Good morning, ladies and gentlemen. Welcome to Tube Investments Q3 FY 2022 earnings conference call hosted by IIFL Securities Limited. As a reminder, all participant 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 the 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. Anupam Gupta from IIFL Securities Limited. Thank you, and over to you, sir. Thanks, Lizann. Good morning, everyone, and welcome to the post-results conference call for Tube Investments. It's my pleasure to have the leadership team from Tube Investments joining us for the call, including Mr. Vellayan Subbiah, Managing Director, Mr. M. A. M. Arunachalam, the Chairman, Mr. Mukesh Ahuja, who heads the Tubes business, Mr. Srinivasan, who heads the Metal Forming business, Mr. K.K. Paul, heading the Cycles business, and Mr. K. Mahendra Kumar, who is the CFO of the company. I will hand over to Mr. Vellayan Subbiah for opening remarks, after which we can have the Q&A. Over to you, Mr. Vellayan Subbiah. Thanks, Anupam, and good morning, everybody. We are just discussing our results for Q3. Our PBT for the quarter was at INR 161 crore. Revenue in Q3 was INR 1,701 crore compared to INR 1,309 crore for the same period the previous year. The PBT was at INR 161 crore as against INR 145 crore the previous year. The return on invested capital annualized was at 49.6% compared to 51.7%. The free cash flow for the quarter was INR 172 crore with improved NWC levels from Q2 FY 2022. The PAT for the quarter is INR 120 crore as against INR 107 crore for the same quarter last year. Just a quick summary on each of the businesses. For engineering, revenue was at INR 996 crores compared to INR 733 crores. With all the businesses, one of the reasons for the revenue jump has also been the price of raw materials. The PBIT for the business was at INR 87 crores as against INR 102 crores in the corresponding quarter of the previous year, primarily due to higher fixed costs incurred towards special maintenance expenditure and plant layout changes. Metal Formed Products, the revenue for the quarter was at INR 330 crores compared to INR 315 crores in the corresponding quarter the previous year. PBIT was lower at INR 32 crores as against INR 38 crores in the corresponding quarter the previous year due to lower volumes in railways and door frames. Mobility registered a revenue of INR 280 crores compared to INR 234 crores in the corresponding quarter the previous year. PBIT was flat at INR 13 crores due to higher three-wheeler OpEx costs, which are also part of the Mobility team right now. Others, the revenue was INR 159 crores compared with INR 79 crores. Industrial Chains has done very well this quarter, and PBIT for the quarter was INR 11 crores against INR 8 crores in the corresponding quarter the previous year. At a consolidated level, obviously now we're consolidating CG and Shanthi. The revenue was INR 3,410 crores as against INR 1,700 crores the previous year, because we didn't have much of CG in it last year. The PBT was INR 353 crore as against INR 158 crore in the corresponding quarter the previous year. CG Power, in which the company holds a 52.61% stake, registered a consolidated revenue of INR 1,551 crore as against INR 820 crore in the corresponding quarter the previous year. PBT before exceptional for the quarter was INR 174 crore as against INR 64 crore the corresponding quarter in the previous year. Shanthi Gears, in which we have a 70.5% stake, had revenue of INR 95 crore as against INR 65 crore in the corresponding quarter, and PBT for the quarter was at INR 17 crore as against INR 10 crore in the corresponding quarter last year. Commenting on the financial results, Mr. Arun Murugappan, Chairman of TII, said, "The results for the quarter show a steady performance for all businesses. The company is closely watching the impact of challenges of the drop in auto industry performance, which has impacted domestic tubes and our metal form business. Performance in exports has witnessed healthy growth in tubes and industrial chains business. CG Power has also delivered consistently high results across all of its business segments." Broadly, let me stop with that. I mean, I think, like, Mr. Arun Murugappan's comments, our concern on the auto businesses is really what's gonna happen should demand in the coming quarters, because of the drop that we saw, especially starting in December last year. Otherwise, we're quite encouraged by kind of, growth opportunities and otherwise, or I would say kind of, you know, things are more or less in line with what we expected. Let me stop with that. I'll turn it over to you for questions. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question may please press star and one on your 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. Participants, if you wish to ask a question, you may please press star and one. The first question is from the line of Nishit Jalan from Axis Capital. Please go ahead. Hi, sir. Congratulations on a decent set of numbers despite tough times. My first question is on exports. This is one segment which we have scaled up very well on the engineering side, especially. Just wanted to get your sense as to where are we in terms of overall share of exports in our total revenues. What would be the target in the medium term? I think in the past you have shared about a target to scale up exports in the fastener segment as well. Would we have some opportunity on the metal formed business? Can exports be a significant part of revenues in the next three to five years compared to where we are today? That would be my first question. Yeah. Let me just first I'll let Mukesh talk about exports in his business, in the engineering business. Then we'll come back and give you an overall perspective. Mukesh has the largest part, so let him talk about exports in his business, and I will come back and give you an overall perspective. Mukesh. Good morning. Mukesh this side. This year has been a very