Ladies and gentlemen, good day and welcome to the Tube Investments Q4 FY22 conference call hosted by IIFL Securities Limited. As a reminder, all participant lines will be in 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. Anupam Gupta from IIFL Securities. Over to you, sir. Thanks, Richa, and welcome everyone to the Q4 conference call for Tube Investments of India. From the management we have Mr. Vellayan Subbiah, Executive Vice Chairman; Mr. Arun Murugappan, Chairman; Mr. Mukesh Ahuja, who's taken over as managing director recently; Mr. K. Mahendra Kumar, EVP and CFO for the company; and Mr. K.R. Srinivasan, who heads the Metal Formed Products business, as well as Mr. KK Paul, who heads the mobility business. To start off the call, I'll hand over to Mr. Vellayan Subbiah for the opening comments and then we can open up for the Q&A. Over to you, sir. Thanks, Anupam. The board met yesterday and approved the financial results for the quarter and for the year ended 31st March. The board also declared an interim dividend of INR 2 per share in February, and now we've recommended a final dividend of INR 1.50 per share. Okay. The revenue for Q4 was at INR 1,735 crore compared to INR 1,480 crore for the same period in previous year. Revenue for the full year was at INR 6,590 crore compared to INR 4,256 crore for previous year. The PBT after exceptions was INR 173 crore as against INR 162 crore for the same period in the previous year. PBT for the year was INR 338 crore compared to INR 359 crore for the same period in the previous year. ROIC 46.5% for this year compared to 35.1%. Cumulative FCF was INR 205 crore, which is at 43% of that. That was lower than the same period of the previous year. This is predominantly because of the cash flow in the previous year was higher into lower NWC levels, right? In terms of how we calculate that. In terms of overall business and, you know, the Indian auto industry is continuing to kind of face challenges. TII's revenue for the quarter, like we said, was INR 1,735 crore, and then I'm getting to the individual segments. Engineering revenue was at INR 1,030 crore compared to INR 854. PBIT was at INR 103 as against INR 92 in the same quarter, which is a growth of 12%. Full year revenue was at INR 3,868 versus 2,337. The full year profit was at 376 versus 261, which is a growth of 50%. Metal Formed Products revenue was at 336 compared to 335, and PBIT was at 39 as against 37, which is a growth of 5%. Full year revenues was at 1,240 as against 1,032. That was basically a profit of 136. A PBIT of 136 crores, which is a growth of 81%. Mobility for the quarter was 249 versus 301 last year. The bicycle business has been down. PBIT was at 13 crores compared to 17 in the previous corresponding quarter. The revenue for the full year was at INR 963 compared to INR 847. PBIT for the full year was 55 as against 44. Revenue for the quarter was at INR 194 compared to INR 92. The segment also includes trading revenue for the sale of CG Power. PBIT for the quarter was at four, which is the same as previous year. Revenue for the full year was at INR 562 versus INR 263. Profit for the full year was at 36 versus 13. In terms of key developments, the company has subscribed to 17.52 crore share warrants for CG Power Investors, for INR 150 crores and has paid INR 37.5 crores, being 25% of the total warrant subscription amount. During the quarter, the company exercised 9 crore share warrants for CG Power out of the total warrants of 17.5 and paid INR 57.78 crore, representing the balance 75% of consideration for the warrant exercise. Right now the company holds 58% of fully diluted shares of CG Power. The corporate guarantee of INR 1,365 crore in favor of the lenders of CG Power has been released. During the quarter, the company has incorporated a wholly owned subsidiary, TI Clean Mobility Limited to pursue and engage in clean mobility and electric three-wheeler manufacturing. As part of the clean mobility business, TI CMP also acquired a 70% stake in Cellestial E-Mobility on 4th March. It's in the business of making electric tractors. CG Power and Industrial Solutions, a subsidiary in which the company holds 58% stake, registered consolidated revenue of INR 1,507 crores during the quarter as against INR 1,118 crores in the corresponding quarter of the previous year. PBT for the quarter was INR 139 crores as against INR 19 crores in the corresponding quarter of the previous year. Consolidated revenue for the full year was INR 5,561 crores compared with INR 2,964 crores for the previous year. The consolidated PBT is INR 528 crores as against a loss of INR 117 crores in the previous year. Shanti Gears registered a revenue of INR 104 crores for the quarter as against INR 72 crores. PBT for the fourth quarter was at INR 19 crores as against INR 12 crores, and the revenue for the full year was at INR 337 crores as against INR 216 crores. PBT for the year was at INR 59 crores as against INR 26 crores. For the consolidated basis, we have INR 3,415 crores in revenue and a PBT of INR 295 crores for the quarter. For the full year, it was INR 12,525 crores in revenue and the PBT was at INR 1,135 crores. Commenting on the financial results, M.A.M. Arunachalam, the chairman, basically said the results of the quarter show a steady performance for the company even in the wake of challenges on account of supply constraints, lower domestic demand, increase in fuel and commodity prices. Part of which also was the result of the war in Ukraine. Exports have however consistently delivered good growth in tubes and industrial chain businesses. The company is taking various measures to mitigate the impact of the above challenges in the business. A new initiative in new mobility and bring diversification with different portfolio of our business sets to grow. With that, I will stop and be happy to turn it over for questions. Sure. Disha, you can open up for the Q&A. Thank you so much. We will now begin the question and answer session. Anyone who wishes to ask a question will press star and one on the 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. Anyone who wishes to ask a question, will press star and one. We take the first question from the line of Vimal Gohil from Union AMC. Please go ahead. Yeah. So thank you so much for the opportunity. Sir, my first question is regarding your margin performance. I'm not sure if you've sort of addressed this in your opening remarks. I joined a bit late. In the other segment, our EBIT margins have fallen quite sharply. You know, as compared to other segment, I mean, engineering margins have grown. But 6.6% EBIT in others has fallen too. Just wanted to get a sense on what has transpired there and what is the outlook. Secondly, just if we can give any update on some of the businesses that we are incubating, as how are they scaling up? You know, we've been talking about these newer businesses for about a year now. Any update over there would help. Thank you. Yeah, the other segments, like we said, the big change is how we report the TMT Bar revenue, right? That was causing EBIT to drop because the TMT Bar now is getting reported as a revenue item instead of just a commission