Ladies and gentlemen, good day, and welcome to the Q3 FY 2022 Earnings Conference call of Sandhar Technologies Limited, hosted by Dolat Capital. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Jain from Dolat Capital. Thank you, and over to you, sir. Thank you, Steven. Good morning, everyone. On behalf of Dolat Capital, I welcome you all on the third quarter conference call of Sandhar Technologies. From the management side, we have with us Mr. Jayant Davar and Mr. Yashpal Jain, CFO. Now I will hand over the call to Mr. Jayant Davar for his opening remarks, after which we can have the question and answer session. Over to you, Mr. Jayant Davar. Thank you, Abhishek, and thank you, Steven, for this opportunity to talk to you about the industry, the sector, and of course, Sandhar. While numbers, then I'm gonna leave all of those to Yashpal Ji to explain. I'm happy to begin by once again welcoming you all, wishing you a very, very happy New Year, and also f rom a perspective of Sandhar, just to give you a broad slide that we have in terms of nine-month comparison over last year, these nine months have been remarkably better despite this being one of the most challenging quarters that we have seen in history. The commodity prices have gone out of the window and in some cases gone up by almost 30%- 40%. While the current quarter that we are in is stabilizing, the impact of the growing commodity prices or the rising commodity prices have had an effect on every company in the sector, inside and outside. In the nine months, we've had two difficult things that have also happened. One is the chip shortage, as you're all aware of, which has impacted the output of all four-wheelers. Then in terms of two-wheelers, at the entry-level models, there has been a slump in demand. Putting these two things together, I think it has been a challenging quarter, and our numbers, therefore, for the last three months have not been what we had expected out of the beginning of the year. The silver lining, of course, is that while the entire industry has gone down, we at Sandhar have managed not only to outbeat the industry but show positive results. I'm gonna leave it there and then you can start your question and answer session, and I will ask Yashpal Ji to kind of take on questions where numbers are concerned. I'll happily supplement it with whatever any future-looking statements are. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhishek Gaoshinde from Sunidhi Securities. Please go ahead. Thank you, sir, for the opportunity. First of all, if you can share your outlook for quarter four or first half of the next financial year. Well, Abhishek, I'm not allowed to give you numbers for the quarter. All I can tell you is that this quarter should be better on account of two or three things. One, I understand the chip shortage situation is improving, and therefore, we should see some uptick there in terms of numbers of vehicles being sold. You're aware that so far we've lost almost 500,000 cars in terms of production during the year. I do believe that most of the car companies now are saying that things are getting back to a level which is better than what it was in the last quarter, and therefore, one should be able to see better numbers there. That's one. On the two-wheeler front, again, I understand from FADA that while sales have been low, the footfalls have started to happen in the showrooms. That again is a positive thing. The third positive lined up stuff right now is that, like I said, the commodity prices have started to kind of stabilize. You are aware that for companies like us, when the commodity prices go up and keep going up, our impact it lasts for at least three months and even longer if they continue to grow. After stabilization, the compensation that we get from the customers bring us onto a normal platform. We expect that to happen. The losses that you get or the impact that you have of rising the commodity prices is taken off the table. Those are three statements that I can make with whatever I can see right now. Obviously, I cannot talk to you about the entire quarter. Don't want to open the astrologer's ball here. That's where it is. These are helpful. In terms of numbers, we can't give you any forward-looking statements there. No, sir. These are helpful. These are directional things are helpful. Second thing, sir, you have applied for the PLI scheme. If you can elaborate that, what kind of a products or categories we are targeting under this PLI scheme, sir? Well, we are looking at several. I'm happy to tell you that in the two-wheeler segment, for example, we are looking at a lot of electronics. We are also looking at batteries and BMS's. We are looking at battery chargers. We are looking at motor controllers. We are looking at DC/DC converters. For the four-wheeler segment, some of our technology partners have already started doing stuff internationally, which we brought to India, including the rear parking sensors, cameras, security systems, lane departure warning systems, heads-up display, radars and heat sensors, different kind of sensors, and the stuff that I mentioned earlier. There is a lot in the kitty right now. We're still trying to consolidate and build a demand. A lot of it is mandated. A lot of it will become mandated by the government. We should be in position to be able to take advantage. Okay. Just one last question with Mr. Jain. Sir, you are looking to apply for the PLI scheme. Just based on a directionally, if you can give it- We already applied for it. No, no. My question is that based on your assessment, how the profitability or return of investment would be different if you have invested on the same project without PLI scheme? Just directionally, your call. I'm not looking for a specific number. Directionally, how the things would be different with the PLI scheme, sir? You know, Abhishek, it's very difficult to talk commercials right now. All I can tell you is that the PLI scheme in itself has a built-in module of anywhere between 4%-11%, depending on the product, depending on the investment, and depending on how quickly you can do it over the next five years. While there will be an investment, anything, if you were to say like to like if I was to do it, we have the option, depending again on the amount of input cost, on the amount of value addition, on the amount of distance to be traveled, anywhere between 4%-11%. Okay, sir. Thank you, sir. Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The next question is from the line of Sanket Baheti from GeeCee Ventures. Please go ahead. Yeah. Thank you, sir, for the opportunity. Couple of questions. How much CapEx you have done in nine months, and what is the total CapEx you will be doing in this financial year? Yashpal, may I please. Yes. Yes, I will respond to this. Right as of now, in nine months, we have done a CapEx of close to INR 134 crores, sir. Okay. For the fourth? For the fourth quarter, we are again expecting to go something around INR 50 crores or so, sir. Annual CapEx, we are planning around INR 184 Crores in this current financial year. Sir, next year? Next year, well, as you know, we are at the, I mean, commissioning some new projects for our specific clients, sir. Next year, apart from our regular CapEx, we have a plan to go for another CapEx of close to INR 100 crores, sir. I think if that's okay, INR 80 crore of the maintenance CapEx and INR 100 crore will be this combined? Yeah. Maintenance CapEx is a need-based CapEx. It's not a ballpark, I mean, the thumb rule that equal to depreciation, we have to forcefully incur the CapEx. It depends, but yes, INR 100 crores we will be spending on our expansion, sir, as of now. This figure will keep on changing based on the businesses that we are securing from the customers, sir. Okay, sir. Sir, in the sheet metal. Let me just supplement that. We are currently in this particular year, the idea was to commission five new plants. You are aware that the Nalagarh plant was inaugurated. This was done in the month of December, and in the month of January, we've started commercial production. We have now facilities coming up in Halol, in Hosur- Tamil Nadu, in Mysore in Karnataka, and then an international unit in Romania. If you were to look at what the outflows, net outflows, you know, there is a total CapEx and there is a net flow out as well. This is taken after consideration of the incentives or subsidies that have been provided by the state or the federal government. The total CapEx we look at for the plants here in India, Yashpal Ji, do you want to give a number? Also for the total net outflows for all these five plants. Yeah, definitely. Yeah. I'll go ahead, sir. 4 plants we are building up in India. The gross capacity. Five including the one that we've done so t hat will give you where it's coming from. Yeah. 291 is a CapEx, gross CapEx that we're doing in India. 159 crores. I mean, it's the estimated CapEx. 159 for our Romania plant. This is the gross CapEx there that we have planned. If we take out the subsidies and et cetera, then our net CapEx remains to be, it will be something around INR 66, INR 86, INR 90, INR 115 crores if we take out, this will be roughly around INR 200 crore worth of CapEx, sir, out of INR 190 crore is the figure as a net CapEx after we consider the various benefits and subsidies, sir. That's one. The other thing that you have to keep in mind is that all these plants are fully booked from day one. When they start, they go into full-throated production. We don't have a gradual increase of production that we are looking at, which means that a large part of the revenue will appear against these investments in the next financial year itself. Okay. Sir, by when these plants are expected to start? Well, we are looking, like I said, Nalagarh has already started. It's building up and ramping up. We have Halol, which should also go into production in this financial year itself. Hosur and Tamil Nadu also we are targeting the month of March. In Mysore, it will take us another three months or so we're looking at probably June. Romania again is something where we're looking at June 2022. Oh, okay. What will be the total revenue from this? Well, again, we are building a capacity to overall have a revenue from these 5 plants to the tune of about INR 780-odd crore. Okay. Most of it will come in FY 2023 itself, starting from FY 2023. Well, depending on when it starts, and obviously it takes a couple of months to stabilize. Otherwise the capacities are fully booked. Okay. Great, sir. Sir, in terms of sheet metal components, so I think we have reached a revenue of around INR 116 crores during the quarter. All the new plants will be catering to the sheet metal components if I'm right? Is it right? No, not all. Yes, some of them are sheet metal in India, but Romania continues to be our growth and expansion of high precision aluminum castings. Okay. Sir, last thing. What is the gross debt and net debt at the end of the quarter, please? Yeah. Our gross debt stands at INR 356 crores as at the December end. Our gross debt, sorry, net debt is around INR 350 crores, sir. Okay. Thank you, sir. Thank you so much. Yeah. Thank you. The next question is from the line of Navneet Bhaiya, an individual investor. Please go ahead. Hi, sir. My question is regarding the targeted new products that you've listed in your presentation for both the two-wheeler and the four-wheeler segments. Do we have tie-ups for these with OEM already? Where are we getting the technology from for most of these products? Come again. I didn't get that question. Once again. These products that we are developing, the targeted new products for the two-wheeler and the four-wheeler segment, things like battery charger, keyless solutions, the standard products that we've listed in our presentation. Do we already have tie-ups for these with the original equipment manufacturers? Once we develop it, how does it exactly work? Does it work on a pool basis or do we give it- Well, it works two ways. One is co-creation. Co-creation, it depends on the model, depends on the OEM. I can give you a couple of examples which will probably exemplify what I'm saying. You brought up, let's say, keyless entry. Right. Now for keyless entry, which is the new or the futuristic way of locks. Security for vehicles, there are different elements to it. If you take two-wheelers themselves, there are different levels. Right now the locks that we provide cost anywhere