up mode. And secondly, the strategic directions that we have taken in terms of becoming a small farm mechanization company, our movement into the international market, all these are rupifying. So that should enable us to get to our INR3,000 crore mark by 2026.
So for this year, what should be looking for? I think so now with the softening of the raw material prices, what should be our margin credit be? And for the introduction of new products and as been articulated by you, what should we look forward as a ballpark number for this year in terms of the increase in the top line. If you could comment on that side?
Yes. We are definitely looking at exponential growth on top line. I can't give out a specific number at this point in time. But definitely, we want to be -- the last 3 years, we have grown at almost 20% CAGR. We expect to accelerate further on that in the next 3 years to get to that INR3,000 crores. So definitely, we have to grow at about 30% plus basis year-on-year. So that is the kind of acceleration that we are looking at.And coming to the margins, I've already given your guidance of 11% to 13% this year. That is considering that we will be investing a lot into getting into new markets and product development.
Correct. And sir, earlier also, I think so you did spoke about our -- the land we have at Bangalore. And any update on the land parcel which we can expect for this year?
No update on that at the moment. The decision is not taken. No decision is taken at the moment. And as soon as, like I said before, as soon as that is done, that we will be informing.
Okay. And on the -- on our Mysore unit, I think, that precision unit we have invested a lot, and we were about to integrate the same day tower operations. So what's the update on the same? And how have we performed on the spare parts business for this quarter and for this year?
Yes. So first, let me talk about Mysore. The Mysore business -- I mean, the Mysore Precision Component plant has been supporting the company in terms of especially the machining of the 5C component, which is the camshaft, crankshaft, cylinder head, cylinder block. So that is what is causing us to scale up our volumes. If you see our power tiller business has moved to some roughly about 19,000 3 years back. Now we are at about close to 40,000 tillers. Now this ramp-up has been made possible, one of the key support areas has been what precision component division has been doing out of Mysore.Also in terms of new product development, our ability to bring new products, not only internal products but also make supplies to companies like Monarch out in the U.S., our ability to meet tolerances of an electric autonomous tractor, all this has happened because of our work that we do in Precision Component division in Mysore.And coming to the distribution business, I shared with you, it has become -- it is the spare part business. We call it as distribution business. It has crossed the INR100 crores mark for the first time ever. And it is set to grow. Previously, I shared with you, we launched electric pump in UP and Bihar, which is now being scaled up to another 6 states this year. And this is a total digitalized business that we are building. And over a period of time, we would like to build this business into our distribution powerhouse for the rural market.
Sir, on the pump business, which you had just mentioned, what's our objective? It's only penetrating the market? And why have we selected the electric pump as a segment?
We are starting with electric pump, and there is a huge potential for electric pumps. We're starting with electric pump. But as you rightly kind of mentioned, the idea is to penetrate the rural market through very efficient distribution using TOC and digitalization.
But this is a trading product only, sir? We are not into manufacturing of pumps?
We're going to do only trading in this business, in this particular business.
Okay. But the spare part business is on the manufactured items that we are going to and --
Spares is definitely the traditional business that we have that will continue to grow as the volume picks up.
Sorry to interrupt, Mr. Saket Kapoor. May we request that you return to the question queue for follow-up questions as there are several participants waiting their turn.[Operator Instructions] Our next question is from the line of Arjun Khanna from Kotak Mahindra Asset Management.
Congratulations on a great set of numbers. In terms of our margin guidance, that 11% to 13%, obviously, this is related to start-up costs, et cetera, for new units and the trading business increasing in size. Just wanted a sense in terms of the Zetor tractors. Do we have a sense or -- us as investors, how do we understand if this launch has been a success? So given our volumes of tractors, what kind of numbers, say, for next year, one would assume that probably the product is a success?
Yes. In the next 3 to 4 years, you will see a major share of our business in the higher horsepower segment coming from the V.S.T. Zetor business. So this is our real foray into the higher HP segment. We tested those waters with our in-house product, and then that is also there, and that will continue to occupy the position of a value product and the V.S.T-Zetor products will compete with the multinational products that is in the market, that is the premium positioning products.Now this launch will be happening in the -- towards the end of Q1 and early Q2. That is what our plan is to launch these products in the market. And we have definitive volume plans, but the more critical aspect is to establish these products with the value proposition that we have thought for this product, which is of high power, high fuel efficiency, and in terms of the additional features we are giving in terms of the premium product.
