Tube Investments of India Ltd (TIINDIA) Q4 FY23 Earnings Concall Transcript

Tube Investments of India Ltd (NSE:TIINDIA) Q4 FY23 Earnings Concall dated May. 16, 2023.

Corporate Participants:

Vellayan Subbiah — Executive Vice Chairman

Mukesh Ahuja — Managing Director

AN Meyyappan — Chief Financial Officer

K R Srinivasan — President and Whole-time Director

Unidentified Speaker —

Kalyan Kumar Paul — Managing Director of TI Clean Mobility Private Limited

Analysts:

Anupam Gupta — IIFL — Analyst

Anika Mittal — NVEST Research — Analyst

Jinesh Gandhi — Motilal Oswal — Analyst

Nishit Jalan — Axis Capital — Analyst

Saif Gujar — ICICI Prudential AMC — Analyst

Koushik Mohan — Ashika Stock Broking — Analyst

Abhishek Poddar — HDFC Mutual Funds — Analyst

Manoj Bajpai — Private Investor — Analyst

Sundar S — Avendus Capital — Analyst

Abhishek Ghosh — DSP Investment Managers — Analyst

Prithvi Raj — Unifi Capital — Analyst

Dhruv Bhatia — Bank of India — Analyst

Hardik Doshi — White Whale Partners — Analyst

Vimal Gohil — Alchemy Capital — Analyst

Hrishit Jhaveri — Pi Square Investments — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Tube Investments Q4 FY ’23 Earnings Conference Call hosted by IIFL Securities Limited. [Operator Instructions]

I now hand the conference over to Mr. Anupam Gupta from IIFL Securities. Thank you, and over to you, sir.

Anupam Gupta — IIFL — Analyst

Thanks Ankur. Welcome everyone to Tube Investments 4Q FY ’23 conference call. From the management, we have Mr. Vellayan Subbiah, Executive Vice Chairman; Mr. M.A.M Arunachalam, Executive Chairman at TII; Mr. Mukesh Ahuja, Managing Director; Mr. Srinivasan, Director and Head, Metal Formed Products; Mr. K.K. Paul, Managing Director at TI Clean Mobility; Mr. Murali, Head Engineering Business; and Mr. A.N. Meyyappan, the Chief Financial Officer.

I’ll hand over to Mr. Vellayan for opening remarks, post which we can have the Q&A. Over to you, sir.

Vellayan Subbiah — Executive Vice Chairman

Thanks, Anupam. The Board of Directors met yesterday and approved the financial results for the quarter. The Board has declared an interim dividend of INR2 per share in February and the same was paid to shareholders in March. Now there is a final dividend of INR1.50 per share for the financial year 2022-2023.

Good morning, everyone. So we’ll [Phonetic] just take you through the standalone results for the quarter and then I’ll give you a quick consolidated summary at the end. So standalone revenue in Q4 was at INR1,663 crores, compared with INR1,735 crores for the same period last year. And for the year, it was at INR7,236 crores compared to INR6,359 for the same period last year.

PBT for the quarter was INR331 crores as against INR173 crores in the same period last year. PBT for the year is INR928 crores compared with INR628 crores for the same period last year. ROIC is at 54.5% for the year ended March 31st, 2023, compared with 46.8% for the previous year, and free cash flow for the quarter was at INR235 crores, and cumulative free cash flow for the year was at INR608 crores, which is 91% of PAT.

A quick summary; the Engineering business revenue for the quarter was INR1,044 crores compared with INR1,030 crores in the corresponding quarter and PBIT was INR132 crores as against INR103 crores. Revenue for the full year was INR4,562 crores compared to INR3,868 crores, and PBIT was INR549 crores for the full year as against INR376 crores which is a growth of 46%.

Metal Formed had revenue of INR347 crores as against INR336 crores, and PBIT was 45% as against 39%. Revenue for the full year was INR1,424 crores compared with INR1,240 crores in the same period last year. PBIT was INR174 crores as against INR136 crores, which is a growth of 28%.

For our Mobility, which is our cycles business — bicycle business, revenue was at INR155 crores compared with INR249 crore, so that was our biggest drop, and loss was INR5 crores as against a profit of INR13 crores. Revenue for the full year was at INR800 crores compared with INR963 crores in the previous year, and PBIT for the full year of INR17 crores as against INR55 crores. Revenue for the quarter — for other businesses was INR191 crores compared to INR194 crores, and PBIT for the quarter was INR11 crores as against INR4 crores in the corresponding quarter of the previous year.

