Ladies and gentlemen, good day, and welcome to the Tube Investments of India Limited conference call, hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star and 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, Robin, and welcome everyone for TI's, our first quarter 2024 results conference call. From the management, we have Mr. Vellayan Subbiah, Executive Vice Chairman of TI, Mr. M.A.M. Arunachalam, the Chairman for TI, Mr. Mukesh Ahuja, the Managing Director, Mr. K.R. Srinivasan, President and Whole-Time Director for the Metal Formed Products Business, Mr. Murali, Senior VP and Head of the TPI or the Engineering Product Business, Mr. Govindarajan, CEO for TX Green Venture, which is a JV venture for TI. Mr. A.N. Meyyappan is the Chief Financial Officer. Mr. K.K. Paul will be joining us in some time, who heads the TI Mobility Business. I'll hand you to Mr. Vellayan for opening remarks. Hopefully, we can have the cue. Over to you, sir. Thank you. Thank you so much. Good morning, everybody. The board met yesterday and approved the financial results for the quarter ended June 30th, 2023. The revenue for Q1 was at INR 1,780 crore, compared with INR 1,977 crore for the same period last year. PBT was INR 198 crore, as against INR 180 crore in the same period previous year. ROIC annualized was at 36%, compared to 31%. The axle for the quarter was INR 97 crore. I'll go through the businesses. The engineering business basically had a revenue of INR 1.2 crore compared with INR 1,244 crore. Now, this was more because of pricing of steel as the predominant factor for that. PBIT for the quarter was INR 135 crore, as against INR 118 crore in the corresponding quarter last year. The Metal Formed Products Business had revenue of INR 342 crore, compared with INR 335 crore, and PBIT was at INR 44 crore as against INR 38 crore. The weakness, we've had a weakness in the cycles business, which had a revenue of INR 187 crore, compared to INR 246 crore in the corresponding quarter, and their PBIT was at INR 2 crore versus INR 9 crore in the quarter in the past year. Other businesses, the revenue was INR 110 crore DA compared to INR 223 crore. PBIT was at INR 16 crore versus INR 17 crore at the same quarter last year. On a consolidated basis, revenue was at INR 3,898 crore, as against INR 3,776 crore in the corresponding quarter last year. With the, the profit, the full share of profit of an associate joint venture, exceptional items and tax for the quarter was at INR 396, as against INR 336 in the corresponding quarter of the previous year. CG Power had a consolidated revenue of INR 1,874 crores as against INR 1,643, and PBIT was at INR 263 as against INR 167. Sorry, PBT. Shanthi Gears had a revenue of INR 121 versus INR 99, and the PBT was at INR 34 as against INR 18. Commenting on the financial results, Mr. M.A.M. Arunachalam, Chairman, said, "The company has witnessed a steady performance in this quarter, though the Mobility division was affected by sluggish market. Engineering and Metal Form registered good growth in the auto industry, and performance of our subsidiaries, CG Power and Shanthi, has been very encouraging, with strong top-line and bottom-line growth. Our electrical vehicle business is making steady progress, and we expect revenues to pick up in the coming quarters. We have now partnered with JV and incorporated a new subsidiary to foray into electric small commercial vehicles. With this, the company will be equipped to serve the full spectrum, full spectrum of manufacturing electric vehicles for commercial use. Let me stop with that and be happy to turn it over to all of you for questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhishek from DSP. Please go ahead. Yeah, thanks for the opportunity. Just a couple of questions. Just wanted to understand around the margin element. If you see on a quarter-on-quarter basis, you have seen some, you know, deterioration in gross margin, and if you look at the engineering division, there is some margin deterioration on a sequential basis. Is it, is it related to product mix or pricing not being able to pass on? Just help us understand the reasons for that. If you're talking about engineering, well, Engineering division margin has not been. Revenue is there. It's saying on a sequential basis, so compared to Q4 Actually, the for the, Q4, INR 1,004 in the turnover and INR 131 crore is the EBIT. For the current quarter, the INR 1,141 is the same, and INR 134 crore is the segment profit EBIT. There's a slight margin drop, right, on Engineering. Mm-hmm. Yeah. Basically, because of minor mix issue, but it's- Yeah, there's no, there's no. Yeah, it could be, some of it could be mix, but there's, there's no, there's no major kind of indication that there's any kind of drop on the, on the margin side. Okay, okay. I was just trying to understand that, is it related to exports being lower? That typically leads to better margin, you know, some of those elements. I just was trying to understand on that aspect. How is the exports overall? That is something one has seen weakness overall as well, I think, because the demand conditions in the in the in the in the overseas markets have not been great. How is the exports done for us in the engineering part of the division? Exports has improved over previous quarter. Previous quarter, we were at 13% of exports overall for TI, and now we are at 15%. However, in the industrial chain, business, particularly towards Europe, there is some weakness there occurring there. Overall, at TI level, we've been very able to grow exports for entire year. Okay, okay. Sir, if you can just talk about the EV, where are we in terms of in the