Ladies and gentlemen, good day, and welcome to Varroc Engineering Limited conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal 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. Basudeb Banerjee from ICICI. Thank you, and over to you, sir. Hi, thanks, Ryan. Good evening, everyone. Thanks to Varroc Engineering management for giving us the opportunity to host the Q4 FY 2022 results concall. We have with us Mr. Tarang Jain, Chairman and Managing Director, Mr. Christian Päschel, CEO of Varroc Lighting Systems, Mr. Arjun Jain, Whole-time Director, Varroc Engineering, Mr. T.R. Srinivasan, Group CFO, and Mr. Bikash Dugar, Head of Investor Relations. I'd like to hand over the call to Mr. Tarang Jain for his initial comments. Post that, Ryan will coordinate further Q&A session. Over to you, sir. Thank you, Mr. Basudeb Banerjee, for hosting the call, and good evening to everyone. I would like to thank you for joining the Q4 FY 2022 earnings call of Varroc Engineering Limited. Looking at the past year, while we were all anticipating a rapid recovery in volumes, the second wave of the COVID-19 pandemic struck, impacting both the supply and the demand side. Just as we were coming out of the second wave, we saw a worsening of the supply side challenges, particularly the semiconductor shortages, which is continuing and might take till the end of FY 2023 to get normalized. The higher fuel prices, commodity inflation, and tightening of financing has resulted in higher cost of ownership of vehicles impacting demand. We're also witnessing geopolitical issues like the Russia-Ukraine Conflict impacting the global economic re-recovery. All this has made the operating environment for the business very challenging, impacting the profitability of the operations significantly. In the background of these challenges, the company took the decision to divest its four-wheeler lighting business in Europe and the Americas, and signed an SPA with Plastic Omnium for an enterprise value of EUR 600 million in April 2022. The transaction will take four to five months to get completed as we need approval from the shareholders, regulatory bodies in various geographies, and also from our lenders. This divestment will help the company strengthen its balance sheet and invest in identified focus areas to drive future growth. In our financials, the business which we are divesting is now accounted for as discontinued operations, and only the profit and loss from discontinued operation is shown as a one-line item in the income statement as per the accounting standards. In India, the auto production for two-wheelers in FY 2022 fell by 3.5% despite the lower base of last year due to the reduced demand and the higher cost of ownership. Passenger vehicles in India rose by 19.2% due to the preference for personal mobility. Commercial vehicles and three-wheelers also witnessed growth due to the lower base and overall economic recovery. On the backdrop of all this, the revenue from continued operations for FY 2022 has grown by 33.6% to INR 58,442 million as against INR 43,739 million in FY 2021, outperforming the industry production numbers. The EBITDA margin for FY 2022 was 6.1% as against 7.7% in FY 2021 for the continued operations. The margins were impacted by higher commodity prices, Forex losses on intercompany loans and a lower operating utilization in some of the geographies. The revenue for Q4 FY 2022 for continued operations came in at INR 16,520 million, which increased 11% quarter-on-quarter and 9.8% year-on-year, again outperforming the industry production numbers. The EBITDA margin improved on Q-on-Q basis by 150 basis points and came in at 6.5%. The margins for the quarter are still impacted by higher raw material prices. The focus of the company remains to pursue strategy, which is a combination of growth and margin improvement for our various business units. We have growth opportunities due to the mega trends and some of our businesses, business units like electric & electronics in India, our polymer business in India, the electronics business in Romania, are geared up to capitalize on specific growth opportunities. We are looking to improve the profitability of some of the business units like IMES, forging plant in Italy and our metallic business in India, the four-wheeler lighting business in India and our two-wheeler global lighting business by a mix of improving internal efficiencies, higher capacity utilization and in some cases, price increases from our customers. Strong order wins for new businesses in FY 2022 across business units will enable us to continue to outpace the industry growth and will also help us in improving the profitability. During FY 2022, lifetime revenue from new order wins is at INR 35,509 million. Out of that, the business wins from the EV customers is INR 10,451 million. To capture the growth on mega trends, we're happy to announce that the government has approved our application for product-linked incentives, and we will be investing around INR 2,000 million over the next five years under the scheme. I'm now handing over the call to Mr. T.R. Srinivasan, our Group CFO, so that we can run through the presentation, which is already uploaded in our website and in the topic page also. Thank you. Thank you, Tarang Jain, and thank you, Basudeb Banerjee, for hosting us today. We had uploaded our presentation a short while back. I will just quickly touch upon the highlights from the presentation, focusing on the financial part. We will leave the floor open for questions. Starting with the highlights of the last quarter and year. The biggest highlight obviously was the securities purchase agreement we signed with Plastic Omnium in April, which you are already aware of, and we had a separate call on that as well a few weeks back. The second is about our application under the PLI scheme under the auto components sector, which has been approved by the central government. We'll be investing close to INR 280 crores over a five year period. The other highlight is that from a revenue perspective, both in the quarter and year-to-year, we have grown. Part of the growth is related to commodity price inflation, and part of it is due to better capacity utilization and additional orders we are able to get from customers. Sequentially, we have been able to improve our EBITDA margins for the continuing operations. You might have seen from the financials that the lighting business in Europe and North America that we are planning to dispose of have been reported in a separate line in the P&L under discontinued operations. Rest of the P&L reflects the results of the continuing operations we have. During the year, we also won a new business which will contribute lifetime revenues of around INR 3,500 crores overall, out of which revenue relatable to the two-wheeler EV segment will be in the region of about more