Sir, just to get a clarity. This is not on the compact segment. This is full-sized tractors?
This is a full-size utility tractors, basically. This is the utility tractors.
Right. So we will be competing in the roughly INR6-plus lakh market now?
Actually INR8-plus lakh market.
Okay. So we would be looking at exports also?
Yes. So we'll be looking at everything. I mean exports, possibly. This initial phase of products will be followed by 4-wheel-drive products as well. So we will be exporting to some of the African market as well.
Sure. And for a success, maybe 3 years, 4 years down the line, would a milestone be 5% market share, 10% market share? What would our thought process be?
We are not looking at market share. So like I've said this before, the whole aspect is about capacity utilization. We have a plant which we can produce about 30,000 tractors. We are producing only around 8,000 to 10,000 tractors year-on-year. So the -- and plus the electric supplies and the component supplies and all that we have started. So the focus clearly is capacity utilization. So the first milestone will be to get to 30,000 tractors, including compact and higher horsepower.
Sure. From our FY '23 volume of roughly 6,900?
Yes, yes. There is no higher HP in that. Hardly any higher horsepower in that.
Sure. Perfect. Well understood, sir. Sir, the second question is on our power weeder segment. We had anticipated very strong growth in this segment. If I look at volumes, as put in our presentation, thank you for that. Volumes are up from 2,000 units to roughly 3,400 units. One was expecting a more exponential growth.
This is only the second year. So you will see a massive growth coming in the next 2 to 3 years because this segment, unlike the dealership that we use for coverage, this is kind of a near store procurement that the customer does. He goes to the nearest store near is house and buys the machine, the small machine. So now we are developing that network and you will see -- like this is the second year for us. So 3,400 has come in the second year. So you can expect these volumes to jump in the next 2, 3 years.
Could you care to give us a sense of what kind of numbers are we talking about?
It should be 10,000-15,000 plus in the next 2 years.
Okay. Perfect. Sure. My last question is, if you look at the balance sheet, we see a deterioration in the receivables. It's shot up considerably on a year-on-year level. I understand the March quarter had extremely strong volumes. Is that the reason for this receivables moving up? Or is there something else that we need to know?
No, I will explain a bit. From about 29 days the previous financial year, it has moved up to about 54 days of receivables. Out of that receivable, roughly about 20 days is basically the subsidy release of some of the volumes that came from the government orders in the month of March. So the payment is getting realized in the month of April and May. So that is why you see a jump. But if you remove that aspect and see, it has moved only from 29 days to 33 days.
Sure. And if I understood you correctly, sir, we would have received part of that in the month of April?
Yes, you're right.
So when we see the 6 monthly number aside any aberration, we should go back to our long-term historical receivables?
We should be around 40, 45 days. I don't intend to take it down to 29 days.
Our next question is from the line of Murali Reddy from Anandrathi.
So our profit is INR40 crores this financial FY '23 quarter. So compared to previous year, INR22 crores, good number posted this quarter. So is there any CapEx plan? Is this like only in India, 3 manufacturing units there.
No, no, definitely, we have a CapEx plan, but that CapEx plan is not in terms of building more capacity. I think we have adequate capacity at least for the next 2 to 3 years. But -- yes. But having said that, we are doing a spend of CapEx in terms of our product development and building a global tech center. We have allocated close to INR100 crores only to develop the global tech center, which will also be equipped with a lab for electric tractors. So we have become suppliers to one of the leading electric company, which is selling tractors in the U.S. that I have said, we should be able to ramp up this year. Apart from that, we are working with at least 1 or 2 more players to get more into the electric tractor space, wherein we will develop the entire electric tractor for them and supply to them.So there is a massive investment in terms of -- I mean, comparatively from what we used to do, there is massive investment that we go into product development in the next 2 years.
Yes. My next question is, sir, in the balance sheet, the liabilities are increasing, sir. And are you doing any investment?
No. liabilities have not increased towards any investment. It has increased towards working capital that I explained to the previous caller, the certain business that gains from the government in the month of March, the collections come in April and May. So it is a temporary blip in terms of -- but we will be maintaining our receivables at about 45 days.
Okay. Then, sir, actually, are you tied up with any state government like any partnership?
