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Edited Transcript of ENDURANCE.NSE earnings conference call or presentation 15-May-19 4:30am GMT

Q4 2019 Endurance Technologies Ltd (CN) Earnings Call

AURANGABAD May 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Endurance Technologies Ltd (CN) earnings conference call or presentation Wednesday, May 15, 2019 at 4:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anurang Jain

Endurance Technologies Limited - MD & Director

* Massimo Venuti

Endurance Technologies Limited - Non-Executive Director

* Satrajit Ray

Endurance Technologies Limited - Group CFO & Executive Director

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Conference Call Participants

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* Aditya Jhawar

Investec Bank plc, Research Division - Analyst

* Bharat Gianani

Sharekhan Limited, Research Division - Analyst

* Chirag Shah

Edelweiss Securities Ltd., Research Division - Research Analyst

* Hitesh Goel

Kotak Securities Limited, Research Division - Associate Director & Automobile Analyst

* Jinesh K. Gandhi

Motilal Oswal Securities Limited, Research Division - SVP of Equity Research

* Jitendra Panjabi

* Mahesh Bendre

KARVY Stock Broking Limited, Research Division - Research Analyst

* Narottam Garg

* Niket Shah

* Ronak Sarda

Systematix Shares & Stocks (India) Ltd., Research Division - Analyst

* Vijay Sarthy T.S.

Anand Rathi Financial Services Limited, Research Division - Research Analyst

* Ashish Nigam

Axis Capital Limited, Research Division - SVP of Automobiles

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Endurance Technologies Limited Q4 FY '19 Earnings Conference Call hosted by Axis Capital Limited. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Nigam from Axis Capital Limited. Thank you, and over to you, Mr. Nigam.

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Ashish Nigam, Axis Capital Limited, Research Division - SVP of Automobiles [2]

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Thank you, and good morning, everyone. Welcome to the Q4 FY '19 Results Conference Call of Endurance Technologies. From the management team, we have with us: Mr. Anurang Jain, Managing Director; Mr. Ramesh Gehaney, Director and COO; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Satrajit Ray, Director and Group CFO; and Mr. Raj Mundra, Treasurer and Head, Investor Relations.

I'll now hand over the call to Mr. Jain for his opening remarks, post which we can have Q&A. Over to you, Anurang.

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Anurang Jain, Endurance Technologies Limited - MD & Director [3]

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Thank you, Ashish. Good morning. I am Anurang Jain, Managing Director of Endurance. I would like to share details of how we have done in the fourth quarter of 2018/'19. I would first like to thank all our shareholders for their overwhelming response to our offer for sale for a dilution of 7.5% of our promoter shareholding. This offer is still oversubscribed 2.7x both each in retail and non-retail. Now our promoter shareholding stands at 75%.

In India, in the fourth quarter of 2018/'19 and as per the SIAM data, the 2-wheeler industry sales degrew by 7.6% compared to the quarter 4 of the previous financial year. Scooters degrew by 14.7% and motorcycles degrew by 4.6%. As you know, 78% of our India sales is with 2-wheeler OEMs. Our customer, Bajaj Auto, grew by 17% in the fourth quarter. In Europe in quarter 4, in spite of a decline of 3.3% in the European Union automotive sales, our European operations have posted a total income growth of 12.6% in rupee terms and a growth of 10.9% in euro terms.

On the financials, I will briefly talk to you about the fourth quarter of 2018/'19 and then about the financial year of 2018/'19. During quarter 4 as compared to previous year's same quarter, our consolidated total net income grew by 9.4% from INR 17,424 million to INR 19,060 million. Consolidated EBITDA grew by 22.6% from INR 2,650 million to INR 3,302 million. Consolidated EBITDA margin percentage is 17.3%. The profit after tax grew 27.7% from the previous year and is INR 1,486 million at 7.8%. The profit after tax includes the Maharashtra state incentive for megaproject amount of INR 205 million.

During quarter 4, our standalone total income grew by 8.1% from INR 12,242 million to INR 13,449 million. This is against a degrowth in 2-wheeler industry sales of 7.6% in quarter 4. Standalone EBITDA grew by 27.4% from INR 1,665 million to INR 2,120 million with an EBITDA margin percentage of 15.8%. Standalone profit after tax grew by 34.7% and is INR 1,103 million at 8.3% after considering the Maharashtra state incentive for megaproject amount of INR 205 million.

I will now brief you on the financials for the year 2018/'19. During the financial year 2018/'19 as compared to the financial year 2017/'18, our consolidated total income grew by 18.2% from INR 63,748 million to INR 75,375 million. Consolidated EBITDA grew by 21.5% from INR 9,513 million to INR 11,558 million. Consolidated EBITDA margin percentage is at 15.3% and the profit after tax grew 26.7% and is INR 4,950 million at 15.3%. And the profit after tax grew 26.7% and is INR 4,950 million at 6.6% after considering the Manesar plant closure, legal dues and settlement cost payment of INR 208 million to our workers and the Maharashtra state incentive for megaproject amount of INR 205 million. The consolidated ROCE is 24.8% and the ROE at 20.9%. The consolidated net debt is at INR 1,578 million and the net debt-to-equity ratio is at 0.6:1. The asset turnover is 2.4x.

During the financial year '2018/'19, our standalone total income grew by 20.5% from INR 45,084 million to INR 52,337 million. Standalone EBITDA grew by 22.9% from INR 6,088 million to INR 7,482 million with an EBITDA margin percentage of 13.8%. The profit after tax grew 31.8% and is INR 3,579 million at 6.6% after considering the Manesar plant closure, legal dues and settlement cost payment of INR 208 million to our workers and the Maharashtra state incentive for megaproject amount of INR 205 million. The standalone ROCE is at 26.7% and the ROE at 18.5%. The standalone net debt is at INR 1,517 million and the net debt-to-equity is at 0.7:1. The asset turnover is 2.53x.

We would like to mention that Endurance is focused in both its Indian and European operations on growing higher than the industry growth. The detailed financials are available with the stock exchanges and on the Endurance website.

I would like to share certain other points on the financial year 2018/'19. HMSI or Honda 2-wheelers awarded Endurance with the prestigious award for new product development for 2018/'19 at the vendor meet in March 2019. Endurance was ranked at 166 by the NSE Stock Exchange in terms of market cap as on 31 March 2019. The Business India magazine ranked Endurance at #137 on India's most valuable companies.

