Jtekt India Limited (JTEKTINDIA) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4FY202526 Earnings Conference Call of JTEC India Limited. As a reminder, all participant clients will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal for an operator by pressing star and then zero on your touch-tone telephones. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Chanana, Director, JTEC India Limited. Thank you, and over to you, sir.

Good afternoon, ladies and gentlemen. Let me introduce a team here from JTX India site. We have with us Mr. Yusuke Fujiwara-San. He is a whole-time director. We have Mr. Dhanunji Rao. He is a technical advisor and part of the MD office. Mr. Ashish Singh is divisional head, strategic division. He is responsible for sales and marketing as well. Vikas Goyal, he's the financial officer of the company, and I'm Rajiv Chana, full-time director. I will hand over the call to Mr. Fujiwara Seng for the opening report. Thank you.

And welcome to the JEDICT India Limited annual earnings call. My name is Yosuke Fujwala, full-time director of the JEDICT India Limited. I would like to thank all participants for joining this call and the organizers. For the FY2526, Potential vehicle segment achieved sales of 5.54 million units compared to 5.07 million units sold in FY2425, thereby achieving annual growth of 9%. This was an unexpected achievement. Particularly considering the fact that during the first half of the year, the passenger vehicle segment registered a growth of only 1.6% in September 25. The Indian government announced a major indirect taxation reform which lowered the GSC rate from 28% to 18% for smaller vehicles and from 50% to 40% for larger ones. This change improved vehicle affordability, particularly for the small-sized segment. In the second half of FY2526, the passenger vehicle segment registered a growth of 16.7%, which was quite significant. Now I'd like to discuss with you the company's financial results. During the financial year 25-26, JTECS achieved a sales growth of 11 percent compared to passenger vehicle market growth of 9 percent. The growth in sales at JTECS was supported by SOP of eVitalas and Victorious by Maruti Suzuki, where we are supplying demand for certain vehicles like MSGear, CEPS, and CBJ. Due to reduction in JGST rate, There was increase in demand for the certain vehicles like Alto, Jimny, Valeno, Eltega, and Brisa, where JTEC is supplying components to multi-Suzukis. Our sales to Mahindra, Mahindra, and Tata also increased by 17%. With the improvement of sales, the EBITDA margin for the second half to a level of 8.48% compared to 7.71% achieved last year. Despite this improvement, we are short by 0.1% as the full-year margin declined from 7.60%, last year to 7.5% in the current FY2526. JTX continues to exercise strict control of fixed cost. In the category of the employee cost and administration cost, we achieved a saving of 0.28% as a percentage of sales. Variable cost was higher by 0.38%, mainly due to product mix, increased rate of state electricity power and reciprocal tariffs paid on export to the U.S. As we conclude, I wish to convey my deepest gratitude to our shareholders. Your trust and support have been instrumental in making of our maiden rights issue during the year a great success. Our promoters, JZ Corporation JAKAN and Maruti Suzuki, participated fully in the rights issues. And the participation from our public shareholders was overwhelming with appreciation, exceeding twice the number of the share offered. With this, I'd like to thank you for your participation and open the conference for questions. Thank you.

Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may enter star followed by one on their touchstone telephones. If you wish to withdraw yourself from the question queue, you may enter star and two. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Tushar from Peace Wealth. Please go ahead.

Yeah, hi. Thank you for the opportunity, sir. My first question is regarding the growth margins. So if we see the growth margins from last two years, they have been continuously declining from 29 to 27 percent now. Can you just highlight what are the key factors behind this, and how should we see the growth margins from here on? That is my first question.