No, we don't have any partnerships per se, but we work very closely with all the state governments in terms of supporting the small and marginal farmers through the schemes that the state governments propose from time to time.
Like a few state governments announce discounts, right, sir? So like...
Yes, the state governments announce subsidies every year. Yes. So we participate in those subsidy schemes.
Our next question is from the line of Vandit Dharamshi from Alpha Invesco.
Congratulations on a great set of numbers, sir. And congratulations to Mr. Nitin as well for joining our company. I just have 2 quick questions. First, when we target INR3,000 crores of revenue here by FY '26, how do we look at our leadership base moving ahead, for example, the Tier 2 or Tier 3 management, say, after the CFO, if you can just talk about that piece, sir?
Yes. So first things first. So now we are moving the era of exponential growth. So we are definitely looking at more leadership across the company. At the senior level, Nitin has joined as a CFO, and there is also Mr. Pramod Rajan, who has joined as a CTO, who has moved from Escorts Kubota and joined us. And there are a couple of peers who have joined as leaders, and we are also looking at Tire 2 and Tire 3 leadership.One of the key step company has taken is to build a talent pool. This is the first year we have gone in for recruitment at graduate engineering trainee level. We are recruiting -- we are in the process of recruiting 40 engineers at GET level, which we want to groom them for the future.
Got it, sir. And sir, one more question is we have seen recently that some of our competitors have started entering the lower horsepower segment with a decent amount of offerings. So would you want to talk about that, sir?
Yes. So if you look at the lower horsepower segment below 30 HP, totally shows an industry of about 90,000, roughly around that. And if you see, out of that 90,000, it is splitting to 2. One is a 4-wheel grade compact tractor, which is a space that we occupy, which is about 50,000, 55,000 industries. And some tier it goes to 60s, and it is around 55,000-60,000. So this year also, it has been the same. It has not grown considerably. And then there is the balance 35,000-40,000, which is utility less than 30 HP tractors, which is not necessarily a combat 4-wheel drive tractors and normal 2-wheel-drive tractor, which is less than 30 HP. So you see most of the players entering in the utility space, not in the compact 4 wheel-drive space. So -- but if you see as a whole that industrial segment below 30 HP has not grown much because the people prefer to buy niche products. I mean this comes with specific applications and the niche products, basically that meets the purpose is the 4-wheel drive compact tractor, which is used in grape farming, certain horticulture usages, applications for sprayers, wherein we have been fluctuating around 6,000 to 10,000 kind of volumes depending on year-to-year. And if you see the max, major loss has not happened in market share as well. However, the growth is not coming as the industry itself has not grown. Second point is there were certain competition who came in and launched new products. But today, I'm very happy to say that V.S.T. has all the models available, which is in comparison with any other player equally better or competitive.
Got it. Sir, if I may ask one last question, sir, can I?
Please, please.
Yes. So I just wanted to understand if you could give what could be the employee expense as the percentage to sales 3, 4 years down the line? And second is, what kind of dealership number are we looking for small farm mechanization business and tractor business by end of '24?
So see, employee percentage to sales is definitely improved. I don't have the exact number with me right now. But I can say, if you look at the employee cost, you can see in the results, it has come down from around 13% to about 7.6 odd percent. So -- and we are looking at around 7% this year. And this has happened, this entire growth from INR540-odd crores to INR1,006 crores has happened without much addition of manpower. That means the productivity or the sales per employee has definitely gone up.Now coming to the channel partners. Today, we have about 355 tractor dealers net, and out of that 71 dealers were added in the FY '23. And in the small farm mechanization segment, today, we are at about 660 dealers and about 171 dealers were added in FY '23.
Yes, sir. I'm asking for FY '24, what kind of number can you look at and central --
We are looking at around adding, like I said, around 200 numbers. So it should be around anywhere between 175 to 200 numbers, we will add again in FY '24 in small farm mechanization.
Sir, my question was regarding FY '25. As you spoke about you adding a lot more leadership pool, so how do you think that number moves to? Will it be [ 6% to 7-odd percent ]? Or do you think that should move up?
Which one, exports? I didn't hear you, properly.
So just wanted to understand, going ahead, by FY '25, '26 as it relates to INR3,000 crores of revenue, what kind of employee cost can we look at?
We should be around 6.5% to 7%.
[Operator Instructions] Our next question is from the line of [ Varun Arora ], Individual Investor.