timelines? How are you seeing the traction? You have reported marginal revenue in the current quarter. If you can just help us with an update on that, that'd be helpful. EV, again, right. One of the things that we don't want to do, and I've told you, I said this before also, I think EV is gonna take a little bit of time to pick up. We don't want to get into this quarterly cycle because it's gonna be very difficult to kind of, because then expectations will build up kind of unrealistically. I do think, like we said it before, it will take time to pick up. You know, our only request is that if you can kind of give us that time, so we can. Because it is building, you know, four new businesses, right? So kind of that process will take some time. Our only request is if you can give us a little bit of time on that. you know, the new businesses, it's very difficult if we put them on quarterly pressure too quickly, right? I don't want to get into that, that, that habit of focus. Sure. Just one last... Sure, I appreciate that. That's really fair. Just in terms of the rail part of the business, that is something we were expecting, you know, that part of the business to pick up after having been lull for some time. Any improvement are you seeing there in terms of framing or ordering? Just an update there, thanks. KRS? KRS, yeah. Yeah. Morning, KRS Srinivasan here. The tenders have started coming, last month end onwards, and, we hope to, you know, get orders. End of Q2, we hope to get orders, transferable from the... Okay. Just one thing on the engineering part of the division, the decline that one has seen in the top line, so you mentioned in your opening remarks, it is because of steel prices. If you can just broadly help us understand what would have been the volume growth, because that will just help us better understand the segment. Yes. The revenue growth is almost around 6%. Volume, volume growth is around 6%? Volume growth, 6%. Okay. All of the decline has come in from about 43% of realization. Okay, got it. Okay, sir, thank you so much. I'll come back to you. Thank you so much. Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead. Hi, sir. Two questions from my side. One of them, exports, are we now seeing some stability in raw exports, because that's one area we want to sort feedback for broader engineering exports are impacted? Are we seeing some stability now coming, or we are still in the inventory mode for on the export side? Yes, we expect this year will be better for exports. That's our estimation on our this quarter has been... This quarter is also better, and next quarter also we see it to be better than the previous quarters. Right. When you say exports has improved from 13%, from 15% to 15%, this is year-over-year, right, or quarter-over-quarter? That is 15%-15%. Is it YOY or QOQ? QOQ. Thank you. Got it. Clearly, we are becoming better. The second question pertains to, to the, the electric three-wheeler and business. We are now in the process of rolling it out, and I think the new facility is also ready. Are we, have we started to, take orders on commercial basis now? If yes, what would be the, attraction in order book look like? I mean, we just started, so on the three-wheeler. Jinesh, this is again, kind of where, you know, even the previous question was, was there on make it. You know, the thing I would continue to reflect is that, you know, that you give us a little time to build those businesses. You know, because getting in a quarterly mindset for new businesses is very difficult, right? Getting on predictable quarter on quarter performance. We do have orders on the three-wheeler, and we just start taking orders. We've got over 1,000 orders on that product. It is, like I said, it's still very early days on those products. Sure. We have also started taking orders. I mean, we've just started doing, bringing the truck to customers on trial. I think, most of this quarter will just be, will go on us getting customers to trial the heavy trucks. I just, that's why I want to be very cautious on revenue guidance in that business. Sure, sure. The new plant is up and ready, right? The 1,000 units per annum, for, for truck is up and running. Yeah, it's more like, it'll be more like 3,000 units per annum, 3,000-3,600 units per annum. Okay. Yes, the plant is now ready. Okay, got it. Thank you, Mandeep. Thank you. Thank you. Ladies and gentlemen, to ask a question, please press star and one. The next question is from the line of Vipul Kumar A. Shah from Sumangal Investments. Please go ahead. Hi, thanks for the opportunity, sir. Just wanted your views on our diversification in CDMO and surgical space, when there is a lot of headroom for us to grow in engineering space. What is the rationale? Just trying to know your view, sir. Yeah. Sir, I think we've kind of articulated this perspective of TI 1, TI 2, and TI 3 now for at least 3 years+. The, you know, what we actually see is, I mean, and again, the perspective we took is, we derived a bunch of set of filters that allowed us to look at businesses that we think are going to have, you know, secular growth in India over the next at least 20-25 years, right? Perhaps kind of have a sustained growth over that period of time. If you see India, there are a set of white spaces that have not been filled, right? Those spaces, as you probably know, kind of, you know, manufacturing forms about 14% of India's GDP. I submit under manufacturing is a bit under INR 400 billion. Everybody's been in a traditional set of sectors, right? Those are the sectors that will continue to grow at a particular organic rate. But, you know, everybody, you know, if you look at what