Revenue — full year for other businesses INR768 crores compared to INR562 crores, and PBIT was INR48 crores compared to INR36 crores. At a consol level, consolidated revenue for the quarter was INR3,778 crores as against INR3,393 crores, and consolidated profit was INR403 crores as against INR291 crores. For the year, consolidated revenue was INR14,965 crores, as against INR12,447 crores, and PBIT — PBT was at INR1,593 crores as against INR1,111 crores.

[Indecipherable] talked about the performance of our subsidiary, but CG Power and Shanthi Gears remain the two main subsidiaries that we have [Technical Issues]. Commenting on the financial results, Mr. M.A.M Arunachalam said Engineering and Metal Formed Products businesses continued their good performance in the fourth quarter as well. The bicycle industry continues to suffer from contraction in the market and our bicycle business worked to its cost reduction and improving overall efficiency through [Technical Issues]. Overall, the company has delivered excellent results and profitability. Our subsidiaries, CG Power and Shanthi Gears have registered a strong performance and delivered strong results across all segments.

So let me stop with that, Anupam, and we’ll be happy to turn it over to the audience for questions. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question and answer session. [Operator Instructions]. Our first question is from the line of Anika Mittal from NVEST Research. Please go ahead.

Anika Mittal — NVEST Research — Analyst

Good morning. My first question is, during the quarter four financial year ’23, I noticed a profit of INR166 crores from the discontinued operation mentioned in the consol financial statements. In the notes, it is stating that CG Power has received a liquidation [Indecipherable] for one of its subsidiaries. Could you please provide more details on the reasons behind the liquidation and which item [Technical Issues]?

Mukesh Ahuja — Managing Director

So I think the question is on the liquidation of CG Power subsidiaries?

Anika Mittal — NVEST Research — Analyst

Yes, sir.

Mukesh Ahuja — Managing Director

So I think that is specifically talking to PSOL [Phonetic], or are you talking about the Belgian [Phonetic] subsidiary?

Anika Mittal — NVEST Research — Analyst

In the consol statement, if you notice that there is a profit of INR166 crores of discontinued operations?

AN Meyyappan — Chief Financial Officer

So Meyyappan here, so as it was released, we have a separate — Middle East [Phonetic], CG Power Middle East where they have certain liabilities on their balance sheet. So since it was there in the balance sheet, once the subsidiary was liquidated, this amount got written back into the balance sheet of CG Power and thereby got consolidated EBITDA [Phonetic], so that’s the reason for this profit — that’s the profit of deconsol.

Anika Mittal — NVEST Research — Analyst

Means profit of deconsolidation.

AN Meyyappan — Chief Financial Officer

Yes. Go ahead…

Anika Mittal — NVEST Research — Analyst

Sir, what is the reason behind this consolidation?

AN Meyyappan — Chief Financial Officer

What?

Anika Mittal — NVEST Research — Analyst

What is the reason behind this liquidation?

Mukesh Ahuja — Managing Director

As you know — ma’am as you know is that CG Power has been kind of liquidating or kind of closing down all of its non-operational assets. CG Power had a lot of non-operational subsidiaries overseas, which have been closing down.

Anika Mittal — NVEST Research — Analyst

Okay. Okay, sir. Thanks. And my second question is, a company with FDI and other multiple investors has planned to invest INR6,000 crores in subsidiary TI Clean. What is the rationale behind this investment and how company is going to utilize this amount?

Mukesh Ahuja — Managing Director

Okay. Is your question that multiples have invested in TICMPL? Is that your question, ma’am?

Anika Mittal — NVEST Research — Analyst

Yes. In the TI Clean…

Mukesh Ahuja — Managing Director

TICMPL is a company that is — again, is a subsidiary that’s basically making electric vehicles. And so, the money has been raised to basically develop and manufacture electric vehicles that we will sell, and that is the reason why we raised the money.

Anika Mittal — NVEST Research — Analyst

Thanks. And how the company is going to utilize this amount, means [Technical Issues] what the value [Indecipherable] utilize, and in what way you can utilize?

Mukesh Ahuja — Managing Director

How will we utilize the amount? So it will be — it will go towards either product development or manufacturing, ma’am, of the electric vehicle.