Sir, my first question on this revenue breakup, if you can give for Q4 FY '23 on tiller and tractor and spare part revenue?
Okay. Tiller, spare parts separately revenue you want? You want the numbers or the revenue?
Revenue, sir.
Just a second, yes. So if you look at the revenue, small farm mechanization is about INR590 crores. Tractors is about INR276 crores. Distribution is about INR101 crores.
Sir, my next question is on outlook for Q1 and full year of FY '24 and '25 for the industry as well as for the company. How are you looking for outlook? If you can give any color on that?
So all the commentaries I've heard in the industry is about a single-digit, low single-digit growth. However, that is an industry perspective because the industry is sitting on a lot of channel inventory, which we are not. So we work only on retail, and we don't build channel inventory. So we are looking at aggressive growth again, like I said, in -- to the posting earlier that we are looking at growth about 20% this year as well.
Okay, sir. And how are we performing in this current -- so far? I mean, till this time in April and till this date, how we are performing?
April was a bit slow. May looks to be better and June should be even better because the season will pick up by then. And we expect to grow strongly for Q1 compared to last Q1. However, having said that, there is this news about El Nino and no rains and all that, so fingers crossed.
Okay, sir. Sir, and if you can share your views on exports, how you're looking for the sales?
Yes. So in one of the calls, I had said that we are unlikely to grow in exports in the last financial year, that is in FY '23. But we saw that quite a good demand pickup that happened towards the second half of FY '23. And I think that is continuing, and we will get to grow in large numbers in the export market. And in the long term, we are entering the larger markets where the compact tractor segment is high like the U.S. market where the less than 30 HP segment is much higher that is in India, so -- which is into hobby farming in that particular segment. So we expect over the next 5 years the growth to be very robust in the global market for us.
Okay, sir. Sir, on Monarch and Zetor, so has any one of these tractors started to contribute in our business in this quarter? Or will that start in Q2 or maybe...?
Not yet. But Q1, there is a contribution -- there will be contribution from these products, especially the Monarch supply, which is ramping up. That you will see in Q1.
Okay, sir. Sir, lastly, one more question if I may ask to you on volumes, again, sorry, power tiller, tractors, power weeders, brush cutters, if you can give for 4Q?
Yes, volumes, just a second. Volumes we shared already. It's around 38,247 pillars for power tillers. Tractor is around 6,875 in the last financial year. Power weeders, it says around 3,400. That's the kind of volumes, yes.
This is of FY '23 full year you're talking, right?
FY '23 full year, yes.
Can you give Q4 number?
Q4, power tiller is 9,282. Tractor is 1,575 -- sorry, sorry, that is the previous year. Power tiller is 12,813. Tractor is 1,963. Power weeder is 1,078.
And brush cutter, sir?
Brush cutter is very small at around 300 numbers.
Our next question is from the line of [ Mani ], Individual Investor.
Sir, I have a question regarding subsidies. I wanted to know what percentage of the current selling price of tillers to be government subsidies? And if you can just break that down into central and government -- sorry, state-related subsidies. That is question number one. And question number two, again, on subsidies. I wanted to know how it has changed in the last decade or so. Has there been stable or volatile in terms of the grant -- subsidy grants by government? And also, if you can just work out the correlation of subsidies with farmer buying patterns and also in our tiller sales. So that correlation if you can share, that will also be good.
Yes. So subsidy, it varies from state government to state government while the support from the central government is a certain package, which is given in horticulture, then SMA, there are different schemes which the central government gives. But how it is executed is purely left to the state government. So there is no comparison or there is no similarity between [Technical Difficulty] and the state government.Now some state governments like Assam for certain schemes give subsidy up to 90%. Now some other states like Karnataka, Gujarat, or Tamil Nadu gives a specific amount varying from INR40,000 to INR60,000 on a tiller. So this is what the subsidy schemes are about.Now how does -- what has changed in the last 5 years? Today, no customer waits for subsidy to come. They go ahead and buy the machine and they invariably apply for subsidies. And why this change has happened is because earlier the subsidy used to be routed through the dealers, bearing the customer who gets the subsidy and only then take the delivery from the dealer. Now since the benefit is directly given, that is the direct benefit transfer is there to the farmer, he is confident that whenever he gets, he will directly get into his account. And hence, he is not waiting for procuring the power tiller from the dealer. So this is the trend change that has happened because of which we have seen growth happening.Third part of your question, quantum of subsidy is it volatile? If you see the quantum has not changed. In fact, every year, it is going down. What is happening is when they release. Like, for example, in FY '22, the release happened October onwards. In FY '23, the release happened in February and March.