good year for export, which was a part of our strategy to keep on enhancing exports as a total pie of the engineering division. We are getting closer to the target what we set for ourselves. There's still good headroom available for the new product category for which we just finished even a CapEx cycle in two-three. We are bullish about exports going forward. To just give you numbers, maybe our revenue from the exports is around 20% in engineering division for the tubes which is getting exported. Yes, sir, you can Thank you. I think the encouraging news for us is that in the engineering business, like Mukesh said, he is 20%. We'll have to see what numbers we sustain at. You know, we would like to get to 25%-30%, at least starting in the engineering business. TI Cycles is another area where we have an opportunity for export. That's something that Paul and his team are just starting off on, so it'll take a little while to pick up. In general, the other areas which we've had good exports growth is on the industrial chain side. Industrial chains is getting a significant portion of their revenue now, almost close to 40%, comes from exports. These are the three segments in which we see immediate opportunities. Like I said, metal formed will kind of continue to take a while. In the segments in which we see opportunity, we'll definitely like for at least 30% of the business to come from exports. You know, we'll have to see when we can get there, hopefully in the next couple of years. Okay. Sir, just to get slightly more details in terms of this exports have scaled up very quickly in the last couple of years. Do you think that it's mainly because of the China plus one strategy? Which are the key reasons, region, Asia or other countries which you are targeting or which you are seeing stronger traction in exports across both industrial chain and engineering segment? Definitely, it has been because we've been very focused on it from a strategy perspective. Mukesh, do you wanna talk about your regional split, kind of in terms of engineering, kind of where you're getting your exports from? Yeah. Like Vellayan explained, we as a part of our strategy, we are very focused on the exports. The major focus is being how we can continuously increase the OEM business. As well as, whenever the opportunity comes, we keep focused on the distributor side of the market. This year, maybe there is a good increase in the U.S.-based volumes for TPI and even the large diameter segment also. We've done a very good exports for the Europe markets, which has given a very good run for this year. We hope to keep this momentum sustained going forward, and we improve towards like Vellayan was trying to say, around 25% going forward for engineering division to increase the export revenue. Okay, thank you for the clarification. My second question is more on your strategy on electric vehicles. I know that you are developing electric two-wheelers already, probably we will see that product in a few months. Recently you acquired a 70% stake in Cellestial E-Mobility as well, which is primarily into electric tractor segment. Because what our understanding was that probably we will see electrification happening more in two-wheelers, three-wheelers, and probably in lower end LCVs, right? But tractors electrification could be at a much later stage. Just wanted to understand what is the strategy that we are looking at, and are we looking at Celestial more as a technology kind of a thing, or we are actually looking to get into electric tractor segment in a big way? Yeah. The short answer is we are actually looking at getting into the electric tractor segment. We definitely see that tractor segment as a big opportunity. Just to give you a broad approach to our electric vehicle strategy itself, the one thing that we see is, you know, that we see a much better approach to electric vehicles at the productive end of the spectrum versus the consumptive end, right? The areas we're staying away from are, like, two-wheelers and passenger cars, which are more consumptive. We're focused on the more productive end of the spectrum, where the vehicle is actually an asset that earns income for the owner. Right? If you take three-wheeler cars and cargo, that's definitely the case. All the segments that we're looking at in electric are going to have that characteristic, which is the focus on the productive end of the spectrum. Now, let's talk about tractors for a bit, right? We actually think that basically both three-wheeler and tractor, the reason we chose them as the first and second category to get into, is because we think that these two categories are very ripe for disruption. The three-wheeler, if you take kind of the battery capitalization. So as you know, the battery basically drives, you know, between 40 and, you know, in some cases 50% of the cost of the vehicle, the battery and BMS and in some cases the controller as well. In a sense, what happens with battery capacitization, if you take the two-wheeler, for example, the average two-wheeler travels, like, you know, 40 km a day, right? It's about 1,000 km a month is what an average two-wheeler travels 40 km a day. If you don't capacitize the battery to over 100 km range, people have range anxiety and don't buy it. There's a slight mismatch because you end up with a higher cost point than you need to deliver on the vehicle to get over range anxiety. With three-wheeler, we see this as almost perfectly matched because a three-wheeler on average does about 100 km a day. You capacitate it to about 130 or so in range and the economics start working out a lot better. The second is that we really believe that in three-wheeler the user, right, kind of either the autorickshaw owner or the autorickshaw driver, in some cases they can be the same, will definitely see the financial benefits on a much more tangible month-to-month basis in terms of how its use disappears cash flow. We're seeing the tractors have