than INR 1,000 crores. These are the major highlights. We have included a slide on the overview of the continuing operation, just to give a better idea to the investors on what the business is remaining within the company after the planned divestments. In the VL standalone entity, we have two business units, electrical and electronics business unit in India as well as metallics. In addition to the aftermarket division, where we are seeing significant growth and the four-wheeler lighting business which will remain in India, which will remain with us. We have a number of subsidiaries in India, which are mainly in the polymer business in Varroc Polymers. Then the metallic business under Durovalves. Coming to the overseas business, we have a joint venture in China, like you know, which is into four-wheeler lighting. We also have metal coating business in Italy under IMES. A global two-wheeler lighting business, which has operations in Italy, Romania, and Vietnam. The electronics business in Romania, which we are retaining. If you look at the overall revenue composition, little more than INR 5,000 crore revenue will come out of the businesses we have in India. Something like INR 1,400 crore will be the revenue generated from operations outside India, including our share of the 50% share of the revenue from the China JV. All put together at a group level, we are talking about revenues of around INR 6,500 crores last year, including the China JV revenue. I'm not spending much time in terms of the leadership team and product lines in different businesses. I think many of you will be familiar with that. We have also added additional information on each business unit in terms of the products, the core strengths, and as well as the focus areas going forward for each of those businesses to give you a good idea of how we plan to address this business and how we plan to grow. This time we have also included one slide which highlights the aftermarket business we have. A number of products are traded, some are manufactured internally. The aftermarket business itself contributed INR 500 crore revenue last year. This year, it should grow further. That has a very attractive margin profile. We do EBITDA close to 15% in that business. Out of that, half the revenues come from domestic and half comes from export. We have distributors in a number of countries outside India as well. You see the revenue breakdown per segment. Two-wheeler contributes the maximum, followed by four-wheeler. It's about almost 70%-30% kind of a share. We have a very balanced portfolio between different regions in India as well as in exports. This is one thing which will be key to our efforts to improve margins in the coming year. Coming to the financial performance, starting with the overall industry volumes. In Q4 last year, the two-wheeler segment in India volumes declined by 21%, three-wheeler by about 2%, while there was marginal growth in passenger vehicle and commercial vehicle. On a full year basis, it declined by 3.5%, while there was growth in the other segment. For us, a substantial part of our revenue comes from two-wheeler, four-wheeler, two-wheeler and three-wheeler, which was a challenge for us. In spite of that, we were able to, when you look at the financial performance, quarter-on-quarter, we were able to grow the revenue by 11% sequentially and year-on-year by about 10%. Of course, large part of year-on-year increase is contributed also by commodity inflation, which we were able to pass on with lag of one or two quarters, but that has also had some impact in the margin. If you look at the margin development over a period of time, all the continuing operations together have a EBITDA margin of about 6.5% in Q4, which has sequentially improved. Compared to full year also it is a better number. If we had to split up this business between India, the remaining lighting business and other business, which is in slide number 18, you will see that India margins, India continues to deliver close to double-digit EBITDA margins. Almost in spite of certain exchange loss we needed to book in this year because of the exchange rate fluctuation on intercompany loans to the two-wheelers business. In spite of that, we are tracking at close to 10% EBITDA margin, which is quite encouraging. In spite of the commodity price increases and the delay in pass-through, and once the commodity price is gonna settle down and stabilize, this margin should improve further and go to close to around 11% or so. That's what we expect. The remaining two-wheelers business, which is a combination of Varroc Electronics Romania operations in Romania, the four-wheeler lighting in India, and this global two-wheeler lighting business together are almost at breakeven margins right now because of capacity utilization is still not at the desired level, so which is impacting the margins. Going forward, we expect the margins to improve in the coming year. Others, which is mainly our forging business in Italy, continues to be loss-making, and we are looking at strategic options for that business as well in the longer term. Recently we have been able to get some price increases from customer to compensate for that commodity increase as well as the energy cost increase in Europe. That going forward should result in better margins for the IMES business as well. At a total basis, the margin is in the region of around, let's say, 6.5% in the latest quarter. With all the improvement plans and the growth expected during next year, we try to move towards a double-digit kind of an EBITDA margin. That's what we are targeting to deliver out of the remaining business. The results from the discontinued operations have been shown separately. You see that that business continues to incur significant losses, which will continue to weigh on the P&L and the balance sheet for the next quarter or two till we complete the closing. Like we communicated after the SPA signing. We expect the proceeds from the divestment will help us to pay off the loans we have abroad and also reduce the debt on the books of the parent company. On a net debt basis to become, let's say, zero debt company on a net basis. That's what we are expecting to closing, which will significantly strengthen the balance sheet and enable us to invest in the remaining segments of business where we plan to grow quite aggressively. We have also given the revenue breakdown for the continuing operations in slide 17, just to give an idea of which business it's coming from. You will see that polymer, from business unit perspective, polymer contributes almost 1/3, followed by lighting and electrical electronics business units and metallic and so on. Two-wheeler motorcycles still contribute, let's say 60% of the revenue, followed by four-wheelers and then two-wheeler scooter and three-wheeler. India is roughly, let's say close to 80% of