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Ladies and gentlemen, good morning, and welcome to the Gabriel India Limited Q3 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not a guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Jaggi, Managing Director of Gabriel India Limited. Please go ahead, sir.
Yes, thank you so much. Good morning, everyone and a very warm welcome to all the participants, who are there on the call. With me today, we have Mr. Rishi, our CFO; and SGA our -- Strategic Growth Advisors, our IR relations advisers. So we have uploaded our results and the presentation for the quarter ended 31st of December on the stock exchange and the company website. I hope each one of you had a chance to go through the same.
I would like to begin by highlighting the Gabriel India's recent acquisition of assets from Motherson Marelli Auto Suspension Parts Private Limited, that is MMAS, through an asset purchase agreement. So MMAS is a Poona-based joint venture between Marelli Europe and Motherson International Limited, basically specializing in the design, production and marketing of shock absorbers, front struts and the gas springs for cars and commercial vehicles. This acquisition helps us to improve our position in the suspension market, enhances our capabilities and expand the product portfolio, which will help us drive our growth trajectory. With this move, we have also added an additional capacity of 3.2 million shock absorbers and 1 million gas spring units. Our gas spring unit -- gas spring will actually be a new product line for us. Additionally, we are also entering into a technology assistance agreement with Marelli Suspension Systems Italy to further help in the advanced suspension offerings for the future OEM requirements.
Now I'll provide a brief overview of the operations and key highlights of the automobile industry. The stand-alone operating revenue for quarter 3 grew 14% year-on-year, reaching INR 924 crores, driven primarily by higher volumes and improved sales in the 2-wheeler and the passenger vehicle segments. EBITDA during this quarter stood at 8.6%. In Q3 FY '25, Inalfa Gabriel Sunroof Systems reported revenue from operations of INR 92 crores with PAT margins at 6.7%. The sunroof business continues to experience strong demand, primarily by the rising volumes, the customer preference for the sunroof product and the new vehicle launches. Our well-timed entry has helped us strategically, and we are now set to double the capacity by the calendar year '25 to meet the growing customer demands.
Coming to the industry highlights. On the passenger vehicle in this quarter, the last quarter, the sales volume grew by 6.6%, reaching 12.6 lakh units. The UV segment saw a very robust 16% Y-o-Y growth, primarily driven by strong demand and aggressive launches in the SUV segment. We also saw some improvement in the passenger car segment. The slowdown that we saw in the first half of the year in the PV segment has significantly improved post the festival season, and we see that trend continuing even in the remaining part of the year. On the CV side, the last quarter saw a muted growth of 2.2%, primarily due to the retail volumes declining Y-o-Y by 1.3%. This is primarily attributed to the delayed fund releases from -- on the infrastructure product -- projects from the government.
Despite this, the OEM seems optimistic on the improvement in the demand in this particular quarter. On the 2-wheeler side, we saw a year-on-year growth of 7%. This was led primarily by the scooters at 13% and followed by motorcycles at 4.5%. The 3-wheeler demand, however, saw a muted growth. The trend in the 2-wheeler continues to be strong, while we saw a month-on-month decline in the month of December, but this seems to be a temporary phenomenon. We remain optimistic about this moving forward in this quarter and the further quarters coming up.
On the EV side, this -- the EV industry is into the transition phase. While the penetration continues, the replacement of FAME with the PM E-Drive program has reduced the direct subsidies per vehicle, which has led to the decline in the overall 2-wheeler volumes. While the volumes on an annualized basis have grown, but yes, we are seeing a month-on-month decline in the last couple of months. However, in the increasing PLI incentives for battery production, which will impact on the lower battery cost, will significantly sort of reduce the battery cost, and this will improve the EV affordability and the demand hopefully would remain positive moving forward.
So on this note, I come to the end of the -- of my opening remarks. I now request the moderator to begin the question-and-answer session.
[Operator Instructions] The first question comes from the line of Jay Kale from Elara Capital.
Congratulations on a good set of numbers. So my first question is regarding your Marelli Suspension acquisition. Just wanted to understand this entity has been kind of EBITDA breakeven and a marginal PAT loss as per their reported numbers. How are you seeing the turnaround of this entity? What are the kind of synergies that you have with this entity? Where are the low-hanging fruits to improve profitability? And any time line of when you could take this entity to closer to your existing business margins?