Sure, Tushata. Thank you for ending this conference call and asking the question on margin. Yeah, we are equally concerned about that. So let me take little time to explain the change point which has happened over the last two years. I will not be restricting myself to the current year. I will try to correlate it with a year before that also. You are aware that 2025-2026, it started with a weak note. You know, we saw passenger vehicle market growth just 1.6% in the first half. Now, this is lower than expected sales and EBITDA margins for the first half of 2025-2026 declined to 6.3%, compared to 7.6%, which we achieved first half of the previous year. So, as the sales improved due to reduction in GST rates in September 2026, The margins also started improving, and the second half was 8.48 compared to 7.71. Despite this improvement, like we're touching 8.48 percent, still when we look at the full year margin, they were down by 0.1 percent from 7.5 percent previous year to 7.6 percent in 25-26. Now, let me start my explanation with analysis of the fixed cost. JTEC, you know, we always mention continues to exercise split control on fixed costs. Employee costs as a percentage of sales declined by 0.18%, almost 0.2% compared to last year. Similarly, admin costs as a percentage of sales declined by 0.1%. This reduction in admin costs was particularly important for me to mention because during the year we had a rights issue and the rights issue expenses were also booked, which was about a good amount of 8.2 million. The management focus on exercising strict control on cost, which are controllable at our end, and thus fixed cost reduced by 0.28% as a percentage of sales. But coming to variable cost, there was an increase compared to reduction of 0.2% into 28% fixed cost, 0.38% was increase in the variable cost. And this includes, as you said, margins. Material cost was up by 0.18%, manufacturing 0.1% and selling 0.1%. And that all together, this resulted into reduction in our EBITDA margin by 0.1%. So let me explain the change point in the variable cost segment. Material cost, as I said, was high by 0.18%. So there was a mix of positive and negative factors. Which resulted into the net change of 0.18%. So let me explain the positive factors first. The positive impact was as high as 0.38%. And this was due to improvement in our business condition, which impacted us very badly in the previous financial year, which I'm talking about 24-25. Where the margin fell in a very high manner. About 1.4% was declining in our margin when we compared last year, 24-25 with the previous year. So one major improvement point was increase in exports. During 25-26, we were able to increase our export sales by 20% from 551 million to 664 million. And this improved our margin by 0.15%. We compare these exports here with 23-24, which I am trying to compare two years back. Two years back, our exports were $867 million. So we are still below our benchmark level of $867 million by as high as 22%. And this is still impacting our profitability during 25-26. We expect this should improve in future. So now further, there were some other factors which were positive, like which impacted us in 23-24, like in-world trade costs. You recall we mentioned about the Red Sea issue. There were a lot of testing happening because we were moving into several vehicles, like E-Vitara, Victorious, and one more, MTV, which is now under launch. So we were doing a lot of testing jobs for our new product development, and the new lines were being installed. So, we have... Manual Jail line installed at our two facilities, CTS line, CVJ line. So all these lines were getting established, so the testing charges were very, very high. And then the settlement of provisions, you know, which we mentioned last year. So these improvements gave us, during 2025-2026, compared to the previous year, we improved by 0.23%. So overall, there was an improvement in margins by 0.38%. Now, coming to the negative factor, about which impacting our profitability, oh, sorry, the positive was 0.23%. Now, coming to the negative factors, you know, these negative factors was about 0.56%. There were two major reasons for these negative factors which we faced during 25-26. The first reason was change in the product mix due to major decline in sales to Honda, which was about 33%. Sale to Renault-Nissan for the export models, which was about 16%, and a small decline into it also by about 4%. Now, the profit margins for these customers are better for the sales which we do to them. On the other hand, you know, we saw a lot of change in the business mix where sale of steering systems to Maruti Suzuki for cars like Alto, Jimny. Baleno, Artiga, and Brisa had increased, primarily because of the GST cuts, which gave them a positive impact. Margins in these models are slightly lower. When we compare with Honda, Toyota, Renault, Nissan for export models, I think the margins are slightly lower. And this change in mix costed about $88 million, which is approximately 0.33% impact on the margins. Now, we expect that the Honda sales in the future years will improve. We are waiting for the launch of another vehicle, which is an SUV EV by Honda, which will be launched from their Tapu Kera plant during maybe around December 26. Now, just to reconfirm, you know, I think the point which is relevant for you to note is that the raw material price settlements with customers are back-to-back, albeit with some time gap. So, does reduction in gross margins happen only when we have a product mix? Which is negative for us. Or when there are some other factors like inward fade changes or there is an increase in the new product development cost. You know, the new product development cost is taken as part of the material cost as far as accounting norms. We simply add it into the material cost. So this is one major reason which impacting our profitability during 2025-2026. The second reason. Which is more of an accounting issue. If you look at my financial results, which we have published, you will notice there was a big foreign exchange gain of about 26 million or so, or 62 million or so. So, this, when we realized this positive forex gain at the time of payment to our overseas suppliers. So, you know, when the effective payment. For our imports were actually lower compared to the liability that we booked at the time of purchases. So what happens is that when you record the liability for import, you record it at a certain forex rate, and when you make the payment, you pay at the actual rate. In fact, the material cost should be booked at the actual forex rate. Unfortunately, that's not the accounting practice, which we have to follow. We need to record any forex gain on purchases as a other income. So, therefore, imports were booked at a slightly higher price, which costed about 62 million, 0.23%. So, 0.23% of forex, which is 0.33% of product mix. These two together costed 0.56 as a negative factor. Which offset our improvement of 0.38%, which we achieved compared to the previous year, and therefore their net negative impact was 0.18%. Now, these factors, both the factors which I have just mentioned are, looks, in my opinion, are temporary, and we should not be getting hit by the same kind of a drastic product mix change next year, or we will not get any forex hit. Even though it was income, getting added into income, but we will not have this kind of an accounting issue in future. So considering that, these are the temporary factors. Now, coming to, just to explain a little bit on the other category of variable cost, manufacturing cost was higher by 0.1%. This was mainly because of the power tariff change during the year. And then, you know, another major factor was that increasing power utilization for the new production lines, which are under trial and implementation. Again, this is one-time factor. So, once we, once our lines are ready, we don't have to incur additional power costs in trial and implementation of these lines. Coming to, this was an impact of 0.1%. So coming to last impact, which is selling cost, again 0.1% impact, and this was mainly, so they were, again, they were a positive and a negative factor. The positive factor was that We had a positive warranty cost change. So, warranty cost was down. Just to inform you again, we had a recall situation in the earlier year. This year, the warranty was much under control. So, warranty cost was almost down to half. And that gave us a positive of 0.15%. You are aware about the U.S. tariff, you know, the reciprocal tariff and penalty tariff which U.S. imposed on our exports. That costed us about 63 million, which was 0.24%. So, together, a positive 0.1% and negative 0.24%, there was a net negative of 0.1%. Again, this is one-time factor. You are aware that the order of Supreme Court, this tariff has been now withdrawn in U.S. So, futuristic little bit, we expect some improvements in business situations. Number one is that a reduction in U.S. tariff from 50% to 10%, we expect U.S. exports will increase, and further these exports will be at a lower tariff, and thus will help improve profits as well. Second, we expect sale of new models of Marcus Suzuki, where JIN has started supplying during 25-26, will increase. Marcus Suzuki is expected to launch another MPV, which is EV from Gujarat plant, expected in October 26, and we expect that this will help us to increase our revenue and improve market. Again, for this model, we are supplying all complete sharing MS gear, CPS, as well as CDA. Cost of testing, as I just told you, will reduce in future, and this will help us because most of the SOPs will now start. Export to Brazil will start. We informed in our previous meeting is that we got a purchase order from Brazil, and I'm happy to announce that we will be starting dispatch from this month. From May month, we will be starting dispatch, and this volume will continue to grow up to maybe 5 lakh unit. We expect this will grow. And lastly, our efforts to continue to maintain fixed loss under control. So these are the various things where the management will be working to continuously improve the margins in future years. I hope I have been able to answer your question in more detail.