In 2018/'19, 72% of our consolidated total income, including other income, came from Indian operations and the balance, 28%, came from our European operations. Bajaj Auto share of business on consolidated sales was at 38.9% due to its high growth of 25.7% in motorcycles and 22.3% in 3-wheelers. In India, there was a sizable growth in business at Bajaj by 29%; Hero MotoCorp by 53%; and Yamaha India by 19%. It is important to note that in 2018/'19, in spite of Indian 2-wheeler industry growth at 6.3% and the total automotive industry growth at 6.45%, Endurance India standalone business grew much higher at 20.5%.

In Europe, though there was a degrowth of 1% in car sales, our overseas business grew 5% in euro terms and 12.7% in rupee terms. We grew 68% with Volkswagen Group, including Porsche, and 27% with Daimler in euro terms. Our top 6 clients, comprising 75% of Endurance group business, are Bajaj Auto, Fiat Chrysler, HMSI, Royal Enfield, Daimler and the Volkswagen Group, including Porsche and Audi.

In 2018/'19, we have acquired EUR 59.5 million of new business in Europe mainly from Volkswagen, Porsche, Daimler and Fiat Chrysler. As informed earlier, we have got our first order from TVS for disc brake assemblies, which will start from quarter 3 of 2019/'20, which is this financial year. We are also in the process of finalizing business for suspension, castings and transmission products.

Hyundai and Kia Motors are emerging as large OEM clients for aluminum casting and machine business with a combined order of INR 235 crores starting from this financial year and reaching the peak in 2020/'21. These orders will be supplied from our existing Chennai plant as well as our new Chennai plant at Vallam. Since April 2018, INR 10,336 million value of business has been awarded to Endurance in India. The new business is mainly from Kia Motors, HMSI, Hero MotoCorp, Yamaha India, Royal Enfield, Fiat India, Tata Motors and TVS. This also includes new product platforms and electric 2- and 3-wheeler business for suspension and braking products.

In the financial year 2018/'19, our aftermarket sales in India grew by 13.6% to INR 2,707 million. This includes both the domestic and export sales. Also in the financial year 2018/'19, exports from India grew by 28% from INR 2,198 million to INR 2,773 million. Our exports mainly comprise of exports of aluminum castings to GETRAG, which is now a part of the Magna Group, motorcycle inverted front forks and shock absorbers to KTM Austria and our aftermarket exports to 25 countries.

The status of our new plants are as follows. Our 2-wheeler suspension plant at Halol, Gujarat for Hero MotoCorp started production in September 2018 and is now supplying 100% of the front fork and shock absorber requirement to them. We have reached around 2,600 sets of front fork/shock absorbers per day. And we hope in the next quarter to reach approximately 4,000 sets of front fork/shock absorbers per day. Our Kolar, Karnataka plant for supplying front fork and shock absorbers to HMSI for the scooters will start supplies from the second half of this financial year. The building work is already complete.

In Chennai, we have purchased approximately 9 acres of land at Vallam for a our second die-casting plant and machining plant. And we target to start production in quarter 3 of 2019/'20, which is this financial year. The customers we will start with will be Kia Motors, Hyundai and Royal Enfield. In Aurangabad, we have purchased another 10 acres of land in Waluj for our near-term expansion projects. We had also -- I would also inform you that we have hired 20 key personnel in the last 12 months in India, which includes the President, Operations and the Head of Strategy.

The ABS brakes tie-up with BWI, USA is also progressing well. There is close coordination between the team at Endurance and BWI. We are at present in the process of testing our ABS with our first OEM client. And we hope to get clearance in this financial year. The plant capacity is planned at 400,000 ABS assemblies per annum. This plant's setup will be ready by the end of quarter 3 of 2019/'20, which is this financial year. On our 29-acre test track, the ABS tracks are completed and our ABS testing is on. Other test tracks, including the gradient and durability tracks, and the building with the control tower and workshop are almost ready. And we hope to complete this by this month end.

As I informed earlier, our company has received the certificate for incentives under the Maharashtra Package Scheme of Incentives-2013. Based on investments in fixed assets, which we did between April 2013 until March 2018, our company will get incentives totaling an amount of INR 3,673 million spread over 7 years, which started from the year 2018/'19.

We are extremely excited about all the new business as there are large business opportunities coming our way in all our core product areas, including new products, the motorcycle inverted front forks and shock absorbers, paper friction plate clutch assemblies, front and rear disc brake assemblies, scooter continuous variable transmissions and fully machined aluminum castings for 2-, 3- and 4-wheelers. We are looking at new products to add to our existing core product area portfolio. We are actively engaged to explore and identify opportunities for acquisitions and technical tie-ups with different overseas companies.

We at Endurance will also continue to focus on growing profitable business in all our core product areas with our existing and new clients while leveraging our strengths in R&D, our strong vendor base and our TPM approach of increasing operational efficiency. Also we are focusing on increasing our aftermarket and export business in our Indian operations and looking at organic and inorganic opportunities in both India and Europe.

With these opening remarks, I would like to invite questions from all of you. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Chirag Shah from Edelweiss Capital.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [2]

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Sir, my first question is with respect to this sharp gross margin improvement that we have seen in Q4. Can you shed some light on that?

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Anurang Jain, Endurance Technologies Limited - MD & Director [3]

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Are you talking about the margin percentage or the margin amount?

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [4]

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Of your percentage, if I were to look at the RM -- sales minus the raw materials, we are at 45.1%.

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Anurang Jain, Endurance Technologies Limited - MD & Director [5]

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But you are talking about the consolidated, is it?

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [6]

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Yes.

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Anurang Jain, Endurance Technologies Limited - MD & Director [7]

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Okay. So as far as consolidated is concerned, I think one of the reasons is the drop in commodity prices, mainly on steel and aluminum. And like we've been mentioning over the years that this has the impact on the EBITDA margin percentage. When the commodity prices go up, it has a negative impact on EBITDA percentage. When they go down, it has a positive impact. So this is also a result of that. And plus I think we have been able to control our raw material prices quite well. I think it is a factor of both.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [8]

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And even in standalone, if we see your gross profit margin is historic high actually at 37.1%. It's the same reasoning?

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Anurang Jain, Endurance Technologies Limited - MD & Director [9]

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No. Also there is also this megaproject incentive, which I mentioned, which has also come in...