item. That's the cause for movement in that. There's no drop in profits. It is just the denominator went up because trading revenue got reported there. Sir, what would be the sustainable margin then in this business now, going forward? Are we planning to increase our manufacturing portion there? How should we look at this? TMT Bar will continue to be trading only. We won't be manufacturing them in-house, if that's what you're asking. What should be the steady state margin there, sir? It's difficult to guess here. See this segment comprises of industrial chains also, which is one of the most profitable businesses for us. There the margins will continue to be in the same range. Depending upon how the CMC revenue comes up in future, in terms of trading volume, the overall margins may keep fluctuating. Got it, sir. Sir, anything on the new businesses? Yeah, I think like we said on the new businesses, I mean, these businesses are not a material part of kind of our overall revenue yet, and these new businesses will take time to ramp. When they do start ramping, we will basically kind of start sharing more details. Sure, sir. Sir, and just on the overall outlook on the engineering piece, you know, exports have done exceedingly well for us during this year. It's a two-part question. I mean, what is the overall outlook here? I mean, in terms of the industry that we are serving, what are we hearing from our end users over there? Secondly, out of the, you know, the growth that we've reported this year, you know, how much of that would have come from maybe a pure volume growth and how much of the growth would have come from the pricing that we have, the pricing increases that we have taken to offset the commodity cost pressure? If you can break that up for me, please. Yeah. Mukesh this side. As you're aware, we have started the export journey almost four or five years in the works. Now OEM approval has always been taking place. We're focusing on exports. Outlook is going to be strong only. How are we seeing the current quarter and next quarter because of the build-up in the inventory at sea? There can be a little bit drop, but overall outlook looks to be strong only. To answer your question, 60% of the growth is coming because of the volume growth, and maybe 30-35% growth is coming because of the selling price increase. We have the raw material issues. Perfect. Thank you so much, sir, and all the very best for FY 2023. Thank you. Thank you. We take the next question from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead. Hi, sir. Thank you so much for the opportunity. Sir, if you can just broadly start with, you know, effective first April 2022, the changes that we are seeing in terms of, Mr. Mukesh Ahuja has been elevated as the MD, and sir, you have moved in as the Deputy Vice Chairman. Is there a change in role or its status quo, if you can just broadly start with that? Sure. The basic intent now is that Mukesh will. His primary focus, both of us will kind of talk about kind of where there's been an intersection. Mukesh's primary focus will be on all of the existing and what I would call kind of, you know, the as well as businesses of the company. Kind of the engineering business, the mobility business, you know, our industrial chains business and our metal formed businesses. Mukesh will take primary charge for those businesses and the growth around that. Then I will start playing a broader role in terms of the newer businesses, which includes TI mobility. We thought that we've taken out Kalyan Paul, who used to look after the mobility business to become the head of the TI mobility business. I will be spending more time on growth and new initiatives and Mukesh will be spending more time on existing businesses. Not to say they're gonna separate that like 100%, but that is the broad thinking because both require significant focus and we felt like it requires, you know, separate people to be focused on each of the areas. Does that provide clarity? That's. Thank you so much for that, sir. Sir, just if you can broadly talk about the timelines of the EV launches, both in the three-wheeler and tractor, how should one look at it, some timelines and what are the experiences as of now in terms of the product acceptance and any market feedback that we have? Sure. I mean, the three-wheeler is the one that we can kind of make more statements about because we are most far along that path. On the three-wheeler right now we are planning for a launch hopefully by about September. We are kind of quite far along the homologation process there with the vehicle. The plant is now pretty much ready. You know, I think we're in kind of. We've had very good reception from the initial set of dealers and potential customers we've spoken to. We're quite excited about that. Like we said, kind of, you know, we plan to launch a product or model by September. On tractor, I think I mean we've just got to go through the homologation process. You know, I think we'll be able to give you a more deterministic time as to when we will launch that after we finish homologation. We're trying to get into homologation, submit for homologation by the end of July. Okay. Sir, just in terms of the overall, you know, the three-wheeler business and the other parts of the business, mostly for engineering, I think it will be relevant. Is the kind of price hikes that you have taken for the entire year, and is there some price hikes which is not still, you know, kind of honored by OEM, which you're kind of pushing for given the steel price increase? Some color there will be helpful. Like you're aware, we are having a good arrangement with all the OEMs for backup for the steel pricing increase. Whatever happens, it's a question of little bit lag, sometimes 3 months or 6 months. We are able to recover that fully. However, the challenge is, whatever the inflationary costs are arising on account of fuel and the yield. There we are going through some negotiations with even the OEM as well as we are planning cost reduction inside the company to mitigate even that impact. I hope that answers your question. What would be the cumulative hike that you would have taken for the year, that you would have got? If we see last two years, I think the raw material prices has gone up by almost 100%. You would have got a corresponding 30, 40% kind of a hike, if I think, assume. More than that. Okay. Basically the entire growth is coming because of price. On a volume front you'll still be lower. No exports have mitigated that. Whatever domestic market degrowth is there, that we have mitigated by doing more exports. Overall there is a growth in the volumes also for the company. Okay, great. Sir, just one other thing is if I look at the other expenses as a percentage of revenue in the current quarter seems to have moved up a lot. Is there a freight element or is it because of the TMT bar, the way you are recognizing the revenue? What is the exact reason for that? Which period are you comparing with yourself? Year to year or what? Q4 to Sequentially, sir. Sequentially. Sequentially. You mean Q3 to Q4? Yeah. I mean, this is just scale of operation. There's nothing extraordinary, anything special