the revenue, with 20% coming from overseas. While from a customer perspective, Bajaj contributes easily more than 40% overall, with non-Bajaj customers together contributing close to 60%. You will see that overall about, let's say, our revenues from the two-wheeler scooters, which is where the EV penetration is happening initially at a high pace. Our reliance on that is not very high. Our portfolio in the short to medium term is fairly protected against the transition to EV. You also know that we have a large number of products which are to address the EV sector, EV segment, which we will be able to leverage on that once the volumes start picking up on that. This is broadly on the financial performance. On the EV business I mentioned, we won new business with lifetime revenues of more than INR 1,300 crore. This is between four different OEMs, both engine-related orders as well as non-engine-related components. A combination of that. That will continue to be our focus area to bring new business in this segment in future. Talking briefly about our product portfolio and the kit value, slide number 26, we try to give you a kind of kit value of the components we supplying for different segments. You will see that, we are quantifying the amount for different product segments ranging from around INR 5,300 or so to up to 110 cc segment, going up to INR 12,300 for more than 300 cc segment in two-wheeler. As against that, the EV segment, we expect the kit value to be around INR 30,000 per vehicle. That's the kind of value we are expecting from this segment. In other segments like two-wheeler and the other one we will look more closely on the next slide is in three-wheeler EV. The kit value will be as much as INR 43,500 per vehicle. That's another growth area that, for us, with the product portfolio we have. In slide 28, we have also tried to give a breakdown of the new order wins across different segments, annual revenues as well as lifetime revenues. Essentially out of the INR 35,000 crore, INR 3,500 crore revenue, INR 1,000 crore plus will come from EV and the balance INR 2,500 crore from IC vehicles. Bajaj is about 1/3. Non-Bajaj customers will contribute 2/3. The share of non-Bajaj will continue to grow. Two- and three-wheeler contribute more INR 2,230 crore against INR 1,270 crore for four-wheeler. The four-wheeler segment is another where we are seeing a lot of traction in terms of revenue growth, which also has a better margin profile overall compared to two-wheeler components. I think there are certain additional information on environment and awards and so on, which I am not talking about that much in detail at the moment. The detailed key details are provided and attached in the appendix, if you want to go through. The rationale for the divestment which we shared earlier this month is also available for you to look at. The summary of the discontinued operations in the last slide, where you can see the negative impact of that on the business, continues to be significant, which will be probably a drag for another one or two quarters till the closing. That's quickly a summary of the, let's say, the highlights of the quarter and the year and from a financial and business perspective. Now we are happy to take questions. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. Our first question comes from the line of Arvind Sharma with Citigroup. Please go ahead. Hello, good evening, sir, and thank you so much for taking my question. Sir, two questions from my side. First, on the continuing operations in India. This EV share of around INR 900 million -INR 902 million rupees that you've highlighted, that's broadly remained constant. The 902 crore rupees has remained constant since the last time you highlighted this number. I'm talking about slide 23. Any comments on that, sir? The expected revenue? The EV, see the EV segment, we are saying the lifetime revenues. Are you talking about the lifetime revenues, which we have showcased at INR 1,045 crores? No, sir. I'm talking about the expected revenue in FY 2025 for the current business based on SOB industry price. That's slide 23. One second. INR 2.9 crore, sir. Yes. This is basically the showcasing. This is the revenue which we expect, and this is from all, whether it's related to electric the EV Powertrain products or other than the EV Powertrain products. Overall, that's the kind of revenue we are expecting, you know, from the EV segment, you know, by FY 2025. Sure, sir. Sir, second question is mostly accounting related. The continuing & discontinued operations for the third quarter, which is the loss of INR 2,959 million, is a little different from what was reported in the December quarter. Is there something apart from just the discontinued operation which is impacting these numbers? Talking about the like-for-like numbers, third quarter reported continuing & discontinued loss versus what was reported in December. Just want to understand the dynamics of this new presentation because it's the first time we are seeing this. Actually, what we tried to do this time, because now that we have announced the sale of the business, the sale of the business is not exactly the entire VLS as we were reporting earlier. It is just a certain components of VLS which we are selling, and certain components like the electronics, two-wheeler lighting, global two-wheeler lighting in India, four-wheeler lighting in China we are retaining. That's why we try to break up the financials between continued and discontinued. Right, sir. Sir, shouldn't the sum of discontinued and continued operation be similar? Is there some interparty transaction there as well? I'm just comparing the two numbers, which right now is given as INR -296 crores versus what was given at INR -265 crores when you reported in December. You will see the press statement that there is the Q3 was restated. There was an inventory valuation error in our Morocco plant, which is a part of the discontinued operation. That impact has been taken in Q3 now. That Q3 went up by the equivalent amount, the difference you see, which is about EUR 3 million, roughly EUR 3.4 million, if I remember correctly. That is the amount which has been added to the Q3 numbers which were reported last time. Sure, sir. That explains it. Thank you so much, sir. Okay. Thank you. Our next question comes from the line of Joseph George with IIFL. Please go ahead. Hi. Is the audio clear? Yes, it's clear. Hi. Thank you. Thank you for the opportunity. I just have one question. What will be the effective date of the transaction? What I mean to say is you mentioned in the call that the closure will happen 5-6 months down the line. What I want to understand was in this period of 5-6 months, if there are cash losses in the VLS business, whose account will it fall into, your account or the acquirers? No. One is that we are looking at a