between INR 300-INR 500 odd rupees. Going forward, as keyless entry comes in, the minimum level would be INR 1,600, and the maximum level could be INR 8,000. Now, this obviously means that the features that get involved in this bring in different technologies. You'd be happy to know that your company has one, our own R&D, which has developed the one which is the cheapest level of the keyless entry locks. We have Whetron, which is, let's say the worldwide supplier for Suzuki and Honda, where the cost is about INR 3,500. Then we also have technology partners of Honda Lock, who've been our partners now for 30 years, where the difference could be between INR 5,000-INR 8,000, but they cover up the entire end of the platform that runs for the next 3 generations. that should give you, we not only have one, we have almost three backups for the kind of technologies that we are looking to offer. Depending, like I said, on the model of the OEM, depending on the features required, we have adequate backing of the right kind of technology partners to take us through this. Okay. If I understand it correctly, any of these products that we are developing, you know, we have some 10, 15 or maybe 20 odd products listed. Do we already have a tie-up with the OE once we developed it to supply to that respective model or? Yes. Whatever we are developing is being developed. You see, there are certain elements. I'll break this up into two. There are some components where we are current suppliers. You know, locks for example, we are the largest lock producing company. Now, obviously, all the OEMs that are looking for anything futuristic in terms of technology for the next three generations, four generations of their vehicles co-create it with us. Then there are items which we currently don't do, you know, especially in the field of EVs and so on and so forth. Right. Because the customers do not know that we do them, and the customers do not themselves also have the technology because these are new ideas, but the market is kind of developing. They are reaching out to people who have technology tie-ups, and we have those technology tie-ups, like I mentioned, with several of our joint ventures and technology partners. We are inviting bids. People are coming in. We are now at a stage where we've started talking to them about technologies, features, availabilities that they're looking for, e-commercials and so on and so forth. That's where the scenarios are. The traction seems to be building on the components that I mentioned earlier. Okay. Two related questions to these. New products that we develop, not upgradation, you know, like the locks that you mentioned, new products that we're building on, what proportion of our turnover, you know, in, let's say, a medium term could these contribute? I know cabins is something that we did a few years back, but just wanted your sense on that. How long does it take to, you know, ramp up a new product that we are building altogether? It depends on the changeover that the OEM looks at. You know, I had brought you an example of, let's say, the keyless entry locks. Now, these obviously bring a huge amount of premiumization to the vehicles. So like I said, INR 400 rupee locks goes to a minimum of INR 1,600. There has to be affordability that the OEM feels, which he can afford to put in as inputs into his vehicle, and there has to be a market for it. Now, everybody knows that there is an upgraded component available, the technology is available, so they will gradually build it up starting from their high models and then bringing it down to all their models. So it does take time, but it's very difficult for me to say how long that can take. There are some things which are adopted and adapted very quickly. There are some that takes a few years and more. Okay. I understand. My second question was in terms of traction with new OEs. How does that work and how long does it take to, you know, build up a new partner, a new customer? Build up a new customer? Yeah, a new OEM, basically. Yeah. We have Hero, we have TVS, we have Tata Motors, Honda? At one point of time, we used to be very happy when we used to say, well, we used to have a mandate or a KRA for the company saying that we should add one customer a year. That has not changed, if you ask me, if you're looking at rounded established customers. In current times, you're aware there are 64 new EV suppliers that have come into the platform. Absolutely. Now, if I consider them as our customers and adding and saying that we've added 20 or 30 more, that doesn't make sense. While we are adding, but the size of the customer and the size of business that we can do per customer is very important. EVs is still nascent game, and therefore it is difficult for me to say which ones will work out, which ones will grow their volumes, which ones will become substantial. Obviously we want to keep a foot in the door, and therefore we are entertaining most of them. Going forward, we will have to say which ones meet the criteria that works for us. We typically like to have a customer who's INR 100 crore and more of business for us. Right now there are several new ones which are much smaller. On an overall platform, we like to believe that our KRA of getting a new customer that offers us a minimum of INR 100 crore of revenue on an annual basis is still very strong. I understand. Okay. Fair enough. Thank you so much. I'll join back with you. Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and one. The next question is from the line of Abhishek Jain from Dolat Capital. Please go ahead. Good morning, sir. First of all, congrats for decent set of numbers in a challenging quarter. Sir, my question is related with the Aluminum Die Casting business, which we have seen an increasing numbers in this quarter, and the quarterly run rate has gone up to INR 1.7 billion if we add foreign subsidiary number. Can we assume that this number will be sustainable in coming quarter? Will be? Sustainable in coming quarter. Absolutely. I see no reason why. You know that we made investments. In fact, I would be disappointed if you only say sustainable. It should be a growing number. That's what we are anticipating, hoping. We've been growing even in the quarters where our output of the OEMs and the overall industry has been low. We managed to not just keep our head above water, we've grown, and we will continue to grow. Sir, the company got a lot of the additional business from the HMSI, TVS and Tata for aluminum casting, especially for the tools and molds. What is the quantum of orders and how much incremental revenue we'll get in there for 2023? Well, again, I cannot talk of futuristic numbers, Abhishek. I'm sorry. Suffice to say that, like I said, HMSI was a customer that we added in the last year. They have given us several components. Some of them have been productionized, others are under development. This is an ongoing business for us. Like I said, every element of any new customer that we want onto our platform should be about INR 100 crore each. So therefore, we are looking at those targets going forward, whether it is for aluminum, whether it is for the new lock sets business that we've got now from HMSI. I'm sure you're aware, whether it's the business of sheet metal that we've got from HMSI, that again, I think I made aware in our last investor meeting. HMSI is gonna grow to a large customer for us going forward. That's what we are hoping. That's what we are developing it for. That's where investments are being made. That's why we are engaging with them on a regular basis. Sir, this quarter we have seen sharp revenue growth in the foreign subsidiaries, but margin has seen a sharp contraction. Can you throw some light on it? What is the reason of the margin contraction in the foreign subsidiaries, which is used to be at the higher side, in earlier quarter? Is that right? I don't think so. I don't see a margin contraction. Overseas subsidiaries have performed very well, Abhishek. Our overseas subsidiaries have done very well, yeah. Yeah. Overseas have done well. Can you give numbers of the overseas subsidiaries like the revenue and the margin in this quarter? The numbers that I have in front of me, Yashpal Ji, you have them individually. Yeah, I have them individually. I can give them. Sure. Let me do it. Okay, sir. Sir, my next question is related with the cabin and fabrication business. You have won several new business in India and overseas. Demand for excavators is quite strong. Just wanted to know what is the outlook for the both revenue and the margin for the cabin and fabrications business. Yeah, [Foreign language], because of the fact that I am not supposed to talk about it all I can tell you is that I think last month was our highest level month in terms of output and that is an area which is going extremely strong. Add to it what has been announced in the budget you have seen the focus on infrastructure and if that is going to be the case I think that is one area of pressure for us happy pressure though in terms of growing sales and we see that not abating in the near future. So I think in terms of our run rate we are already at a run rate of INR 40-INR 50 crores a month in that business and I think things will only improve thereon. Okay, sir. Sir, my last question related with this, JV's performance. Can you throw some light on the JV's performance, each and every one? Well, JV's performance, you know, this year again, one quarter, the first quarter was not good with the COVID scenarios. A lot of our joint ventures are with Southeast Asian countries, including Korea and so on. There were certain elements in the JVs which were supposed to be out of India only for export. However, because of no travel which was allowed during this period, some of the delays came in the introduction of those model outputs to sales in Europe and America and also back to Korea. That has put a little bit of delay, and obviously because these are delicate companies, as being new companies, any pressure or stoppage of sales for a period of time also impacts their bottom line. However, I'm happy to say that we managed to keep things under check. The sales has now begun to grow, and Yashpal Ji will give you the numbers. Yes, sure. Thank you. The next question is from the line of Anish Moonka from JST Investments. Please go ahead. Thank you. Jayant, sir, while no one knows how the future will evolve due to the inherent cyclicality of our industry, still, as much as we understand, Sandhar is targeting a 30% growth over the next 3-4 years. I have two questions related to it. Firstly, what part of the targets is dependent on the increasing market share in the auto ancillary industry, whether be it due to new products or just increasing market share in old products? And what part is dependent on a possible auto upcycle in the upcoming year? The second part is on the capacity that we have, where we have given a CapEx guidance of just INR 100-INR 125 crores yearly, basically equal to our depreciation. Given our past asset turnover of just 2.5-3x, that just adds a revenue of INR 300 crores. Are the current capacities enough to support this 30% growth target? Thank you. We're on a monthly basis. Our capacity utilization at this point of time, if I was to aggregate it among different components, among different technologies, I think should be between 60%-65%. That's point one. Point two is that you heard that we are setting up these 5 new projects. Am I audible? Yes, sir. Okay. We are setting up these five new projects. In those five projects, Mr. Yashpal just told you that the total investment that's been anticipated is somewhere to the tune of about INR 350-odd crores. Right, sir. Now, obviously, you can do the math in terms of asset turns. That's something that we are looking to do starting from the next financial year itself. Add to that, you asked about market share. We are not looking at enhanced market share. We are not looking at, because of the unpredictability right now, we are not looking at the auto sector to grow on a dramatic term. What we are doing is focus on technology upgradation and premiumization. also to get newer businesses that we are not doing now, which is our call for wallet share increase. Which means that our from the same customers as I have today, I am trying to get new kinds of components. I'm starting from level zero. I'm not saying my share is 60% and I'm growing it from 60% to 65%. I am saying I'm