Yes. So thank you. Thank you so much. See, in terms of synergies, there are clear synergies on the product side. It is a very similar product lines, very similar customer portfolio that is there. So there are clear synergies. As I mentioned earlier, the gas springs, the gas dampers is a new line for us, which we sort of -- we always wanted to enter into. So this gives us a clear benefit there. In terms of the customer portfolio, the customer portfolio is quite good with Tata, Maruti being -- and obviously, Renault being the top 3 customers and some exports also would help. So I think building the synergies is not a big challenge, to be honest, with this. Yes, we also get access to the technologies that are available, and we also get access to better product range that is available there. So...
And Jay, on the margin profile, you're right in terms of what you've noticed. But there are a lot of onetime adjustments, which are required to look at the numbers on an ongoing basis. Second is obviously the operating leverage that will happen with the increased synergies. In terms of time lines that you asked, well, we have a plan, which at this point in time, we are not able to share. But we have clearly curated a plan in terms of improving the margins and bringing it to the levels that Gabriel will be at.
Okay. Understood. And just on the technology side, what is the kind of technology that they -- because you all have been in the suspension market for quite long and you'll are one of the leaders over there. But what is the kind of incremental technology that you could benefit from this acquisition? I understand you'll are working on semi-active and you have made the semi-active suspension from your R&D globally as well. But any new products that you'll -- any new global clients that you'll can leverage from the Marelli relationship?
So as I mentioned, Renault is a running client, which is a global client that is there. In terms of technologies, I just mentioned earlier, gas spring, gas dampers is one product, which -- where the technology is already available there. The product is running. And there are enough opportunities in the market to ramp up that. So that definitely helps. And again, within the shock absorbers, every company uses a different technology. So there are always some pros and cons of every technology there. So some add-ons we see where we can utilize some of them on the -- say, on the commercial vehicle side as an example.
So Jay, on this particular point, a couple of things to note. One is, as Atul rightly mentioned, the gas damper is a new product. A good scope there with increasing SUV population, the load balancer requirements are going up and up. That's one. Second is that the territory is largely India and the export that currently this entity was doing. So in terms of synergy benefits, Renault getting added helps. In terms of the technology piece, there are designs which are different and have different or similar capabilities, which adds to the product basket in terms of what we can offer. And as just right now Atul mentioned, on the CV side also, there are such opportunities.
Understood. And you had mentioned historically that in the next 2 to 3 years, at least 1 or 2 more new products. I'm assuming that this acquisition is more of a consolidation -- is seen more of a consolidation from your side and not necessarily 1 of the 2 new products that you'll maybe plan to do it in the next 1 or 2 more years. So I think that trajectory is expected in the next 1 or 2 years. I'm assuming that if you can just clarify on that.
Yes, so we -- so see, M&A is not an event, right? It's a journey. So we are on that journey. We are certainly not saying that we are pausing. This is one of them, which came across and we were able to conclude it. As we speak, there are other opportunities that we are evaluating, and we'll come back to the market at an opportune time.
Understood. Just one last question, if I may squeeze. On the sunroof margins, if you could throw some light on how have they -- if you see consol minus stand-alone, I'm assuming that there is some dip on a Q-o-Q basis, while Q2 was substantially higher. What should be a sustainable margin on sunroof? And if you could also consistently kind of disclose those numbers, that will be really helpful for us to track the sunroofs.
So with one subsidiary, Jay, I don't think it's a simple math, right, consol minus standalone. There are other reasons why we have taken it out of the investors presentation directly. So request you to -- you all to bear with that. As far as the numbers are concerned, it was a good quarter. The sales was as per the budget that we had anticipated. We are also in the process of now going SOP for the AY program, which is the Kia platform. And with that, we are now anticipating to ramp up the production. We've already mentioned that we are looking at doubling the capacity and the order for that is already in place. And very soon, we will be in a position maybe in 2 years of time where we'll be almost exhausting that capacity as well.
