Varroc Engineering Limited (VARROC) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to VAROC Engineering Limited Q4 F526 Earnings Conference Call, hosted by Investec Capital Services. Before I move to introduce the management, I would like to remind all participants that they are 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, raise your virtual hand. Please raise your virtual hand. Please note that this conference is being recorded. Today, it gives me great pleasure to introduce you to the management of Aroch Engineering. Mr. Tarang Jain, Chairman and MD. Mr. Arjun Jain, Whole-Time Director and CEO, Business 1. Mr. Dhruv Jain, Whole-Time Director and CEO, Business 2. Mr. K. Mahindra Kumar, Group CFO. Mr. Bikas Duggar, Head Investor Relations and Finance Controller Business 2. Mr. Vishal Rawal, Group Finance Controller Business 1. With that, I now hand over the mic to Mr. Bikas Duggar. Thank you.

Thank you, Investec. Thank you, Satna. Good evening, everyone. Just before I ask our chairman to give opening remarks, just a small disclaimer that today's discussion may include statement which may constitute forward-looking statement, all statement that address expectation or projection about the future, including but not limited to statement about the strategy for growth, business development, market position, expenditure, and financial results, or forward-looking statement, forward-looking statement are based on certainty. Assumptions and expectation of future events and involves known and unknown risks, uncertainties, and other factors. The company, no obligation is assumed by the company on this forward-looking statement. So, with this, I will ask our chairman to give the opening remark. Thank you, Vikash.

And thank you, Team Investec, for hosting the call. And good evening to everyone. I am Taran Jain here. To start with, I just want to say that the India macro table is supporting growth. India continues to remain one of the fastest growing major economies, supported by strong domestic consumption demand, infrastructure investments, and policy-led manufacturing initiatives despite global headwinds. The rural consumption growth is driven by increased farm plus non-farm incomes and easing rural inflation, whereas the urban consumption growth is driven by fiscal stimulus, tax relief, and lower financial costs. The synchronized consumption recovery is driving growth in the automotive sector also. So, in addition to this, mega trends like rising disposable income, increasing vehicle penetration. Premiumization trends, and a strong push towards electrification are also driving demand across segments. This was evident during quarter four of FY26, with all segments of the auto industry showing strong growth on a year-on-year basis. On a year-on-year basis, two-wheelers grew by 20.7%. Three-wheelers grew by 32.4%. Passenger vehicles grew by 11.3%. And commercial vehicles grew by 19.5%. On a quarter-on-quarter basis, two-wheelers grew by 3.7%, three-wheelers grew by 1.2%, passenger vehicles grew by 12.5%, and commercial vehicles grew by 23.1%. For the full year of financial year 26, also, we saw similar positive trends across all segments. Two-wheelers grew here for the full year by 11.8%. Three-wheelers grew by 23.9%. Passenger vehicles grew by 9.4%. And commercial vehicles grew by 13.1%. Coming to the operational performance during quarter four of FY26, the company registered a consolidated revenue of Rs. 23.7 billion with a growth of 12.8% year-on-year. As indicated in our earlier calls, the overseas businesses have already started seeing arrival in revenue growth, supported by a strong order book. Our EBITDA for the quarter was around 9.7% as compared to 9.3% in the previous quarter. A PBT before JV profit was at 4.5% of revenues in Q4 of FY26, as against 4.4% in Q3 of FY26. For the full year FY26, the company registered a revenue of Rs.88.9 billion, a growth of 9%. The EBITDA margin stood at 9.4% in FY26, and PBT before JV profit margin improved by 50 basis points and stood at 4.3%. The revenue from supplying to EV vehicles in this quarter was around 14% of the revenues, and for the full year, it was around 13%. However, I would like to bring your attention to the point that the India EBITDA and PPT were strong for financial aid 26 at 11.7% and 7.2% respectively, and grew both on a year-on-year basis as well as sequentially despite the supply-side challenges explained earlier. In overseas electronics and lighting business, they are continuing to win significant orders, and a turnaround is expected to be more visible from half-two of a financial year 27. Our foremost priority remains accelerating revenue growth across both India and the international market. In India, we continue to leverage our strong customer relationships, technology capabilities, and expanding product portfolios to capitalize on opportunities emerging from electrification and the premiumization trends. In our overseas markets, we are strengthening our presence through deep customer engagement, enhanced engineering capabilities, and focused business wins, positioning ourselves as a reliable global partner. In financial year 26, we achieved the highest ever net new business win with an annualized peak revenue of Rs. 32,889 billion. Notable business wins among these in the last quarter are the vault cargers for our Romanian business from a global EV player, gears and crimpins from our ICE powertrain solutions. All this business win helps us to fill the existing capacity and spread our assets even more. In this quarter, again, we also had some business wins from the non-automotive segment. We continue to follow a disciplined and a value equity capital allocation strategy with a sharp focus on investments in high growth and technology-led segments, transitioning our R&D and innovation capabilities, particularly in lighting, electric vehicles, and electronic domains. Ensuring optimal returns on capital employee and ensuring optimal returns on capital employee. Taking steps to correct the cost structure of the company like GRFs, which we did in FY26. And net development company in FY26 is 4952 million, which is a reduction of rupees 2528 million from the last year. The net debt to equity is at a very comfortable 0.27. The average ROC of the company stood at 24.4% in financial year 26. In this volatile new normal environment, we continue to strengthen our company for long-term growth and performance by taking appropriate decisions and meticulously executing them. Please note that the board of directors have recommended 150% of the face value as dividend for financial year 26. With this, I will now add MK, our group's CFO, to walk you through the presentation and give more insights into our financial performance. We have uploaded the investor presentation to the stock exchanges as well as on our website.