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [10]

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That's INR 31.5 crores on top line.

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Anurang Jain, Endurance Technologies Limited - MD & Director [11]

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Which is at INR 31.5 crore on top line and INR 2.8 crores on profit after tax. Yes, so that has also brought up this.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [12]

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And you also made a comment that Hero, you have seen 50% kind of a growth this year.

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Anurang Jain, Endurance Technologies Limited - MD & Director [13]

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Yes.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [14]

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Now is it largely because of Halol? Or is there anything else?

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Anurang Jain, Endurance Technologies Limited - MD & Director [15]

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Yes. It is largely because of Halol as well as the aluminum casting business, which we are supplying from Sanand plant to Halol plant.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [16]

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Okay. And how does the outlook stand over there? Or is it...

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Anurang Jain, Endurance Technologies Limited - MD & Director [17]

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I think only time will tell because it's very difficult to predict the future at this stage. Because there are, as you know, a lot of factors for which are pretty vital, the same time, it is not that great. But wait for the elections to get over. We, of course, are not economists. But I can just say that if food prices go up, the rural incomes will look up, we're hoping for a good monsoon. The election, the sentiment should improve. We're all hoping for this. So very difficult to say who will do well, who will not do well. Only focusing on higher than industry growth is what we will continue to focus on by taking new business.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [18]

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Yes. In terms of penetration with Hero, so any update, any further scope of entering into new plants or something like that?

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Anurang Jain, Endurance Technologies Limited - MD & Director [19]

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No. So you see right now, as you know, Hero is down on sales, which you can see which is there. We are only looking at entering the other areas. Happy to tell you that we have got, I mean, the order for the disc, part of the disc brake, which will be starting from next month. And clutch and CVT is under testing. It's taking some time. So we are -- see, our focus, like I said, of increasing -- we will supply all the core products to all the -- to all our OEMs, increase our share of business. And that's a focus which is on right now, to be doing both these things.

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Operator [20]

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The next question is from the line of Narottam Garg from Chanakya Investments.

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Narottam Garg, [21]

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Congratulations on a great set of numbers, especially in this difficult environment in the industry. Sir, two questions. Firstly, the new order value that you stated of INR 10,336 million, does this include renewal of any current business or these are entirely new orders that you have received this year?

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Anurang Jain, Endurance Technologies Limited - MD & Director [22]

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See, the way I see it, it is for me, it's a new business. But looking at the industry, it could also replace some of the existing models. So it is very difficult to say that which models will do well or not on the OEMs. (inaudible) new business, now it may replace some of the exiting models, I do not know. It's very difficult to say that. I'm hoping that this is totally new. But it could be, like (inaudible), this could be also replacement of some of the existing modules.

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Narottam Garg, [23]

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But would it be fair to hypothesize that a large portion of this will be entirely new business that you have received either in new product categories with...

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Anurang Jain, Endurance Technologies Limited - MD & Director [24]

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I can tell you a large part is new. Like Honda and Kia, INR 235 crores, it's totally new. The Honda scooter front fork, which is replacing shock absorbers, is totally new. It's a totally new value add which is coming in.

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Narottam Garg, [25]

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Correct. So large part is totally new, right?

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Anurang Jain, Endurance Technologies Limited - MD & Director [26]

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A large part is totally new. But there would be a certain part which could replace because this does happen every year. So your question is right.

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Narottam Garg, [27]

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Understood, sir. And sir, second question is with regard to the ABS. Sir, please, pardon me if I'm wrong here. But is there any delay in terms of getting the final product tested and the final production to start? And also it appears that the capacity has come down from 0.5 million to 400,000 that you were talking about. So if you could throw some light on that, that would be helpful.

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Anurang Jain, Endurance Technologies Limited - MD & Director [28]

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Actually, the capacity, if you see the recordings there, I've always said 200,000. I never said 500,000. Maybe right in the beginning, I may have. But last few investor calls, I have said 400,000 because that is the economical capacity for us. So that's why we close it at 400,000. And there is a delay because what is happening is that testing in Indian road conditions is taking slightly longer time because you have very difficult roads, like the gravel roads and the country roads, high view, low view. So the Indian conditions are having a challenging time. And here, the benchmark is Bosch, which is the world leader, like Continental also. So it's taking more time, but it's better to satisfy the customer. They should be totally convinced on performance. Once we cross that, then we can go ahead. So it's also very important, even if it's taking a bit more time, it's fine because it's a learning for us also.

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Narottam Garg, [29]

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And are the orders there to have a good utilization on the 400,000 capacity that we are putting up? Or are orders already in there?

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Anurang Jain, Endurance Technologies Limited - MD & Director [30]

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Yes, we are engaged with a few customers. One client is already doing a testing which is there as we speak. So that is already going on. So we are hoping. See, business is taken with a (inaudible). See, I can only say that I know strengths of Endurance on whether it's performance, quality and cost and development. And always there is a certain amount of risk in any business. This is a very high technology product, our whole focus will be. And like I said in the past, we have trust of our clients. We have built a lot of trust over the years. So I'm quite hopeful and I'm quite confident that over a period of time, we will do our best to grow our volumes, looking at our strengths as we have today.

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Operator [31]

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The next question is from the line of Jeetu Panjabi from EM Capital Advisors.

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Jitendra Panjabi, [32]

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I've got two questions. You see the European Opel data, the numbers are disastrous, right? And even the U.S. numbers are not that good. Chinese numbers have actually (inaudible) a little better. But my broader question is in the context of all these numbers. Your international business seems to have done pretty well. So can you explain relative to just looking at the Opel numbers, what drove your numbers to do what they did? Then the second question is more just a general -- if you were to look at your guidance given by your customers over the next 12 months in terms of what they're trying to achieve and how much they want you to gear up in terms of volumes for, what's the sense of getting there? Is the pessimism internationally continuing? Or do you see any signs that people are expecting things to get better?

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Anurang Jain, Endurance Technologies Limited - MD & Director [33]

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Okay. So I'll request Mr. Massimo Venuti to answer this question. As it's more related to overseas, he's a better person to answer this. So I'm just handing this over to him.