So in terms of the pipeline, it's looking as per the plan that we had casted out, in fact, a little more aggressive than what we had planned for. Coming to the margin profile, you are very right. Last quarter was at an abnormally high margin. This quarter, there has been some one-off costs to the extent of INR 22 million. But to answer your question on sustainable margin, it will depend upon the product mix and what plays out, how much TVS, how much [ BLGS ], what is the proportion of that, which are the customers that we are going to add. As we all know, competition is also heating up on that. And with localizations, the prices ideally should go down, but we are clearly looking at a margin, which is accretive to Gabriel in the range of 12% -- 12% to 14% is what we had mentioned always. So that's the endeavor to keep it at that level going forward.
The next question comes from the line of Amit Hiranandani from PhillipCapital.
Sir, continuing on the ongoing acquisition, which is going on. So by when we are going to have the technical agreement signed with them? And secondly, continuing with that, what is the penetration of semi-active suspension in India? And where do you see it moving in the next 5 years? And presently, what is the penetration level for the same in the developed market, please?
I'll take the first one, Amit. So the technology license agreement and the technology assistance agreement are all sort of clearly agreed between both the parties. Once we have finished the conditions which are required customarily for closing a transaction, we should be able to enter into that and make it effective. So -- and again, we've already specified the long stop date in our disclosure. So that's the time line that we are working with. On the semi-active.
Yes. See, on the semi-active, while it is too early to sort of start giving a percentage to the penetration there because this is one product which is -- while I think a lot of discussions have happened in the past, but the EV that was launched, the BEV, one variant of that has come up with this particular suspension, the semi-active suspension, which is sort of locally assembled here. Yes, there are a couple of models, the top-end models where as a CKD or a CBU, they have this suspension. So this is just starting. In terms of where this will go, again, very, very difficult at this time to put a percentage to the penetration. But yes, because Mahindra has launched a variant with this, there are other customers also who have started discussion on this particular topic, and they are quite interested in this.
Right. Sir, any idea what is the penetration level of semi-active in the developed markets?
No, we can come back to you.
Yes, I think we'll come back to you on this.
Sure. And sir, can you please help us with the basic financial of Marelli Motherson like how much was the EBITDA margin and loss in FY '24 and current capacity utilization of this entity? And also, do we need to incur CapEx post the acquisition?
So Amit, past records, we really cannot share given that we have an asset purchase. So that is something that you will have to sort of fend for yourself. Second question is with regards to the asset utilization. Well, the entity has done INR 200 crores, INR 260-odd crores in the past. You can check that from the ROC filing. And with that, broadly, the gas damper is fully utilized and 60%, 70% would be utilization for suspension. And as we've always mentioned, these numbers are subject to bottleneck and capacity enhancement will depend upon what is the bottleneck. And as regards CapEx, well, it will all depend upon what kind of program we are able to synergize and add to this entity or add to this asset. So typically, in Gabriel, we have done asset turnover of 5%. We don't see any reason why it should be anything lower than that.
Right, sir. But sir, are we on track to achieve the double-digit EBITDA margin for the stand-alone even after the acquisition of this Motherson's entity?
So we'll have to see, there will be some stress because of that for sure. But in terms of track, yes, we are pushing harder.
The next question comes from the line of Aditya Khetan from SMIFS Institutional Equities.
Sir, my first question was on to the sunroofs business. I believe, sir, there is a drop in margins and even the top line has reduced on quarter-on-quarter basis. I believe, sir, the volumes -- so we were looking to ramp up the volumes. So any particular reason like so why the top line has dipped?
Last quarter was the festive quarter, last to last quarter. So there is a very, very marginal number. So from a revenue perspective, actually, it is poised to grow now that we are going to add the -- we're going to start the SOP for the new program of Kia. And on the margin, we've already mentioned now that there was a one-off in this quarter. But on a sustainable level, we are looking at anywhere between 12% to 14% of EBITDA.
Okay. And sir, in terms of competition, so do you see in the longer run, so many players have now started to like expand into the sunroof business. Is there any like a number which you can put so whether the growth could be slower or the ROCEs could come down in the longer run into the sunroof business?