closure, you know, by September, you know, of this financial year. That's our target. To answer your question, see, till we close the transaction, whatever are the profits or the losses, you know, in this discontinued operation will be a part of, you know, our consolidated results till that time. Yeah, we still own up to the results, whether negative or positive, till the time we close the transaction. Is it possible that you would have, I mean, you may have to infuse some capital into VLS if the operational losses continue? Yes. In case we see that there is a need for the cash because presently what's happening is that it's not only chip shortages which continue in, you know, in the discontinued operations. That is one reason for lower revenues. Also this Ukraine, Russia issue also has impacted, you know, volume because of higher commodity prices and inflation, and there is a certain kind of a, you know, impact on the demand. Therefore, there will be a likely possibility that we will have to infuse some amount, you know, as per need, you know, till the time we close. Understood, sir. Thank you. That's all I had. Thank you. Our next question comes from the line of Shivlal with Unique Investments. Please go ahead. Hello, good evening. Can you hear me? Yes, I can hear you. I just wanted to know the quantum of forex loss you have booked in internal corporate transactions. Will it be for one time only or it will be a recurring feature in near future? You are saying for the year -last- year, for the year? For this quarter four. Forex loss also we have accounted for. No intercorporate loans. The Forex loss we are accounting in the return now for all the three years. For the full year, it was INR 28 crores net. The last quarter, actually Q4, it was a small profit of about INR 4 crores. It will be a continuing feature in future? The loan will be repaid. It's really a function of the exchange rate movement in the sense that these are intercompany loans. These are all mark-to-market. So at closing, this will all get squared off. So yeah, theoretically it can move in either direction, and we are also looking at ways of hedging it to the extent possible, so. My another question is that how much will be the interest burden for the next year, 2022, 2023, after this disposal of the lighting division? After the disposal, the borrowings will come down significantly. Like I mentioned, on a net debt basis, we should become debt-free. It doesn't mean that there will not be any debt in the books at all. We'll still have some borrowings outstanding. Maybe out of the INR 2,600, let's say, gross borrowings, we have about close to I think, INR 3,000 crores or thereabout. We will probably end up repaying somewhere between INR 2,000 to 2,200, 2,300 crores of revenue. Sorry, of debt, sorry. The balance is what is remaining. You'll see a big reduction in the interest costs for sure, but it's a function of how exactly we are able to, let's say, negotiate and settle those loans and because that also will have an impact on the credit rating post-closing. Once we are able to pay off the debt, large part of the debt, which will reduce the interest cost rate, let's say, so on. It's a combination of all that. Yeah. But I can just say that post-closing can see a significant reduction in the interest cost. Maybe, I don't know, maybe one-third of the level we have now or even less could be. But it's a bit difficult to put an exact number to that at the moment. No, I think that for last year, to give you a kind of a number, for the continued operation, I'm not talking about the discontinued operations. On the continued operations, I think we had incurred about INR 150 crores of interest costs. I think post this sale, probably we would not be more than one-third of this as interest cost to us, post the closing of this transaction. You know, because none of the debt here also will get reduced, you know, which is in the continuing operations. This will happen by FY 2023? From Q3 onwards, you would see that annual impact. For the first six months, you know, till we close. Yeah. That I understood. First months of FY 2023, till we close, obviously, we have to absorb the overall interest cost. You know, once we close the transaction, then you will see that what I'm talking is about the continuing operations, you know, interest cost, you know, on an annualized basis. Okay. Thanks a lot. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one. Our next question comes from the line of Noel Vaz with Asian Market Securities. Please go ahead. Hello. Can you hear? Yes. Yes. Thank you for the opportunity. I just had one question. Right now, as per the slide on slide 18, you're saying that Bajaj is about 42% of revenues for FY 2022, right? I just wanted to know exactly since we are getting some four-wheeler wins as well as some other wins from the EV segment. The portion of Bajaj to non-Bajaj, how should we see it changing over FY 2023 or 2024? FY 2023, I don't know whether it will really change, but if you talk for the next 3-5 years. Mm-hmm. You know, once we also are focusing in India on the four-wheeler side of the business, and we are also winning customers for EV products also in a bigger way, you know, and also driving more our global business in Europe, you know. You will see that, you know, the Bajaj's percentage will go down. I don't know by how much, but it will go down to maybe it could be 1/3. You know, because Bajaj for us is a significant customer also on the EV side. Whatever numbers you saw for two and three-wheelers, but there's a full content of EV Powertrain there, plus of course the other parts like plastics or switches or LED lamps. I mean, they are our biggest consumer of all our parts for the EV vehicle. It will go down, you know, but I would say next three to five years, I think probably Bajaj should be one-third and non-Bajaj should be two-thirds. That's the way I would look, I mean, look at it. Okay. Thank you very much. My second question is actually related to your EV portfolio. It is, I think, DC-DC converter and starter motor, right? If I'm not wrong. Or I mean- The traction motor. Sorry, traction motors. The thing is, I see there are a lot of other peers who are coming out with, or are trying to compete in similar products. I just wanted to know exactly so how should we see this competition within these particular products going forward? Are we going to see a situation where there's going to be only three or four players competing within India within those same segments? Is it going to be still a little bit more fragmented than that? Hi, this is Arjun. I'll take the question. You know, in general, right, I think across the EV product lines, I think they will continue to evolve over, for sure, the next three to five years, right? For us, I think the way we look at it is, the technology that we have, the technology that