So what I was trying to understand is, if the quantum of subsidies by the government because it's obviously determined by the government and their scheme goes down, how does it decorrelate in terms of buying patterns for farmers and then that will also affect our sales? So I just wanted to look at the --
In fact, my personal view has been since direct benefit transfer is there, it doesn't affect purchase pattern at all really speaking, because he is anyway going and buying when the need is there, and he is only putting in the application to get the subsidy because it is available. And whether he gets or not is not a deciding factor for him to buy any more. So -- but the key if you see in small farm mechanization is not subsidy anymore for its growth. It is availability, awareness, accessibility, affordability and the -- finally, and the most important, if you ask me, is the ability. Ability means I'm not talking about buying ability. It is about usage ability, how convenient he is -- he is finding it easy to use the machine or not. For example, some machines are very complicated. Some multinationals have introduced products, which are very complicated. And for a small marginal farmer, using that become very difficult. So from that perspective, whichever machine is easy to use and convenient for him to operate, where the fatigue is lower, that sale is increasing, and that is why our sale is also increasing. So the quantum of subsidies have not gone up.
Yes, sorry. One part of the question you skipped. I would like to understand what percentage -- on an average, what percentage of the selling price is currently the subsidy amount? He might get it later. I understand the --
I don't know. I told you, it is a state government to state government, somewhere it is INR40,000, somewhere it is INR50,000, another state, it is INR60,000. In Assam, there is tribal scheme where 90% subsidy is given. So there is no guarantee. This business, if you ask me, is not influenced by subsidy. The only thing that happens with subsidy today is capital accrual will happen in the hands of the farmer because he's getting a direct benefit transfer, and he might use it in very different ways than buying a power tiller, because he has already bought the power tiller.
Our next question is from the line of Arjun Khanna from Kotak Mahindra Asset Management.
Sir, I'm just referring to the release we had on 22nd March, where we talked about the power tiller industry growing from 60,000 to 100,000 by the year 2025. Just wanted to understand why should the power tiller industry suddenly just move up more than 50% over the next 2 years? Just wanted your thoughts on that, sir?
See, there are 10 crore families which are involved in farming in the small and marginal segment, which is less than 2 hectares of farms. So that is a major, major segment. And we have been able to grow our business from 19,000 to close to 38,000 plus in the last 3 years. We expect this -- our own growth to happen in a phenomenal manner in the next 3 years, which will drive the growth of the industry to 100,000.
Sure. Because if I look at our numbers way back even FY '14, almost 10 years back, we should do 28,000 units, which is now 38,000 after almost 10 years. So I just want to --
Those days it used to be influenced by subsidy -- I mean I explained to the previous caller. Earlier, the benefit was given to the dealer and the quantum of subsidy used to decide how many power tillers used to sell. Now that is not there anymore. It is direct benefit transfer. So the need is creating the purchase of the power tiller. And then every single farmer applies for subsidy. It is not that I'm saying nobody is applying. Everybody -- see, something is available, I will also apply, right? We are seeing every farmer is applying. But how many are getting, the quantum has not changed. It has not increased.
Sure, sure. And sir, just to understand, in terms of the other segments, for compact tractors, while there would be some farmer subsidy. For utility tractors, is there a subsidy with our Zetor brand? And for power weeders, is there a subsidy?
Yes, there is subsidy in power weeder, and there is subsidy in tractors also in states. Now in Zetor brand, we will launch, we'll have to go through the process of investing for subsidy.
Our next question is from Devanshu Sampat from [ Yes Securities ].
Yes. Two questions. So just to basically talk about for the -- in your presentation, we can see right that obviously, the distribution has been very strong in the South and not so much in the North. Now earlier, for the North market, you pretty much said that we'll take a state-by-state approach and test the market and grow it slowly for the higher horsepower products, right? But now if we look at the -- since we have a different strategy of, say small farming mechanization products versus only selling tillers early on them. We have more in the distribution, everything -- so what is north -- can north market we can tap for this SFM range? Or is there something because it seems like it could be a pretty large space that we can tap. So your thoughts on this?