is happening in India, there are a set of new sectors that are beginning to open up, which are beginning to grow at, you know, and will, will be required for Indian growth in the future, right? You know, the surgicals is more focused on the domestic market to start with and then export. We have a set of businesses where we're focused. Most of our businesses, I would say, are focused on us getting an established position in the domestic market, and then following that up with export opportunities as they arise, with the exception of CDMO, which I'll kind of talk to in a minute. When you take the surgical business, one of the things we've stated for a while is that both medical devices and consumables are predominantly imported into India. We think that there is going to be more indigenization in the manufacture of these products. We see that as a significant opportunity. The largest players are still, you know, foreign brands, and we see an opportunity for more and more indigenization. The second thing is that, you know, healthcare as a percentage of GDP is definitely going to go up, right? From a manufacturing company perspective, obviously it makes more sense for us to manufacture consumables and, and devices, versus thinking of it as a services play. Healthcare, as healthcare expands, you know, we do believe that this, there's going to be an opportunity in this whole business, like surgicals, to both defend market share of domestic players like ourselves, and also play into a market that is growing much faster than our, our traditional engineering businesses. That is the logic for surgicals. The logic for CDMO, again, we see this space in a very nascent position right now, that, you know, all the Western world continued to kind of, you know, send a lot of this business. You know, there was a lot of it going to China and kind of then India, the Indian space is just beginning to pick up. We see it as kind of, you know, a growth industry, you know, as we look out the next, you know, 20 to 25 years. We see that as a significant opportunity for us. In addition to that, in that business, you know, China, most of it was going to China, and the Western world is increasingly growing wary of sending that business to China because of concerns around intellectual property protection. This whole China plus one strategy is a strategy that we see playing into that business well as well. Govind is also on the line, I believe, and Govind, I don't know if you want to add any commentary in terms of, you know, what you prospectively see for the CDMO business, but, that's, you know, from a political collection perspective, that's the logic. Govind, perhaps, would you like to add something on, on, on the vertical? No, you already covered it, sir. In case you kind of cover it. Sure. You covered it well. Sure. Thank you. Yeah. I hope that answers your question. Yes, sir. Related question, we have this electric three-wheeler, electric truck, CDMO, then surgical. What will be our quick get? Because these all businesses will take time to scale up. To come to profitability. Should we expect a sharp jump in debt, over the next two, three years, sir? Sir, this also we've articulated several times, that, you know, the peak debt that we will allow is 2x annual free cash flow. Okay? Right now, we're still running at debt less than net working capital. The good thing is that, you know, at least kind of from, I mean, from our perspective, just to give you a sense of it, kind of the way we look at it is, we're very focused on, on both capital allocation and capital efficiency, which is why for the surgical business, we basically partnered up with C&G to kind of reduce the capital outlay for us. For the electric vehicle business also, we've partnered up and taken 1,200+ for multiples, again, to basically reduce, you know, potential capital burn on this. We're very conscious of that, and, like I said again, I mean, we've stated several times, and we will adhere to that, that the peak debt will never exceed, will not exceed, 2x, 2x, annual free cash flow. That's very reassuring. Thank you, sir, and all the best. Thank you, sir. Thank you. Thank you. The next question is from the line of Vimal Jamnadas Gohil from Hakami Capital Management. Please go ahead. Thank you for the opportunity. The question is regarding engineering business, sir. You mentioned that we have taken our pricing corrections. Are most of the pricing corrections done here, or are there some parts left which can be probably seen in the subsequent quarters? So I just want to be clear, right? I mean, pricing corrections is the wrong language to use. Kind of in general, kind of what we do in the engineering business is more of a conversion business, where there is basically automatically, therefore, a connection to steel pricing. This is a... It's not like we are trying to kind of move around. It, it, basically, it, it ends up being kind of a structure that we've always had with the OEM industry. Yeah, I should have used the word, so I should have used the word, you know, from this. Sir, do you see more, more, do you see the volume growth and pricing growth getting normalized going forward, is what I meant? Again, right, so the volume, you know, as we look to-- we're running close to capacity, so we are expanding capacity. As our capacity expands, we will continue to see volume growth in that business, right? We see very good demand, especially in the Large Diameter business, and on exports beginning to pick up, and on the domestic business. Like as we expand capacity, volumes of business will continue to grow. As far as pricing is concerned, pricing has always been a