Yes, sir. That was very helpful, very detailed. Thank you for that. I really appreciate it, sir. If I can go to my next question, sir. My next question is regarding the Tarotas Badidi plant. So, as we know, they were putting up a third line in Badidi, and that was to be commenced this year itself, and from what I have been reading in the public articles is that this has already commenced. Can you just confirm this, if that has commenced, and if yes, then how should we see the revenue mix from Toyota, or for us, which has been traditionally about 12% in this go to 15-16% in the near term?

Sure. So let me tell you about the breakup of our sales. So Toyota was 12% last year, and was 10% this year. And one of the reasons why Toyota slightly declined by 2% because market Suzuki went up from 56% to 60%. Others were more or less same. Honda declined from 8% to 5%. Mahindra and Tata remained together at 10% level. And exports slightly improved from 2% to 3%. So this was a somewhat breakup of our sales to different customers. Coming to your question about Toyota, Toyota is, you are aware, is that part of a group of JTEC. They hold about 20% equity in JTEC Corporation Japan, and JTEC Corporation Japan is the largest promoter of JTEC India Limited. So, we are connected with them. So, in India, we are involved with most of the developments, like, for example, like, all the current manufacturing is happening using our steering systems. And one of the reasons our moving to Western region was is to, you know, because we are aware that Toyota possibly will be setting up new facilities in Maharashtra. We are hoping that these facilities set up as early as possible because we will be ready for that. And that was the main reason for our setting up a plan in Gujarat, primarily to support Suzuki, which already has a plan and they are expanding in Gujarat. And we will, we expect Toyota to expand in Maharashtra. But these are all news things. We do not have the exact information at this point of time. And normally we will not. Even if this happens, this will happen sometime in 28 and 29, in our understanding about the Toyota thing which you are saying.

I am asking about the Toyota's Badidi plant, which is an existing plant where they were putting the third line with an investment of 3,300 CR, where they were increasing the capacity by another 1 lakh. I think that has already commenced.

Right. No, no, that has not already commenced. The new facility, in our understanding, is that to begin in the first half of 29.

Yes, that is for Maharashtra, but for Badiri, where their existing plant is housed, there also they expanded that capacity by 1 lakh. It's okay, sir, I'll maybe check on that later on with you via mail.

As I said, the most important thing is that we are attached with Toyota for all their steering requirements. And you are aware that we are supplying for Hydrider, etc., for CVJ also, we are already supplying to them. So we are the only supplier at this point of time for them, and we hope that we'll continue to be the only supplier for Toyota in future as well.

Yes, yes. That's the call of Toyota on that. Since now Toyota is also putting up a plant in Maharashtra, they have officially announced this. So, on the driveline segment of JTEC Corp, as I understand, there are multiple products that are there and not just CBJ or hub unit bearing that we do. Hub is something that we will do. But other than that, also, there's a whole catalog of different items like drive shaft, drive plates, and there's this LSD, ITCC, and flex plates. So, is there any plan for J-Tech Corp to, you know, give these products also under J-Tech India on the line? Do we have any intent of doing that other than CBG or hub unit bearings?

