Q3 concall notes:
- Picture of gajrola factory spread across 26 acre of plant (95% of revenue from here).
- Residential complex for key employees: 80 families.
- 100 cr of sales. 72% Exports. 28% domestic.
- New capacity additions running at 70% capacity utilization
- First co to export gears to Japanese OEM
- Started gear honing technology which improved our margins & value addition.
- Got 1st order from KTM for assembled gear shaft (shaft, gears, bearing) put straightway into engine housing. Top of line, duke 690. Got contract in 2014.
- 1st electric car: Mahindra Reva : E20 had RACL gears. When mahindra overtook they started producing their own gears.
- Product portfolio: Complex critical safety components & assemblies
- Gear has application in chassis, engine,
- Foot rest (for an indian 2w), steering tube (central pivot on which bike head is mounted), rad flanch (break mounting part), steering shafts (ZF, Revolutionary product.), axle shafts (truck part going to europe). These components will go to EVs also. Balancer shafts, Balancer shaft assembly (going to engine, duke 990 motorcycle for KTM; very complex requirement; Weight balancing, angle of weights)
- Parking lock wear (for EV car),
- E-mobility parts: output shaft, rotor shaft, wheel & axle assembly :
- Operator packages the part where it is manufactured.
- Competitive advantages: Business RFQ: RFQ to actual sample submission, product generation, high lead time for equipment deployment,
- 800 different part numbers
- Guidance for FY24: 470 cr. 43% from 2w. Cars : 9% of revenue in FY24. EV: 4% (based on confirmed orders).
- Guidance of 365 cr for Fy23 (105 cr for Q4)
- Building a new plant : Shakti plant. 470 cr majorly from ojas plant. Low contribution from Shakti plant. Primarily being built for beyond FY24. Put solar power plant on our ojas plants. 5% of electricity from rooftop solar. In next 5 years, ~50% of electricity will be from non-fossil fiel based sources.
- We have barren land on the left side. We produce wheat also.
- Customer who strategizes their business plan. We take that forward. ZF has very ambitious plan to source components from india. ZF sources 300M$ right now from india. 2030: 3B$ source from india. (10x in 7-8 years). We were 1st co in india who gave fully finished parts for passenger vehicles for europe for ZF. New flood of RFQ with us. Just in 3 years ago we started & the business is growing well. All our customers have ambitious plans.
- For capex we are spending 25% from reserves.
- Seasonality: Different products have different seasonalities (on road & offroad vehicles). It balances out.
- Working on beyond 500cr milestone: Existing business projects are in infancy stage. Volumes will ramp up by Fy26/27. That will grow revenue beyond FY26/27.
- Niche & luxury british motorcycle manufacturer was sitting in our factory some time ago.
- Roadmap very soon on 500 to 1000 cr roadmap.
- 250 cr capex over 4 years, then over Next 12 years , 20% of the capex (50 cr) will be given as subsidy (4cr / year).
- Many times need to invest up front to produce 1st part.
- Dont see margins Q to Q.
- Debt is comfortable. Customers compensate even if some orders fall through. For next 2 years at least no change in strategy of capital structure.
Disc: Invested, biased.
| Subscribe To Our Free Newsletter |