we look to develop, we have and that we have developed, we feel there's clear differentiators for it. So there will definitely be segments. So the segment of the market, that we are very clearly targeting really is, you know, the kind of vehicle that a Chetak is, right? However, in general, right, if you look at the EV marketplace, it's still relatively fragmented even by performance of vehicles. You could expect that there will be a level of fragmentation for some more time. However, of course, you know, I think over time, as let's say, the market starts to mature, I would expect the component suppliers would also start to mature. Again, from a Bharat perspective, we are very confident that the portfolio we have chosen is, you know, really the most differentiated and has highest value add. Okay. No, thank you. Thank Thank you for taking my question. That's all from my side. Thank you. Our next question comes from the line of Rikin Shah with Omkara Capital. Please go ahead. Hi. Am I audible? Yes. Yeah, you're audible. Not very clearly, but we can get it. All right. I just wanted to understand regarding the patent infringement cases, while it might not be quantifiable, but what is generally the liability in cases like these similar? Can you please repeat? It's not so clear, you know. Patent infringement liability. Ah. Like we did. The way it works is that, you know, Valeo has, like, you know, raised a number of infringements against us, you know, a couple of years ago. Mainly it's in the German courts, you know. The way the German courts work is that, you know, there's a separate court which identifies if there's an infringement of any kind, even the smallest of infringements, they will say it's an infringement. Then there's another court which kind of hears out your nullification process. The first process is with the first set of courts would be in Germany, you know, okay, whether we have infringed or not. You know, and then, okay, there could be some interim liability, you know. According to us, all these patents are actually quite frivolous in our view, and they will not stand, you know, when it comes to nullification. You know, it will not stand, you know, on its feet. The only thing is that between, you know, this infringement which is granted by the court and the nullification, the gap is more than a year, you know. Till then, you know, it's something which you need to kind of deal with. What we are also parallelly trying is we're trying to see that whether we can reach some kind of a reasonable understanding, you know, with Valeo in this regard, so that we don't really have to unnecessarily kind of spend more on legal expenses and other things, and also settle the case, you know, I mean forever. We are also discussing with Valeo to see whether we can settle and come to a reasonable number, which would be in a single digit, you know, kind of in EUR million, it would be in a single digit. Let's see how that goes, you know. Of course, the court proceedings are going on, but at the same time parallelly we are looking at some kind of a settlement also with Valeo. Let's see what works out. If something reasonable, we will settle. All right. That's all from my end. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one. Our next question comes from the line of Deepak Pawar with Vasuki India Fund. Please go ahead. The person you are speaking with. Hello? Hello? Ladies and gentlemen, the caller has kept the line on hold. I will be taking the next question. The next question comes from the line of Abhishek Jain with Dolat Capital. Please go ahead. Thanks for opportunity. Sir, how much is the total debt if we include the discontinued and continued operation? On a net basis, so we are at about INR 2,600 crores. On a gross basis, it's close to INR 3,000 crores. 2,900. INR 2,900 crore on a gross basis and INR 2,600 crore on a net basis. INR 2,650 crore on a net basis. A continued operation, total debt is around INR 1,600 crores, right? Continued operations. See, when you say continued operation, you need to see India plus overseas. Yeah. Yeah. That is about, let's say INR 1,300 crore-INR 1,400 crore. That also, part of that debt was taken to finance the lighting system business. In that sense, it's not going as a discontinued operation, but it is really to fund the lighting system business. If you look at purely funding for the continuing operation, the net effect it will be much lower. Maybe a range of INR 600 crore-INR 700 crore maybe all put together. That's why once we have a closing and the sale proceeds coming in, you will see this figure coming down sharply. Yeah. Majority is for the discontinued operations, whether it is in any entity, whether it's in India or it's in overseas continued operations. Largely, none of the debt has been taken to fund the VLS operations over the last couple of years. What we are saying is that out of the INR 2,900 crore of gross debt, about INR 2,000 crore -INR 2,300 crore at least would be, you know, towards, you know, towards the VLS, you know, kind of, business. The balance would be more for the, you know, India and a little bit of maybe, other businesses abroad. You have raised around INR 4,700 crores from this deal, and your total debt is around INR 2,600-2,700 crores. Plus there is some adjustment because of the working capital. Most probably, you should become net a cash company after this deal. You are talking about that the debt will continue to be there around INR 8-9 billion in the books. Can you explain it entirely? Yeah. On a net basis, we will be cash positive on a net debt basis. But that doesn't necessarily mean that we will repay 100% of the existing borrowing. Some of the existing working capital financing, et cetera, which is at a lower cost, will continue. We will prefer to preserve some liquidity to be able to fund our investments in the growth areas we have identified, both EV related and otherwise. If we consider the cash and cash equivalents, then what would be the position in FY 2020 end about our cash on the cash or the net base? Yeah. On a net basis at closing, we should become surplus. That's what we have communicated. Beyond that, we expect to maintain that status going forward. It won't be any material change. Parallelly, we are also working on the long-term strategy for the India business or also other parts of the business. If as a fallout of that, if we decide to make any significant investments, at that time we will update in terms of anything. But we don't see. We still expect to end the current financial year on a net cash basis. Okay. What would be that CapEx for the next two years? Because the order book is quite strong, and as you said that around INR 1,000 crore orders from the EV side. In that case, you need huge CapEx going ahead. Can you throw some light on the CapEx plan for next two years in the continued