So, you know, these new products, like, for example, when we introduced CVJ, Constant Velocity Joints, into the Indian market, this was actually a step towards company aspiration to increase product portfolio. You're rightly so, and we always wanted to gain the share of important driveline segment of Art of Components. And so while steering, we have the complete... We are not a complete system supplier, but we are not a system supplier when it comes to driveline products. So our aspiration is to keep increasing our capacity in this particular segment and keep introducing more projects. However, you know, it takes time, you know. We need to see that we first reach to a certain level of growth in CVJ. We told in the last meeting is that our first level target is to touch about 15% market of CVJ. So, just to give you a little bit more information on CVJ, so, during the current financial year, you know, we, the second CVJ line came into operation from November 25, and this has increased our production capacity by 7.54 lakh units per annum, which is equal to 3.8 lakh vehicles because CVJ is supplied in sets. And, uh, 25, 26, uh, the... Total sale was about 1,300 million only. That was just about 67% or 65% of the total capacity utilization. What's happening is that the third vehicle of Maruti Suzuki, which will be launched now, and we will start supplying, and we expect that the capacity utilization for that will increase to 90%. And this sale will touch about, say, to 50 crores or more than that. Currently, we are only supplying for Grand Vidara and Toyota Highrider. And then in August 25, we are aware that we started supplying for eVitara and Victorious, which Marky Suzuki introduced. And so, you know, the idea is that we need to capture the market of, which is a huge market, and can be bigger than a MS gear market, which we are currently serving in the steering category. We are the... Competition is there. NTN and other people are already there. They already have more than... GKN has got more than 60% of the Marathi business. So we need to enter that area. There's a huge competition, and we are targeting that business to reach to a level of at least 15% to begin with. The third line, we will start working now. So CVJ third line will give us about a production capacity which can help us to touch about 15% market share. And then when we move to Gujarat, yeah, we will expand further in the CVJ category. So this is one area where we have just introduced and we are still working very hard because there are various versions and various, you know, specifications which we need to get over a longer vehicle and a smaller vehicle. We call it a long-stem technology. So many, many things we have to do in this particular area. So give us some time. I think you will be the first person to know whenever we plan a similar activity in future. Yeah, we have insight a few things, but nothing at this point of time which has displaced because we need to do a lot of work on CVJ first and maybe then move to another segment.

Okay. My last question, sir, now is about this JTEC Brazil order that we got was the first of its time from JTEC group. Do we, are we in discussion with other JTEC entities also? Do we have a plan in future to cater to other JTEC entities?

So, if you recall, yeah, so if you recall during its presentation to investors, While announcing its financial results for 24-25 JTEC Corporation in Japan, they expressed its intention about strengthening Indian sites by promoting India as a global site. You know, this was not just a statement because when JTEC Corporation in Japan is informing something to the investor, they have a lot of weight behind it. And we expect that to strengthen our operations to meet the expectation of our group franchise. So this activity of Brazil will now start, and we expect that about 70,000 units will be supplied during the current year. The first shipment will happen this year, this month itself. We will start supplying to them. And this business can be huge. We already set up, as we inform you, we already set up a line, manual gear line at our Chennai unit with an installed capacity of approximately 4 lakh units. And this business will go very fast, as per our understanding, because there will be many, many variants which will be launched by Stellantis in Brazil on the same platform. And we have a few details that this business can rise up to 5 lakh units per annum. And once we are able to establish ourselves with the group entities by performing well, supplying on time, supplying the best quality products at the right cost, once we are able to establish ourselves, I think there will be more business waiting for us. We just have to be a little patient, keep working hard, and then see that the next order will come.

That's great. Very heartening to know, sir. Thank you so much. Now, just before I wrap up, sir, are we supplying to Duster also? Are we supplying for Duster also? Or not?

No, we are not supplying to Duster. Most of the models which we are supplying to Renault and Nissan is on the export models. Sunny and all those models. That's where we are, mostly.

Okay. Thank you. Thank you so much, sir, and all the best.

Thank you, Tushar. Thank you so much.

Thank you. The next question is from the line of Aman Vohra from Premier Capital. Please go ahead.

Hello. Yes, Aman. I'm audible?

Yeah, hi. Yes, Aman. Yeah. First of all, many congratulations on a strong fourth quarter performance. I actually just wanted to get some understanding from you on our revenue trajectory. So, in the previous quarter, you had explained that by F27, we would look to add about 1,000 crore to top line because of all the new capacities that we have commissioned in the last six to nine months. So, could you just update us on that? Where are we on that guidance? And also, given all the initiatives around the new capacities from all our clients, the opportunity of export to the promoter group, as well as the CVJ ramp-up, can we move to double our revenue in the next three to four years?