Thank you, Sonam. Good evening, everyone.

Let me take you to the highlight slide, which is slide number 7. So, during Q4, as I was simply explained, the revenue was $23,681 million or those in which state grows. So, the growth of 4.8% year over year. In operations within this grew at 12%. But the most important point here is the overseas operations grew by 24%. We were explaining earlier that the art of book is now going to turn into a strong sales performance this year. We already started seeing it in Q4, so the momentum should continue during the current year also. The revenue from EV models in Q4 was at 14%, which actually amounts to a 50% growth year over here. And Q4 of EBT was at 4.5%, was at 4.4% during Q3 of 526. EBITDA was also at 9.7% versus 9.3% reported last quarter. And coming to the full year revenue, it was at 8,891 crores, a growth of 9%. We are registering a double digit 10% growth. And full year EBG was at 4.3% compared to 3.8% of last year, which amounts to a growth of 22%. But we see this again, if you really look at India, profit alone is grew by more than 40%. And revenue from EV models continues to be at around 13%, which again grew by 39% if we take full year. Now, the order intake, it was $33 billion, which is, I think, the highest ever order intake. Nearly 65% of this relates into EV models. And one of the notable recent business things were the mall charges business, which is going to be a manufacturer of a Romanian entity, which will further add to the revenue potential in the coming years. Coming to the net debt, net debt decreased about by 253 crores compared to last year, and stood at about 495 crores. There was a marginal increase in the last couple of quarters in net debt, but that was largely due to the VRF scheme, which we spoke about in the previous quarters. Also some temporary challenges in networking capital, which should get correct in the coming quarters. And as our team has explained, the board has recommended a dividend of 150% of KCLIU, subject to the approval of the shareholders, which compares to 100% dividend which we declared last year.

Going to the next slide, I

can now simply explain the industry growth numbers. Basically, the momentum continues in the auto industry. We take Q4 year-over-year growth, the two-wheeler grew by 21 percent, two-wheeler by 32, passenger weight is by 11 percent. As you see, the full-year numbers, almost all the segments grew in double digits. And the two-wheeler volume on

year-on-year basis also grew by about 54 per second.

Due to the Q4 financial, the total revenue reported was 2,368 crores with an EBIT of 9.7% and PPP of 4.5%.

The full year number is 8891 crores, which amounts to 9.4% EBITDA and 4.3% EBITDA. Coming to the split of the performance

between India business overseas and the R&D, you can see that during Q4, the India business top line grew by 12%, EBITDA by 14%, and BGD by 27%, and overseas business also there was a strong growth of 24%, which also improved the overall EBITDA level. At PVC level, the improvement was not significant, but that is going to be visible in the coming quarters.

And in terms of the R&D spending, it was close to about 34 crores at a bit higher. The next slide, we explained the movement in net debt.

As you can see, we reached the lowest point of 380 crores six months ago, back in September. From there, we actually, we had to take an increase in net debt by close to 115 crores, taking it to 495 crores. So, this is a combination of the VRS team

plus some increase in net working capital. And in subsequent slides, of course, we gave the business take-up. We just changed the format, but contents remain the same. Let me stop here. We're happy to take your questions. Thank you.