So it's difficult to say, the competition that you're mentioning is still to pan out and see what they are going to do. One of the competition is going to be up north, where we are not there yet. We are in south and most likely in west. But to that extent, we are sort of competing with Webasto, which was -- who was already there in the space before Inalfa Gabriel came to India. Well, on the ROCE, if you look at the steady state margin, you can sort of assume that we will be able to retain the steady state ROCE as well.
Okay. So sir, on to the -- so the recent acquisition, sir, so post ramping the complete business, sir, what is the -- so peak expected top line and EBITDA from this business?
So as of now, we are not able to share those information. This is going to be -- as it's an asset purchase, it's going to be a plant of Gabriel once we have completed the customary conditions. But you can look at the past numbers and given that, that we have acquired the full business, some assumptions can be drawn.
Got it. Sir, just one last question, sir, on to the base business of our suspensions. Is it possible to share the volume growth on Y-o-Y and on quarter-on-quarter basis and also the absolute value, if you can share it.
Aditya, absolute value, obviously, is there segment by segment in the investors presentation. On the volume, we do not share that information given the sensitivity of the price and realization for shock absorbers.
Okay. So sir, at least at what -- so utilization so level we would be operating that plant as of now?
Which plant you're talking about MMAS or...?
Which plant?
Sir, the base business plant of suspensions?
We have 8 plants. So see, again, every segment has a different utilization, every plant has a different utilization. So it is very difficult to sort of put one number to that. But it will be 60%to 70%...
Yes, it will...
60%to 70% is the number that we keep. Again, the logic being very different for every segment because say, if you take a 2-wheeler segment, the festive demands are so high that on a normal year level, we keep it at around 65% to 70% so that we are able to service the customers well there, but mostly on the assemblies we look at a 2 shift kind of a demand, [ work in plant ].
Okay. Sir, just one last question, sir. Is there any scope for further increase in market share in the 2-wheeler and the passenger vehicle segment?
Yes, definitely, yes.
Okay. So sir, in the next, you can say -- so 2, 3 years, any number, sir, so we are targeting?
Yes, we -- with some acquisitions, we are seeing some growth. There are some more businesses that are there in the pipeline. So the -- say, in the case of 2-wheeler, the share of business has been continuously improving. We see that trend continuing. Again, putting up a number also becomes a little difficult because it also depends upon -- because the penetration is very different with different customers. So it also sometimes depends upon how that customer sort of performed in the market. But yes, there is a healthy business pipeline and from a -- even at a customer-to-customer level also, we are seeing a share of business improvement in most of the 2-wheeler customers where we are, and again, key customers like Maruti in the case of passenger car segment.
Yes. And Bajaj was -- as we had disclosed in the past, Bajaj was one of our endeavors in terms of increase in the SOP and with now 2 new programs, the Dominar and Pulsar we have sort of now there with them deeply entrenched that will certainly help our share of...
And just to also share with you like with Yamaha recently, we have got -- we have won a new scooter business that will again help us a little bit more on the Yamaha side. And so similarly, again, this continues. So there's a good healthy pipeline that is there. And I think already shared with you, Maruti, I think 2 launches are already planned this year, so.
The next question comes from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities.
Congratulations on the good growth and the recent acquisition, sir. Sir, continuing on the suspension new order wins, you have also mentioned some TVS order wins across the CNG, EV, 4-wheeler and electric 3-wheeler. Can you talk about this opportunity, sir?
On -- with which customer you said?
TVS Motor with the CNG and the electric 4-wheeler, electric 3-wheeler, which you have mentioned in the presentation.
Yes, yes. So yes, so these are all sort of -- these are all confirmed businesses under development. So I don't know exactly what information you are looking at. Mumuksh, can you elaborate for us to understand...
Yes. I mean just in terms of the size of the opportunity, if you can indicate what could be the opportunity size for this? And when the business would start the SOP of this order, sir?
So again, Mumuksh, you are aware that we are bound by the contract not to share the SOP and neither the volumes currently, but we can certainly share the orders win.
Got it. Got it, sir. Sir, this quarter, exports have seen a very good growth. Can you elaborate what has led to the growth? And what would the outlook ahead for this?