there. Okay. I have few more questions. Probably I'll come back in with you and best of luck with the entire team. Thank you so much. Thank you. Thank you. Before we take the next question, a reminder to the participants. Anyone who wishes to ask a question may press star and one at this time. We take the next question from the line of Maitri Parekh from III-s quare Investments. Please go ahead. My question regarding EV has been answered. Now I have one more question. Mark, you know, what is the export of your total revenue? What is the what? Sorry, you can't hear me. Export. Export. Yeah, export. Of the company as a whole is around 12%. Yeah, company as a whole. Q4 it was around 12%. Okay. FY 22 would be around? Maybe a little bit higher. Probably around 14, 15. Okay. One more question that we have subsidiaries in Sri Lanka as well, right? Because of this economic crisis in Sri Lanka, what is the condition and where do we stand in, you know, as a part of that, those subsidiaries? There's no immediate impact because the subsidiaries in Sri Lanka meant only to cater to our supply chain requirements. Okay. Imports and exports are denominated in US dollars, so there's no impact. There's very little which is getting added to the value added because of the local operations. Okay. One last question, what would be your market share in the bicycle segment? I think it was around 27%. 27. Okay. That's it from my side. Thank you. Thank you so much. We have the next question from the line of Rishabh Jain from uncertain. Please go ahead. Yeah. Hi there. Thank you for the opportunity. My question is on your share of auto business. Over the last two years, auto industry has been in downturn, while you have done very well in exports and probably in non-autos as well. Just wanted to ask what would be the share of domestic auto business in your overall revenues now? If you can give some broad color within the engineering and metal formed segment, it will be very helpful. Broadly at the company level, still the range of 65-45 to 65% roughly. It will be higher in metal formed products, maybe around 70-30 there. Engineering also I think it will be in the range of 65-45 or 64-75. Basically you're saying, 55% of total revenues is domestic revenues. Did I hear that correct, sir? At the total company level. 55%, right? Correct. Within the segment it's closer to, in engineering and metals form, it's closer to 65%-70%. Correct. That means cycles you are excluding, you are not counting it as a part of autos, right? Yeah, yeah. Cycle is not part of auto. We have the other industrial businesses, all those things which are not part of auto. Okay. Sir, just, if I can get slightly more color, within the metal formed business, especially the automotive chains, I understand that in both tube and chain business, we are a predominant player. Are we well spread out across all two-wheeler OEMs or there is some gaps, we are not present across certain OEMs and that could, be an opportunity for us, in the next few years, both on the, auto two-wheeler chain, door frames, as well as on the tube business? Sir, can you please repeat it? You're saying opportunity. Basically what I'm saying is, you have three different sub-segments within autos, right? One is the automotive chain in two-wheelers, second is the door frame for cars, and third is the overall tube business where you cater to all the segments. What I wanted to understand was, are you well spread out across OEMs within segments? Or do you think that we will have an opportunity to penetrate into newer OEMs where we are not present currently and we are gaining traction there and there could be some good opportunities? If you can give some color without naming the customers also, that would be very helpful. Just to give you idea, whichever businesses we are in, whether it is in chains or whether it is in door frames, we are having a good spread across all the OEMs. Even in the engineering business, we have our spread is towards two-wheeler passenger vehicle, commercial vehicle, even the three-wheelers. We are widely spread. That gives the advantage to us as a company, in terms of if one segment is not doing well, another segment is doing like the case in this quarter. Commercial vehicle segment is doing pretty well, but two-wheeler there is a little bit slowdown that helps to perform us as a portfolio. Okay. My last question is, in all the TI2 activities that you are present currently, what is the cumulative investment that you have already done over the last few years? TI2, not much actually. Maybe around INR 50 crores, fifty- Sorry, include TI CMP as well. Yeah, that's. Including the total investment, including the EV, the optic lens, the truck body building, all the businesses combined, what would be the total investments that you would have done so far? It'll be around 210-240. Yeah. 160 of that is in electric vehicles. Mm-hmm. 50 is in everything else. Okay, sir. Thank you so much. Just one more correction on your earlier question, you were talking about the auto industry intensity in MFP, right? MFP products. That will be close to 90%. Sorry, sir. Sorry, sir, I missed your comment. Can you please repeat it? No. To your earlier question on auto industry intensity of metal formed products segment. Mm-hmm. It will be 93% if you are taking only the MFPD segment alone. Okay. Would you be able to give some color on what would be aftermarkets within that? I would assume that railways as a business has come down, and because of which, the proportion of auto business has gone up in the metal formed business, right? Is that correct? No, no, we don't give a sub-segment information, so. Okay. No worries, sir. Thank you so much. Thank you. We take the next question from the line of Anupam Gupta from IIFL Securities. Please go ahead, sir. Yeah. I have a few questions on each segment. In the opening remarks, you mentioned that cycles has been slow and which is obviously affecting in the segment numbers. How should we look at it from, let's say, next couple of years perspective? Do you think domestic will improve or will remain subdued? How much can exports offset that as they pick up? Paul, you will take that question. Paul, are you there? You, would you take that question? I think overall the game plan is to see, you know, how we can keep gaining share. Even this year it is seen. Mukesh Ahuja mentioned that we are 27% market share, so we gained about 2% market share this year in a market that has been dropping. Okay? In relation to the market, we have definitely performed better. You know, although the volumes have been lower because of the absolute drop in the industry volumes, we've dropped much lesser than that. Having said that, I think the way that we are wanting to progress there is to see, you know, the newer opportunities of growth, particularly in exports, then in e-com, you know, in thickness and also in e-bikes. These present big opportunities for us, and this will offset partly the drop in the trade domestic market and would help us to secure the plans that we've been making. A lot of action has already been initiated over the last six months to see how we can, you know, scale up exports. A