Thank you, sir.

We will now begin the question and answer session. Anyone who wishes to ask a question, please raise your virtual hand, and I will unmute you. Ladies and gentlemen, we'll wait for a moment before we get the first question.

We have the first question from Mr. Mihir Vora. I'll unmute you, sir. Go ahead, sir.

Yeah.

Am I audible?

Yes, you are. Yes.

Yeah. So, sir, just going through the order book part here, we saw a very good increase in terms of the last quarter in the new order booking part. And can you just also give some split on to whether how much would be the overseas order booking year and more specifically in terms of how are we seeing the ramp up of specific to overseas order booking?

So, the overseas order book for this year was around close to 1,400 CR. And in terms of the ramp-up, we would already start seeing the majority of these programs start production within fiscal year 27. However, of course, there's a ramp-up period. So, it's more out there fiscal year 28 where we start seeing the true potential of these wins. However, we already are seeing Of course, increased revenue in fiscal year 27 itself, but fiscal year 28 will be a lot more.

All right. Okay. And, sir, this also includes, like, are we getting some traction onto the Thailand plant, the lighting plant orders as well? Some color on that, as well?

Yes. So, as part of this 1400 CR of revenue that we have mentioned, this would also include business wins for our Thailand location. This would be, of course, within mixed-year lighting space.

Yeah, and this would be predominantly what, two-wheelers or four-wheelers?

It's purely passenger vehicle lighting.

Okay, it's purely passenger vehicle. All right, okay.

This is headlamp, to be more specific. Yes, so just to clarify, this would also include a headlamp one.

Okay, sure, sure. So, yeah, very good to see the traction building in onto overseas business now. But as we see, as the order book has built up and we have a good, you know, start SOP since from FY20 and 28 onwards. So, will we need to see some increase in the capex here or our capex continues to be at the similar range as what we have guided before?

There will be some significant capex this year, both in India and overseas also, or maybe a small amount next year also, but yes, there will be significant capex this year.

So what would be the, yeah, sorry, go ahead.

So the capex, I think, overall will be at least to the tune-up between 450 to 500 grows, is what we see as the overall capex for this year.

Okay, and this includes the land we were going to proactively purchase before?

This includes, I would say, a small part of the land. But we are looking at other options, you know, to the land, because the land availability is not that easy at the moment. So, we are looking at other options also. But overall, I would say it would be closer to 500 crores, including whatever land we can get our hands on.

All right, all right. Okay. Okay, sir. That's all from my side.

Thank you.

Hello. Hi, am I audible?

Yes.

Great.

Is there actually a couple of questions? So, when we see the quarterly run rate for, you know, majority of our businesses, right? HMI, the e-mobility, and even, you know, the aftermarket. So, we are seeing some Q&A dip. Could you highlight what is leading to that or that was, you know, as expected on unexpected lines?

Yeah, so I would say, I

would say, I think, particularly talking about what would be more the OE sales, which is, I'll answer in two parts, around HMI and e-mobility, I think e-mobility, for sure, in Q3, we had a significant level of backlog recovery also, which also improved performance for Q3 versus Q4. However, otherwise, volume, that will actually be steady. But yes, of course, minor differences in volumes and in gigs between two-wheeler and three-wheeler can also have material impact given just the sheer size of content we have in the places. HMI, I think, is largely along the expected lines. However, I think for both of these product groups, I think as we look forward, I think given just the, you know, it's… Given just the sheer increase in appetite for EV, post whatever global macro crisis we have, you know, we see a strong path, and I think even for HMI, I think we see significant content growth taking place through the realization of the order book that we've already declared. From an aftermarket perspective, yes, you might want to say Q4 is generally a little bit like.

And just one more point that what were the under-recoveries this time owing to the material inflation that would have happened towards the end of March. So, is there an under-recovery and that's why our margins, you know, might improve in the quarter once we pass on? With the lag, how do we see the current situation of the, you know, material inflation impacting us in the near term? So, that is the question.

So, again, I think we are breaking it into two, right? I mean, one is in terms of talking about Q4 versus talking about what is prospective. In Q4, I do not... I don't think there's a material impact in the margin yet. Of course, going forward, it is clear that there is inflation across commodities that we use and also in terms of across commodities that we use. And here, I think we are fairly aligned with our OEMs in terms of how do we drive that.