Anika Mittal — NVEST Research — Analyst

Okay. And sir, what is the strategy behind the acquisition of Lotus Surgicals Private Limited?

Mukesh Ahuja — Managing Director

So as we’ve spoken in TI2, we are looking at kind of new lines of business to basically diversify into. And we’ve talked in several previous calls as well, saying that the medical products and consumables business will be a space that we’re getting into. So this is a completion of the acquisition in that area.

Anika Mittal — NVEST Research — Analyst

And sir, in terms of growth outlook for the next year…

Operator

Sorry to interrupt, Ms. Anika Mittal. May we request that you return to the question queue for follow-up questions, as there are several participants waiting their turn. Thank you.

[Operator Instructions] Our next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead.

Jinesh Gandhi — Motilal Oswal — Analyst

Hi, sir. A couple of questions from my side. One is on the existing business, both Engineering and Metal Formed, we are seeing a flattish kind of revenue performance on a YoY basis. Is there any negative impact of commodity cost deflation over here and the underlying business growth is strong, or can you highlight any other factor which has led to this weaker revenue growth?

Mukesh Ahuja — Managing Director

So you are right, Jigneshbhai, because of the raw material prices coming down in Q2 and Q3, which we have to pass on to our customers whatever contract we have with our customers. Because of that, it is coming down. Otherwise, on absolute volume basis, here, both the Engineering as well as Metal Formed are growing, irrespective of two-wheelers — there is a muted demand, irrespective that, we’re able to grow it.

Jinesh Gandhi — Motilal Oswal — Analyst

Sir, would it be still growing on a volume basis, on double-digit basis, or any indication you can give on the actual growth, underlying growth?

Mukesh Ahuja — Managing Director

It will not be double-digit, but it is a higher single-digit growth we will be looking at [Phonetic].

Jinesh Gandhi — Motilal Oswal — Analyst

Okay, got it. And second question pertains to the Mobility business. So it seems we further had losses on the electric three wheeler business sitting in PBIT of Mobility. So can you quantify the loss for the quarter and for the figures for e-three wheeler business?

Mukesh Ahuja — Managing Director

Yes. I think, maybe we should also change our nomenclature. So mobility business that we talk about in the income statement that I just talked about is the bicycle business. And TICM or TI Clean Mobility is a subsidiary and that is the electric vehicle business. So again, Jinesh, then — maybe then you can just clarify, which business are you asking about?

Jinesh Gandhi — Motilal Oswal — Analyst

I was looking to the standalone, the Mobility business in the standalone had losses. So I believe until last quarter, the e-three wheeler losses were sitting in the standalone side and now the shift has happened of e-three wheeler to subsidiary?

Mukesh Ahuja — Managing Director

No, the three wheeler is in last quarter — as soon as a subsidiary was created, which was…

Vellayan Subbiah — Executive Vice Chairman

March, ’22.

Mukesh Ahuja — Managing Director

March, ’22. From March ’22 onwards, three wheeler has always been in the subsidiary. What we’ve seen in Mobility is only the bicycle business. So maybe, we’ll also change the language in what we call them next time — so mobility and the loss you are seeing is for the bicycle business, Jinesh.

AN Meyyappan — Chief Financial Officer

And that’s a one-time loss, maybe in the Q4 we have booked it because of some internal things which is a one-time.

Jinesh Gandhi — Motilal Oswal — Analyst

Okay. And what could be the quantum of one-time impact?

AN Meyyappan — Chief Financial Officer

Whatever loss you are able to see, that maybe you can say…

Mukesh Ahuja — Managing Director

It would have been flat without it.

Jinesh Gandhi — Motilal Oswal — Analyst

Okay, got it. And lastly, can you clarify on the TI Clean Mobility, what kind of dilution will this fundraise result in? And…

Mukesh Ahuja — Managing Director

This question has been asked. We’ve not disclosed, part of the reason is that it will be a variable amount, right? And — so, we’ve not disclosed it from that perspective, because it does depend on the actual performance of the businesses.

Jinesh Gandhi — Motilal Oswal — Analyst

Okay. But any range for stake which you get benefit, based on this?

Mukesh Ahuja — Managing Director

Jinesh, I think we’d rather not give a range.

Jinesh Gandhi — Motilal Oswal — Analyst

Okay. No worries. I’ll come back in queue for other questions. Thanks.