at zero today, and whatever I'm getting now will take me up to a second source, third source or whatever, but it will give me a share of these new businesses going forward. I don't know if I've been able to answer your question. Yes, sir. Good enough, sir. My second question entails the role of R&D and what are we doing at Sandhar to be ready with the next leg of products that our customers will ask for in the next 5-7 years, effectively being ahead of the curve, such that we not only grow in terms of revenue, but also through a much higher value add compared to our competitors, as you already mentioned in the locks. Could you please talk more about these efforts? Thank you. I mentioned locks, and you saw that premiumization and value addition, as you put it, goes up several folds and several times over. This is not just in the case of locks, it's in almost all the vehicle components that we make. Whether it is Aluminum Die Casting, where we are adding on certain things now that from aluminum we are also going into magnesium castings, which are of a different premiumization, and they give us a much higher value addition. We are going in from regular machined components onto machineless components, which obviously give us a much higher value addition. This is in the commodity space. If you look at spaces which are proprietary, we are moving from one level of sensors to now cameras, which then bring in a much higher level of premiumization and value addition. All across the board, all the areas that we are functional in today, we are looking at this premiumization. Even in the area of sheet metal components, where we used to make bland sheet metal components, we are now moving into a different category of complete assemblies and subassemblies, which are then being delivered not as a component, but as a tier one product. Whether it's muffler bodies complete, whether it's frames that are complete, we are moving on from making parts to making proprietary items. You saw that move when we moved from components onto making cabins, for example. Every element of our componentization is being premiumized. Every element. In terms of your R&D, I'm happy to announce that this year, if I'm not mistaken, we have, I think almost, 12-15 new patents that were targeted that we've already got, and that work goes on unabated. The advantage of getting Indian patents and doing it yourself is that you don't have to pay any royalties anywhere, you don't have to tie up with any, technology partners overseas. Whatever you build out of here is done at Indian cost. That is extremely important in the area of manufacturing in India. Noted, sir. Just a last question from my end. From a capital allocation perspective, would like to know your thought on a buyback, given the valuations at which Sandhar is trading in the market. Thank you. Well, that's a difficult question for me to answer that. I would love to buy it back if we want to, but I think we have responsibilities to our shareholders. In fact, from what I understand, the number of shares available in the market in terms of liquid shares is not very much. We will be talking to people how the liquidity of shares in the market can grow, and what can be brought onto the table to make our investors happier as they go forward. Definitely, sir. I think that could lead to a much better price recovery. I'll join the queue. I will rejoin the queue. Thanks for the elaborate answers. Thank you. Thank you. Thank you. A reminder to the participants, anyone who wishes to ask a question, may press star and one at this time. The next question is a follow-up from the line of Abhishek Jain from Dolat Capital. Please go ahead. Sir, how much increase in content per vehicle in the sheet metal, for setting up new plants and addition of the new plants? Well, the new plants obviously give us a huge upside. Yashpal Ji, you might have the numbers as to how, let's say, our content per vehicle, even if you look at new plants that are being set up, sheet metal, for example, what is our content going up from where to where? Just a moment, sir. I'll just give you. Sheet metals are like our component as of now. There has been a threefold increase in our component size, I mean, the sheet metal. It has gone near to 1,500 content per vehicle as of now in sheet metal, sir, and going up, I mean, with the products being made by the customer. To answer that question for us, as capacity builds up, let me say, in terms of capacity, we will go up to a capacity that can generate about INR 1,000 crore of revenue. Right. From the current level of what we were doing, which was close to less than INR 200, I assume. Okay, sir. Next question is related with the JV's performance AMKIN, which was supplying the helmets to most of the OEMs, the company won several new orders from the OEMs and also received some orders from the export. What is the outlook for this business, and when is it going to be profitable? Well, we are now fingers crossed and happy to state that we feel confident that this will no longer be loss-making going forward in the next financial year. We have, like I said, in the past, we were very happy to report that we now have clearance from almost all the OEM, the only company to do so, and we've also built on a lot of export potential models that we've tied up with. At this point of time, as we sit, those are being assembled, and those should start shipping soon. We are looking at a severalfold increase in numbers over the next year. What about another JV of Jinyoung Electromechanics, which is supplying AV and panel switches. Losses was wide earlier. What is the current status? Well, if you want me to run all of them, I can. You spoke about the AVN panel business, which is Jinyoung Sandhar, where losses have been brought down substantially already with consolidation. It was a new unit, and it got losses because we could not get technology partners to be here. We are very hopeful that those matters are now behind us, and we should be in volume production on a regular basis where that is concerned. In terms of Winnercom, I think we are already now in profitability. If I'm not mistaken, Yashpal Ji, is that correct? Yes, sir. It's profitable. That is profitable. The one thing