lot of that is in the stage of negotiation, sample submissions, you know, customers visiting us, because a number of customers could not visit us due to all this COVID, which is now slowly being relaxed, international travel, et cetera. We hope to, you know, report much better numbers in the export scenario and particularly also the e-bike scenario in the coming quarters. Just to get one detail, what will be the share of exports in cycles in this year, broadly? Share of exports now will be about close to 5%, but moving forward this figure will move up quite dramatically. We can actuate the plans that we have made and some of the customer connects that we are now establishing, which are in different stages of maturity. Sure. That helps. Second question is related to the Metal Formed Products business. Obviously railways has been muted for the last couple of years. How do you see it improving? Let's say we have announcement for Vande Bharat trains, quite a few. How do you see that business picking up? How soon can we see that trend in our numbers? KRS, you will take that question. We as we speak, you know, the Railways is preparing a lot on this Vande Bharat project. We see good traction. By Q2, Q3, you know, we hope the business will see its power. Okay. Understand. Yeah. Sure. Sir, one last question on the engineering product business. In engineering products last quarter, you had said that you will basically be looking to increase the capacity for large diameter tubes. Has anything been finalized there or what sort of capacity should we expect there? Because it was running at a higher utilization, as I understand. Yeah, we have taken some steps to increase the capacity at large diameter, which, as of now, is a marginal increase. However, we are studying even for the much bigger CapEx in this segment of the business and which we'll take a call in coming one or two quarters. Okay. Sir, just one last question. On the share of exports in, let's say, specifically engineering products and industrial chains, what should that be? In engineering business it is about 20%. Okay. Industrial chain? In the industrial chain will be around 40%. Sure. That's all from my side, sir. Thank you. Thank you so much. We take the next question from the line of Shyam Sundar Sriram from Sundaram Mutual Fund. Please go ahead. Yeah. Hi there, good morning. Thanks for taking the question. My first question is, if we dial back around 3.5 years, you had laid out a set of seven performance steps, areas of improvement per se. Seeing scrap realization being one key item there, if we leave aside the revenue enhancement targets, et cetera, because the auto industry is now in a slightly more gradual recovery phase. Now, on the sourcing and scrap realization front, from that perspective, if you look at their RM cost as a percentage of sales, from FY20 to FY24, the RM cost as a percentage of sales has increased by around the 800 basis points per se. Now, how are those initiatives kicking in, and how do we think about the margin improvements from here? Just added to that, how to think about the PBT margins, as we two years out per se, we have ended the year at around 10% PBT margin. Can we expect the earlier lean productivity initiatives to continue and yield anywhere between 12%-14% PBT margins per se? Yeah. The short answer is yes. You know, obviously, kind of where we fall in that range will depend on where raw material prices go because that affects the denominator of various. And I think, Shyam, like you correctly said, lean and productivity will yield more, and sourcing and scrap will yield less now because those are first kind of at least, are not gonna be the larger drivers at the current point in time. Okay. Understood, sir. There is a huge opportunity still. Clean is, I would say another big kind of, another big quarter on the way there. Okay. Which business segments will we see these lean initiatives yielding more results, sir? Shyam, Lean initiative, we have started doing across TII, and a Japanese consultant is helping us in this direction. All the businesses are going to go through this and see. Okay. No, I was just trying to understand how amenable will be each segment to which of those are more amenable to those initiatives, per se. We have seen some improvement on the metal formed side for sure, which you had also talked about in the few quarters back. Are there further low-hanging fruits from these initiatives that can pan out in the next two years? That is, what I was trying to get at. Shyam, we are just a quarter in the journey for the full journey to improve productivity improvements. It's a work in progress. Surely there is a good amount of scope to increase the productivity across the company. Okay. Okay. Finding fruit is a fruit, then we have to work with them. Understood. Got it, sir. Sir, the other point on the capital allocation and, you know, inorganic opportunities per se, how do we incrementally think about it going forward, sir? Is just from a thought process per se, how do we think about on that front per se? Shyam, we said the maximum negative cash, I mean, negative cash on the balance sheet will end up with negative, right? We have to borrow. The maximum we would borrow is up to 2 years of free cash flow. Obviously we're not close to that yet. But as we've also said in terms of inorganic growth, we will be very opportunistic. You know, right now we're kind of in the markets, I mean, like, I mean, where prices are for assets, we don't see as much opportunity, so we continue to kind of track a whole lot of companies. It's basically purely going to be when we feel like, you know, we're getting, you know, a pricing that is not basically kind of, you know, you know, that is attractive for us to get into these opportunities. In the meanwhile, you know, we'll continue on some of the TI 2 activities, right? Understood, sir. That is helpful. Sir, one last question, if I may. Cycles as a segment we saw very good pickup just post-COVID per se. Now it has started coming off per se. As on a two-year basis, should we expect the segment to continue to be declining for the industry as a whole? This is more trying to understand the dynamics there, and so therefore only our lean initiatives can then improve profitability. That is it, how to think about that segment, sir? Yes, Shyam. I would say broadly, we don't expect any significant market pickup. Mm-hmm. The two things we will focus on, one is lean, and second is how we improve market share. Okay. Understood, sir. Thank you very much. I'll call back with you. Thank you. Thank you so much. We take the next question from the line of Niket Shah from Motilal Oswal Mutual Fund. Please go ahead. Yeah, thanks for the opportunity. I had a few questions. First, if you can just give us some qualitative comments on how are you seeing demand on the auto side, because we saw substantial slowdown in two-wheeler in the last quarter. Whatever checks we do, we do see some pickup on the rural side again. If you can just give us some sense, because auto is the largest part of your business, some sense on the demand side would be very helpful to start with. To be very frank, any predictions