operations? We would say that, you know, because the India side, I think we have made a considerable CapEx in the past, but still I think we will need to make CapEx of at least around INR 200 crores here. Then, you know, for the other businesses, you know, whether it's your two-wheeler global lighting or the electronics business unit abroad or for the India global lighting, overall I think probably we'll be looking at, you know, another probably INR 100 crores of investments. We can say, let's say for the next couple of years, I would say for the continued operations, we would look to invest about INR 300 crore, you know, each year, you know, to kind of have this kind of growth which we are aspiring for, which is at least about 8%-10% more than the market growth. What would be the asset turnover of this CapEx? Yeah. Typically the asset turnover for us, depending on the segment, ranges from 2.5-3.5. On average it will take maybe around 3. From the existing business, I'm talking about only continued operation, what would be the peak revenue? What is the current capacity utilization only from the continued operation then? On the continued operation, you are talking about capacity utilization. What is the current capacity utilization and how much peak revenue can be achieved, from the existing capacity only? You're talking about for the full continued operations? Yeah, yeah. I think that, yeah, I think that we could, I mean, if everything goes well and the market is kind of good, we could be looking at at least about INR 8,000 crores of revenue from the continued operations. Besides that, you are doing the CapEx of around INR 300 crores each year, I mean, the INR 900 crores in the next two years. Yeah. I think that's an investment we will make. I think initially, the investments are little bit higher, I would say for the, you know, the business other than our India business of INR 200 crores. For the next two years, it could be INR 100 crores. Then, you know, we don't have to invest so much going forward, even for a double-digit kind of a growth in those markets. Yes, the next couple of years, you know, it would be INR 200 plus 100. Sir, out of the INR 5,800 crore revenue, what was the revenue contribution from the two-wheeler international business and the India lighting business, four-wheeler lighting business? I think that we had shown it in that, initial slide to you. Can you just go there? Initial slide we had shown, in the beginning. Yeah. So basically, as a, we did INR 51 crore. So our lighting business, which was basically the, you know, the, what is that country that we showed? 21%. It's a combination of global two-wheeler lighting plus India four-wheeler lighting. The way we have shown it, if you see slide number eight, you know, we had shown that the India four-wheeler lighting and the global two-wheeler lighting business is 21.4%. That includes also the India two-wheeler lighting. Then you have, you know, the polymer business which is at about 33%. You have your electrical and electronics business in India, which is about close to 20%. You have the metallic business, which is all your engine valves, gear, all the IC related, mostly that's about 12%. You have that IMES, that forging plant in Italy, which is 5.1%, and your aftermarket is at about 8.5%. What would be the part of the VLS revenue in total revenue? If I talk about the earlier, two-wheeler lighting, was the part of the VLS, plus the India four-wheeler was also part of the VLS, which has not been sold yet. If I talk about the only that revenue, what is the quantum? That is the one which I said was 21, you know, the lighting itself as a whole would be 21.4%. That's what we are showing. Okay. It is more than the INR 11,000 crore kind of revenue. Yeah. It will be more than 1,000. Okay, sir. What kind of margin expansion you are looking for from overall business from the continued operations for the next two years? See, I mean, we are gonna be striving to achieve in the next couple of years, you know, an EBITDA margin of closer to 11.5%-12%. That is something we are very confident about, especially, you know. India is something in the next two years we would like to achieve a 12% EBITDA. That's what we are striving for because we have a lot of business already and with a bit of market support, I think we can achieve that 12%. In the other businesses, I think everything else, I think we can look at about we would like to strive for closer to 10% EBITDA or EBITDA. That is gonna be, you know, what we are gonna be looking at. You know, but for India is gonna be probably 80% of our revenues, you know. The balance will be about 20% of our revenues. That's the way we're looking at it in the next two years, that this is something we need to achieve, that we will achieve. As you mentioned that around more than INR 1,000 crore is coming from the international business, international lighting business from the VLS, and we see that is a low margin business. Plus there is a incremental revenue from the e-two wheelers around INR 1,000 crore. This is also a low margin business. In that case, EBITDA margin expansion of around 500-600 basis points is possible. If possible, then what would be the key growth drivers? See, basically the way I see it in the foreign businesses, whether it's your electronics business unit, which has just started and the revenues will be really seen in the coming year, you know, I'm talking the Romania business, and that's going to be a double-digit EBITDA in the coming year. We're also looking at an overall global two-wheeler lighting business, you know, to be at, you know, about 10%, you know. The India four-wheeler lighting business, I think this year we can expect, you know, 8% and then going to the next year, 10%. Our India business, you know, our, I mean, the major business, here we expect it to be, I mean, 11.5% in this year and probably 12% in the next year. Okay, sir. Thanks, sir. That's all from my side. Thank you. Our next question comes from the line of Pawan Parakh with Renaissance Investment Managers Private Limited. Please go ahead. Sir, just one question. What is going to be the cash burn in discontinued operations until we consummate the deal? Frankly, you know, we are not really expecting too much of a cash burn over here. You know, we are looking at, you know, kind of seeing that how we can really mitigate this kind of a cash loss. We are taking already a lot of measures, you know, of Project Grail, which is continuing kind of a aspect. Which means, you know, basically, you know, streamlining the operations, the scrap and all, especially in the new plant. With the current plants, you know, we don't have an issue, you know, as such. But yes, there could be some cash burn. You know, we don't know the estimate because it's month to month. We have to see really based on the volumes, you know, because of the