So in this quarter, we -- there are a couple of reasons for that. We saw a better growth in the aftermarket orders, and we also saw a much better pull from the Latin America market. So these are the 2 primary reasons for that.
And going ahead, sir, how do you see the growth pattern?
We see reasonable numbers. Again, exact numbers will be very difficult to share, but yes, we see a good demand continuing.
So Mumuksh, we have been always saying that our endeavor is to achieve a 10% export of the total revenue. There have been unfortunate situations like the Renault and then the Russia issue. But we are getting more and more entrenched with DAF in terms of improving their export and looking at some other opportunities as well. And now with the asset purchase that we have done, some bit of export will happen from that acquisition as well.
So there are 2 or 3 sort of opportunities that we are exploring in addition to what comes with the M&As. So we are very hopeful of converting them into orders.
Got it. And sir, M&A exports part would be like in the PV and sir, which customer would be broadly, sir?
It is Renault. Renault is one customer. And Stellantis is one customer. So these are the 2 customers that are there.
Got it, sir. Sir, on the sunroof, sir, for the recent additions with Syros and the Creta EV model, I mean, just can you indicate what kind of volumes could we see for these 2 models? And any update you want to share in terms of new order wins or any new orders in the RFQ stage, which could be executed in the coming quarter, sir?
Mumuksh, you're right, with Creta EV as well as with the Syros AY, there is a uptick in the volumes, which we are noticing now. And with that, we will go into the fourth quarter. In terms of order wins, we've spoken about Bc4t and Bc4i last time, the small export to Turkey as well. This quarter, there has been no new wins in terms of programs. The RFQ discussion obviously is confidential and cannot be shared at this stage.
And sir, the new capacity will be ready by end of the calendar year? Right sir?
That is right. A little before that.
Before that. Okay. And sir, on this M&A, you mentioned about the gas spring suspensions. I just want to understand what kind of a size of this opportunity market is there in India? Can you just elaborate on this product, sir?
So the market size for this particular product in India is quite large. And to be honest, even globally also, there's a huge demand for this particular product. There are not too many players who are there in this product. So in India, like SUSPA is one company, which controls the maximum market share. I may not -- but approximately, it must be say maybe 90%-plus there. So the opportunity definitely is huge there. And as Rishi mentioned, with more and more SUVs, the product also gets upgraded, the opportunity size also improves because, again, the cost varies between sort of segment to segment in this. And in terms of we also see -- moving forward, we also see export opportunities with this product.
Got it, sir. Sir, in the presentation, you have mentioned about the e-bikes new traction there. Can you, I mean, update what's the new opportunity there, sir?
So, see, as you are aware, that we have been working on this product for quite some time. We have been able to -- we have -- basically, I think we are doing 3 things on that. One is on the product side, on the technology and the product side, where we have a dedicated team sort of who are working to develop more products, product range here. We have a couple of experts from this industry, who we had hired. So that part is being done. Second is on the customer side. We are again working with multiple customers to sort of explore opportunities and now we are quite hopeful with some product range already available with us and some good customer connect, we are quite hopeful. Or rather when I speak, the team is already in Europe right now, again, working on the same with multiple customers. So we are quite hopeful of something materializing very soon in this particular segment. Again, the segment sort of offers good opportunity both in terms of product, in terms of technology, in terms of the size of the market that is available. So we are quite optimistic about it.
The next question comes from the line of Viraj from SiMPL.
Congratulations on a good set of numbers in a challenging environment. I have 3 to 4 specific questions. First is on the acquisition, which we announced. So just to clarify, Atul, actually, which we will be having with Marelli, that would primarily be...
Sir, your voice is muffled, we are not able to hear you at all.
Am I audible now?
Yes, yes, yes, much better.
So just the first question is the tech license agreement, which we will be entering into with Marelli that will primarily cover the existing product range or it will also cover much more, say, other advanced set of products in suspension?
We cover both current as well as add-ons.
And does that -- would that have a no compete outside of India?
There is a territory restriction and -- but includes the current exports.
Second question is in terms of the product, which we will be adding to the portfolio in suspension. Can you give some color in terms of the addressable opportunity, it kind of adds to the existing suspension business?