a very similar characteristic, especially because power in some cases is kind of quite subsidized in the agri area and therefore, you know, if you take the running cost per day of a diesel tractor, especially during cultivation season, it's extremely high because of the diesel consumption of the tractor. Therefore we see the economics of moving to battery as beginning to play out. We actually think that the crossover point on both three-wheeler and tractor is gonna come much before the crossover point in other vehicles. That's between EV and IC. We are actually very excited about the tractor space. Our sense is that we will come out to the market with a lower horsepower tractor, which also has its niches. In India, almost, I would say 80% of the market is between the 40 and the 50 horsepower. I mean, if you take north of 35, right, so 35 horsepower north of there. But we'd like to come out with a lower horsepower tractor by the July timeframe, if not earlier, and bring that tractor to market. Our intent is definitely to get into the e-tractor segment. I don't know if that answers your question. No, no, sir. Thank you for the detailed answer. Sir, just one follow-up. Would you like to highlight on your distribution strategy on three-wheeler, electric three-wheeler? Because we need to set up distribution deals for that. A connected question is, would you look to get into electric segment in your cycle segment, or you would want to stay away from that as well? We'll definitely get into electric on the cycle as well. As far as the distribution strategy for electric three-wheeler, I'll let Kalyan Paul answer that, who's on the call today. Hello, this is Paul here. I think for the distribution strategy on three-wheelers, we'll start with the southern states, you know, look to consolidate there, and then gradually move towards west and north. This is the strategy that we have. In line with that, you know, we have the distribution network, initial people who would be interested. We've worked out a formula, you know, we've discussed with them, and we are quite bullish about you know, moving forward with that plan. Does this answer? Okay, sir. Thank you. My last question would be slightly more accounting related. You had talked about a few non-recurring expenses in the engineering segment because of plant layout and also three-wheeler operating expenses on the mobility segment. Would it be possible to quantify these non-recurring expenses so that we can get a sense of underlying profitability? A related one is your unallocated income has gone up significantly, almost INR 20 crore. It used to be INR 10 crore last year. I think this is also something which has impacted your segmental margins. Any change in accounting over here? Mahendra, do you wanna answer that? Yeah, sure. Yeah. As far as the one-time expenditure in TPI or engineering is concerned, I think it was close to about INR 12 crore. It was between maintenance and some layout change-related expenses. And then similarly the EV-related expense also I think we spent close to around INR 8 crore-INR 10 crore over the last five to six months. What was your other question? Other income is it? No, sir. Within the segmental level CPC, we have seen a much sharper margin cut. I think your unallocated income has gone up to INR 20 crore, which used to be INR 10 crore last. There's almost a 50 crore swing in which is unallocated to segments. Just wanted to understand why is that? Okay. The unallocated income is basically the other income which comprises various- Mr. K. Vellayan Subbiah, we are not able to hear you clearly. Is it better now? Yes, a little better. Please proceed. Yeah. Yeah, the unallocated income basically comprises of various things. It includes things like, sometimes the exchange impacts, the exchange variation gains. We also gained something in the export incentive, which we did not recognize earlier for part of the period, which we recognize now. We also have things like there were certain property-related receipts which we sold earlier part of the year. That was like sale of certain intangible assets. Those were the gains, which happened in the last fiscal. Okay. Thank you, sir. I'll get back into queue. Thank you. We'll move on to the next question. That is from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead. Yeah. Hi. Thank you so much for the opportunity. Hi. Hi, sir. Just couple of things. In terms of, you know, if you look at while revenue growth has been very strong, but that's also because of the steel prices. I think volumetrically, you know, understanding the company may be a little better. In terms of utilizations for the plant, if you can just help us understand, because we are seeing constant decline in two-wheeler volumes, and your tube goes major part there. Or is there a market share gain that you've been able to kind of, you know, offset the decline in volumes at the industry level? Some thoughts there will be useful. Now I would say in engineering we do have more of it. It's not as you know as full out as we were in kind of first and second quarters. There's slightly more capacity there. Definitely we've seen slight softness kind of because of the auto slowdown. From a utilization perspective, I would say that we have bandwidth in kind of all of our businesses right now for growth. Okay. There's an element of operating leverage which will still play in when you get higher volumes, is what I was trying to understand. That's right. Sir, also if you look at, you know, last three quarters, you've generated almost about, I think, combined close to about INR 450 crore of free cash flow, as per your press release. If you can just broadly understand the capital allocation strategy going forward, because at a consolidated level, your debt levels have, you know, come down significantly. You barely have any debt on balance sheet. How should we look at it now in terms of capital allocation? There's a strong free