So, would it be like a monthly lag or would it be like a quarterly lag? How has the OEM spoken to you? Any light or any color on that?

Every OEM honestly operates differently. So, the method of recovery in every OEM will be different. Having said that, having said that, there is a strong commitment, I mean, the way the industry works, so far, I think there is a strong commitment from OEMs and understanding of OEMs that inflation will be compensated.

But, I mean, there could be, in some of the cases, there would be probably a lag of excess of water, but we are expecting to be compensated in full. You know, despite this, despite this lag.

Okay. And just last question. So, we see a very material ramp up in the order post. So, that's, that's a very good silver lining this time. But as we go in, you know, two to three years hence, how, how are you seeing Verroc emerging, you know, over next two to three years? Probably this is one to quarters is a very short story, but, you know. What our targets would be for the EV components per se that we do. And when we are pivoting to, you know, more like electronics, the wall chargers, how big do we see our contribution in that field to be? So just if you could throw some light around that, it would be very helpful.

See, basically, as you know, as you know that in the last quarter in India, about 14% of revenues came from EV. And now we see some signals that this EV penetration is even going to increase, definitely in our segment of at least the two winners, where we will see actually a major increase and even to an extent also in the passenger car. So I do see that, you know, there will be a good amount of precision increase. I mean, as a part of our sales, you know, overall sales where the EV content is concerned. And when it comes to our business abroad, whatever the businesses we have won, of inverters, interior lighting, where we've already started, our supplies, even going forward, the wall charges and everything. The major part of all the electronics. These are largest percentages all towards EV only. So, I mean, at the moment, I think probably more than 80-90% would be towards all the winds we've announced is EV. So, all the winds in Romania all towards EV vehicles. And also, when the lighting segment is concerned, a major part, of course, is also towards EV segment. So, whatever the revenues we see abroad. Coming out of Romania and later on in Thailand, which will start in a small way from December, all that will be towards EV. So EV content as an organization will definitely be significant going forward.

And just to add to that, the per vehicle content which we will have in our overseas business of this EV customer will be very significant.

Okay. I'll join back in the queue for my follow-up questions.

Thanks. Thanks. The next person is Mr. Rahul Kumar. Mr. Kumar, I'm going to unmute you. Please mention your firm name before you ask the question. Yeah, go ahead, Mr. Kumar. You can hear me.

Hi. This is Rahul from Vaikaria. Just one question on the international business. When do we expect the break-even in this international business? I mean, which quarter do we expect the break-evens to start from?

International business has two, three parts. As far as the two-wheeler business is concerned, it's already, it's mildly positive. Only in Romania, we have significant change. And we should reach EBITDA break even by Q4, just again. As per as the Italian forging business is concerned, that may take maybe one more year to get to EBITDA break even.

Okay, okay.

And for this Italy-forging business, we were planning to, you know, do some action, either basis, you know, sale or some other corporate actions. So, is there any progress on that trend?

We are working on both internal and external measures. We are also making some small corrections here and there to improve the operational efficiency and improve profitability. Yeah, but separately, we are also looking for suitable opportunities to find a proper buyer, but we are not in a hurry to sell it at any cost. The right price comes, we will deep cover it and then we will implement it.

Okay.

And on the debt front, So, what is the guidance you can give us, let's say, over the next four quarters, where do we expect the test to settle down?

Yeah, so I think we explained it in the previous calls also. So, this year, because of the heavy capex we have and the business ramp up which is happening, we don't expect a reduction in test from current levels. So, the average test could be in the range of 500 to 600 crores. But the current levels are slightly upwards. We should move to a zero-dead status by the end of next year.

By FY28.

Yeah, FY28, that's going to be the objective. But see, today we see a lot of growth opportunities, and we don't want to lose those opportunities. So whatever the CAPEX needed, we're definitely going to incur that kind of CAPEX for growth reasons. And we have to see how things go, depending on all the opportunities. We see a lot of opportunities, so we don't want to miss out on those opportunities also. But like you said, we are very mindful, we are very financially disciplined, so we are very mindful of this overall net debt in the organization. But having said that, we don't want to lose on any opportunities also.

Okay. Can you highlight a couple of opportunities we are actually

doing the CAPEX, this particular segment?