on the auto demand will be, let's say, anybody's guess. What we are doing is we are focusing on what is in our hands, internally, like lean initiative. Can we do the focus on the product portfolio and the exports category? This is a work we are in this. But as of now it looks like that commercial vehicle will be looking little strong and two-wheeler, there is a slowdown and TV looks to be strong and the EV portfolio also is picking up. That's how the broad phenomena we have it. As I said earlier, let us focus internally. That is better rather than forecasting industry. Sure. That's helpful. The second question was on the lenses business. When do we see capacity coming up now, for the plans that we had highlighted? Should we assume that in a couple of quarters we should see a capacity coming on stream? K.R. Srinivasan, you will take this? Yes. Yeah. On the lens business, like we were saying earlier, there is a bit of a pause mode now because of the international travel restrictions. That still continues, but we hope that will get resolved in this quarter because the things are opening up. Second and third quarter we'll see, you know, some, you know, good plans being made for the expansion in this segment. If I understood that correctly, it's likely to come sometime at the end of the Q3 or should that? Yeah, that's right. That's right. Okay. Got it. Yeah. Sure. Any comments, again, qualitative comments on the railway side of the business? Have you started seeing some pickup on that side of the business? Railway side we are seeing good pickup. Like earlier I was explaining about Vande Bharat project. There are a lot of plans from railways, you know, on this project. We see some good, you know, demand from end of Q2 or Q3 onwards. Because the plans are being made now, tenders will be open very soon and the action will start from end of June. Got it. Final question is, you know, the raw material costs have been going up over last couple of years. It obviously distorts the numerator, denominator and hence the percentage margins. Would it be possible for you to give us some qualitative comments on, say, EBITDA per ton? Has it improved in FY 2022 over 2021? Because that I think might be the right way to look at it. Mahendra? Sorry, you're talking about EBITDA per ton? For revenue- Because if the realization goes up 100%, then the percentage margins comes down. But maybe the EBITDA per ton would have moved up as well. Just trying to understand, you know, how should one size the pie? Basically we don't measure the EBITDA per ton in our industry. We go by the PBT percentage. As you know, the operating leverage is kicking once the volumes ramp up. That's the only show improvement going forward. No, I think his question is more because of the pricing increase, right? The trends. Yeah. -we recognize for- Yeah. Yeah, I think I will answer that. See, as far as the customers are concerned, OEM customers are concerned, we are fairly covered as far as the raw material is concerned. I mean, we are, you know, totally protected. Even in some of the railway tenders, the price variation clauses are there. We are, you know, protected to a great extent. Wherever we are also having aftermarket also we do, you know, price recoveries. If you talk of EBITDA per ton, there would be some, you know, challenges in terms of maintaining the percentage because of the denominator effect. Other than that in absolute terms we are fairly, you know, okay in terms of recovery of the raw material cost increase. Got it. Perfect, sir. I'll join the dots. Thank you and best of luck. Thank you so much. We take the next question from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead. Yes, sir, just couple of things in terms of overall utilization and if I just broadly talk about the engineering segment and the railway part of it, because these are, auto has not done well and railway has also not picked up. What will be the broad utilization in terms of the key factories that are kind of catering to these segments? Where will you be at operating utilization levels? We just do the capacity calculation exercise almost 1 or 2 years in advance, but generally we don't share the capacity utilization. I can tell you next two years we are covered in both the divisions, Railway as well as Engineering, to take care of any market growth which is going to come. Okay. Where my question was, sir, that there is a significant amount of operating leverage which will also play if there was a cyclical recovery in auto and railway demand was to come back. Is that something also we should keep in mind? I'm sorry. Okay. Okay, thanks. Sir, also in terms of the export part of it, you spoke about a lot of the newer countries also kind of giving you approvals. How should we look at the export journey for Tube? Is it a function of more of, more geographies getting approved and you scaling up? Or is it also will be a, you know, function of more products getting approved in many more geographies? If you can just broadly just talk about it. Is it like maybe you have catered to 60% of the geographies, but maybe in terms of product it is only 20% because of the China plus one factor. How should one look at it? Just some broad comments there will be helpful. Like we shared in the past, it's a function of both. Our penetration is increasing in terms of geography as well as the product. We have already identified close to 11-12 product categories where we are going geography by geography and increasing our participation. Our focus remains more on the OEM side of the business, where the continuity of business is assured for at least 5-7 years' time. Okay. Today it will be fair to assume that out of the 10-11 products, two or three key products will be prominent part of that export business today. Yes, two or three products we can say that even at the international level we are getting into a good share of business. Other eight, nine product categories, we are at a very early stage, so a lot of work has to be done in terms of geography penetration as well as the customer approval. As you are aware of, any OEM approval takes about 2-3 years' time. Some has already given a result in the last financial year and the same work continues going forward also. In terms of geography also, it is largely U.S. and couple of more countries giving you this entire revenues. I'm just trying to understand from that perspective. Yes, it is U.S., Europe, and even we started participating in China. Last year even the China also we have done a good exports and we are looking for new geographies like South Africa, Brazil, and we are penetrating those countries where our penetration level as of now is less. Okay. Ex-China, you know, the incremental OEMs who are giving you business, is it like earlier they were procuring from China and now they are looking to diversify, that's the reason they are opening up? Or is it like you are now up the scale and you are able to better provide them at a better cost? How should one look at it? Is it like that we do this work by studying even what is the imports happening to that particular geography. We found that in even China there are certain products which are getting