cash generation that is happening. Part of it is going to EV, we do understand. But beyond that, how should one look at it? And also cash flows from CG Power. Will you know, CG Power do its own investments or, you know, it will come into Tube and will you look at it on a consolidated basis? Some thoughts there, it'll be very helpful for our understanding. Thanks. Sure. No, I think yes, definitely on that front, the situation is quite encouraging because like you said, both businesses are generating cash. CG also went net debt free, so because we were able to sell that Kanjur Marg property. You know, in my sense, we will have both CG and TI generating you know, at least north of kind of INR 400 crores each in free cash flow. CG will do both. Next year we will likely kind of dividend some of that back to TI. But CG will continue on expansion initiatives that it's identifying internally. We've looked at you know, several areas within CG where we will drive expansion. You can... One of those obviously is gonna be on the EV motors area, where we still have to find a partner and kind of look at a way of getting into that business. But there are opportunities for investment within CG itself. Then if you take the money that CG dividends back after TI and they take the free cash flow in TI, that's where I would say we've been fairly busy through kind of the whole lockdown period, identifying opportunities for growth. Especially after we finished the CG acquisition, we started looking at several areas, electric vehicles kind of being one of them. We are pursuing and beginning to look at kind of other businesses as well, which as soon as we take through and get approval internally, we will start discussing, you know, with you. We actually see this as kind of the beginning of investment. Like we've articulated TI-two and TI-three. There is some investment that will go into TI-one, but I think significant investments are gonna go into TI-two and TI-three in the next, you know, definitely in the next calendar year. Sorry, actually in the next fiscal year, I meant to say. So all of the segments into which we've obviously announced electric vehicles, but there are, you know, two more additional segments into which we will be investing. Now we're currently doing our complete diligence on them and identifying opportunities there. So there will be both organic and inorganic investments into these new areas of growth. Like we've always articulated, right, we want to kind of move away from being an auto supplier. A lot of this is either focused on EV, for example, that makes us an OEM in the categories that we go into, or it can be into new areas, which we're exploring. My sense is we're gonna deploy significant capital towards those areas. I honestly think that India right now is really primed for looking or investing in growth segments like that because there's so much opportunity opening up on the industrial and the manufacturing side. Without stating the specific segments, which we will kind of discuss with you over the next few quarters, I will say that we've been kind of, you know, very busy identifying investment and growth opportunities, you know, across the whole spectrum, in both TI2, especially in TI2, I would say. Great. That's great to hear, sir. I have a few more questions, but I'll come back in the queue. Thank you so much, and wish you all the best. Okay. Yeah. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, we request you to limit your questions to two per participant only. The next question is from the line of Sameer Dosani from Carnelian Capital. Please go ahead. Thank you for the opportunity. Am I audible? Yes. Yeah. My question is toward Shanthi Gears. What is your overall outlook for Shanthi Gears, seeing that the CapEx cycle is going to pick up? And then second, what is the capacity utilization currently, given that we have delivered almost around INR 95 crore of revenue over there? And what is the time period in which we think that the order book of INR 275 crore will be executed in Shanthi Gears? Okay. I think the question was on Shanthi. I mean, I think that obviously last quarter was you know very good revenue numbers. There was also it had some overflow from the previous quarter, but in general, we feel like if we can hit close to those revenue numbers, that will be a great target for the company to hit. And at that level, kind of the utilization on. Utilization is a bit tough to kind of define in a place like Shanthi Gears because of the number of bespoke machines. I would say that utilization is pretty high at these revenue levels. I think the third question was how long would it take to run through the order book? Typically about six to nine months, but obviously kind of the order book will also get more input coming in in the next few months as well. Yeah, that's it. Thank you. Thank you. Thank you. The next question is from the line of Romil Jain from Electrum. Please go ahead. Hello. Sir, good morning. Thanks for the opportunity. Am I audible, sir? Yes. Yeah. Yes. My first question is on Shanthi Gears. Just want to understand, you know, I think a lot of CapEx is happening, you know, on the railway side. If you can just briefly let us know what kind of pipeline is there, you know, by the government on the railways, which areas, you know, we are working on, maybe any new products from the Shanthi Gears side. You know, some absolute number on, you know, the order book, so that, you know, we can understand where the growth can lead to. Yeah. I think we just answered this question on order book. It's two- INR 20 crore. INR 270 crores is what the order book is at. Okay. Obviously on railways, yeah, we are quite strong in the railways business. Mm-hmm. We will continue to invest there. You know, but we see it as a significant opportunity for growth. We would continue to kind of invest in that business. I would say a lot of the revenue that comes off, if they come up with so