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [34]

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Thank you to everybody. So the situation in Europe for sure is not so good in this period of time. But as I told in the past, our future growth in Endurance will depend on the capacity to gain market from our competitors. And this is the activity that we have done in the last 2 years. And we are having benefit in this period due to the fact that we are starting with a lot of projects with Volkswagen Group. As Mr. Jain told you before, during the 2018/2019, we increased our turnover of 5.1%, about 68% of growth with Volkswagen Group and also 27% with Daimler. The positive aspect in my opinion in this situation of the market is due to the fact that in 2018/'19, Endurance Overseas acquired EUR 60 million of new projects. This is the positive aspect from it that (inaudible) we are increasing our turnover for the future year. And we are positive, another important aspect is that more or less 35% of this total business are for electrical and hybrid vehicles. This is the important things. And so it means that we are following the new investment in terms of technology with our customer.

We acquired EUR 30 million with Volkswagen Group, but EUR 26 million with FCA because also FCA, they suffered a lot in 2018/'19 with changing completely the range of their products. And within 2020, they will start with more or less 50% of total vehicle completely hybrid. And we took 100% of the transmission component for them. But the positive attribute is, for sure, is that we acquired, as I told you during the last call conference, the PPE program of Porsche, the premium program electric, 100% of the business with Porsche. And certainly that we can have a benefit in the future here due to the fact that they will use Porsche in order to enter on the market. But they will want to do economy of scale with the other brands of Volkswagen Group. So today, for the first time in the last quarter, 2018/2019 in the fourth quarter, Volkswagen Group became the first customer of Endurance Overseas with more or less 24% of our turnover. And so for sure the situation is not so good. But if we will be able, as in the past, to continue to grow, to take new business through our competitor, I don't see a big problem.

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Jitendra Panjabi, [35]

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Okay. And a follow-up question, Anurang, I want to ask the same question for the India business in terms of outlook. Would you have a view on what you're seeing on the ground?

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Anurang Jain, Endurance Technologies Limited - MD & Director [36]

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Right now, to be honest, nobody can say when the growth comes back because of sentiment. But like I said that as far as we are concerned in Endurance, we are going after diversifying our customer base. We are adding new products in all the 4 segments to our customers and increasing our share of business with existing clients. So we will continue to do that, so I can grow higher than industry. Because the external environment, I have no control. It's very difficult to predict the future. But there are customers we are very confident about, but it is not fair to say it on this call. And we're just hoping that after the elections, the sentiment should regain and that things come back. See, these top lines do come, but they go also. So I've never seen top line last for a long time, so I'm optimistic. I've seen enough in 33 years, so I know what it's like, so -- but if we were to base the external environment on this, we have no control. (inaudible) one thing that the trust of our clients, our financial strength we have and a strong vendor base, very loyal vendor base will help us to get through these tough times, which are there (inaudible).

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Operator [37]

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The next question is from Mr. Niket Shah from Motilal Oswal MC.

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Niket Shah, [38]

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I just have one question. Recently, Mahindra CIE had brought over Aurangabad Electricals, which is obviously one of your competitors in the casting part of the business. Obviously, there would be some competitive intensity increasing. Have you seen any client loss? Or do you think that there can be any loss of business within the existing pie? Or you seem to be fairly comfortable and you can further grab more share going forward?

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Anurang Jain, Endurance Technologies Limited - MD & Director [39]

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That's a good question. I can only tell you that we are very confident. That's all I tell you.

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Niket Shah, [40]

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There has not been any loss of client in the...

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Anurang Jain, Endurance Technologies Limited - MD & Director [41]

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No, not at all.

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Operator [42]

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The next question is from the line of Jinesh Gandhi from Motilal Oswal Securities.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [43]

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Congrats on a good set of numbers. First question on the India business gross margin improvement, can you share, is this also because of increasing share of proprietary business or mix helping fairly stable?

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Anurang Jain, Endurance Technologies Limited - MD & Director [44]

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Yes. So that's very true. The proprietary business has increased over the casting business, so that has definitely seen by, I think, 2 percentage points on total India sales, so -- but that doesn't mean -- but I'll tell you one thing that also in the casting front in '18/'19, we've done a lot of work to improve the margins. And we will definitely see better margins going forward in the casting business, too. But see, I'm not looking at focusing because casting is a very important part of Endurance business. I mean we started with castings. So we are taking the business, the various casting, whatever opportunities we get for profitable growth. We are focusing on all the segments, proprietary and castings, both. So it's not that we are focusing more on proprietary and less on casting. For us, both are important.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [45]

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Sure. So proprietary would be what percentage now?

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Anurang Jain, Endurance Technologies Limited - MD & Director [46]

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Now proprietary, I think 51% or 52%. The latest actually is 51%.

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [47]

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It is 51%.

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Anurang Jain, Endurance Technologies Limited - MD & Director [48]

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It is 51%. And casting has gone down from 45% to 43%. And actually, if you ask me, the formula is slightly up to 6.5%.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [49]

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Great. Okay. And secondly, if we look at the European business as well, margin expansion has been pretty smart. So what has led to that?

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Anurang Jain, Endurance Technologies Limited - MD & Director [50]

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Okay, I'll request Massimo Venuti to answer that.

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [51]

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So in the fourth quarter 2018/2019, despite the reduction of 3.3% of the market, we grew 11.4% as total income. And EBITDA grew by 17.3%, so from EUR 12.5 million to EUR 14.6 million. EBITDA margin percentage improved 19.9% in the previous year to 20.9%. Considering the total financial year, there was an increase in terms of EBITDA of 10.6% from EUR 45.4 million to EUR 50.2 million. The percentage of the EBITDA improved from 18.3% in the previous year to 19.3%.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [52]

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Great. So what about up to this kind of percent...

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [53]

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It's 8.1% in the quarter from EUR 4.4 million to EUR 4.7 million. And the total year, you see by 5% from EUR 15.8 million to EUR 16.8 million.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [54]

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Great. So Massimo, what would be the driver of margin in the fourth quarter? Because if we look at margin improvement of 200 basis points on quarter-over-quarter basis, 130 basis point on Y-on-Y basis, is it just reflection of operating leverage or there is something more to that?

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [55]

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No, for sure, there is also the impact of extraordinary item in terms of tooling from our customer. As you know, in this year, we invested more or less EUR 36 million, of which EUR 21.6 million for Volkswagen Group. And we started -- we have the start of production of the (inaudible) 1.5 liter. And so we received in the quarter 4 of this financial year more or less EUR 3.5 million of tooling with a good profit margin. But we have had the same impact also in the last quarter, in the quarter 4 of 2017/2018. In fact, if you analyze the mix of our profitability in the fourth quarter of the previous year and also this financial year, we grew in a (inaudible) way compared to the last quarter. And also as Mr. Jain told you before, the impact of the reduction of aluminum cost.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [56]

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Great. Okay. And second is on the European business prospective, what's the feedback you're getting from your customers on WLTP norms, WLTP 2 norms which are due from September 2019?