negotiated between the OEM and us. You know, it's only the, the, the steel price that is basically kind of, in effect, kind of, you know, a pass-through. Understood, sir. Thank you so much. Have a good day. Thank you. Thank you. The next question is from the line of Anika Mittal from Nvest Analytics. Please go ahead. Can I ask a question? What is the growth outlook for the next three years? What is the growth outlook for the next three years? Yes, please. Okay. Yeah. Ma'am, I think broadly in the, in terms of the TI 1, the current businesses- Mm-hmm. you know, we, we believe will be kind of, you know, getting closer to 15%, kind of in the TI 1 current business. Okay. Sir, how much has the company has recovered in the quarter, can you please elaborate on that, sir? INR 70 crore, ma'am. INR 70 crore, ma'am. INR 70 crore, ma'am. What are business, like EV business and, other, main business of the company? TI1 businesses, ma'am. Sir, EV business, sir? For EV, do we have the specific CapEx for ourselves? This quarter, we have spent only INR 20 crore during the quarter. Last year, we had spent under INR 70 crore. Okay. Thank you. Thank you. The next question is from the line of Anupam Gupta. From IIFL Securities. Yeah, morning, sir. I have questions on the two ventures which you announced in this quarter, the Jayem Auto. Firstly, could you talk briefly on the current and longer-term plans for PEHV business? What is Jayem, their role in that? Similarly on the R&D sort of joint venture which you have done, how is that different from the integration which you started at the beginning of the quarter? Sure. You know, Jayem has predominantly been an R&D shop. You know, I think that they probably, they are the leading, you know, R&D shop in India for automotive. They have already developed a prototype for us on the small commercial vehicle. That prototype, we are going to go into homologation, hopefully by the December, January timeframe. You know, by first quarter next year, you know, maybe late first quarter next year, we hope to basically go to market with that product. You know, we want to kind of, as we, you know, kind of grow our presence in EV, we need significant R&D. Therefore, we see them as a good partner in that journey from an R&D perspective. They are also keen in specifically kind of participating on the adoption and go-to-market journey in the small commercial vehicle. For there, that's why we have the DI Gold subsidiary, which basically they, they have a 30% share in, and we have an 80% share. I hope that that gives you some color in terms of the nature of relationship on both levels. Sure. Is it, is it more towards, let's say, if I were to talk about, you had earlier talked about the BMS part, looking at integrating BMS in-house and other things in-house. Is that where this R&D EV is? Absolutely. One of the areas definitely we will start focusing on with them is what I would call kind of just a EME integration, right? Kind of, you know, to start with, I think, like we said, kind of India is going to, you know, import, and we will import kind of a work on with foreign technology for most of it. We do see the opportunity to first get into just the EME integration components, and then later, at a later stage, get into the components themselves. Yes, that's definitely part of the intent as we move forward with JL as well. Sure. One other question, now that you have, almost the entire gamut of products or will have the entire gamut of products from the production side of EV, how do you see, this helping you in the distribution side of it? Is it possible that single distribution channel for everything, or how do you look at this over this, how do you develop that? Yeah. No, there definitely won't be a single distribution channel for everything. I think, you know, some business we're starting off in a direct model, so, without dealers and distributors, because a lot of the sales are heavily kind of, B2B versus B2C. It requires, you know, a, it's, it's significant transformation in terms of thinking and the way the business is approached. I would think, Anupam, it will come down to kind of 3 sets, right? Kind of one, which will be kind of more retail and, which is starting with urban and suburban, which will be, for the three-wheeler and the small commercial vehicle, so they will both develop independent dealerships. The tractor side is gonna be more rural by nature, and therefore will also have dealers. The direct, the 55 ton side, the truck side will be direct. Understood. Okay, one small question out of not basically, basically from side, there was one small announcement, which had come in, not from you, but from the customer side in terms of, partnership for some, supply of, technology. Was that something meaningful, or you can maybe give a picture on that? Yes, maybe Govind can talk to that. Yeah. This is, I think you're talking about the, the announcement from Anupam that time? Yeah. Yeah. That is related to continuous process of flow chemistry, and we are creating that because we have successfully established the flow chemistry and continuous process in agrochemical. Now we are collaborating with them to get that technology into pharma product question. That is, so pharma parts, we are working with them, but it is still between us. We can use this for generate customers for seeking their business for innovation and emerging pharma. Okay. Okay, understood. Fine. That's it from my end. I'll join the queue. Thank you. Thank you. Thank you. The you. The next question is from the line of Nishit Jalan from Axis Capital. Please go ahead. Yeah, hi, sir. Thank you for the opportunity. My question is on the