much on the Train 18 side, on the, sorry, Vande Bharat trains, we will basically get that volume as well. Okay. Sir, the other question, you know, is a broadly connected question with regards to our continuous cost efficiency projects that we, you know, do. Earlier we did a lot of low-hanging areas and, you know, now I just want to understand what are the other areas that we are working on, and, you know, also the impact on the margins going ahead with the raw material inflation that we've seen. You know, how do we counter that going ahead along with the cost efficiency projects? What would be a broad margin band that we can look at? Obviously, kind of the raw material pricing, nobody can say where it's gonna go. Sure. I would say that there's at least one percentage point more to be had from the cost efficiency side and the lean initiatives that we're working on. Sure. At least one if not two percentage points that we can get from that in the next few years. Okay, sir. Excellent execution and all the best. Thanks. Thank you. Thank you. The next question is from the line of Sanjay Shah from KSA Securities. Please go ahead. Good morning, gentlemen. Most of my questions have been answered. There were more on Shanthi Gears side. Can you elaborate something on that side? Are we planning to add any new products to our portfolio? Do you have any growth strategy on that side? You see, actually, we've always articulated that, you know, we don't want too many Shanthi questions coming, and now there are more Shanthi questions coming and TI questions coming. I think broadly we articulate because we keep our investor communication that we manage through Shanthi. I mean, obviously, we're constantly looking at new products in that area, but I don't think that there's anything on, I mean, it's again, across all segments, we continue to see opportunity there. Thanks, sir. Thank you, sir. Thank you very much. Thank you. Thank you. The next question is from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead. Yeah, sir, I'll come in for some few questions just to balance the call. Just a few things I just wanted to understand in terms of your ability to pass on the, you know, price increases with the OEMs. How difficult has been that as a proposition, and how should one look at it? You know, obviously your gross margins have deteriorated. Obviously you can't go back to the normalized gross margins because the steel prices have moved up. We do understand. How should one look at that element of it? Some you know, color there will be helpful. Thanks. We continue to believe that, you know, and we continue to have had the capability to pass on price increases. We are getting into situations now, especially when we went through kind of the last couple of quarters when steel really went through the roof, that there were situations where the OEMs were pushing back significantly. I do believe that those situations are only at the extreme margins, right? Which is basically it's only when prices go up, as sharply as quickly as they did, last year. In most situations, the OEMs have, you know, been quite accommodative, and kind of cognizant of the fact that, you know, we, you know, cannot take those risks on our own balance sheet. I would say in general, we're still very confident that we are able to pass on the price increases, but we do end up with some kind of hiccups at the extremes. Sir, fair to assume at the margins, assuming commodity prices remain stable from here, the gross margin should improve. We can. Right. I question the magnitude, but at the margin it should improve. Right. Absolutely. I think that's fair. Okay. Okay. Just one thought. Railways has been very soft for you all through the entire crisis. The expectation is it might come back stronger. Just one thought, you know, the income from the passenger railways also has been very weak. Any thoughts from you all in terms of can that CapEx be a little pushed back given the funding situation? Because railways may not be in the best position given that passenger income has been fairly weak. Some thoughts there or if you are positioning yourself, because CG also derives a lot of revenues from this. Some thoughts that will be helpful. Yeah. You're right in terms of the passenger revenues being weak. For the railway, the way they are acting actually now looks like they're gonna give it a very serious push towards that number, right? If we get anything close to that number, I think that's gonna help. It will definitely help the CG side much more than TI. TI also will benefit, you know, from the coaches. CG's benefit will be huge, because we do believe that they are gonna push towards this number. We're quite bullish about it. Sure. Just one last thing. In terms of the exports part of it, had the container availability stayed normal, could you have been better in exports or, just some thoughts there? Mukesh, I'll let you answer that. Yeah. Like you indicated, let's say this, container availability is getting normalized. But there was a lot of pipeline inventory and material waiting at ports, which is slowly getting cleared. We hope it will get normalized by quarter four and quarter one of next financial year should be coming back to the normal situation, which will again push the exports demand is the view we take. No, Mukesh, I think the question here was, had there been better container availability, would our exports have been higher? Clearly, yes, sir. Yes. Okay. The whole, you know, steel price arbitrage also, which was kind of helping in exports, is it still continuing or even without that or. Because, you know, there were a lot of dynamics which were playing, higher freight rates, steel arbitrage. Are those things normalizing? Will you be still competitive in a normalized scenario as far as your exports are concerned? Mukesh, if you can just throw some light. Yes, we will be competitive even going forward. But like you rightly pointed out, this