Currently small, Viraj, and I'll let full [ pigeon ] here. But as of now, we are obviously not sharing what is the potential that we have internalized the numbers with, but the current opportunity in terms of the overall percentage to Gabriel consolidated numbers is small.
No. So basically where I was coming from is, if I look at the product and look at penetration, say, outside of India. Just to get a flavor, what kind of penetration in these product categories we see in mature markets? Just to get of flavor, not giving exact numbers or -- just an indication.
So Viraj, these are primarily the shock absorbers, correct, which are there. In terms of penetration or in terms of opportunity, the sort of -- the entire world is open for us. I think we have been discussing about exports from Gabriel for quite some time.
Sir, I think the question is on the dual balance, sir.
On -- you are talking about the gas springs?
Yes. I'm just trying to understand the product which we added to the portfolio, what kind of penetration...?
Viraj, I will give you the content per vehicle. There are 2 for the rear boot. There is -- there could be 1 for the front bonnet so that's the minimum that a vehicle can have.
Okay. Just 2 more questions. One is if you look at the said asset, which we are purchasing, they have had issues in terms of ramp-up and quite a high rejection rate. Do you see any possibility of higher provisions related to warranty or any product liability risk, which we would be facing once we take over?
Even it's an asset purchase, we are not taking over any liabilities for the period, which has belonged to this entity.
So there's no liability.
Okay. And last question is on the suspension. See, if you look at the contribution margins, which we are earning right now, it's an environment where [Technical Difficulty] are very benign and certain high-margin segments are relatively doing well for us, aftermarket, 2-wheeler. Still our contribution margins are still around 25%-ish compared to the past where it has even gone to 27%, 28%. So would it be right to say that margins what we are earning in the business should kind of grow [Technical Difficulty] would still remain in that 8.5%, 9% given that in the past, we have been slightly more aggressive in some [Technical Difficulty] and that's how on a portfolio basis, this is [Technical Difficulty] in that plan?
Viraj, your voice was dropping. But if I have understood your question correctly, looking at my contribution margin, yes, obviously, the product mix plays a big role. And as you rightly said, we have been working on the mixes, which are of a higher contribution, 75% is raw material cost, as you are aware. So that has to be factored into when we are looking at an increase in the EBITDA margins to a double digit. We are sort of short of 1.5% there at this point in time. So some part of that will have to come from contribution and some part of that will have to come from operating leverage. And we've already spoken about the Core 90 program. So under that all aspects of cost as well as revenue and income are sort of taken into consideration. So you can sort of assume a fair split between cost elements and the income elements.
The next question comes from the line of Chetan Gindodia from PGIM Mutual Fund. [Operator Instructions]
Sir, firstly, congratulations on a great set of numbers. Firstly, sir, any new labels that you are added other than, say, Hyundai or Kia, which has been our base customers for the sunroof business or any other OEMs we are in discussion with?
Yes, we are in discussions with other customers other than Hyundai and Kia, can't share the name unfortunately, Chetan.
Okay. Got it, sir. Sir, for the sunroof business, can you share any kind of revenue targets or any guidance you have for this business, especially given that we are doubling our capacity over here. And you said that you already have the customers for the expanded capacity as well. So any guidance if you can share on that side?
See, when we had gone live with this entity, we had mentioned that we are clearly looking at INR 800 crores to INR 1,000 crores in 5 years of time and that we will be our -- that is the continued endeavor.
Okay. Great, sir. And sir, lastly, of that we have already done 2 sort of acquisitions, firstly with the sunroof business and now with the new plant that we have acquired. So is there more to come for -- on the inorganic side going ahead as well are we -- or is this more or less done for you now?
No. I think as we mentioned earlier also, I think -- see, this is an ongoing journey. So there's no full stop to it. As we speak, again, 1 or 2 discussions are going on, how they materialize, we'll see in the next sort of due course of time, but our focus remains there. Our efforts remain.
The next question comes from the line of Abhishek Jain from AlfAccurate Advisors.
Congrats for a great set of number, sir. Sir, in base business, you have seen a very impressive growth in the 2-wheeler side that is 19% versus the muted growth in the industry. Is it because of the higher revenues from the electric 2-wheeler side from the Ola and TVS?