chip shortages, you know, and also the Ukraine issue, largely more in Europe. I would say the European perimeter, which is a major perimeter. You know, here, you know, it is very difficult to really predict what is gonna be our cash burn. I think whatever it is, it's a question of another few months, you know, that's something we will finance. We don't expect it to be some kind of a major cash burn over here. There could be a small cash burn or something we will finance. Okay. What was the cash burn in Q4? Q4 cash burn was how much about, Kumar? I mean, in the region of EUR 10 million-EUR 15 million. About EUR 10 million-EUR 15 million. Basically, when you say small cash flow means like EUR 10-15 million for two quarters, which means like EUR 20-30 million. No, no, we are talking about, Going forward, what we are seeing is that the revenue sequentially is improving quarter on quarter because the main issue so far has been on the revenue side because the semiconductor supply shortage situation. Capacity utilization was an issue. Now that issue is getting improving, like, sequentially, we are improving the revenues. We expect this quarter and next quarter. I mean, this is not fully normalizing, but still it's coming to a reasonable level of capacity utilization, which is why operationally we expect the cash flow to come close to break-even levels. It could be. On top, we are also getting price increases from customers to compensate for the commodity cost increases and the energy cost increases we have had in the last few quarters. The combination of that, we expect the business to be operationally come close to kind of break-even free cash flow. That would be. The main financing requirement will be related to certain loan repayments, which are coming due between, let's say, in the next few months. That would be in the region of EUR 15 million-EUR 20 million between now and let's say closing September or so, which we had to finance from the parent company. A little bit of incremental operational funding, depending on how the revenue- Yeah, a few more million EUR probably may be required. We have to keep that, you know. It's not something like significantly what we have seen in the past. We don't expect that to happen. Okay, sir. Thank you so much. Thank you. Our next question comes from the line of Basudeb Banerjee with ICICI Securities. Please go ahead, sir. Thanks, sir. A couple of questions. One, to continue with the previous question. That six months from April to September, not a small time, it's almost half year. So on a general basis for VLS for full year, CapEx used to be almost INR 700-800 crore. So in this six-month period, what is the CapEx VLS will be doing? Is that subdued significantly or it is normal that will also define the quantum of cash burn? So from that angle, if you can highlight. Yeah, I don't think that, you know. I think presently we're not really spending more on CapEx because we already have a lot of investments in place. We utilize on our investments and, you know, so the moment we are not really doing much of a new CapEx. Presently for the last, I would say from January onwards, our CapEx has been only towards past payments. We are not really investing in new CapEx at the moment. Sure. Second question, sir. If I look at in your presentation slide 17, where you have highlighted segmental profitability, it's very useful. Where roughly FY 2021 and 2022, both the years, VLS remaining operation operated hardly at 1%. And similarly, IMES Italy -9% in both the years. So broadly, one can see that the loss of IMES might get balanced out by either EBITDA profit of VLS remaining, and the residual EBITDA is only from India operations. So 1% moving to almost 9%-10%, as you mentioned, and -8%-9% moving to +5%-6%. If you can explain the journey. More, is IMES fixing also up and running sooner rather than later because double-digit EBITDA loss making entity taking away a significant part of your residual EBITDA. See, the way I see, frankly, for FY 2023, you know, the EBITDA margins I expect, you know, in India would be closer to 11.5%. That's my expectation. Sure. You know, on the VLS remaining operations, I would expect it to be closer to 10% in the coming year. IMES would be in the range of probably from a -8.7%, I would say in the range of 4%, 4%-5%. This is what I am looking at for FY and FY 2023. IMES, why it's coming to profitability is because recently we have got the price increases from our customers in this business towards gas prices as well as towards raw material price increase and general price increase also. Therefore, you know, I think we'll be better off also in our other operations IMES side also in this coming year. Sir, VLS India four-wheeler lighting operations, how is the profitability? That will be around 8% in this year, but then next year we are targeting 10%. Similar to the gas price and other raw material contract changes what you mentioned for IMES, how one should look at VLS remaining operation margin moving from 1%- 10%? I think this VLS remaining only 1%, you know, has got a lot of noise around it, you know, in the last year. I don't want to get into it. The business, if you see the VLS remaining operations, largely I've only told you about the India operations where we expect it to be, you know, at about 8%. The other two main businesses are the two-wheeler lighting businesses, where we have got plants in Italy, Romania, and in Vietnam. Vietnam is doing very well with a high level of EBITDA because it's got the revenues, you know, and it's already doing a very good double-digit EBITDA. When it comes to Italy and Romania, the issue today is the capacity utilization. That's something where, you know, we're looking, you know, to see that we are able to in that region at least touch about 7%-8% for the EBITDA. Overall, I think we will be at a 10% level for our two-wheeler lighting business, at least, you know. And then the EBU, now we see the sales coming in. We've not really had any sales, the Varroc Electronics Romania. There also we see, you know, revenues, you know, coming in at about INR 25-30 million in this year. And we're looking at a double-digit EBITDA also in our Varroc Electronics Romania because this year at the moment, we're supplying all these PCBAs, lighting PCBAs to VLS, which will then BPO, you know. Therefore overall, you know, we are quite confident that, you know, because we have the businesses, the business has been taken at good prices. You know, it's a question of better utilization in some of these plants like Italy and Romania. I think with a better utilization, you will see a double-digit EBITDA in these businesses. It's not really a problem. Sir, now like, from the previous question, regarding that inventory adjustment for Morocco plant which got accounted later on. Like, initially all of VLS was going to get, either off