container freight and the steel arbitrage was there, which we hope in next three to six months' time, it should, the margin should normalize, say, the gap should shrink. But even after shrinking it, we are going to be competitive in the exports. Okay. Any new geography that you're now seeing? Because the U.S. came back very strongly for you. Is there any new geography that, you know, is giving you a lot of optimism in terms of the sustenance of this export growth? No, like we earlier said that we are very focused on the OEM side of the story, which takes almost two to three years kind of a cycle for the product development, where lot of programs are in the pipeline, which we are on the verge of the closure. In this year itself, almost close to two to three new programs which we were not earlier there in the business got approved, and the journey will continue. We are very focused on the product category where we want to be globally present, and the strategy will continue for that. Great. Okay, sir. Thank you so much, and I wish you all the best. Thank you so much for answering my questions. Thank you. Thanks, Abhishek. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is in the line of Anupam Gupta. Please go ahead. Yeah. Morning, sir. A couple of questions from my side. Firstly, in the tubes business, we understand that large diameter tubes has been growing very well. I think the capacity utilization there also has reached quite a elevated level. So incrementally, when you are targeting more large diameter tubes sales both in India as well as in exports, how do you cater that? Are you looking at incremental investment there, or what's the plan? Yeah, we're definitely going to expand capacity. Where we choose to expand capacity, we will decide, but we will definitely expand capacity and CapEx in the next financial year. Okay. Understood. In terms of second question, in the mobility segment, the three-wheeler launch, which is due next quarter, can you just slightly elaborate on two aspects. One is on where you are in the product stage at this point of time. Has the testing happened, or what sort of responses you have seen there? Secondly, on the distribution part of it, while you said that you'll start off in the south, and then go north and west, but given that you don't have so much of B2C sort of expertise, directly in the company, what sort of organizational sort of investment have you done there? Again, I'll let Paul answer that. Just to give you a sense on timing, I think the timing for launch will actually kind of move to this July/August timeframe. We are slightly delayed. The timing for launch will move to July/August. Let Paul answer the specific question you have. See, I think, you know, from a perspective of B2C, actually we have some experience in Cycles because Cycles is also basically in B2C as well. Right. In a sense, we've taken that level of expertise and seeing what needs to get done at the distribution side for the three-wheeler EV three-wheeler. We worked out various models, et cetera, you know, what kind of consumer experience do we want to get? You know, what is the benchmarking we need to do there? How will we get there? We tested out some models as well. Products have undergone, you know, extensive testing, you know, over a period of the last one year. Even now, there are all kinds of prototypes on the final version that is undergoing reliability tests at different stages. That's where we are at in terms of this. We are also looking at, you know, how do we build in a better class of consumer experience? That's what we have concentrated on and got some models there, you know, in terms of taking our initiatives forward. Just as we are speaking, we have our own sort of distributors, dealers interested. We've looked at also, you know, what is going to be their return on investment and how will we sustain that even in the first year? Which was the challenge in terms of this. How do we keep the investments at a level where they can make a return, you know, at the end of a year in terms of this? These are kind of initiatives that we've set. We built up a separate EV team also, you know, that will specifically focus on the areas of technical, on marketing, on sales, after-sales service, the branding. How do we do with the, you know, social interface? You know, what can be applicable in the three-wheeler segment, and how do we move forward? Those are kind of works that we've done. Of course, because of COVID, some amount of setback has happened, but we followed modular levels, you know, and minimum viable products to test all the concepts that we've been talking about internally to see that when we hit the road with the launch, you know, we should pretty much fixed up all the areas so that we can give our Indian consumer a very good experience. Understood. Just one last question, Vellayan to you. You highlighted that capital allocation, obviously you're looking at investments in TI-2 and TI-3. TI-2 per se seems to be obviously a smaller investment which grows over time depending on the viability. In terms of TI-3, what sort of size will you be looking at in terms of investments within the next one year or a couple of years? Now let me just articulate it, because basically what you see, right, even Celestial is slightly larger than an investment that we might have made in a classic TI-2 play, right? You know, we also have been kind of debating that, right? Which is like, TI-3, I kind of just reserve for the slightly stressed kind of larger deals that we look at. I should actually say that we're gonna see more activity in TI-2 right now. Right. There are gonna be some slightly bigger deals in a sense like, you know, with, you know, INR 200 crore plus EVs could be going even larger. Hmm. The general approach we've taken, which we've kind of consistently articulated for the last three years, is that, you know, the maximum we will go to in terms of debt levels is like, twice