that will be a big launch for us will be Kwangsung Corporation. That has started manufacturing and started shipments in the month of January. These will be ramped up as we go forward. Again, you will see substantial numbers coming out of the exports that we do from this unit. This is sun visors and BOT films. BOT films have been accepted very well, with the customers in India, and we expect those numbers to grow, and so will the sun visors. Okay, sir. Thank you, sir. Sir, my last question is related with the EVs. What all products you are going to add in your portfolio? How much revenue currently you are receiving from the EV segment, and what is your target? Right now, the EV segment, I'll give you the revenue very quickly. I think, Yashpal Ji, you will have that revenue. Yes, we are looking. EV revenue is still very small. It is very, very insignificant. Although having said that, we've tied up with almost more than 50% of the EV makers in the country. You're aware that there are huge numbers. We've tied up with many, many, many of them that seem stable. Some of them are extremely small. Some of them are producing 10 numbers a month, which obviously has no meaning for us. Yashpal Ji, what has been our revenue? Sir, it is INR 38 crores for 9 months from EV, sir. There you have the number, INR 38 crore from nine months. If you look at it's less than 5% of our revenue. [audio distortion] Like, as the EV offtake starts and the EV starts, our revenue will be going up. Certainly the reason is that, like, quarter two was lesser due to chip shortages, the business were affected in overseas business also. That's the reason because we are supplying for four-wheelers as well as two-wheelers in EV segment, sir. What all products you are? Yeah. Thank you. There are two sets of products, Abhishek. One is the product which is our existing products based on commodities which go into EV vehicles, and then there are electronics that are specific to electric vehicles. Going forward, the way we are looking at is that some of the things that I spoke about, which is, let's say, the BLDC motors which will be specific, controllers which will be specific. These will be specifically for only electric vehicles. You know, let me give you an example. We can say we make a sheet metal frame for a motorcycle. That can go in a regular motorcycle, and that can go in an electric vehicle. Some things like a motor controller or like a battery pack or like a battery management system will only go into an electric vehicle or a hybrid vehicle as such. We're working on both items. The regular items obviously grow from our regular investments that are already there, but some of the new ones will go in specifically for the electric vehicles, where new technologies are being developed and are being fine-tuned. Thanks, sir. That's all from my side. Thank you. The next question is from the line of Shashank Kanodia from ICICI Securities. Please go ahead. Good morning, sir. Just to get a sense of the, you know, return to double-digit margin profile with the kind of contractual arrangement that you have with the OEMs as well as stabilized raw material prices, how soon can we get back to a double-digit margin profile, and what kind of a guidance will be for next two years? Shashank, you know, double-digit is a better double-digit is what you're looking at. Double-digit should not be difficult to reach. There is an aberration in the double-digit thing for now on account of commodity. Like I said, if prices keep going up of the commodity, then the compensation that we get from the customers comes in only three months later. Therefore, we've had impact. Yashpal, what has been our impact on raw materials? In terms of the EBITDA hit? Yes, uncompensated ones. Uncompensated. Right, sir. Yes, sir. Thank you. It's INR 12 crore, sir. Huh? It is INR 12 crore, sir. It is INR 12 crore. Now, if you were to add INR 12 crore, Shashank, we are already in double digits, aren't we? I don't think double digits is an issue at all. Our stabilized things that we work for, that we should be working at, optimized EBITDA margins of anywhere between 12.5%-13.5%. Anything lower than that is typically on account of stuff that happens, commodity prices. We get compensated. That's the number that we kind of target at. Sir, this INR 12 crore should come back in full itself, right? The uncompensated raw material. Yes, it should come back. There is some long-term effect when there is commodity price increase, because in absolute numbers you get that compensation back. As a percentage of the output, there is a little bit of slip up that happens unless and until the model changes. When model changes, then fresh costings are done. In any case, double digits is the minimum that we should be looking at, is our target. Okay. Sir, for next year, maybe 12% is something that we should be able to do, right? Again, I cannot talk of numbers. Again, astrology balls I can't open. I don't know if commodity [Foreign language] Secondly, sir, just if you can throw some more light about our penetration with top EV OEMs domestically. Like say, for example, Hero Electric, Okinawa, Ather Energy, Ola Electric. So how are we penetrating with these kind of an OEMs, and what products do we specialize with? We are in either supplying or actively developing with all the names that you heard of in the Indian context. I'll have to leave it there for the moment with that statement. Fine, sir. Secondly, the Hero is going to be their own EV product. Since we have a stronghold in Hero MotoCorp, we'll have a substantial share of revenue or different segment from them, right? Yes. As and when we appear and as and when their volumes go up, you will be able to see it in your balance sheet. Okay. Sir, lastly, on the debt profile, how do we see the debt visibility over next two years? Well, Shashank, I will respond to this. Presently, like we have a debt size of INR 356 crore. As you know, we are building five new plants, right? We are planning something around INR 150 crores of additional capacity. Again, next year we'll be having an internal cash surplus of close to INR 250 crores plus. Largely, I don't see that going much beyond our level of another INR 100 crores, even if we have