Let me explain to you where are we now. I will leave it for you to decide. So, I will explain to you where we are. So, let me start with 25-26. That's just completed financial year. So, JTEC India, as Pujivara Sand in his opening remarks mentioned, that we touched a growth level of 11% compared to the passenger vehicle market segment growth of 9%. So, we perform better than the market. So, now, out of this 9%, when we look at the overall passenger vehicle market growth of 25-26, the share of Marty, Suzuki, and Toyota was 5%. So, when we say that the passenger market vehicle grew by 9%, Marty, Suzuki, and Toyota grew by 5%. Now, this taxation reform, you are aware about GST reduction, etc., etc., this actually sparked optimism. And we have saw a significant increase in demand for several models of Marty Suzuki where we are present, like L2, Jimny, Paleno, Altega, Prisa. Because of our presence in these models, during the last two quarters, we were able to get a huge business from these. And therefore, as I told during my previous, answering the previous question, that our share with Marty increased from 56% to 60%. Again, the new business of Marcus Suzuki, Vitara, Victorious, they gave us an additional scale of 173 crores, 174 crores, because we are supplying almost every product, like we are supplying manual gear, we are supplying CPS, and we are supplying constant velocity CVJ joints also. Still, this was not good enough, you know, because there was a huge delay in the SOP of these models. We expected these models to start from June, and then they finally started from August, and then mainly for export models, and then launch in Indian market was further delayed till possibly October, November. So what we expected for these models, we did not achieve that, but still, you know, despite that, just a few months, and then we touched about 200 crore kind of a sale turnover from these two models. And now we are waiting for the third model, which Marthi Suzuki will be launching. This is a MPV EV from Gujarat. And we are again a complete supplier for all the three products, manual gear, CPS, and constant velocity joint. So we expect that this can give us good business. Now, coming to the negative points, you know, we had a negative growth of approximately, if we look at the impact on the market side first. So, that gave a 1% negative growth, you know, to the market, like Honda and Nissan, these people. So, when we look at Honda standalone, their business in the passenger vehicle segment declined by a massive 30%. And we are, you know, we are almost 100% supplier to Honda, and this negative growth impacting our overall sales. However, and that was a major reason, otherwise our sales could have been even, maybe we could have touched. 12 to 13 percent compared to 11 percent, which we actually touched. Now, again, for the Honda, we are optimistic that once they will be coming up with their new SUV, which is an EV, and we expect that they will be able to capture part of the market which their people have lost. This business is expected to be around, you know, on the optimistic side, about 40,000 numbers, which Honda is planning, and this can be a 100-tour business for us. If everything materialized is good, this can be a good business for us. Now, coming to CBJ, you know, we, as I said, we've been supplying to Vitara, Toyota Highrider. We will not, we started supplying to, sorry, we were supplying to Grand Vitara and Toyota Highrider. We will not start supplying to E Vitara and Victorious. And this, you know, sale, which is about 130 crore this year, will touch about 250 crore on a full. We are very hopeful that once the MTB EV or Mark Suzuki will be launched in October 26th, we will touch 90% capacity utilization of over two CVJ lines. And we are now working on the third line. We already started working on the third line. Now, coming to Brazil, this is a start and a small 70,000. And we will start touching about, next year we will touch about, may say, 1 lakh to 1 lakh 50,000, which can be about 50, 60 total kind of a business, and then it can touch 5 lakh units over a period of time. So this is something, the direction of export, like, you know, one thing is that we are getting business, where we are now supplying, not only steering, we are supplying driveline products as well. Our export will continuously increase. We expect U.S. exports to improve. We expect... I suppose to Brazil to improve. We expect Honda business to come back to some reasonable levels. They have actually lost a lot of market share. I think they should come back, and the product mix will be positive. Now, if you have seen the presentation which we filed on stock exchange yesterday, we have put our new capacities, which we have set up, and we mentioned about the capacity utilization in 2025-2026. So, if you look at CVJ line 2, which was set up in November 25, with a capacity of around 3,700, it's just 27% utilized today. CVJ line 1, which was installed previous year, is about 83%. MSGL Line 5, Daru Reda, which we installed last year, has already touched 106% capacity utilization. Our new 6th line, MSGL Line, is just 21% utilized at this point of time. Similarly, MSGL Line 4, which we have set up at Chennai for export business, is the SOP has yet to start, so practically not utilized. Similarly, CPS Line 4, Line 3 at Bowers is about 50% utilized. So, when you look at... The capacity which we have already created in the last one year, over 25-26, because most of the models like Vitara and eVitara and Victorious started in between the financial year. Therefore, these lines could not be fully utilized. So over a period of 25-26, the utilization, for example, the CPS line was just 50%. But now with the new models coming in, and now for the full one-year production of eVitara and Victorious, these production capacities will be fully utilized. So we expect that whatever capacity we have set up will be 100% utilized over the next one year or maybe one and a half year, depending upon the market. So, I have given you all the data which I have already have, but I am trying to tell you is that we are... You know, at the end of the day, if the market grows, we will grow better than the market. And that's what we have demonstrated over the last three years. So let's see, you know, if your projections about the market are 20%, I can assure you that we'll also grow by 20%. But let's wait for the market to shape up in the next three, four months. I think we'll have a better picture emerging. And you can link my growth with the market growth very easily because I have production capacities. Which are not fully utilized. We have already committed for additional production capacities, and we are all ready now to capture any new share of business, you know, which we will get from our customers.