unknown mobility business, on the chain business. Just wanted to understand, is there any scope of gaining market share with any of the OEMs, where we are not present, to the extent, we would desire to be there? We just wanted to understand how will we do in the core business related to the industry growth. What is the scope in terms of new productization or in terms of gaining market share with certain customers, or basically adding new customers altogether, where we don't have any presence? If you can share some thoughts around that, it'd be very helpful. Yeah. On the, you know, like, I think there was a question earlier, what we've indicated is that TI 1 will grow at about 15% a year, right? Obviously, the question is, what is driving that growth? It's predominantly kind of the tube, tubes in the engineering business, because that's over, over 50% of the, and then that's followed by the Metal Formed Products division. As far as, as far as engineering, to your question, see, one of the things that we're developing is, first, we have developed a kind of a north-south split, where we add, where we added capacity in the north, and that allowed us to serve the customers in the north. We're adding more geographic presence this time in the west as well. We keep just kind of adding geographic presence, because this doesn't, it doesn't travel so easily. It's expensive from a logistics perspective. We do believe that just kind of getting more into the individual kind of zones will help increase market share in, in, in, in individual areas. We're also increasing the number of products, right? Kind of as we go more into large diameter, we're increasing our range there. That allows us to serve a fuller range of product to our existing customers. We're increasing service levels by providing excellent product to customers whenever we can, and that's also increasing our value addition in the mix. Obviously, exposure is continuing to increase. Across those four dimensions, basically, it's allowing us to increase at what we would call above market growth rate levels. I don't know if that answers, hopefully, that answers your question. Yeah, that answers. When just one clarification, when you talk about 15% growth, what is the underlying industry growth that you are considering? I'm trying to understand what is the outperformance that you can do in the core business versus industry growth. Yeah, I mean, see, it's tough to predict kind of what the underlying industry growth is. What we do is. Ladies and gentlemen, the line to the management seems to have disconnected. Please stay with us. We reconnect with the management. Ladies and gentlemen, we thank you for your patience. We have reconnected with the management. Sir, you may proceed. Yeah, sorry about that. What, what we were talking about in terms of, you know, growth and kind of, we said it's difficult to predict kind of what the market growth is. I mean, we are very committed to delivering this 15% growth. You know, so, and, you know, I talked about the engineering business with you. You know, the answers are similar with metal, with metal form products as well, where we're expanding our market share in those businesses. The approach we're taking systematically to expand market share wherever we are. Sure, sir. Thanks for that. Just one, just one follow-up. Few, in the past conference, you have talked about that, the TI 1 business will grow at high single digit CAGR, but now you seem to be little bit more confident of growing at mid-teens. Is it just the low base of the industry that is giving you confidence, or do you think that you have a new some products, or you are looking at exports in a bigger way, or some, some other plans which you think that you can grow at a much higher pace compared to what you were thinking maybe a year or so back? Well, honestly, I think, you know, in each of the businesses we have kind of revisited why there is not enough opportunity for growth, right? Each of our businesses are constantly looking at that. It's one of those classic approaches where when you take a set of businesses and say: What is the opportunity to kind of really grow them? You can take a broader view to market share. I mean, a broader view then allows you to say that you don't have as much market share as you thought, thought you did. Basically saying that we can get into more products, more geography and more customers, right? That is effectively what we've done in each of our businesses. It's very similar to kind of this Danaher approach. What we're doing is taking a more expansive view of where we can grow in each business. Yes, you're right, that is allowing us to kind of grow more bullish in terms of what we think can be achieved in each of the businesses. Okay, thank you. Thank you. Thank you so much. Thank you. Thank you. Participants who wish to ask questions, please press star and one at this time. Ladies and gentlemen, if you wish to ask a question, please press star and one. To ask a question, ladies and gentlemen, you may press star and one. If there were no further questions, we can close. Sir, we have one participant who has joined the queue. Okay. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead. Hi. In the optic lens business, are we, where are we in terms of, in terms of ramp up? Are we closing the pilot stage soon and evaluating commercial investments there? This is Mukesh. We are maybe just on the development side of this. We are setting right our processes, and even customer is helping us in that, and hopefully, we see going forward, we will ramp up the processes. Yeah. Jinesh, I guess the answer is that it is still in development, right, Mukesh? It's clearly kind of, you know, so it, it requires customer support in helping us bring it up, right? Because the technology is fairly complex. It's tougher to kind of give a definite answer this time, but the customer is helping us in the process, so we're kind of optimistic. Okay, okay. Second question is on the railway business. Given so much of focus on the environment to modernize and when the Vande Bharat program is in there, how do you see our railway business to ramp up over the next perhaps maybe three years and even through the final period? How big can be the potential for us? Vineet, I think kind of the answer is obviously different for CG and TI to a certain extent, as a local, and TI is much more in the bodies for the coaches. The CG business, I think we've already talked about on, on this CG call, there's significant opportunity we see there. On the TI side, we do see opportunity, but the first step that has to happen is that the railway has to start kind of, you know, releasing these orders, which we, like we said, we expect to start happening at the end of this quarter. There definitely looks like a lot of demand in terms of of what they have to build, we've just not seen that demand hit the ground yet in terms of, you know, so that's, that's basically been the challenge that we're basically waiting for at this stage. Okay. Okay. Right now, the TI business is there. We're looking at additional revenues to grow. Is this something, TI, from the railway sector beyond body, are we looking at additional components or technologies in TI as well? For railways. Yes, you want to answer that? In, in TI, there are two areas in which we operate, in, in TI. One is for the fabrication assemblies in coaches, and the other one is the structural for wagons. Now, wagons are also looking after the next two or three years, we also see some upside in the wagon structural going forward. Okay. Okay, got it. On the engineering business, you talked about expanding capacities. Is it beyond Large Diameter tubes where we are building capacity or, you, you are referring to Large Diameter tubes only? We are adding our three verticals capacity in engineering. It is cold rolled strips, tubes, as well as for exposures in Large Dia. Got it. Thanks a lot for this. Thank you, Jinesh. Thank you. The next question is from the line of Sunder S from Avendus Park. Please go ahead. Thank you, sir. A couple of questions. The first one is on local financial goals. Just wanted to get your sense in terms of how should we look at this specific business? Years ago, in terms of FY 2022 and 2023 numbers of this team, from the MCA filings to what we have today, because it doesn't seem to really grow from the local perspective. What is the kind of opportunity for it? I understand there is an opportunity here, but what's the size we are looking at and what really the vision for this business? We, I mean, we, we feel confident that we can we can deliver more than 20% revenue for our business year on year, year on year. We can expand margins in that business. This picture, like you got data from MCA filing, it has been flat on it, so it is. This is what we definitely believe we can deliver from the business. You will start, you will start seeing that data. The, the quarter, do we have the growth numbers? Yes. Huh? Actually, for this quarter, the locals have done 34% as against 35% in the previous year, same quarter. With respect to GPG, they have done INR 6 crore as against INR 5 crore in the previous, 20% up to the previous year. Right, sir. From a longer term perspective, I want to look at this, this is the opportunity is going to be mainly distribution for that function, right? We also see export as an opportunity after that, no? Then it's a base business for us, so we would see kind of wound closure more broadly. We'll have to start thinking of other products we can add. We're basically developing a foundation on each of these other businesses that we can keep building upon, right? Okay. It's not like we would just say, you know, just with the current products as we kind of go forward. Right. Just we then expand into other wound closure products and into other products in, in the medical space as well. I think from our earlier stands, 80% is a product number that I look at, linearity opportunity to see much from there. When you say- The last one. I mean, I do think that, I mean, hopefully we will deliver better than 20% numbers. When we initially gave guidance, I just want to be sure, because every quarter you'll be asking me how much we did. Obviously, we wouldn't also get into it. If we, we see 15% growth in our base business and only got 13% on this, we won't get into it, no. We, we obviously see it from that perspective as well. Yeah, are we going to see some, you know, non-Indian growth? Yes, we definitely believe in that system. The... Our perspective is that, you know, like I said, I mean, part of the challenge is, you know, it, it just kind of entered, you know, kind of, we just got into it like literally two months ago, right? I don't want to start putting so much near-term pressure, you know, saying, you know, let's just say I commit, like, 30% to you, or it was like, whatever. I don't, then next quarter, then the question is gonna be, why only 30%, right? I'm just saying we need a little time for some of the new businesses. Sir, in the second part of the game towards, TI 2, as you would call it, in terms of electronics, this is something that, a couple of years ago, in AGM, we are saying that this should be the, this is where we're looking at acquisitions for, or this is where we'll start having, non-linearity