imported and we started participating those import substitution program and that has helped them last year. Got that. Sir, just one last thing in terms of the engineering part of the business, since you have a very high market share in two-wheeler, you know, tubular products, have you started supplying to some of these tubular products to the EV manufacturers or EV OEMs? Or does your product get somewhat consumed in the overall EV vehicle, is what my question is. Because the penetration in two-wheeler has been fairly high. Yes, that's the opportunity available for us and we are participating. We don't know which will be the winner and which will be the losers, but as of now we have taken a strategy, we are participating everywhere. Let's see how the development in the EV vehicle space takes place and we are participating in all segments in EVs. Okay. Your product is getting approved by the new market share guys or new players who are coming into the EV segment in two-wheeler. Yes. Wherever we get a safety critical and quality requirements are there, we are running the tests wherever possible. Okay. Just one last thing in terms of the overall, cash flow part of it, and I think the earlier individual also kind of spoke about it. Broadly, if you look at it this year, working capital was a little, stretched. You had some amount of working capital, cash outflow, and you also had, investments into CG Power and other things going. But excluding that, if you look at it, you can broadly generate INR 600-700 crores of pre-CapEx cash flow every year at this current run rate. It can obviously improve, but that's the broad number at this point in time, assuming working capital is stable. How should one look at it in terms of how much of that will go into new EV initiatives? Is there a number there or will it come as opportunities come by or fit the tractor and the EV investments, is it largely done? How should one look at it? No. I think, like we said, right, I mean, like, first off, we're constrained at one end because we won't take more debt than three years of free cash, right? Sure. Second is like it really depends on kind of how quickly this EV trend picks up, right? But broadly, we will look at overall capital allocation across new businesses, to manage against that constraint, right? Which is not kind of going more than two years of free cash. I really think that at this stage we're more. It's a bit indeterminate because we don't know how quickly some of these segments are gonna pick up. Okay. Okay. So- Just a- The total burn to get, like, the three-wheeler product to market. Each of the segments, right? We don't have more than a total burn of INR 200 crore to get the product to market. Right? Yeah. Now the question is kind of once the product is in market. We need to see kind of what rate the product starts picking up. That's what is a bit indeterminate at this stage, and that's what we kind of will get once we have a better sense of this. Sure. Because again coming. Let me clarify that there was no working capital challenge or anything last year. Actually, we started last year with a negative working capital because in 2021 because of COVID, the business started ramping up only towards the end of the year and we had extended credit period and all, which gave us that benefit. Yeah. Which got normalized in 2021, 2022. No, no, absolutely, sir. My only limited point is from here on, you will generate that INR 600-700 crores of free cash every year, pre-CapEx. That should be a normalized. I do take your point that FY 2021 was an aberration. Just to balance this just one point, you know, the whole, you know, you also had a thought that you also want to diversify away from auto, right? Your dependence on auto is you don't want it to be very heavy. Is there, because of the EV adoption curve, a change there or one should largely stick to that thought process? I think our articulation has always been this, right? Yeah. If you remember from the first conversation, what we actually said is that our concern was that as an auto supplier, right, we were in a tough spot, right? Correct. If you remember even kind of the earlier conversations in 2018 and 2019, our articulation has always been kind of the challenge of being an auto supplier is that we're caught with kind of big guys at either end of us, right? Which is basically we're selling to auto OEMs who are like 10 times our size, and we're buying steel from, you know, again, a steel manufacturer who are 10 times our size, right? Sure. Industry position wise, that was a very bad position to be in, right? Now, the way we look at auto OEM is slightly different, right? Because then you're in actually kind of more of a B2C business, right? I think that that's a better position to be in. The second is the discontinuity offered by electric, I think, is a large opportunity, right? Which is basically in our mind at least it's gonna create a new set of OEMs that have, you know, as much clout as the existing OEMs have today. I don't know if that answers your question. Yeah. No, I get that. Basically you want to have some amount of pricing power which you didn't have it earlier, maybe because of the large scale of supplier and customer you're dealing with. It's basically a conversion business, right? Yeah. Yeah. It, whether it be an auto or non-auto, it doesn't matter, but you at least want to have some pricing power. That's the broad Yeah. That's the broad. Okay. Just one last thing. You're, you know, trying to do too many things in terms of trying to grow this company at a very fast rate. What is one or two broader things that kind of worry you today, if you were to just look back at us? I mean, right now, I think basically the issues are this, right, which is the biggest issue I think is, and again, it's not just for me, but everybody is just worried about these raw material prices and, you know, basically inflation and price of everything, right? What that's gonna do to overall demand, right? Otherwise I would say that after coming out of COVID, we're very well poised for a lot of growth. These two I would say are the biggest concern that exists. Okay, sir. Thank you so much and wish you all the best. Thank you so much. Thank you. Thank you. We take the next question from the line of Aman Rakesh Shah from Geeta Investments. Please go ahead. Hello. Thank you for the opportunity, sir. My question is on Shanthi Gears. I joined the call late, so if it's repetitive, I'll just read the transcript. Some of the questions are, we saw very good order inflow uptake in Shanthi Gears over last 3-4 quarters consistently. Last quarter we saw a very strong order inflow. What went wrong in this quarter or last quarter? How are the order pipeline looking like for the outlook for say, for FY 2023? The order pipeline is looking okay, but generally, we prefer to restrict this call only to TA related questions. Okay. The only thing was, can we have, sir, on Shanthi Gears, maybe a request would be, if we can have a con call or some analyst meet, say, half yearly, like. Okay. We'll consider that. I think you can also write to kind of investor relations there, and we'll be happy to answer questions for