Yeah. No, sir, so when you mentioned that over the next 12 months, we will move to full capacity utilization on these capacities that are added, how much revenue can we get on full utilization from the current capacity? Like, it's difficult to pinpoint 12 months or 18 months, but once this current capacity is fully utilized, how much revenue would we be able to get? Would it be 1,000 crore of incremental revenue, 800 crores, 1,200 crores?

We already got 300 crore in peace this year, so from 2300 crore to 2600 crore, 300 crore we already got in this year. Export will be additional. Suppose whatever market grow next year, let's talk theoretical. Let's not talk what my numbers will get me. I give you a different way of calculating my growth is that suppose the market grow by 10%. Okay, so we will be able to grow by 400 tores, and if we are able to grow or export by, say, 100 tores, we can get another 500 tores. We got 300 tores this year, 500 tores next year, so we will be touching about 800 tores additional. You are saying 1,000 tores, I am saying conservative 800 tores. I will not be able to share my next year's business plan. I'm sorry for that. We don't share that. But I can give you some way of calculating it.

Yeah. So if you see your financials, our return on capital employed was 16% in F24, which is now down to 10%. This is because we've done about 800-odd crores of CAPEX in the last three years. At the same time, our fixed asset turnover is down from 4 plus to about 2.2. So we have added significant capacity in the last three years. Now, if we have to improve our ROCs, which is the mode of adding these capacities, or get back to where we were originally, we have to have a revenue ramp-up and as well as improve margins. So that is where I'm coming from, how we see this ROC trajectory moving back to our historic levels of F24, where we were doing 16-17%, which will be a factor of revenue growth as well as margin improvement. That is where I'm coming from. Not a specialty guidance for next three months, but maybe for next three years, the trajectory.

So we are 100% aligned with what you are saying. We have exactly the same thinking which you have. We have a capacity and we need to utilize that. And I think, as I said, we expect that our capacity will be 100% utilized within a year and a half. That's what our understanding is based on the new orders which we have. So just coming to your return on capital employed thing, you know, So maybe you do not have a balance sheet with you at this point of time. It will be published in the next few days' time. Our CWIP, which is the assets which are not yet operationalized, is about 411 crores. So if I simply remove it, you know, because these assets are at this point of time not generating any revenue, so if I remove that, the return on capital employed improves to more than 11 percent. Yeah, whatever number you just told. So that's where we are, is that, you know, but then, yeah, once a full capacity utilization is achieved, this return will further improve, because the profit will improve, numerator will improve, denominator will remain the same. So this will again touch back to the same numbers as we touched about two years, three years back. CWIP is a major thing which you must keep in mind. So you are an analystist, so I would always request you that whenever you read my balance sheet, please continuously read the CWIP. That will continue to impact my ratios for the next maybe one year or two years.

Right. Got it, sir. So, just last question for me. So, this year, we've done close, like a 400-clore-plus-capex. What would be our expected Apex for F27? We've seen a slight increase in debt also. So, any guidance on the Apex for F27?

So, definitely, because most of the expenditure on line setup has already been completed. The one activity which is currently going on is our setup of our Gujarat location plant. Where again, we have committed about 250 crores for that particular unit, and we have already spent about 112 hours from the rights issue and maybe some money from our own pocket. So maybe 130 we have already spent here. So overall capex for that particular location is about 250 crores. So maybe another 100 crores for that location and then other normal capital expenditure. It will not be as huge as we have done in the last two years, but yeah, Gujarat is one location where we need to spend some money going forward over the next one or two years.

Got it, sir. Perfect. Thanks a lot, sir. Thank you for the opportunity.

Thank you. The next question is from the line of Manant Polaria from MKP Securities. Please go ahead.

Hi, sir. Thanks for the opportunity. I have two questions for you. One, again, following up on what the previous participant was saying, if on the driveline side, you could give us some more color on what other products are in the near-term launch pipeline? Secondly, how are margins or when you say picture set turnover, how does that differ? And as to the 750 crores of KPEX that you've done, I understand that your previous assets were well depreciated. So I just want to understand what sort of FATO you can look forward to going from here when you make new investments as well.