coming in from. Apart from motion, there's nothing that's happened that really affects from that side. Yeah, we continue to explore the sector. It's, it's a sector that we want to be kind of, you know, very careful about it, because whatever first step we take, we want it to be a best work, right? I mean, I mean, it's the same thing, even with medical consumables, it took us a while. I mean, it took us, like, over 2 years to kind of get to the, the first kind of bet that we made. So even if, even if it was something, I'm telling you, kind of, like, now we're kind of going more down the space of it might be JV or greenfield versus kind of doing something like make an acquisition in electronics. It takes a while to identify the right sector, identify, you know, within that business. Electronics itself is a huge ocean. Right. We want to be kind of very clear on the right things we do. We continue to kind of explore it fairly intensely. But, you know, I, I just think that we're not going to get pressured into doing it at any particular point in time. We continue to kind of. We, we think there's a lot of growth. When we do it, you know, we want it to be researched, and we have it be the right thing to kind of get into. Excellent. one last one, just let me shift the question the other way around, so we can get more insight. should we look at debt repayments here to integrate, understand the business? What? Repayment. Yeah, the repayment. Yes. No, no, because, like, like we said, I mean, the between kind of the TI 2 business, there's enough to kind of hand, hand the growth in TI 1. Right now, we're getting 15% growth in, in TI 1 top line. I mean, well, again, we, I want to be careful on saying top line, because, you know, it depends a lot on features, I think. There's enough to kind of, to enough good uses of capital for us. What do you implement CapEx to become $24 million? No, again, I can't be deterministic about it, no? Sure. That's why, I mean, like, we've given broad guidance that said debt will be less than 2x free cash flow, right? Now you can set a limit as to what the maximum CapEx can be as well. The way I've always looked at it, is it's going to be opportunity driven, right? See, what we've been able to see is that there's significant opportunity. Yeah. What we have to recognize as we kind of look out for the next decade, actually, is that India is going to be capital short for what it needs to do. The number of sectors that have to grow in this country, right now, there's not enough capital in order to kind of fund this up. We are very careful about this saying, like, I don't want to be so burdened with debt that I, I, I can, that it makes me uncomfortable in the operating business. Which is why, you know, the approach we've taken with EV or, or, or with medical device is that we will work with partners, right? I mean, there, there's capital available, right? There are good partners. We want to partner with good people. We're, I'm, we're centrally kind of driven by what we see as growth opportunities, right? Again, they don't have to be growth opportunities that have to deliver next year or next quarter, right? We have to look at what are the sectors that are going to form a majority of GDP as we look over the next, like, 15 to 20 years, right? We want to start planting seeds in those sectors, right? Like, you know, I mean, like, if you plant a seed, it takes time for the seed. That's what we're, we're focused on at this stage, right? What are the sectors we want to plant seeds in? That is why I'm saying that, can we tell how much, right? We can't tell, right? You know, that's why we're, we think kind of this broad guidance should give you some level of comfort, saying that we won't take more than 2x debt, I mean, 2x net cash flow as, as a total debt on our balance sheet, right? Right. My question on CapEx is just very specific to TI one. Sir, say, TI 1, I think, continues to, continues to generate cash. Every year, it's generated cash, it continues to generate cash, even after the CapEx that's required for TI, TI 1 growth, right? Right. Whether the cash kind of drops to the balance sheet, depends on what we do on TI 2 now. Okay. Sounds good, sir. Thank you, and all the best. Thank you. Thank Thank you so much. Thank you. The next question is from the line of Vipul Kumar A. Shah from Sumangal Investments. Please go ahead. Hi, sir. Thanks for the opportunity again. Sir, can you share the capacity on the electric 3-wheeler, electric commercial vehicle side and truck side, and what will be our CapEx for each of these products cumulatively? Electric three-wheeler, we have capacity for about 70,000 per year. Okay? And the heavy commercial vehicle, we have capacity, you know, like we said, for between 3,000 and 3,600 a year. And on the tractor side, we've now built up capacity of 25,000 a year. What will be the cumulative CapEx for each of these products, sir? I would roughly put it in the range of about, INR 300 crore-INR 350 crore per product. Basically, combined, about INR 1,000 crore. That will be spent over the next two, three years, right, sir? No, this is what's already been spent for the most part, right? I would say that of of this, only maybe INR 200 has to be spent. All the rest has already been spent. Oh, INR 700-INR 800 has already spent. Yes, sir. Okay, okay. likewise, on CDMO-- or CDMO and surgical side, what should be our CapEx, sir, if it is possible to share? Surgical is an acquisition, sir. It already has capacity. We're not going to spend more on that right now. It's very minimal, what we'll spend. And CDMO, we've outlined INR 300 crore right now. Okay, sir. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Pratik Shirke from Nippon India Mutual Fund. Please go ahead. Yeah, hi. Just one small question. You know, the radio build-up capacity on the electrical screen, from a broad perspective, localizing cells, is that something which you get big opportunity or can be a big opportunity for you or, or not something that also given that it can be a good, runway approach? Pratik, what we've been very clear on is in terms of cells, we will buy. We will not kind of make our own cells. Right? We do see that localizing is going to happen, because there are several large players that are setting up capacity. We will buy from those large players once they've established this capacity and stable capacity in India. We definitely see that as an opportunity. We also think that that will help reduce prices, you know. Other things I'm always bullish about is when Reliance gets into a business, prices drop, you know. We, we do believe that, you know, that prices for cells will come down over time. You are okay buying cells from the rest of players as long as it...? As long as, once, the entire supply chain will come to India, it just takes time. Right? So that's the process we have to give it, right? So I don't know when the local suppliers will be there with cells that are as safe and, you know, as good as imported cells. I have absolute belief that it will happen, Pratik. Thanks. Thanks a lot. Thank you. Thank you. you. The next question is from the line of Siddharth Chand from Goodwill. Please go ahead. Yeah, hi. Could you give us an idea on the two-wheeler automotive chain business? What are market share there, OEM versus washer market? How much growth are we expecting here, and what's the EV risk that we face over here? Like you are aware, the two-wheeler industry, the Q1 has not done good. We are on the OEM, our shares are in that, and we are working on aftermarket share as well now to continue the growth momentum. However, given that in terms of two-wheelers not doing well, that's why I'm saying that. Answering your question on EV, we don't see next 7-10 years because the kind of vehicles that are available on the road, the system will consume huge aftermarket profit going forward, so we don't see that. However, OEM side, our penetration on is expected to be around 30%. There also, there are some inquiries coming out and development change on this. These are too early stage to comment on that. We are working on it. I mean, I think one of the questions was what market share do we have in OEM? Yeah. Okay. We don't share kind of specific market share data. Yeah, just kind of idea. Yeah. I mean, just to think of it, OEMs is predominantly for 2-wheeler, is predominantly what, 3 suppliers have it? Three suppliers. Yeah. Three suppliers Three suppliers kind of cover most of the market. on FCD also kind of, you know, between the, you know, between the spare parts divisions of the. Again, there are, I would say, three players, which is the spare parts divisions of the OEMs, and then two aftermarket players have the largest shares, right? including some Chinese imports there on FCD. To the other question on EV, yeah, obviously, OEM demand will drop, as they start shifting a bit more to EV. Like Mukesh said, anybody that's moving away from a hub motor, some of those players are also beginning to look at chains, if you move to a frame-mounted motor. Okay, there is potential for chains also in OEM market, like in non-hub motors. Actually, there are chains getting supplied right now. Correct. May, I'm aware in some bikes, but how about the sales? Yeah. It's a smaller number, and therefore, that is why we've always had a release and set them with the changes. Okay. Okay, perfect. Thank you. Thank you. Thank you. The next question is from the line of Anupam Gupta from IIFL Securities. Please go ahead. Yeah, so thanks for the opportunity again. Just a small question on the TI 1. You said you are very high utilization. Currently, let's say in terms of capacity expansion, when do you think of fine blanking, Large Dia, and general tube capacity will come in, and what sort of expansion are we looking at? By end of this year, capacity expansion, almost 70% will be over. Some parts will spill over to the Q1 of next year, but we expect that capacity expansion to be over. What sort of addition are we looking at in terms of%? You can say about 30% increment in capacity. Okay, and that should basically be good for next couple of years, I think, in terms. Next 2 years should be good to go. Fine. Fine. That's conclusion. Thanks a lot, and I think, we don't have any further questions. I'll hand over to you, Mr. Vellayan Subbiah, for any closing comments. Yeah, nothing else, Anupam, but, you know, I think, like I said, you know, the, the broader opportunity, I think, you know, in India, I'm just getting more bullish on as we begin to look at the number of, you know, changes. You know, actually, I mean, also what we see constantly is the government is very supportive of bringing more and more manufacturing back to India, whether it's electronics or other industries. That's also kind of extremely encouraging because I think. What we have to really look at is this constant balance between kind of growth in existing segments and the opportunities that are presenting themselves in the new segment. This is what we continue to stay focused on, and we continue to be pretty bullish on this as we go forward. Sure. Thanks a lot for your time, sir, and this call, too. Probably we can close it now. Thank you very much, sir. On behalf of IIFL Securities Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you. Thanks. Thank you.