annual free cash flows. That's still kind of our approach to it, right? Basically what we see is that, you know, now the time seems to be very ripe for a lot of investment opportunity because there are a lot of white spaces that because of all of these different things that are getting announced by the government, you know, PLIs in different areas, you know, it actually. It's not just PLI. I mean, if you take kind of just the fact that exports are picking up in a lot of segments because of China plus one, the domestic market is becoming fairly large and there are no defined players or some cases import substitution. We've been kind of doing a broad scan across industry segments and have shortlisted a few in which we see there are good white spaces that can become significant areas of, you know, of, significant platforms for TI over time. We're going to start seeding those white spaces in the next financial year, and I think you're gonna see some of that activity over the next couple of quarters. That's what I was talking about. Specifically, I think it's gonna be more in TI-2, but it'll be slightly larger deals than we've traditionally done in TI-2, right? It's not like the INR 20 crore, INR 30 crore things anymore. Understood. That's all from my side. Thank you. Yeah. Thank you. Thank you. We'll move on to the next question. That is from the line of Niket Shah from Motilal Oswal Mutual Fund. Please go ahead. Yeah. Hi, thanks for the opportunity. I have two questions. One is, you did highlight about PLI in auto. Just wanted some sense of how Tube is looking at that opportunity and what kind of products or role would you play in PLI? Yeah. PLI in auto, you know, we've looked at it. I mean, EV is the only category that kind of actually seems to make sense for us, right? That's what we're exploring right now as far as PLI in auto is concerned. Got it. The second question was on the EV three-wheeler launch timeline. Are we now on track to just launch in the first quarter as far as export is concerned? Will export also be a part of the EV three-wheeler? Then you will do it parallelly or you might launch it after a few years? First off, on the EV, we are delayed. I think we're now pushing kind of, you know, the end of July, maybe early August, as a launch for EV three-wheeler. We have been delayed. Second to your question, I don't think we'll wait 2-3 years. You know, initially we won't. Initially, we'll focus on the domestic market, and then we'll determine how quickly we can go to export market. Sure. That's helpful. The third question was, you know, while you put all the EV business into one company, will you be looking at partnership at that company level through a JV route or diluting for some strategic partner? Is that an opportunity or is it just to get more focus at that? Yes, that is an opportunity. We definitely think at the right scale, if there are partners with interest, we will do that. Got it. Just final question, as most of the questions have been answered. Your margin guidance of about 13%-14% range over the next few years, does that stay, given the current raw material situation that you have, given the cost cutting programs that you already initiated? That's obviously dependent on the raw material prices. If they stay at these kind of elevated levels. I mean, the thing is if they stay at very elevated levels, then even a smaller percentage will get us the same benefit. So I would say that the benefit to be had is still there. The percentage will depend on kind of what is happening with raw material prices. Sure. Is any product mix changed? Because in the last call you had highlighted that you essentially want the higher margin products to really increase the percentage of revenues. That's one way to take up the margin range higher. Should we assume that given the current raw material environment, the product mix has to do a far bigger job as compared to raw material costs coming down and numerator, denominator, really playing out this? I mean, the biggest opportunity on our legacy business side continues to be exports, right? Because exports is something that can help our margins definitely. I'd say more than a mix side, it's exports being a big driver. Understood. One bookkeeping question is how large is the auto business now within the engineering and the metal form business? Do we have a sense, Mahendra, I mean, total auto business percentage is- At total level it is about 65%, 60% roughly. That's what it is known as. Right. Across category, right? Engineering and metal formed business. You got it. The company level. Okay. Perfect. Thank you so much, sir. I'll come back if you have any further clarity. Thank you. Thank you. Thank you. The next question is from the line of Rahul Ranade from Goldman Sachs Asset Management. Please go ahead. Hi, thanks for the opportunity. Just any update on the optical lens business, where it stands right now? I think the last comment that I remember is that because of the chip shortage, there was still some, you know, issue with demand coming on stream. Just wanted to get a check on that. At this stage we're in trial orders with a potentially large customer, and we're waiting kind of on product certification. If we get product certification, hopefully we will start scaling that in the next quarter. Can you remind me what’s the kind of investment that has gone into this capacity right now, and what’s the capacity for entry? Very small. It's about INR 34 crore at this stage. Still kind of almost at a pilot level. We'll only scale it up once we get comfortable with that. We've only put in about INR 34 crore. All right. Do we have any kind of an anchor customer who kind of ties up for a meaningful part of the capacity and then, you know, the rest depends on the demand supply conditions? Is that the way it works? That's what we're in certification for, right? So basically, if we get the product certified with this customer, they will become an