Sorry, Abhishek, your voice is not clear. So...
Are you able to hear me?
No, Abhishek, you need to take the mic a little away from your mouth. It's very muffled.
Hello, sir, is it fine?
Yes, yes, yes, better.
So in 2-wheeler side, basically, we have seen a 19% growth Y-on-Y and we outperformed industry growth. So is it because of higher revenue from EV side from Ola and TVS?
So it is -- again, it is not only from the EV side. The -- it is also supported by the new launches that are there from say TVS, better offtake from Bajaj and other customers. And obviously, the EV plays a role there.
So as you mentioned that you are winning new business from the TVS and plus Bajaj, also won the new business from the Yamaha. And plus that, there will be significant growth on the EV side where you have a market share of around 87%. In this case, how do you see 2-wheelers growth in FY '26, if industry growth would be around 5% to 6%.
Again, we'll not be able to share the sort of projected numbers that we have. Industry growth, as you rightly said, we are also expecting around 6%, 7% industry growth in this, but the effort is to continue to be better than the industry.
Okay. And in the 4-wheeler side, basically, there is a 14% growth. Is it because of the higher revenue from the UV side where your market share is 29%?
Yes, we -- see, the growth in the UV market anyway has been much better in this quarter. The overall growth has been I think 16% in case of UV. So that impacts us also positively.
And how much the difference in the content per vehicle in the 4-wheeler UVs versus sedan?
It's not a straight math here. And unfortunately, those numbers cannot be shared. But to give you some help on that, usually, you can look at the proportion of the car cost also.
Okay. And as you mentioned that you are going to double your capacity in sunroof. So how much current capacity and capacity utilization?
We are currently at 180,000 sunroofs per year capacity. That's the 1 line capacity that is there. Currently with the new program, we will be exhausting that capacity. Yes. Did you hear me?
Yes, yes. Okay. And in railway segment, what is your plan? And what kind of the revenue projections for the medium term, sir?
Well, again, projections we don't share. It's a small part of our top line, but a very important part, given that, that segment we want to be present as well as from a profitability perspective, it's a good margin product.
And we have the entire product range.
And railway, as you know, this also depends upon how many coaches are finally built and it is a tender business. So it is never a single source business in railways, so.
Okay. And my last question on the sunroof side, how much is the royalty payment you are doing at this point of time?
Both the parties taken together, 5%.
5%.
Both the parties.
Both parties, okay, sir.
The next question comes from the line of Jeetu Panjabi from EM Capital Advisors.
So I have one -- just one big question, right? You've taken over the mantle a few months ago, you've kind of seen this acquisition happen. You're also kind of working through the sunroof business. Can you articulate what's your vision for the business? Where do you want to take it over the next 2, 3, 4, 5 years? How do you plan to spend energy, like what will be the focus and the energy focus going into different segments? And is there anything different you intend to do from what Manoj was doing over the years?
Jeetu-bhai has always good question.
So I think even in the last call also, while it was my first day -- the second day rather, this question was asked. So see, as you know, I was away from Gabriel only for 8 months there. So even in the last strategic plan, I was a part working with Mr. Kolhatkar there. I completely believe I think the 4 pillars that we have been talking about in terms of the domestic dominance, in terms of focus on exports, focus on M&A and the technology. I think they remain intact. The vision is very, very clearly defined. What I intend to do and what the effort has been till now in this new role and which will continue -- or rather I'll say it will sort of -- I'll try to bring more focus to that is bringing pace to these things. So like I think we have been talking about exports. We all understand export is very important because it helps in the better mix. So how can we speed up some acquisitions that we have been working on, on the export side, how can we do more in terms of bridging any technology gap that is there, I think, has been the focus, and will continue to remain the focus. So...
Okay. And anything different you intend to do from where you are on status quo as you think through your vision for the business?
So as I mentioned, I think 2 things. One, on the current 4 pillars that I said, more renewed focus, better resource allocation to expedite these things. Another area that definitely, I would like to focus would be to also see that can we have better synergies and get into some different -- even in the suspension side also into different product range like we discussed sometime back on the e-bikes. It presents -- it is a different segment, but it presents a good opportunity. I think at some stage, we spoke about some of the industrial products also can we bring more focus to that so that we have even a better mix, both in terms of the customer in terms of the market, the segment profile. And yes, I think there has -- there will be more focus on how we can sort of get to more product through M&A or through anything else.