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [57]

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Frankly speaking, at this moment, I am not able to predict the future. But I can tell you that I hope that within September, the situation will change. Because in is my opinion at this moment, the reduction that we have had in the market is due to the WLTP process. One example for all the customers, the reduction of premium brands as Porsche of the fourth quarter 2019 is absolutely unbelievable and can't be due to the financial situation of the market. Because when the brand has -- Porsche reduced the sale of 40%, in my opinion, there is another product. Starting, as you know, they are reducing the stock from the dealer because there are a lot of registered car dealers. And so they want to reduce these stocks from the dealer. And starting from September, I hope that the situation will improve.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [58]

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Okay. And what are the total order booked for Europe? You indicated about EUR 60 million order.

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [59]

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See, in this EUR 60 million, we can maintain probably EUR 280 million to EUR 290 million of turnover. I know that last year, I told you EUR 300 million. And now we acquired the EUR 60 million. But you have to consider also that this is out of the production, it's different compared to 1 year ago.

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Jinesh K. Gandhi, Motilal Oswal Securities Limited, Research Division - SVP of Equity Research [60]

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Sure. And this would be executable by -- the peak will be by FY '21 or...

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [61]

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Yes.

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Anurang Jain, Endurance Technologies Limited - MD & Director [62]

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Yes.

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Operator [63]

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goes down, so we will. The next question is from the line of Aditya Jhawar from Investec Capital Services.

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Aditya Jhawar, Investec Bank plc, Research Division - Analyst [64]

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Congratulations on a great set of numbers. In -- for Europe business, in this quarter, we integrated an entity that we acquired in Jan. If you can help us understand the contribution on revenue and EBITDA of this entity and what is our plan in terms of impact on EBITDA margin of our overseas business.

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [65]

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Sure. So the delta perimeter is due to the acquisition of Endurance Casting on the 1st of February is more or less EUR 7 million considering 50% of the intercompany with Endurance SPA, with an EBITDA of 0.7% -- 0.6 million -- EUR 0.7 million, sorry, 10% of EBITDA, despite the acquisition of -- and gross capital, the EBITDA, as I told you before, grew in the quarter 17.3% from 19.9% to 20.9%, despite this EUR 7 million turnover with only 10% of EBITDA. Our target, as I told you in the previous call conference, is to increase EBITDA in U.S. casting from China to 12% in 2019, 2020, 2 year savings and economy of scale with our technology in Endurance SPA. Because as I told in the past, Endurance Casting is a foundry but they buy from the market a lot of machine process. And so they do allow us to integrate the machining process with our production capacity formula due to the fact that with the reduction of volume with that of customers, we have a free capacity and to increase our profitability in Endurance Casting.

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Aditya Jhawar, Investec Bank plc, Research Division - Analyst [66]

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That was quite helpful, Massimo. One question, Anurang, if you can please repeat the new order wins for the India business.

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Anurang Jain, Endurance Technologies Limited - MD & Director [67]

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Sorry?

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Aditya Jhawar, Investec Bank plc, Research Division - Analyst [68]

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If you can please repeat the new order wins for the India business in Q4 FY '19?

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Anurang Jain, Endurance Technologies Limited - MD & Director [69]

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Sir, I don't have the breakup of Q4, but I have a total year of 10,336 million. I don't have the breakup quarter-wise right now. But the total is 10,336 million.

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Operator [70]

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The next question is from the line of Ronak Sarda from Systematix Shares.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [71]

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Anurang, a couple of questions. One was on the (inaudible) active of front forks. How will the transition happen from shock absorbers to front forks? I mean is there a new model launched by Honda this year? You highlighted that the plan could be operational in second half.

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Anurang Jain, Endurance Technologies Limited - MD & Director [72]

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Yes. So the plant will be operational from October '19, and that is how the ramp-up will happen. And I think the peak will be reached in 2020/'21. This is -- and this will be taken to -- I told you it's about 2.76 million tonnes per order which we have. It is from Sanand and this plant in Karnataka. Sanand Gujarat.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [73]

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So both plants will be manufacturing this, and together it's 2.7 million?

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Anurang Jain, Endurance Technologies Limited - MD & Director [74]

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Yes, all the 4 plants of HMSI, all the plant.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [75]

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And sir, this 2.7 million, just a follow-up on this. 2.7 million is on what base? Because obviously (inaudible) have also taken a big knock and especially for HMSI.

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Anurang Jain, Endurance Technologies Limited - MD & Director [76]

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This 2.76 million was on the base of last year's 6 million which was there, which has now come down to 5.78 million. But we're hoping it will go back to 6 million by 2021.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [77]

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So it's from the entire 6 million, not just the Activa?

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Anurang Jain, Endurance Technologies Limited - MD & Director [78]

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No, no. It was on the Activa. If you talk about Activa, see total scooters which were made were about 3.9 million in '18/'19. You can see it was on that base approximately. Okay? So we'll see how they do this year, how they do next year. Ups and downs will happen. How much is the aluminum?

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [79]

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Sure, sure. Just wanted to understand that. And the second question is on the ABS. I mean you highlighted that Bosch is the benchmark for you. But what I wanted to understand is irrespective of the trial runs happening at customer level, we have now entire industry shifting to ABS mostly. So how does our product compare to the real -- with the performance of the ABS launched on the bikes today? Have we done any analysis? And how do we stand there?

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Anurang Jain, Endurance Technologies Limited - MD & Director [80]

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There is a testing which is on. And once the performance is reached on these very difficult tracks, which I told you, which are special tracks for rural and I would say the normal tracks of India, especially in rural areas. Once we reach that, we are going towards benchmarking the competition for sure. But that's why I said the performance has to be achieved. And then I said our strength of -- in terms of our QCBDM, the customers we have with our clients. So we will do our best to get the business. But first the performance has to be met. That's very important.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [81]

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So it's mainly performance on the different road conditions which is the key right now?

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Anurang Jain, Endurance Technologies Limited - MD & Director [82]

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Up until now, our biggest thing is road -- there are so many criteria.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [83]

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But what I want to understand was how close are we in terms of results.