I mean, our order book is heavily skewed towards e-mobility and supplying product into EV models. Actually, of course, the CAPEX will also be geared towards these segments. And then further to that, of course, we will drive a level of capex also to drive The expansion in capacity, the market is now demanding.

Okay. Okay. Okay. And in the comments earlier, you also mentioned that you have won some orders in the non-auto business segment. Can you just elaborate a bit more on, you know, the quantum, the customers, and which segment we are actually doing this?

Good morning.

Welcome to wheels today are primarily around motors like motor controls. These are smaller sized motors where they essentially will drive a level of import substitution. In terms of the analysis.

Is there to be more experimental or test data something?

And that is like with ramp-up of any product, right? So there will be a gestation period and ramp-up, but I think the total value of business win that we have is around 50 crores.

Annual peak revenue. Okay, got it.

Just last question, is there any progress on, you know, the order wins for the, you know, top three EV two-wheelers, which we were discussing in the previous call?

This is the same as what we discussed last time, where we continue to be engaged, and hope we have something to announce.

Okay. And this is with, you know, I mean, potentially with the top three players in the EV segment. Is that correct? Yeah. Yeah.

Okay. Okay. Yeah. Thank you.

Thanks. Thanks, sir. I will now ask Mr. Subham Jain from Investec to unmute himself and ask the question.

Hey. Hi. Thanks for taking my question. Can you please help us understand on how should we think about the growth outlook going into FI27, given that we have a strong order book and our overseas business is also seeing a good revival. Also, the momentum in EVs is strong. Should we expect a mid-to-heighting growth in FI27?

Yes.

Okay, okay, that's great to hear. And also, can you please elaborate on how has the recent tensions in Middle East impacted us so far, given that we have a contractual pass-through for most of the cost overheads? How should we think about margins in FY27? Should it trend higher versus our FY26 levels?

So, again, if the question is specific to the Middle East crisis, I would say the impact is too cold. I think one is the inflation that we call out. Like you said, we have material costs passed through arrangements, and we expect that these costs will be passed through. The other topics really cause as a result of the situation is, of course, to do with, you know, through the supply chain in terms of both commodity as well as labor availability. Even here, I would say we are now largely stable. In terms of margin performance as a result of the Middle East crisis,

I don't expect it to have a bearing on the absolute value of margin.

Okay, okay. Thanks.

That's it for my second.

And F.27 margins

will be higher than what you reported in F.26.

Okay, okay.

Thank you, sir. As a reminder to all the participants, I would request if you have any questions for the management, do raise your virtual hand. If you have joined this call by a dial-in, the way to ask your question is to do star 5 on your phone, and then I'll unmute you. We'll wait for a minute. We have a few questions on the call. I will now unmute Jyoti Singh. I will request you to please let us know the firm that you are from.

Thank you. Yeah.

Yeah, Joji, we can hear you. Slightly louder, you're... Okay, now it's better. Yes, now they're audible.

Okay, thank you. So, one question on the non-Bajaj contribution has increased, 54% of the revenue. So, which customer is driving incremental growth, and are we seeing this next improvement? Another question on the EBITDA margin side that has increased to 9.7% but remains below peak level. So, what are the key labels to reach? There is a double-digit cash of EBITDA by F.27 or F.28. And also on the raw material inflation side, if you can comment on the recent volatility and largely your commodity price. If you can guide us on both sides and what kind of pricing pass through spending with the union. And another on the body parts remain the largest contributor is 35.5% while immunity is EB is around 6.5%. So how do you see this mix changing over the next three to five years? And the last question is only make sure that international below 11% now. So, going forward, we are expecting to increase further,

or it will remain at this point.

Okay, I will

ask the

first question which he asked was the share of percentage from Bajaj and non-Bajaj.

So, the percentage of share from Bajaj, I would say that is reduced simply based on the execution of the order book. So, we have declared an order book, so as we keep executing it, share will move in line with what we execute first, what we execute second.

Yeah, and from 9 month to full year, the percentage of share of Bajaj has remained the same for overall company. That has not gone down. The second question was that we are reporting EBITDA margin.

Okay, so we don't give any guidance like that, but your question was also about the levels, which will actually take us to the level with EBITDA. So definitely the revenue growth and the operating leverage that comes out of that is a strong level for growth. Plus, we also talked about the turnaround in overseas operations and growth in overseas operations. So that should also help us in coming close to the target. But we don't want to give any specific time frame to it. But yeah, these should be the levers to take us to close to 10%.