So, I think on the driveline product, which was your first question, I think we have already explained our CVJ strategy, our aspiration to touch market share of 15%, and maybe, you know, long term will include our, you know, further increasing capacity from Gujarat location. So, currently at our existing Dharuera location, we already have two production lines. With a capacity of around 7.54 lakh units, which translate to about 250 crores kind of a volume of value, sales value. And we will be up about 90% capacity utilized when we will get the third EV model of Marty Suzuki, which will happen sometime in October 26. So, this is where we are for our existing, there are four models where we are supplying, as I said, Grand Vitara, Toyota High Rider, eVitara, and Victorious, and then all the fifth models will be added, and we are up and running, you know. The next challenge will be that moving to other customers, once we are able to establish ourselves with Marcus, Suzuki, and Toyota, the next challenge will be to move to other customers and establish our product with them. So this can be a huge business. This is a driveline business and can be a huge business which can be equal to or more than a manual gear business which we currently have. We have more than 40-45% share of the manual gear business, and we can continuously would like to increase the CVJ business also in the same direction. Coming to other products, we will not be able to inform at this point of time because there is no concrete plan which has already been finalized along with JETEC. This will happen, but not immediately. It will take time, because we first need to stabilize us in the CVJ market, which is a huge market, and we know that there are opportunities also to supply overseas also. The certain parts of CVJ, the certain force part, etc., there is a big opportunity that we can supply, we can export to our group entities also. So, this is a big strategy which we have, and we will keep on reporting back to you as and when we take more actions on that. Give us a year or year and a half to complete our strategy on CBH side. Maybe then will be the right time to move to the next strategy, maybe introducing another product in Indian market. This is one thing. So coming to your next question about investments, which we have done. So I think if you have seen the – I would request you to see the presentation, which we submitted to Stock Exchange yesterday, which talks about all the capacities which we have built. When you look at the turnover ratio, you know, for example, if I just give you an example of CPS, the fixed asset turnover ratio for CPS can be as high as 2.5 to 3 times. When it comes to manual gear, the ratio can be, say, 2.2 to 2.5 times. CVJ can be lower, you know, CVJ can be 1.5 times. So, it depends on the capital expenditure which is required for setting up that kind of line. So, fixed asset turnover ratio will be different from product to product, but the target which we always take is three times. So we've been doing more than three times in our past, and we hope that once these capacities are fully utilized, we should touch a reasonable level, which should be upward of three times. So that's what our estimations are. But then it will depend on product-to-product, as we'll be having more CVJ in our product line, the fixed rate turnover ratio may be slightly lower side compared to, but that does not mean that the profitability will be low. So, these products have good profitability. Just, I think we informed last time also is that CVJ is one product where we have almost 100% localization. It's all local products. There's absolutely nothing which is imported at this point of time. We've been able to, there was certain part which was being imported earlier, but I think we've been able to localize all those parts. And so, this can be a good model for us as, you know, that as we'll be moving towards lower depreciation over the period of. Few years. I think these can be very good, profitable products for us. So this is where we are. I hope I have answered your question. If I miss any part of your question, you can repeat it, please.

So, you've answered most of my questions, sir. Thank you. Again, as far as the FATO is concerned, just one clarification I'd like from you. When you say FATO, what is the fixed asset number you are taking because you have a number that goes into the factory and there is a balance of materials, EPC, etc.

Everything. I consider furniture and pictures, office equipment, CWIP. I think this is a balance sheet number only. So, ideally, I should have removed CWIP because that is not generating any revenue at this point of view. We don't do that. So, whatever number we have published yesterday is on a gross assets basis, covering every asset. All directly from the balance sheet.

Understood, sir. Thank you. And just on the CVJ margins, if you could tell us how they're different from the console margins?

So, better than what we get on manual gear. Good thing is that, as I said, it's a 100% localized product. Beta margins are better than even most of the MS gear products. MS gear, you know, over a period of time, they've been huge competition, and we feel that CBJ is one product where we can perform, where we can have little competitive edge. It's a very good product which we have set up with a lot of innovative design and a lot of quality parameters we have. I think the testing, et cetera, took almost two years' time to develop this product for the Indian conditions. We are very sure that there may be little hiccups. It's a start for us, and we are just maturing in this area, but we are very sure that over a period of time, there are a lot of opportunities for backward integration also, for example, forging, etc. So many, many opportunities to keep strengthening our supply chain, strengthening our production facilities, and performing better than other products which we are supplying. So margins are good.

Right, sir. Thank you for answering all my questions. Thank you so much.

Thank you. The next question is from the line of Kevin Gandhi from CapCro Capital. Please go ahead.

Hello.

Sir, I hope my answer is audible. We are, just one minute, we are almost at completed time, so we take it as a last question, if you kindly permit.

Yeah, yeah. Thank you, sir. I just wanted to understand that, sir, how much would be the total sales estimated, total sales potential once the entire capacities are utilized? And just to follow up on that question, how much is the business that you're expecting from the Maruti EV, which is going to get released? So that's the first question. My second question was that the CWIP of 400 CR. So where would that be used for? CVJ and MSG. Sure. Those are the two questions, and those questions I would ask subsequently as a follow.