to meet our like maintenance surplus and further expansions. We'll be restricting it. Whatever cash generation we will be generating from the businesses, that we'll be using to reduce our debt. Okay. Since the next year it will peak out at INR 250 odd crores, and then thereafter you plan to reduce it, right? Yeah, exactly. Because what happens is that we are doing CapEx in a staggered manner. It's not that we are building all the capacities together. One is going live, it's started generating revenue. Similarly, another one is being built up. In a phased manner, all these five plants will be coming up. Whatever the cash addition is there, we'll be using it for further expansion purposes. That's how we plan to do it. Sure, sir. Thank you so much, and wish you all the best. Thank you. Thank you. Thank you. The next question is from the line of Nikhil Kale from Axis Capital. Please go ahead. Yeah, thanks for taking my question. My question was more on the strategy. Sir, in the presentation you talked about multiple new products that you're kind of working on. Just wanted to understand, I mean, how are we looking at it? Because we already have a strong position in some of the locking side of mirrors. Now, when we are getting into so many different products, how do you kind of ensure that we have the kind of correct focus so that we can scale up and become a significant player in at least a few of these components? Or are we spreading ourselves too thin? Nikhil, very quickly, very good question. Thank you for joining the call today. You know, a lot of components that you talk about, that we have spoken about fall in the same genre of componentry. You know, so if we talk of sensors, for example, the base level of the sensor is the same. The applications are different. So if you look at companies that do sensors, they do all kind of sensors. So I might be able to say, well, you know what? We do parking sensor, we'll do an ambient air pressure sensor, we'll do a TPMS, and so on and so forth. They all fall within the same gamut. So overall, in terms of our context of technology, they fall within the same range. Similarly, some of the electronics fall in the same range, and you know that we've been working on electronics now for the past 5-7 years. Whether you look at USB chargers or you look at foldable keys or you look at ESLs, all of them fall in the same category. Categorization is not different. It is just that it is a new block, and that new block is not of 70 technologies. It is probably only 2 or 3 technologies that every player has to claim. You also have to understand the air pressure sensors or any other sensors for that matter in themselves do not have too much a value. You need to combine and give it as a block to an OEM. An OEM will not buy different kind of sensors from different kind of partners. They would want to concentrate on sensor technology only with one or at best two suppliers. I don't know if that answers your question. Yeah, it does. Just taking that point forward, sir. What I am thinking is, see, right now in an IC you have multiple products and multiple suppliers that kind of position themselves across each of these products. Now, as we gradually move towards EV, specifically on the two-wheeler side, the addressable number of products is coming down, right? What we are seeing is that incrementally, most of the suppliers are focusing on the same products, be it motor controllers, battery BMS, battery chargers, DC-DC converters, sensors, all these products, right? Now, like you mentioned that OEMs will try tend to just stick with a couple of them and try to source most of these sensors say from one or two suppliers. Do you feel that structurally there has been an understanding that margins in these products are higher right now, but going forward over the next two, three, four years, given that you will see more and more competition for the same products, margins will come down? There will be quite a bit of margin pressure within the competitive intensity. Absolutely, Nikhil. You are bang on. The margins will go down, and it will be left to only two or three players in each segment. No question about that. This is something that's always happened, and I don't think that will change. However, what is the edge that Sandhar has over maybe 50 people who announced? Over this is our technology partners and technology partners that have been with us for years and decades. You are aware, Honda Lock, for example, has been with us for over 30 years. Now they have not only been our partner, we've set up an R&D center here in India with the Japanese engineers sitting with us jointly and doing joint development here in India. Now, obviously, they have a traction. They've been doing it all over the world. When they are doing it with us, the customers obviously will come to us because they are familiar with this entire thing. That goes with whether it is our tie-up with Whetron or whether it is with Honda Lock or with several other Korean companies who've been doing exactly the same thing. Now, because these are validated, tried and tested, obviously the customers want to go with people who are tried and tested. If our suppliers have been supplying these things internationally to, let's say, Hyundai and Kia, obviously we will be the first stop of call for these people when they come to India or they deliver in India. Yeah. Sir. I hope I answered your question, Nikhil. No, no. It does. It will get even more competitive as we go forward. Yeah. Therefore, we have to understand that for some years, some people might get a little bit of booty on top. Yeah. Effectively, at the end of the day, it is all stabilized business that will throw up equitable margins as most other components will. Yeah. Sir, just on the technology partner side. Can you just talk about who are the technology partners in some of these electric vehicle products, be it battery BMS or chargers or for that matter, wiring harness? Yeah. Wiring harness, we have a tie-up with Hanshin that we tied up, which does data cables. Now for the first time, we're not only doing data cables, we are also doing offline data cables as well as regular wiring harnesses. The connectors there are a little different. That