you. Sure. Thank you. Thank you so much. We take the next question from the line of Jinesh Gandhi from Motilal Oswal Financial Services Limited. Over to you, sir. My question pertains to first clarification on the lens business. Are we indicating that capacities will come by Q2 of FY 2023 or plans to put up new capacity will be finalized by Q2 of FY 2023? We will start filling existing capacity by then. Okay. expanded that business, which we will, I mean, we'll only do once we feel comfortable with kind of the, you know, the existing business today. The current capacity which is there of close to 5-6 million lenses will get fulfilled by Q2. Got it. Second question pertains to the Vande Bharat opportunity. Can you indicate what would be our share of pie of that opportunity of the 30,000 coaches? I mean, what could be our content per coach? How should one go about that? K.R. Srinivasan, if you would take that. Yeah. I'll take it. See, from TI, we are participating in the fabrication portion of that Vande Bharat projects. We fabricate, you know, side wall, end wall, roofs and all that. Separate designs are being made by Railways for it. We have already developed the prototypes. We've already got the proto order, and we have started supplying to them. We continuously participate in the tenders, ensuring tenders for these parts. Okay. Any sense on what would be our content per coach there? I mean, what kind of revenue per coach we can expect there? Pardon me, I'm not getting your question. Per coach, what would be our revenues as such? Say, INR 15,000, INR 20,000, I don't know. No, normally we don't share those details, Mahendra. Yeah. We actually participate in the fabrication portion of the coaches. Okay. Okay. Yeah. Got it. Something that's okay then. Okay, cool. Thank you. Yeah. Thank you. We take the next question from the line of Rishabh Ja from Axis Capital. Please go ahead. Yes, sir, just two more questions. Firstly on the export side, just wanted to understand on the engineering side, are we catering to two-wheeler OEMs in the ASEAN region as well? Where I'm coming from is on the metal formed business, your exports are very low, and in metal formed business we cater to two-wheeler, the chain business in a major way. Just wanted to understand whether there could be an opportunity if you have already existing relationship with two-wheeler OEMs globally to push more automotive chain products on the export side as well. That is the first question. Second question is basically what Mr. Vellayan Subbiah mentioned, that you want more pricing power in the businesses. Obviously, B2C businesses are something which will give you more pricing power. Just wanted to understand what would be our share of overall revenues from the B2C businesses currently? How should we look at it going ahead from the current TI1 core business, not about the new businesses. Coming to your first question, regarding engineering business for participating two-wheeler segments. Yes, we are participating in particularly Asia, Southeast Asia countries. Whatever we do supply to Indian OEMs, that also we take care of the Asian countries. Coming to how to build a synergy between these two, your point is good. But as of now we give the service to tier one suppliers where the synergy is less. But we take your point how we can explore it going forward. That's about first question. Got it. Regarding this question of what is the share in consumer-driven business. As of now it is cycles basically where we have a power for pricing, but all other businesses are B2B only. Going forward, like, Vellayan mentioned, we are getting into EV in a big space, and which will increase our, percentage of share of business for the consumer directly, going forward. When we reach a respectable level, we'll start sharing those numbers. Thank you. Sir, I would assume that in the metal formed business also, aftermarket would be a good chunk of the overall revenues, which is again B2C. Am I wrong in that? Yes, you are right. That is also, the spare part business is also B2C. Sir, can you share just a rough number, not an exact number of what percentage of the segment revenues would be aftermarket? We don't monitor as of now internally as well as we don't share also those numbers. One last question from my side. Sir, in the current TI's core business that we have, any more product adjacencies that you see, where you can penetrate or where you can launch more products? What I'm trying to gather is, obviously your business will recover with recovery in auto industry and exports is something where you will do well. I'm just trying to understand in the domestic market, how can you grow at a faster pace compared to the auto industry? In that perspective, any scope you see of launching more adjacent products or any place you see where your content per vehicle can go up, any color on that would be useful. We are doing that work, because like in the opening statement we said that, industry is not growing, but our ambitions to grow in the business are higher. We are exploring those opportunities. Once we firm up, we will definitely share with you what are the new businesses we can enter in, which will be, adjacencies to the current business. Okay, sir. Thank you so much. Thank you. We take the next question from the line of Kashyap Pujara from Broadview Research. Please go ahead. Yeah, hi. Sorry, I kind of dropped out in between due to a bad connection. I missed your answer on working capital at the standalone level. I mean, it's a broad question was that, you know, you have an EBITDA growth of close to 40% year-on-year. But if I look at operating cash flow, that's gone down from INR 600+ crores last year, more than 100% conversion to 325 there about, so just close to 40%-45%. Just wanted to understand in your assessment of the business, where do you see a normalized cash flow from operations at? Is this a one-off? Do you think that this will get resolved over the coming year? Yeah, that's right. What I was explaining was, see, there was no working capital constraint or challenge last year. In 2021, 2022, we started the year with negative working capital. Correct. It was because in 2021, because of COVID disruption, the operations did not happen for a few months, and most of the ramp-up started again happening only towards end of the year. Understood. That's when again we built inventories and then we had good credit periods from the creditors. That resulted in a favorable working capital at the end of 2021. Because of that, at company level we had a negative working capital, which is not a realistic one or sustainable one for a large company like us. Fair enough. This is a one-time correction which we had to see in 2021-2022. Going forward, we think the working capital will be more or less in the current range. Fair enough. That's helpful. Second is just a broad question on, you know, the pricing negotiations, because we do have still, you know, a reasonable amount of OEM business at a standalone level. Just wanted to understand, given the kind of mayhem we've seen in, RM prices, supply chain, et cetera, how simple or tough is it to kind of go out and raise, pricing? I mean, what are