One more question was on the mixed and international.

Whether that mixed revenue percentage will change.

We'll improve more in favor of the overseas business. Right now it's around 7%. I think by the end of this year, it should move close to 10%.

And the last question was, the revenue mix between HMI, ICE powertrain, e-mobility, body parts, whether that mix will undergo a change over the next 3 to 5 years?

Yeah, for sure. I think the e-mobility share will definitely increase just driven by e-penetration. I think that's a trend that we see. I think for e-mobility and HMI, I think I would definitely increase over the next three to five years. The nice powertrain, I think, will, as we already see, continue to lag a little bit.

Understood. And sir, just try to understand this Bajaj contribution will going to remain the same, or is there any chances that it will improve to non-Bajaj?

So, look at our order book, we declare our order book in terms of what is Bajaj, Bajaj O2 versus non-Bajaj. And the order book is skewed more towards non-pajaj, so I would assume he has to share with you.

Okay, thank you.

So, just one last question, I'll allow, because there's a couple of people on the call.

Yes, thank you. So, just one question, like a lot of auto-owned companies, diversifying toward the aerospace, because a lot of opportunity over there. And we see we are already competing some of the company in the transmission component side and engine rotating assembly side and precision part side. So are we planning any such kind of acquisition going forward or is there any extra discussion?

So, if the question is AL space as an industry, are we looking to drive home? I would say the answer today is no. Having said that, non-automotive as a space is something that we continue to explore, and we've declared business wins also in this space.

So, we've achieved our first business wins in a non-automotive space.

Thank you. Thank you very much, sir.

I will move to the next person. The person is from a firm called SIMPL, Simple. I'm going to unmute you, sir, but please share with us your name. Thank you. Yeah, go ahead.

Thanks for the watch, VD. Just a couple of questions. Can you share your name?

I don't have your name.

It's Viraj Kacharya from Simplen. First question is, if I have to look at the margin and the return structure of the different business segments we are in, what would that typically be? And where do you see maximum scope for margin improvement?

Overseas is also recovering, as we explained earlier in the call. So, the recovery from now in terms of margins will largely come from overseas business in the next couple of years. And of course, the Indian business also has the growth happens in the top line, the operating leverage also kicks in. So, that's the way it goes.

And broadly in terms of, yeah.

Just to add to that, any new business which we take, we have criteria based on IRR. At least that kind of IRR, the new business could meet. Based on that on-heel, we are taking our business into the company.

Understood. But broadly, if I have to look on an analysed basis, what will be the different margin bands each of the business would be operating, you know, for us right now?

We've got the small margins that include your sub-segments, but yeah, broadly in terms of overall direction, earlier also we mentioned that our intention is to pay PPT itself to 10% in the coming years. If you really look at our India business, and in Q4 particularly, we're already at 8% plus. Our idea, our objective is to take the entire business to 10%, but it will take a few years. It won't happen in India.

Okay, and just one more question on the lighting business. See, that business has seen some consolidation or slack, you know, if you look at Q4 also for us. So just trying to understand, you know, what is happening there and how should we see this business, you know, evolving for us going forward.

The lighting business in Q4 over Q3, it has grown. It's mainly because of overseas. The lighting business has also grown. And also in India business also, it has grown. And in coming years, because of the premiumization which is happening, I think this will be one of our growth engines.

Okay, so fast forward three to five years on the line based on the order book we have. How should we understand the mix in the business evolving? You know, would we have more towards EV and lighting, you know, or if the traditional business segments like body parts and other ice powertrains, do we also continue to be a majority share? Any color you think?

So, for sure, we would expect e-mobility, HMI, and lighting to continue to occupy a larger share of the pie. Having said that, it does not mean the others will also not grow. They will also grow, but probably not as quickly as the other three.

And this is really driven, I would say, by technology change, technology differentiation that is required.

In the interest of time, I will request everybody to restrict their questions to maybe maximum two and then come back in the queue for further questions. As a reminder, I want to tell everybody, do raise your virtual hand to ask the question. I'm going to now unmute Mr. Vinay Jain. Please mention your firm name and go ahead with your question. Thank you. Yeah, Vinay, you can go ahead.