technology is available with us. In terms of Shark Fin Antenna, there are ones which are wired and there are some which may not be wired. Again, that technology comes from Winnercom, who is one of the best known people in the field in the world. In terms of locks, ESLs and so on and so forth, we have Honda Lock, like I said, who we've had since 1987. Therefore, that's a very strong relationship where we are building on newer technologies in India in our joint engineering center that we set up here. In terms of our sensors, we have Whetron, and Whetron is a large supplier in the EV domain, based out of Thailand. All the names that you see get covered in all of that. Okay. Got it. Thank you. Thank you. The next question is from the line of Anish Moonka from JST Investments. Please go ahead. Thank you. My question is on the auto industry as a whole. For the last 7-8 years, the number, whether it be two-wheelers or passenger vehicles, the volumes as a whole are stagnant. Jayant sir, given your 30+ years experience, are there any structural issues due to which we are not seeing the growth that China or Indonesia saw while their economies were growing rapidly? Do you see the Indian growth story coming back in the next 5 years, or the industry would have to look at exports to grow further? Thank you. My quick response to this, has been there has been a trauma, and I use the trauma, to say that, you know, with so many things happening at once, I think there was a shock in the system. You remember the mandates that came in when it started off with saying Euro 4 to Euro 6 or Euro 3 to Euro 4, standards of Bharat 3 to Bharat 4. There was a huge jump in terms of the cost that went into these vehicles. Then came the mandates, then came third-party insurances, then came, things which were mandated on account of either pollution or on terms of comfort or in terms of safety. If you look at, let's say, even motorcycles today, the same motorcycle that used to retail at less than INR 40,000, today the minimum price is over INR 60,000. That, as you see, is a 50% jump over an entry price of what somebody was looking at from graduating a bicycle to a motorcycle. The same thing has happened in passenger vehicles. The same thing has happened in heavy commercial vehicles, medium, light vehicles, and also in construction equipment. There has been trauma on one side. Add to it the fact that there is this huge thing built on pollution fronts. Everybody, every state, every city in this country said, you know, IC engines are polluting. Little did they understand that when you are moving from Euro 4 to Euro 6, the amount of pollution that was being caused was minimal. Going forward, as you graduate from this, you will actually not have pollution coming from IC engines. Those are technologies. In the system there was this huge shock that happened. Add to it COVID, where people stopped going out, and the last thing on their agenda was to go and buy a new vehicle. Here, most people, especially in the MSME sector or people who were running their small businesses or people like ready walas, for example, who wanted to graduate to a motorized vehicle, were now thinking of where to get their three meals to eat, let alone go and buy vehicles. There has been a shock in the system. Where is it that we are looking at? You said about the future. India still is at less than 30 cars per 1,000 people. Compare that with the U.S., which has 560. Compare it with Thailand, which has 150. I understand from my understanding or the numbers that I have from statistics, Pakistan has more than what India does. Now, the aspiration, on one end we talk of demographics, where we say that, you know, 65% of our population is under the age of 35, with aspirations. We talk of aspirations of rural areas where everybody talks about, you owning your own home, owning your own car and education for your kids. Now, all these three sectors are not going to just run away. China, you're absolutely right, grew up. But they grew up to huge numbers without any headwinds. All of a sudden, in the last three or four years, there have been massive headwinds. I do feel that this is mitigating as we go forward, and I'm looking at this, new COVID that, variant that came to be the beginning of the end, and my fingers are crossed. I think once we can get past that, once the shock of this entire thing goes away, the commodity prices begin to kind of stabilize, people and banks around the world stop printing money, it should stabilize. Honestly, if the entire world is moving to India to make it not just a cost, low cost manufacturing base, but also the hugest market that is available today, I see no reason that we sitting in India, producing here, selling here, will not be able to get benefits out of it. To me, this is a temporary, speed breaker and we should find a highway to take off soon enough. That makes all the sense. I totally get the optimism and potential. Any inorganic opportunities that we are in talks, given the pain the industry has gone through in the last few years? Always are, always have. Yes, there are a lot of stressed assets available. However, the entire market, because of easy money, had gotten used to high valuations or very, very high valuations. I think those are getting stabilized now and we should hopefully have some announcements to make soon enough. Thank you so much again for the elaborate answer, Jayant sir. All right. Thank you. As there are no further questions, I now hand the conference over to the management for their closing comments. Over to you, sir. Well, thank you, Dolat Capital, for putting this together. Thank you to all the participants today. I am not sure if I could answer questions to the best of your expectations. However, I did try, and sometimes over the phone it gets a little more difficult. I hope these COVID times pass by, and we can all sit physically across each other, celebrate back to normalcy. And I'm sure we will get an opportunity to answer your questions in much more detail. Thank you once again for being here and a very happy new year to you and your families again. Thank you very much. Ladies and gentlemen, on behalf of Dolat Capital, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.