anchor customer for us. Okay. Got it. Just in terms of numbers, what would the capacity be in terms of number of lenses or... Our current capacity is fairly small. We're at 500,000 lenses per month. Okay. Okay. We'll only ramp up once we get, you know. First we need to get a product stabilized, only then we can ramp up. Understood. Okay. Yeah, yeah. This is helpful. Thank you. Thank you. The next question is on the line of Megha from Pi Square Investments. Please go ahead. Yeah. Thank you for the opportunity. I just have one question on the CapEx side. What's the total lay out plan for this financial year? For the current financial year? Yes. For the current financial year, we take it to our board in the March board meeting for approval. We're finalizing those numbers, and we'll take it to the board in March. We'll be able to give you the better guidance after that call later in the year. We'll be able to give you better guidance in April. All right. Thank you. That's it from my side. Thank you. Thank you. We move on to the next question. That is on the line of Rohit Ohri from Progressive Shares. Please go ahead. Hi. I'm sorry. The questions will be related to Shanthi Gears here. I ask two or three questions on a biannual basis. If you allow, then I ask them. Sure. Yeah, thanks. In your comments you mentioned that the utilization of Shanthi is quite high, and there was even a spillover from the previous quarter. With the gross margins not moving around, and it's almost in the same range of 49%-51% or so, is the service part of the business, the aftermarket sales from Shanthi, is that the factor that is contributing to the remaining top line? It's not aftermarket sales. I do think that, you know, okay, the utilization has now gotten higher than it was before. Mm-hmm. As the increased utilization is what's helping the bottom line. If you can just state what would be the share from the service segment for Shanthi Gears from 95 products. Do you have that number? Roughly one. One. No, it's more than that. We'll try and get you the number. I don't know, Mukesh. Do you have the number offhand? Do you think- It's a very small percentage of today, service. Okay. Total company guidance is around 60, between 16%-20%. Okay. That's all right. Okay. We're maintaining the guidance over there. Okay. If the utilization is higher and we have this ambitious target of, you know, kind of tripling the turnover in next three to four years and trying to double the profit, will we see more of growth CapEx coming in for Shanthi Gears? Sorry, you said tripling the turnover in Shanthi? Yeah. That was what was mentioned in the AGM. In the TII AGM or Shanthi AGM? Shanthi AGM. Mukesh, when is the Shanthi AGM? Its turnover. I don't know. Which AGM is it? This one, it's the recent one, the fourteenth AGM. I don't know. Because the last AGM I would have been, I don't know. Did we do this virtually? I don't remember giving any guidance on Shanthi for tripling the turnover. I'm not sure who gave you that guidance, because that is not my guidance. Okay, sir. I'll take this offline and try to get in touch with you. Okay. Thank you. Thanks, sir. Thank you. The next question is from the line of Sameer Shaikh from Kotak Securities. Please go ahead. Purvi, thanks for the opportunity. I just have two questions. First is, where do you see on a consolidated basis your investment over next three years on the revenue side or about that kind of growth in the target ten year? The second question is on the return capital employed side. Over the next three years, how do you see the consolidated, how do you see it moving for Tube over the next three years, sir? That's all. Okay. Sorry. Your first question was consolidated revenue over the next three years. Yes, sir. You ask what will the ROIC. We track ROIC more than ROC. Yes, sir. Again, in three years is your question. Then what is your third question? Those are the two questions, sir. Thank you. ROIC, I don't know if we've got a determination. I think what we've kind of guided has been like 17% compounding on revenues. I believe that we should continue to kind of achieve that on a consolidated basis. You can calculate that. I just compounded 17% for three years. It'll take you to your final number. Okay. You can do that. What will be the key drivers of growth, on a, like, sector-wise or industry-wise, what will be the key drivers of this growth? I think that obviously kind of, you know, now you can see that, you know, first off, on a consolidated basis, you can see CG is continuing to kind of compound at a good number. That compounding will continue, because there's strong growth levels in CG. Within itself, we think that we've always articulated this, that we think that the core businesses will grow at about 6%-9%, and that remaining gap of, again, another whatever, right, sorry, about 10% or 11% or so, will come from the TI-2 opportunities and any TI-3s that we do. It comes from the largest obviously bets that we're making is electric vehicles. But like we said, we're gonna announce a couple more segments in the next couple of quarters as well. Okay, sir. Thank you. Thank you for that. Thank you. Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments. Yeah, no, I think, thanks. Nothing specific from our side, Anupam. You know, obviously, like we said, you know, as far as auto is concerned, we will see how things play out. I don't think anybody has any good idea. We continue to be very bullish about new growth areas. Those are some of the white spaces that we're beginning to invest in. We've made a couple of announcements in EV, and we definitely think some of these segments offer a lot of growth going into the future. We continue to be very enthused about your medium to long-term growth opportunities here. Yeah. Thanks a lot, Vellayan Subbiah. Yeah. Okay. Thank you. Thank you. Ladies and gentlemen, on behalf of IIFL Securities Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.