I think I've already answered that question to my, to the previous, you know, we should not, there are two things. One is the capacity data, which I've already submitted with you. This was part of my presentation, which talks about all the new production line, which we have set up. So, for example, at Daru Hira, two facilities, we have set up the sixth manual gear line. So, capacity is around 3.5 to 4 lakh per line, you know, that's the overall capacity, which we have for the MS gear line. CPS, we have set up the third line now at Bowen. Capacity is around 5,000,000 units per line unit. CVJ, we have set up the second line. Capacity is around 3,000,000 per unit. So these are the three main products. So I have given you the capacity number. And based on that, you can estimate a little bit on the sale side. But now, let me repeat the answer which I gave to the previous caller, is that this year, we were able to achieve a 300-tron extra turnover, which was coming from the new capacity, which we set up, for example, the line number 5, which we set up at Dharu Reda, and CVJ line, which we set up at Dharu Reda. So mainly the production came from that, the sale came from that. Now, coming to the next year, what I told the previous caller is that suppose we consider a 10% growth, this capacity which we have already set up is good enough to cater to that 10% growth for the next year, which means, say, another 400 crores business, if we add to our sales and another maybe 75 to 100 crores of export, we can touch about 500 crores additional sales based on our existing setup, the production facilities already have at Chennai and at Darweda and Bawal. We can cater to approximately 500 crores, which means 300 crores of this year and 500 crores of next year, we can touch, we can easily cater about 800 crores of extra business from this. So, my answer to the question was that we just need to wait for the market to shape up. In the next one or two months, I think we'll have more clarity as to where are we heading. Currently, it looks good. There are good numbers for April and there are good forecasts for the month of May in terms of sales. And we expect that if the market grows like this, this number is achievable, what I told you on a theoretical basis. This is one thing. Now, coming to your second question about Gujarat EV. So, we already have EBITARA, which was the first model launched by Marcus Suzuki. And we got the NCAR system, which means MS-gear, CPS, and CVJ. And the new vehicle, which Monty Suzuki will now be introducing sometime in approval, which is MPV, which is a multi-utility vehicle, which is again an EV model. We are again there. Again, we are supplying the complete set, like manual gear, CPS, CVJ. So our line, CVJ, the second line will be 90% utilized for NCAR. 7,40,000 capacity, which we have for the first to learn, will be fully exhausted once we have this new business. So, this is where we are. So, we are currently supplying to 100% of multi-EV business at this point of time. I hope we have answered your question.

Okay, sir, go on. And, sir, just like one little... Kind of clarification on the MS gear line 6, that food shall be utilized once the Maruti EV car comes right, if I'm not mistaken.

So, line which we set up, you know, we, this could cater only for partial of year, because this, you know, we got the, this EV tar and Victoria's business started in between the year. It was not for the full year. So, the current capacity utilization of this line, which is about. Say, 30 percent will increase to 60 percent, and then the new model will be added, so we'll be touching about 80 to 90 percent of this line.

Okay, sir, got it, got it. And sir, my last question was that, like, what do you see, like, what as a company do we see the potential of expanding into the areas of US and Europe? Because KTAD Corporation, Japan, they are actually making losses there. So, there might be potential of us supplying there or exporting there. So, what is the strategy with companies actually forecasting for those regions? Because that's a huge market as compared to India.

So, I have a few questions. So... We are moving in that direction. I think India has the capability to cater to the world market. We will be starting with Brazil. I think this is a big order which we have got, even though we will be supplying with, say, 70,000 units this year and maybe more like 50,000 units next year, but it's got a huge potential to continue to supply. It's a Stellantis model, and Stellantis will be supplying in Brazil as well as nearby countries. And we expect that once we are able to establish ourselves as a good quality, Delivery supplier at a competitive cost. I think then, you know, we can expect another order coming up very fast from home. So let's wait. You know, we are going in the right direction. You know, we've been waiting for this opportunity from the global entities for almost two, three years. And now that has materialized. Now we need to demonstrate that, yeah, we are the best suppliers for the world market. I think we are very hopeful for that. We have a brand new channel line ready, and people are emotional, and people are very, very, you know, ready to take this challenge. And we hope that this will establish ourselves with our overseas overseas other OEMs.

Yeah. Okay, sir, got it. And, sir, just one last thing, sir, on the...

Sir, we are out of time. We are out of time. You just call me, please. I'm sorry, yeah?

Okay, okay, sir, okay, sir, sure. I'll take this offline, yeah. No, no, no, sure.

Thank you. Give it by 10 minutes, sir.

Ladies and gentlemen, that was the last question. I now hand the floor back to the management of JTAC TDR Limited for closing comments.

Okay. Again, I would like to thank everyone for joining this call. I hope we have been able to respond to your questions adequately. We are really positive about growth in automotive sectors and that we will continue with our effort to expand to meet industrial requirements. Thank you very much. Stay safe, stay healthy, and thank you once again for joining us.

Thank you very much. On behalf of JTEC India Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.

Thank you, everyone. Thank you so much.