Yeah, thanks for the opportunity. Vinay Jain here from Karma Capital. Just two questions from my end. Firstly, again, like if I look at the domestic growth for the quarter, somehow like we have not been able to participate in the industry growth which we have seen across say two-wheeler, three-wheeler and passenger vehicle. Primarily, again, like 75% of the business being from two-wheeler, three-wheeler, which has grown at upwards of 20%. And again, coupled to that, if you see the EV business for us growing at 50%, so if I discount for that, then the growth seems to be even lower. So one wanted to just understand why. The growth lower versus, say, the industry or our largest customer as well. And secondly, on the capex, if you could just quantify the capex outline for the next two years and the areas in which it would be spent. Thank you.

Yeah, so, I mean, I'll take the first question. And, of course, you're right. In terms of, you know, if I think about the past that we have been on for the last two or three years and discussed it multiple times, I think the focus has really been around driving content growth and driving growth in premium vehicles and in electric vehicles. So, given where the growth has come from really in Q4, And when we look at what is our customer mix and what is our model mix also in the customers where we have mix, the segments where we have higher content have maybe not grown as quickly. And that is essentially why I would say through Q4 we are a little bit behind. Having said that, like we mentioned earlier as well, as we look forward, we definitely see a very strong trend around incrementally the penetration. And we definitely see a strong trend around further premiumization even in, let's say, lower-segment vehicles. The continued execution of our outer book should allow us to play more significantly in the growth in market that we see as well.

This year it could be in the range of 450 to 500 crores. This year it could be lower, maybe around 300 to 400 crores could be the requirement. Most of it will go to create capacities or to spend on program related capex, which is also related to growth.

So, basically, see...

Any specific areas to highlight?

So, it will be, of course, towards electronics, more towards electronics and lighting, and obviously, towards EV vehicles is definitely something we would prefer. Lighting and electronics is the area, EV and electronics is the area where the focus will be more. But having said that, when it comes to even body parts or metallic parts, we are seeing growth there also. There also we will continue to grow and one thing also we are focusing on is on more of mechanizing automation on the shop floor in India. So going forward, we do not also want to depend too much on, you know, the manpower. Which we are finding a lot of challenges as we grow. So, we would like to mechanize and automate more, and therefore, a part of the CAPEX every year will also be towards, you know, some better technology equipments and also towards mechanization automation.

That was helpful. Thank you so much.

Thank you, sir. The next question is from Mr. Naman Maheshwari.

Yeah, hi. Thanks. So, this is Naman from Shami family office, right? Just to follow up, right? One is on to the revenue trajectory, right? We already closed about 9,000 crores, and we have SOPs worth 3,300 crores coming in F527 and F528. So, is this the right way to look that the next two years, you know, we could I'm not asking for the guidance, but I'm just asking for the conversion on a like-to-like basis.

You know what? The order book, we are confident. We don't need to make it to the order book. We will achieve that, whatever you are saying, $9,000 plus that thing will happen. Okay, okay.

And just on to the margin profile, so that would lead to the break-even of our, maybe the overseas businesses altogether. So the drag that is coming close to about 70-odd throws on the overall, that would also reduce by a lot, right, on a comparable basis.

Definitely. Definitely. In two years' time, we do want to

break even overall abroad.

Okay. And just quickly, the last point that I wanted to make.

So, now, excluding this year, right, this year could be an anomaly. But as we move into a steady state, high performing EV plus electronics manufacturer, the delta change, right, in EBITDA, right, would it be like a conversion margin or would it be more toward a technology oriented solution provider? Could you just explain that? Which side it would bring towards?

See, we, across the product lines that we do, we operate different models, we operate different models with the ODN. But, generally, we own technology for every product that we supply. We care about. In terms of, in terms of what margin profile would look like, and I think like our CFO has said before, Our focus is on PVT, and our focus is on return on investment. Here, we believe we will continue. Here, we do not believe there is a material change

on these metrics versus what is the business profile rate.

Okay, and the NCD approval that we have taken, that's an enabling resolution, or are we planning to raise the NCDs in the near term for 500 kHz?

Right, it's an enabling one. Okay, okay. Thanks, I'll just come back.

Thank you. I will take the question from Mr. Rahul Kumar. Yeah, go ahead, sir. Please ask your question.

Yeah, hi.

Just one question. Actually, in the previous comment, you mentioned the break-even for the international business for two years onwards. So, does the break-even mean including the R&D business also, or is it only the… Only the operational subsidiaries.

It's only the operational one. R&D one will take some more time.