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Anurang Jain, Endurance Technologies Limited - MD & Director [84]

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I can only say we're getting closer and closer.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - Analyst [85]

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Okay. Just a housekeeping question, from -- on the India sales, if you can just break it up between how much was casting, suspension, brakes, transmission percentage, if you have it, for the full year?

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Anurang Jain, Endurance Technologies Limited - MD & Director [86]

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No, no, I've got a listing but we don't declare product. I can -- like I said, it's 43% castings, and it is 51% proprietary, which is a combination of suspension, transmission and braking. And then we have 6...

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [87]

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5%.

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Anurang Jain, Endurance Technologies Limited - MD & Director [88]

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We have 5% aftermarket. And how much is now...

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [89]

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Less than 1%.

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Anurang Jain, Endurance Technologies Limited - MD & Director [90]

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No. But we also have the 4 wheeler, right? Actually, we are talking about the segment below Kia. And then we have 5% aftermarket, okay.

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Operator [91]

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The next question is from the line of Priya Ranjan from Antique Stockbroking.

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Unidentified Analyst, [92]

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A couple of question. One is on the growth side. Your key client, 50% of your business is with Bajaj. They have grown by around 15%, 16%, even if I look at the production numbers sir...

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [93]

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17% last year.

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Unidentified Analyst, [94]

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I mean that is the sales number, but even if we look at the production number for fourth quarter, they have grown -- even last quarter, they have grown by around 14%, 15%. But if I have to translate that, then your growth should be roughly around 7% to 7.5% even if I assume there is a degrowth for the other players. So how should we look at it as the new domestic growth is just around 3%?

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Anurang Jain, Endurance Technologies Limited - MD & Director [95]

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No. Our domestic growth is 8.1% in quarter 4.

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Unidentified Analyst, [96]

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No, no. If I remove the incentive of the Manesar.

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Anurang Jain, Endurance Technologies Limited - MD & Director [97]

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There is 5.6% without the incentive.

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Unidentified Analyst, [98]

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Do you consider the income as well in that?

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Anurang Jain, Endurance Technologies Limited - MD & Director [99]

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Yes. But that is part of the margin. Other income is basically all operation related. (inaudible) sale of old machines. It's a part of the business.

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Unidentified Analyst, [100]

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If I do the -- I mean typically that doesn't come with take your time or anybody will take it below the top line numbers because that is mostly the revenue number. So if I remove that, then it comes around 3%. So that's my view there.

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Anurang Jain, Endurance Technologies Limited - MD & Director [101]

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What you are doing is you are looking at the volume versus income, right? There's also product mix there, okay? So you cannot take volume versus amount income. You see volume versus volume. You know what I'm saying. So that would be a wrong comparison to compare volume versus income. It should be always volume versus volume. And then the product mix also makes a difference.

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Unidentified Analyst, [102]

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Yes. And this quarter was also the tailwind for say the disc brake because most of the cars -- most of the companies had moved to the disc brake assembly. So typically, the growth should be much higher than what it looks like. So I'm just...

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Anurang Jain, Endurance Technologies Limited - MD & Director [103]

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I would say whether its the disc brakes, whether it's the paper clutch assemblies, getting into more and more machine castings, so the factor of many things which are happening, which is a strategy. But that's our business. We have to do this. We are focusing on profitable growth. So we have 2, 3 products which give us higher margins.

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Unidentified Analyst, [104]

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And the second part is I think if I look at this -- aluminum spot prices, et cetera, so it has fallen by around 7%, 8% in this quarter. So how much we are confident of retaining all this because, typically, customers ask for the price direction in the next quarter, particularly related with the commodity first.

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Anurang Jain, Endurance Technologies Limited - MD & Director [105]

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We are very confident. There's a very good quarterly understanding with all the customers on aluminum, which is passed on, whether there's an increase or decrease. And there's no problem at all on this. In fact, the EBITDA margin percentage, it will help EBITDA margin percentage, like I said earlier due to mathematical reasons.

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Unidentified Analyst, [106]

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But can you retain all the fallout -- have you been able to retain all the fall?

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Anurang Jain, Endurance Technologies Limited - MD & Director [107]

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Yes, yes, actually quite easily.

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Unidentified Analyst, [108]

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Because your customers are also under pressure in terms of their own margins?

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [109]

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All under pressure.

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Anurang Jain, Endurance Technologies Limited - MD & Director [110]

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Yes. We are all under pressure. We are all under pressure, but this is the understanding on the pass-through of aluminum and steel which is happening. That is the industry practice. So if it goes down by 8%, 9%, then it goes down so we will pass it. If it goes up, then they will give it, that's the rule of the game. And yes, auto company suppliers have to manage both, distribution as well. I see one thing which I told you, we have a very strong vendor base, strong and loyal vendor base, which have always stayed since we went public is our strength. Let's keep that in mind.

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Unidentified Analyst, [111]

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And one more thing on the European business. So on the EUR 60 million, what kind of ramp up we have achieved in this year and how we are going to do it by, say, FY '20?

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [112]

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Sorry, can you repeat the question, please?

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Unidentified Analyst, [113]

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Yes, so on the EUR 60 million new orders from the VW group, so how much we -- what kind of run rate we have achieved this year and what can we expect next year because you said probably the peak will be in FY '21 or FY '22.

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [114]

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Yes. We will start part -- more or less 50% of this (inaudible) will start in 2019 and 2020. And the 50% in 2020/2021. But now the rising of the volume is -- in terms of period of time, is very fast. So we have an expectation to reach the maximum production capacity within October 2021.

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Unidentified Analyst, [115]

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And another point is on M&A. If I exclude the 7 million I think which you acquired for the new business, so what will be the organic growth in -- including the organic plus the new business growth, if I remove the 7 million acquisition growth in euro?

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [116]

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No, no, you have to consider only 50% of this total volume because as I told you before the company, Endurance Casting working for Endurance. So this isn't intercompany. Only 50% of this total turnover is external.

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Unidentified Analyst, [117]

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Okay. So that 7 million we can reduce it by say 60%?

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Anurang Jain, Endurance Technologies Limited - MD & Director [118]

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Yes.

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Operator [119]

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The next question is from the line of Hitesh Goel of Kotak Securities.