The next question comes from the line of Alisha Mahawla from Envision Capital.
Sir, just a couple of clarifications. Earlier, we had a target for -- revenues for sunroof for the current financial year was INR 400 crores. Will we be able to meet that aspiration? And also, you mentioned earlier in the call that there was a one-off of about INR 22 million. If you could just maybe clarify what was this pertaining to?
So first question, yes. We are -- we will be able to meet our target for sure. Second question, these were onetime costs in terms of some price settlements with the customers.
Sorry, couldn't hear you very clearly.
These were price settlements with the customer as well as some other costs which are nonrecurring in nature.
Understood. Okay. Sure. Sir, next question is margins on the stand-alone business, while you did spell out that there are a couple of steps that we can still take and like it was asked earlier, the recent asset purchase that we have done. Will this mean that the double-digit margin that we've been working towards since the last multiple quarters will now probably be slightly more back ended?
One is that in terms of the total top line, it's not very significant as compared to Gabriel, that's one. Even if we do a weighted average, it should not be impacting significantly. The idea here is not to get -- not to find reason to delay the pursuit. We are still on the target, and we'll continue to do so.
So we still stand by FY '26 to hit double-digit margins on the -- in the stand-alone business?
FY '26, we've said 2 years. So, yes.
Understood. And lastly, our net working capital or working at the cycle has been inching higher, it used to be 20, sub 20 days, now it's 26 days. What is leading to this change and where is this number now expected to settle?
So 20 days was an aberration. I would safely assume it to be in the range of 21 to 22 days. You are very right that this quarter, we have a little higher working capital. That's largely owing to the holiday season in China. So some amount of inventory buildup was required to maintain supply chain on the imported inventory and some amount of increase in the finished goods. On a steady state basis, we would always expect it to be in the range of 20 days.
20 days.
Yes, some part of that was planned.
Yes. Yes.
Okay. And just one last question. The acquisition that we've done. You did mention that at least they are operating at almost full capacity. So are we looking at doing any incremental CapEx there? Is there anything that we would maybe want to spell out currently?
So I think what was mentioned was that in terms of the gas damper, they are working at almost the full capacity, in terms of the other shock absorbers and struts, the -- it is available there. We will have to -- definitely gas damper presents good opportunity. So we will have to look into the bottlenecks and then see what kind of CapEx is needed to enhance. But yes, the capacity enhancement would be needed in that particular segment, not on the other products in the...
And -- yes, shock absorber is at what capacity utilization?
Should be around 60%, maybe 55% to 60% should be the number.
The next question comes from the line of Jyoti Singh from Arihant Capital Markets.
Sir, I just wanted to clarify on the e-bike side, as you keep mentioning that it's a very good demand. So we are basically seeing for the Europe or any other reason that we are targeting. And what kind of opportunity we are seeing and margin contribution on that side, if you can explain.
The market that we are looking at is Europe. We are not looking at any other market as of now. We are looking at Europe as a market. Europe is the biggest e-bike market in the world. And so that is the market that we are looking at. And this is where we are working with multiple customers right now.
And what kind of margin we are seeing, sir, from this segment?
Again, margin profile at this point in time cannot be shared. At this point in time, the idea is to enter the market and then to scale it up.
And sir, another question on the sunroof side. Like earlier, you mentioned you are in active discussion with the Indian OEM like M&M and other players. So still it is in the pipeline or any active discussion on that side?
No, active discussions are going on with, I think 3 OEMs, rather, I would say. And -- but yes, Rishi mentioned, there's no firm LOI as of now, but yes, technical discussions are going on.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Jaggi for his closing comments.
Yes. So I take this opportunity to thank everyone joining the call. I hope we have been able to address all the queries. For any further information, please get in touch with us or SGA, our IR advisers. Thank you so much for joining the call, again, thank you.
Thank you.
Thank you. Ladies and gentlemen, that concludes the conference of Gabriel India Limited. Thank you for joining us. You may now disconnect your lines.