or sold. Why these partial operations, still you are keeping or you have kept them on, visibility of major turnaround and capability or Plastic Omnium, didn't want those, operations? See, what we have kept out of VLS is about two-wheeler lighting global lighting business, which is anyway our core business. That's something, which we would not sell, you know, and nobody interested because they're not in the two-wheeler line anyway, and we could also not sell. That is very clear. On the electronics business unit, we have kept it not only for supply of the lighting PCBA. You know, we have also developed our own future technologies on the light engines or the light control units, which we will supply to a lot of the other lighting players, you know, independently, and that's a future technology. Also we are developing at the moment the internal external cameras, which are the ADAS products, which has got a very good, you know, market, especially in China and India, other than Europe. The electronics business unit is also something which is core to us, you know. Electronics as a business unit is not lighting. This is a high ROC business, you know. A good margin and a high ROC business. Electronics is something which we have chosen to be, you know, for us, you know, as a future growth item other than the two-wheeler LED lighting and EV products, you know. This is also going to be a core business for us, you know, moving forward, the EBU, which is in Romania, you know, other than the two-wheeler lighting global. Here the margins are good, you know. We are not too concerned about margins going forward. I think the margins have been impacted, you know, more because of capacity utilization, I would say, in these plants. Romania is a new plant. Our Italy plant has been challenged by some of capacity utilization. You know, with a better capacity utilization at 60%-70% is a PAT positive plant. You know, I mean, the Italy plant, you know, et cetera. These two businesses anyway we want to keep. India four-wheeler lighting is our market. We want to keep the India four-wheeler lighting business. Of course, the market we understand, I mean, here whether they are global four-wheeler lighting company, four-wheeler companies, OEMs or there are Indian OEMs, we have a good relationship. We do other parts also, like plastic parts or, you know, some of the other, engine parts, you know. I mean, we have old customers here. Here they're very comfortable, you know, in doing business in India, you know, it's in our market. You know, we wanted to keep this. It was our choice to keep this business. Here we have a non-compete arrangement with Plastic Omnium, you know, for five years, you know, and which would also continue further. We have all the latest technology agreement also. Whatever future technologies come in also will be, you know, will be there for India. When it comes to China frankly did not get sold because it's a JV. You know, because it was a JV, it's something which, you know, companies were not interested in buying, people were not interested because it's JV. Going forward, you know, once we have a solution for China, we will see what to do, you know. You know, but presently, people were not interested in actually buying into a JV kind of a thing. You know, they want to be independent. Sure thing. Thanks. Thank you. Our next question comes from the line of Deepak Pawar with Vasuki India Fund. Please go ahead. Yes. Thank you for taking my question. My question would be on the electronic components or parts on two-wheelers and three-wheelers, which, you know, we are expecting INR 30,000 on two-wheelers and INR 43,000 odd on three-wheelers. What could be the EBITDA margins that you expect, any ballpark figure on these kits? I think it would be double-digit depending on the product because some of the more expensive products like motors, which are at least 8-10 thousand INR. Some of the bigger components you could have probably a lower EBITDA, maybe 10%, but it comes to the smaller product. It could be anywhere between 10%-15% is what we look at as a range for, depending on which EV product we're talking about. But that's something our EBITDA margin anyway needs to have for the kind of investments we have made in this business, not only on capacity, not only on CapEx, but even on the engineering side. There's a lot of money invested here. Right. Yes. Yeah. That, that's all I wanted to know. Thank you for taking my question. Thank you. Our next question comes from the line of Arvind Sharma with Citigroup. Please go ahead. Greetings, and thanks for taking my question again. Sir, just a quick clarification on the revenue guidance that you gave of INR 8,000 crores. What's the timeline for this? The 8,000 crore is what we can do in the continued operation. That's our capacity. You know, that's the minimum we can do. But it all depends on the market conditions, you know. But what I'm saying is that we have done about INR 1,500 crores last year in the continued operation. We will do always 8%-10% more than any market growth. That we are very confident of doing, you know. It'll be 8%-10%. I don't want to put a number there, but it'll be 8%-10% more than whatever the. If the market grows at 1%, we will grow at 10%-11%. It grows at 5%, we will grow at 14-15%. That's what I'm saying. That we're very confident of with our whole product portfolio which we possess. Sure, sir. I believe that includes the new EV orders as well. Yes. Yes. Sir, just to rehash, the margin numbers, the Consol business margin aspirations are 10%. Yes. Which includes 11.5% for India and 10% for the remaining part of the VLS. Is that the right number, sir? Yes. Like I said, we have, we would like to have 11.5% for India, you know. In India, the only line of business we are not looking at more than 8%. Then the other businesses, we are looking at 10% abroad. Sure. So if I- Right, sir. Just, I know you clarified on this, but just to know, to be very sure, when you talk about the India operations revenue in the group performance, India and VLS remaining India operations revenue include EBU, MBU, but do they also include the four-wheeler lighting business in India, which was earlier part of VLS? No, no. Four-wheeler lighting at the moment comes in the VLS remaining. VLS remaining. Got it, sir. Thank you so much for the clarification. That's all from my side. Thank you, sir. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to our management for closing comments. Thank you. I just want to just thank everyone again for joining us, listening to us, and asking your various questions and queries. The trust and faith of all our stakeholders is what motivates us to pursue excellence in our day-to-day life. Thank you very much in showing confidence in us over these last few years especially. Thank you. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.