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Hitesh Goel, Kotak Securities Limited, Research Division - Associate Director & Automobile Analyst [120]

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Sir, this is on the European business. Basically just -- we want to get a sense, one, why has other expenses gone up so dramatically by 41% on a Y-on-Y basis in the fourth quarter, put some sense on that. And depreciation will also increase. So have you in-sourced some of the business which has led to improvement in EBITDA margins? Because if I look at EBIT margin, the EBIT margin on a y-o-y basis is actually down, so just wanted some clarity on that.

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Anurang Jain, Endurance Technologies Limited - MD & Director [121]

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Yes, the impact in the other expenses is due to the acquisition of Endurance Casting. As I told you before, the company buys from market all the machining process. And this impact is in spite of the other space. And for this reason, there is an important increase in the last quarter. I hope as I told you before, to reduce this impact in the next ER due to the fact that we are trying to in-source this activity in our Endurance brand.

Regarding depreciation there was an increase for sure for the delta perimeter of Endurance Casting. And those will be the fact that we've accelerated the depreciation for product linked to the diesel that we're growing this out before compared to our expectation.

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Hitesh Goel, Kotak Securities Limited, Research Division - Associate Director & Automobile Analyst [122]

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Okay. So -- and the related question to that is just wanted to get a sense that there's -- total income that you've told -- talked about, EUR 3.5 million tooling income in fourth quarter FY 2019 from Volkswagen. Was there some tooling income booked in fourth quarter FY '18 also? Just wanted to do a like-for-like comparison.

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Anurang Jain, Endurance Technologies Limited - MD & Director [123]

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In '17/'18, while the tooling was EUR 4 million, but we did have an impact of EUR 0.5 million (inaudible). But let me say it depends from when you start in production with the new product. It's not -- usually, we don't receive in the last quarter of every year. In this case, we received this turnover -- the increase of turnover due to the tooling.

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Hitesh Goel, Kotak Securities Limited, Research Division - Associate Director & Automobile Analyst [124]

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And Anurang, on some other expenses question, why the other expenses have gone up so much?

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Anurang Jain, Endurance Technologies Limited - MD & Director [125]

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Other expenses, as I told you before, due to the machining process of Endurance Casting, the acquisition of Endurance Casting. Because as you know, the company is a foundry, but they buy from the market the machining process. Also, the other expenses are very high compared to our business because, in Endurance parts, we do the machining process in our factory. So you have the impact in the customer material and every cost. Buying the company, starting to consolidate the companies in January 2019. In this quarter, there is an increase of other expenses for this reason.

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Operator [126]

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The next question is from the line of Vijay Sarthy from Anand Rathi Securities.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [127]

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Sir, could you please quantify the disc brake order that we will get from Hero from next month?

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Anurang Jain, Endurance Technologies Limited - MD & Director [128]

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No that is -- it is the disc for the brake. I don't have the value.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [129]

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The other thing is I understand that you have a very staged approach towards increasing your share of business with customers at different quarters. And I believe that all of this will peak out in FY '21. So is it fair to assume that your India business, especially OEMs, will kind of normalize towards FY '21, assuming that you would have heard Audi and Hero and HMSI as just how you have Bajaj product segments?

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Anurang Jain, Endurance Technologies Limited - MD & Director [130]

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No. See, like I mentioned earlier that we -- see, there is a long way to go. Today, you see we have the 4 product areas. Only 2, Bajaj and Royal Enfield will supply all the 4. We have a long way to go towards adding the other 2 product segments for the others, either 1 or 2. Like HMSI is on 3, for example, disc brake assemblies, which are also in process, right? We are planning to increase Europe business like we are setting up new plants. Like Sanand has to reach full potential with Honda, who has to reach full potential, 6,200 a day also. And that has to reach full potential which is there. So we are also increasing our share of business. And we have diversified our customer base, now we are doing this. We haven't started supplying to them. We have a brake order which was at 40 crores last time. As we are talking, we are taking other businesses also. But this will be a completely new customer with a new business. We are looking at aftermarket growth. We are looking at exports growth. We are looking at a lot of things. So the question is I don't see any kind of saturation in growth for Endurance. All this we will endeavor to grow our business high in the industry.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [131]

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Sir, with respect to domestic OEM, beyond H1, you wouldn't have stated in your capacity utilization for all these segments that you talked about with these customers?

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Anurang Jain, Endurance Technologies Limited - MD & Director [132]

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No. And that's because I also believe...

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [133]

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Except TVS. I agree TVS will take a lot of time, but with respect with say Honda or Hero, wouldn't you pick up on your capacity by FY '21 end?

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Anurang Jain, Endurance Technologies Limited - MD & Director [134]

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Of course I also believe the 2 wheeler industry will grow in India. These kind of downturns will happen, but they will grow. Like I mentioned earlier also, there are 1.7 crore bicycles which are sold in India. These guys will graduate to a 2 wheeler sometime in the future. So the question is that I'm very optimistic on the 2 wheeler industry for sure. And I think that's it's -- well it's going to grow, for sure it's going to grow. I mean they have done a volume of about 23 million, of about 24.5 million in '18/'19. And I -- and we will see a growth in the future for this industry.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [135]

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And any new portfolio products that you are planning apart from these 4 segments, anything you can talk...

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Anurang Jain, Endurance Technologies Limited - MD & Director [136]

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Yes. We are actively working on this. So whenever we are ready, we will tell you.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [137]

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Finally, sir, any market share gain in abroad business? That's one. Second, in India business, why has the staff costs fallen sequentially?

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Anurang Jain, Endurance Technologies Limited - MD & Director [138]

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Okay, I'll talk about India first. I think we are trying in Endurance to create a lean organization. We are focusing more and more on performance, which is very important, okay? So I think our focus is to get more and more value add, to pay people well and get more and more value add from our employees, from our people. So I think this focus has already helped. And secondly, I think we will grow, I will say that you see the same growth. That also as a percentage to sales has helped. In the employee costs, percentage went down.

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [139]

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Last 3 months.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [140]

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But there has been some cost rationalization, is it on staffing?

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Anurang Jain, Endurance Technologies Limited - MD & Director [141]

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Maybe. For example, on Manesar. On Manesar, we have saved a lot of money by the plant closure. This happened in December. So we had 167 workers, and I think another 20 people in staff, so almost 187 people going out. That's definitely helped lower the manpower strength as well as the costs.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [142]

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Okay. Okay. And market share gains in abroad?