Okay, okay. So, to summarize the operational subsidiary, you mentioned the break-even by Q4 of next year, right?

Yeah, that's what the electronic business, so many are talking about. 2-villars business is already in the positive.

And then I-NAS will take one more year.

Okay, okay. And out of this 14% yearly revenue, how much

is contribution from non-Bajas customers?

Out of this, nearly four to five percent is non-bajars. Okay, thank you.

Thank you. Thank you, everybody, for your questions. We'll wait for a minute if there are any last questions.

We have a question from Mr. Laakash Mora. Go ahead, Mr. Vora. Hello, yeah, am I audible? Am I audible? Yeah, yeah.

So, hi, this is Akash from NV Alpha. Sir, my question will be pertaining to the answer that you gave to one of my earlier participants, wherein you said that growth for us this quarter has not come from the segments where we have a higher content per vehicle, which we can also see to a certain extent in the e-mobility segment. So, sir, my question would be regards to that since you are confident that, you know, those segments will work out positively in the coming quarters. So, sir, I just wanted to understand where does that confidence come from because that e-mobility piece, I think one of our anchor customers there has also grown superbly well in Q4. But that growth has not replicated for us. So, I just wanted to understand or, you know, reconcile this a bit.

Yeah, so I would say, I think the first thing I would say is, when we are comparing our growth with the vis-a-vis any particular OEM, so really look at production data rather than the retail data. And from a production standpoint, I think we are fairly on track. And the further confidence of growth comes from the fact that we are seeing, you all read in the newspaper also, right, that there is a fundamentally larger demand for

EVs today versus, let's say, two months ago. Okay.

So, basically, if the shift toward VVs increases, our market share, our wallet share with our own customers should keep on increasing from here. Is that what you mean?

I think, I'm not clear what is your definition of wallet share, but if you have more, very simply put, our content in an EV is significantly more than what it is in an iScooter. The more EVs you have, a total addressable market increases, then whatever portion of that market our customers gain,

we naturally gain over as a result. Say enough, sir. Oh, thanks.

I will take the next question from Mr. Naman. Yes, Mr. Naman, go ahead.

Just a bookkeeping question, right? So, now I think with the TYC thing being majorly solved, you know, there is still a point in our auditor's report with regard to that. So, when do we, you know, get to resolve it completely and get it out of the way?

Any thoughts on that?

Yeah, so the arbitration process is going on.

I mean, there are different submissions to be made between now and end of the year. So most probably by end of the year, we should know which direction we are heading towards.

But this is going to take some time to subject to the arbitration process.

Okay. Okay.

But likely, we are hopeful that by the end of next year when we get the audited report, we are majorly through with that.

Yeah, that's the objective. That's what we are working towards.

Okay.

Okay. Okay. And just last thing that, are we seeing any major production disruption happening in? You know, that's far till May, or has it been kind of on track so far?

Well, see, basically, see, what we have seen is issues, you know, not so much with us. We had issues also when it came to, you know, shortage in labor. You know, because of this war crisis, not material, but I think more at our suppliers at Tier 2, Tier 3, is where we are facing challenges, but after 15th of May, we see improvements over there. So, what we are doing is that we are actually proactively working to see that we are getting our supplies from, you know, all our suppliers. It's made to do with bought-out components. Not so much with the raw material. Once that is kind of there, then, you know, we will also see that we are able to manage the sales to the fullest extent. But the things have really improved. We have kind of normalized after 15th of May. And we are also seeing more of normalization of the supply rate, which may probably, you know, kind of normalize by the end of this month. And at the same time, we are also now working on, because there are, we see a good growth going forward, so we are also now working on our own internal capacity expansion, as well as at least supply range. But this will be critical for achieving, you know, the higher level of sales,

you know, which is there in front of us.

I think with that, we've come to the end of this call. In the interest of time, I would, you know, I would like to hand the conference over to Mr. Tarang Jain, the chairman, for his closing remarks. Thank you.

Thank you, Investec, once again, and I would like to again reiterate that with a strong foundation and a clear strategic priorities and a committed team, We are confident of delivering sustained growth and a long-term value creation for all our stakeholders. And thanks once again for joining the call and for your continuing support.

Thank you.

Thank you.

Thank you very much, sir. And thank you for giving Invested the opportunity to host your earning call. With that, ladies and gentlemen, we come to the end of this conversation. You may now hang up the call.

Thank you.