your broad thoughts on that? That would be really helpful if you can just kind of explain to us how the negotiations or discussions with customers on this subject. We have a fair amount of transparency in the agreements with all the OEMs. What you said, it is a challenging time because the raw material price has almost gone up by 100%. As of now, our track record is we are able to recover it fully, but however it is a big challenging job which our teams are going through and will continue to do that. Sure. Okay. You know, just any progress on the Cellestial acquisition? I mean, what is the timeline? I mean, any progress on introducing e-tractors? Where are we, you know, on that roadmap? Yeah, I think, this part we addressed a bit earlier also. We said it basically, so the tractors themselves, we are estimating that in the end July timeframe, we will submit for homologation. Homologation, like you know, the process is not fully in our control. It's gonna depend on how long that process takes. Once kind of that is done, we'll be able to kind of talk about when we can go to market. That's the best determination we can give at this stage. Sure. Fair enough. That's fine. Mr. Vellayan Subbiah, just one, you know, a bit long-term question. I mean, we've had this conversation in the past as well, but how should one think about the business over a 3-5 year horizon? You know, I remember earlier you kind of used to say that the traditional businesses will be like a 5%-7% growth and the nonlinearities will come from TI 2, TI 3, and that's how the double-digit growth on top line will shape up. Just wanted to kind of take a recap how you think of a business from where we are right now over a 3-5 year horizon. Yeah. Our view continues to be the same, right? Which is basically that we are going to invest in kind of and grow, you know, new businesses, which is why we also I mean, like somebody asked earlier, kind of, you know, Mukesh is gonna take more responsibility of existing businesses. I'm I'm gonna take more responsibility for the new. The rate at which these new businesses grow, Satya I would say, you know, because they are newer and therefore kind of a bit less defined, I think it's more difficult for us to deterministically predict. We continue to feel confident that we will kind of grow these initiatives and that we have to basically kind of, you know, be in new sectors because that's where kind of a lot of the growth is gonna come from in the future. Sure. Okay. Thank you so much, and wish you guys all the best. Thank you. Thank you. Thank you. Thank you so much. We take the next question from the line of Prateek Poddar from Nippon India Mutual Fund. Please go ahead. Sir, yeah, thanks. Sir, just one small question. What would be your go-to-market strategy for e-three-wheeler? What is the go-to-market strategy for e-trike? Paul, do you wanna answer that? I think, little while earlier, I think Mr. Vellayan addressed that question. I think we are looking, you know, for a launch of the first variant of the e-three-wheeler sometime during Yeah, I heard that, sir, during July, sorry, September. My question was how would we want to distribute these products? Will it be the traditional route in the sense and what would be your focus markets like when you launch? Is it a pan-India launch? I was just trying to get some information over there. We will go, you know, we've laid out a plan in phases. You know we will be first, you know, looking at how to launch that product and get everything right in the southern part of India and thereby then, you know, we look at the other parts in quick succession. That's the thing. The distribution model, you know, how we will do, that's pretty much tied up. The distribution is also tied up. The after-sale service is tied up. You know, how we offer the after-sale service, what we do with the experience, you know, how do we data mine the data. You know, those are new opportunities which we learned in terms of this and how do we give the consumer a better experience and also data mine from all the information that keeps coming to us. Because in this form we'll get a lot more input which we use for your product development, improvements and also improvements on, you know, go-to-market strategies, you know, in terms of looking at that. Currently, you know, we employ the sales guys, you know, the after-sale service team and many of these has been done. The production line is getting ready, as Mr. Vellayan Subbiah said. We're quite upbeat that, you know, we will have a good product on which, you know, we can actually make some impact in the market space. Based on that, then we'll be launching the other variants that we have in plan sequentially across the later part of the year. If I may ask, sir, when you talk about tie-ups, right? That is what I was trying to look for. Who are these distributors? Are they existing authorized? Also on the after-sales service part, you said you have tied up. Maybe if you can explain this tied-up part, that will be helpful. Yeah, I think the after-sales service means, you know, we are looking at servicing within 24 hours, number one. Number two, service on wheels, number two. There's a tie-up that is required there. You know, we finish that tie-up so that we can provide, so the downtime on a productive vehicle remains the least, so that the earning is not affected. Mm-hmm. Those kind minor details, actually, we work to great lengths in terms of seeing that we are able to get that done. The customer feels very confident for the adoption. There is a lot of work that's going on currently to see, you know, who are the potential set of customers. You know, there is a big database, you know, and how do we establish contact with them now, which we are doing pre the launch. You know, how do we use influencers on the ground, you know, to see that the bike is, or that the vehicle is experienced in terms of this. Thereafter, you know, the adoption starts happening. To begin with the last question, how many distributors have you tied up with? What's the distribution strength like? See, today I think we've tied up with about 40 dealers, actually. Basically, on the southern side of the southern part of India. To answer your question, yeah. Okay, sir. Thank you so much. Good day. Thank you. The last question is from the line of Anupam Gupta from IIFL Securities. Please go ahead. Thanks. Just one clarification, sir. The INR 500 crore enabling resolution which you have done for borrowings is that just enabling resolution or is there a plan? Because you said that your cash flows are strong and you don't have right now any inorganic opportunities visible. Yeah, it's an enabling resolution. Sure. That's all from my side, sir. Yeah. We can, Mr. Vellayan Subbiah, if you have any closing comments, and then we can close the call. No, nothing specific from my side, Anupam. Thanks a lot. You know, we thank you for all of your support, and we'll continue updating as we do at the next meeting. Sure. Thanks a lot, sir. Thanks a lot everyone for joining in, and thanks for the management. Thank you so much. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your phones. Thank you. Bye-bye.