Here are my notes from today’s call.
- Domestic market: Added Escorts Kubota (agri tractor), TVS (in their apache bike + 300cc BMW bike) and Kawasaki (which earlier had joint venture with Bajaj; now manufacturing alone) in Indian business segment.
- Export market additions: CFMOTO (2-wheeler, KTM has tied up with CFMOTO to enter into China market, RACL had relation with KTM and are providing fully furnished gearbox to them), Moto Guzzi (2-wheeler high end Italian motorbike company, owned by Piaggio, they have had a long relationship with Piaggio), ZF (new client; biggest auto parts manufacturing company globally; entered Chassis component of passenger car (for both electric and conventional cars) which is a new segment; first Indian company to supply fully finished parts to passenger cars to ZF), Man trucks (Europe’s second largest CV manufacturer); New capacity: 50% will go to ZF and rest will go to Man trucks
- One of major electric vehicle bike will be launched by European player in India
- 2025 turnover objective: 500 cr.
- Key reasons for higher operating margin: Export margins are much higher. In-house manufacturing of certain instruments (eg: forging) have helped to improve margins. Also out-source some other jobs. Aims to maintain this kind of margins
- Some prototyping orders this quarter have led to higher gross margins which is not sustainable
- Expansion: Plant is already ready; end of 2021 will start production. Volumes will start coming in 2022
- Core competence: Gears. Diversifying into chassis component (will remain in e-vehicles)
- Precision of gears will increase manifold in e-vehicles. Investments have been into doing precision gears which makes less noise which is required in EVs
- In India, gear making technology is not available. Equipment are generally imported
- Current capacity utilization is 70-75%
- 10-15% of revenues can potentially come from the EV opportunity