No, I agree with you totally. North is a untapped market for us. We are engaging. That is why we continue to grow our dealer network. SFM, that is a small farm mechanization business, as we call it today is mostly focused on the east, south and the west. The north is a very big opportunity. So today, we have about 660 dealers. I think in the next 2 to 3 years, our dealership network will be more than 1,000 dealers in the entire country. Much of it will be in the North.
Incrementally?
Yes.
Okay. And coming to -- so just to touch upon this, as you mentioned also earlier that the working capital that we were planning to keep -- the receivables a bit tight earlier, you said now that we have -- it seems that you've been compared to -- roasting it a bit and make it around 40, 45 days. So what has changed? If you can just give your thoughts on that?
I'll tell you, see, 29 days when it happened in FY '22, what happens is the institutional orders or some of the cash flow which used to come in, the subsidiary release happened sometime in November, December -- or December, January. So what happens is that entire money gets rotated. And then it comes to our collection. So by March, all the collections have come in. And that is why the reflection of 29 days were there in FY '22. However, what happened in FY '24 is that bulk of whatever quantum of subsidy that released -- by the way, the quantum has not changed. But bulk of what was released came in the month of -- after 15th of February. So because of the rotation did not happen, that is why I explained to one of the previous callers, if you net it off, you will see that the receivables has not moved beyond 33 days. So -- and that collection that was pending is coming in, in April and May. So I think I've fully explained this to you.
So one question I have is around your tractor business, we did roughly around 7,000 this year. Can you share what was the export number for FY '23?
Roughly around 1,400.
Okay. And incrementally, can you give a sense on what is it that we are looking at in terms of export and domestic, if we are looking at growth from here on, say? And if I'm not wrong, you mentioned you're looking at tractor 20% growth only for the tractor business this year?
Yes.
Okay. So how are we looking at, say, the extra 1,500 tractors?
Mostly, it will come from domestic and the export also should maintain the growth rate. Exports, we are entering into 2, 3 more countries this year. One is U.K., another one is Mexico. So we are looking at 2, 3 countries as a focus for this year. That should get us the growth of that 20% plus that we are targeting.
Got it. Got it. And sir, last 2 questions. Any update on the acquisition that you've been talking about for a while now so?
No, we are looking at various opportunities. There are opportunities that are coming up. Some of them we have dropped. Some of them we have -- it is still in progress. Too early to say on that.
Okay. And any update on the Hubert France manufacturing business?
Hubert, work is still going on. There are talks happening, nothing concluded yet. Things are progressing.
We've been talking about this for a while. So just any -- can you give a sense on what exactly --
Yes, it is definitely, it is a good opportunity. So we are working on it.
Ladies and gentlemen, the last question for question-and-answer session is from the line of Vandit Dharamshi from Alpha Invesco.
I just wanted to understand what would be your R&D run rate or new product development run rate over the next 2, 3 years?
What exactly you mean by run rate, number of products or the investment you're talking?
Investment, sir.
Yes. So investment, I told you it is upwards of INR50 crores this year, and if you continue like that for some time for R&D and product development is on.
Okay. And sir, if you could just quantify how much -- what is the size of our Bangalore land parcel?
I don't have -- it's roughly around 20 acres.
Okay, sir. And sir, last time on the call, you had mentioned that I think we're planning to enter the Madhya Pradesh and Rajasthan market and North to begin with. So is there any progress or are we waiting for the launch?
No, we have launched a few dealerships as pilots, and we are nurturing them towards doing mega numbers when the V.S.T. Zetor products are launched.
Okay, sir. And if you could just quantify what would be the power tiller market as of year-ending?
Roughly around 60,000. It should be around 55,000 to 60,000. The final figures are not out yet from all the manufacturers. Unlike CMA, there is no association, so that final figure is not come. Roughly around between 55,000 to 60,000.
Okay. So that means that we must have gained massive market share?
Yes, we have gained market share. We have to drive the growth in this industry. And that is what we -- this I shared with all of it before as well.
That was the last question for our question-and-answer session today. I now hand the conference over to the management for closing remarks.
Thank you so much for your participation. Today, it was a short notice immediately after the Board meeting we had to upload the presentation. There were some delay. Apologies for that. Look forward to meeting all of you in the next quarter. Thank you so much.
Thank you. On behalf of Batlivala and Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.