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [143]

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If you consider that the market go down 1%, considering also an increase of the import in European market are more or less 10% compared to the previous year, we grew 5%. And so for sure, we are gaining market share compared to our competitor.

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Vijay Sarthy T.S., Anand Rathi Financial Services Limited, Research Division - Research Analyst [144]

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Any customers where you've gained market share if you can highlight?

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [145]

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Volkswagen Group. Today, Volkswagen Group is, as I told you before, the first customer in the fourth quarter 2018/2019 of Endurance Overseas.

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Operator [146]

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The next question is from the line of Bharat Gianani from BNP Sharekhan.

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Bharat Gianani, Sharekhan Limited, Research Division - Analyst [147]

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I just had one query on the incentives that you stated in your comments. So what is the incentives amount that you have received over say -- I think you pointed out to a period of 7 to 8 years. So what is the total amount that you will get?

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Anurang Jain, Endurance Technologies Limited - MD & Director [148]

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It was INR 367 crores I will request. Massimo will discuss it more in detail.

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [149]

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Yes, it is to be received over 8 years because our incentives, operating figures start from August '17 and ends in July 2024. The amount receivable is INR 367 crores.

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Bharat Gianani, Sharekhan Limited, Research Division - Analyst [150]

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Okay. So roughly, I think, about INR 40 crores to INR 45 crores of amount would be added -- would be recognized in the next -- over the next 5 to years. Is that right?

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [151]

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It's around INR 50 crores. If I had to be precise, if we divide this 7, it comes to INR 52.4 crores. There will be 2 broken years so those numbers would be different. But otherwise, it's INR 52 crores. But this accounting is under discussion with the institute so we will know exactly because there are 3 rules. Like do you apply after your GST audit is over? And then you get 90% of that eligible amount. And then 10% comes after your GST assessment is over. So this accounting is still under discussion with the institute and other audit body. So we will take it in the best possible accrual.

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Bharat Gianani, Sharekhan Limited, Research Division - Analyst [152]

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Okay. One last question again on this front. So in FY '19, what is the amount that you recognized for the whole year under this incentive?

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [153]

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INR 315 million.

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Unidentified Analyst, [154]

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Sorry?

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Satrajit Ray, Endurance Technologies Limited - Group CFO & Executive Director [155]

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INR 315 million.

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Operator [156]

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The next question is from the line of Mahesh Bendre from KARVY Institutional Equity.

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [157]

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Sir, I just wanted to understand contribution of -- from various customer in domestic business.

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Anurang Jain, Endurance Technologies Limited - MD & Director [158]

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I don't give those breakups, to be honest. But I can tell you that our top 5 customers are Bajaj Auto, HMSI, Royal Enfield, Yamaha and Hero MotoCorp. These are the top 5. They constitute more than 80% of our business.

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [159]

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And sir, Europe business, what proportion of our business is for PV and CV? Any growth, passenger vehicle and commercial vehicle?

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Anurang Jain, Endurance Technologies Limited - MD & Director [160]

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The passenger vehicle is more or less 90% versus commercial vehicles.

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [161]

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And sir, what is the CapEx plan for domestic entity and international entity in FY '19 -- or FY '20?

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Anurang Jain, Endurance Technologies Limited - MD & Director [162]

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FY '20, I think it will not be more than INR 300 crores in India, which is in fact, we are -- it will be less only than that. And in overseas...

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Massimo Venuti, Endurance Technologies Limited - Non-Executive Director [163]

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EUR 25 million in Europe.

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Anurang Jain, Endurance Technologies Limited - MD & Director [164]

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And EUR 20 million in Europe.

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [165]

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Sir, last question on operating margin side. We have improved our margins considerably over the last 2, 3 years. So do we think we will be able to sustain these kind of margins going forward?

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Anurang Jain, Endurance Technologies Limited - MD & Director [166]

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Yes. Our full effort will be to do that definitely. We are working on many fronts of cost controls. In fact, this consolidation of plant, that closing of Manesar was one such initiative also, going for more and more outsourcing, product mix and total of employee costs or raw material costs, is from 65% of our sales in India. So there is a lot of work for different teams which is going on at Endurance. So we have a very high focus on cost control, very high.

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [167]

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And sir, last question, there is a lot of talk about electric vehicles that are going to come up. So will this benefit us as an aluminum casting company? Will this contain per vehicle for us will go up?

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Anurang Jain, Endurance Technologies Limited - MD & Director [168]

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I think that only time will tell that -- see I believe aluminum casting will remain but in different forms and sizes. We'll have to see what kind of opportunities come, whether they start first with (inaudible) 3 wheelers and scooters first. And still have to see about motorcycles in the future, but the cost will be higher. But of course, I'm sure that electric vehicles, given the government support and subsidies as well as the infrastructure, if these 2 things happen, I think electric vehicle is here to stay. It's surely going to come. Time, we cannot say. But I think to answer your question, aluminum casting will come in different forms and sizes, your battery housing is one of the structural parts which are coming into aluminum. So the form and sizes will differ, but casting will remain. Whether it will be less or more, only time will tell, depends on the clients, what kind of products will need aluminum castings.

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [169]

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Sure. And sir, what was the proportion of export from India?

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Anurang Jain, Endurance Technologies Limited - MD & Director [170]

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Are you talking about the percentage?

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [171]

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You know, numbers from export from India -- or from Indian entities to the overseas markets.

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Anurang Jain, Endurance Technologies Limited - MD & Director [172]

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The total figure which I had mentioned today was 271 crores. This is 26% growth.

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Mahesh Bendre, KARVY Stock Broking Limited, Research Division - Research Analyst [173]

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Do you think this growth will remain in double digit?

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Anurang Jain, Endurance Technologies Limited - MD & Director [174]

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Yes, the data in there was yes, yes.

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Operator [175]

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Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. I would like to hand the conference over to Mr. Ashish Nigam for closing comments.

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Ashish Nigam, Axis Capital Limited, Research Division - SVP of Automobiles [176]

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On behalf of Axis Capital, thank you to the management team and all the participants for joining the call today. Have a good day, everyone.

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Anurang Jain, Endurance Technologies Limited - MD & Director [177]

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Thank you, Ashish. Thank you, everybody. Thank you.

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Ashish Nigam, Axis Capital Limited, Research Division - SVP of Automobiles [178]

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Thank you. Good night.

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Operator [179]

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Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.