Mukesh Ahuja — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Nishit Jalan from Axis Capital. Please go ahead.

Nishit Jalan — Axis Capital — Analyst

Yeah. Hi, sir. Thank you for the opportunity. So my questions are on the launches on the electric vehicle side. Just wanted to understand when are we planning to start the launches of the three wheeler tractors and any updated timelines that you can share? And what has led to the delays compared to your previous expectations?

Mukesh Ahuja — Managing Director

I think two things. The launch of the three wheeler we have started now. So we have launched in the southern states of Karnataka, Kerala, and Andhra. Currently, also the launches [Technical Issues] and we’re in the process of ramping up the production of the three wheeler. So that’s about the three-wheeler.

In response to the question of your [Indecipherable] because of the change in the standard dictated by the government in terms of the air standards for homologation. So we had to rehomologate the product once more, the battery, the motor, the controllers, so on and so forth. So there were delays associated with that, which was statutory in nature and we have to comply with that. Other than that, from our [Indecipherable] etc, whatever the improvements we had to do till this period, we have done. And now we’re launching it. That’s as far as three wheelers are concerned.

As far as the tractor vertical is concerned, we’re in the process of developing the product, the first lot of two wheeler sample for France [Phonetic] will be done in the June-July period. And post that, from both trials [Phonetic], whatever rectification we have to do, we will do. And then have the homologation done and go to market from there to the end of — [Indecipherable] scenario is missing, right?

As far as heavy-duty truck is concerned, we’re in the process of now selling the trucks. We are manufacturing the trucks in our new manufacturing facility at Manesar. And we have lined up customers and we are in the process of selling quantum — we’re carefully selecting the customers and are doing some trials, and then getting into sales.

But the same thing happened this month, and that’s [Indecipherable]. And then, we have the customer and we have confidence, we’ll be scaling up the volumes in the subsequent months. But the manufacturing facility to scale up these volumes isn’t fixed. And now we are getting the market organized in terms of this to be able to do that, along with the financing etc, so on and so forth. Hope that answered your question?

Nishit Jalan — Axis Capital — Analyst

Yes. So just a couple of follow-ups. So from your comments, I assume that the trucks product — heavy truck product has already been homologated and the process of selling and manufacturing has started now. Is that correct understanding?

Mukesh Ahuja — Managing Director

That’s correct. We just got in the AIS-156 Part 2 homologation done, and now we have the certificate with us and we are waiting for that, although we were ready for manufacturing. And once we get the official certificate, which will be in the year two [Phonetic] then we would be in a position to [Indecipherable].

Nishit Jalan — Axis Capital — Analyst

Got it. That’s good to hear, sir. And secondly, on the three wheeler EV side, can you clarify if we would be getting sale incentives for these products? Are we meeting all the requirements of sale?

Mukesh Ahuja — Managing Director

We are meeting all the requirements of sales. Till the time, the base subsidy is there, we would be receiving the [Indecipherable] subsidy. Actually, our MIS etc [Phonetic], is actually totally geared on the invoice. And from the invoice, it has actually progressed onto their portal, and from there, it automatically will register for the base subsidy. So that’s all in place. Till that time, the base subsidy [Technical Issues] of the three-wheeler, we’ll continue to see that?

Nishit Jalan — Axis Capital — Analyst

Got it. And just one last final question is on the overall capex. Just wanted to understand what is the total capex for FY24 for the standalone business, as well as for the EV subsidiaries or maybe any medical devices that we’ve acquired, any capex that you have planned for this year?

AN Meyyappan — Chief Financial Officer

So the total capex is INR800 crore. That will include kind of our existing Engineering business, as well as — and new initiatives. And then you have a separate capex for TIC India, which will be in the range of about INR300 crore to INR400 crore. So INR800 crores in the standalone and INR300 crore to INR400 crore in TIC India.

Nishit Jalan — Axis Capital — Analyst

And the standalone INR800 crore will also include the investments that we will make into the subsidiaries as well, right?

Mukesh Ahuja — Managing Director

Yes. That’s right, things like medical and everything.

Nishit Jalan — Axis Capital — Analyst

Okay. Thank you so much.

Mukesh Ahuja — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Saif Sourav Gujar from ICICI Prudential AMC. Please go ahead.

Saif Gujar — ICICI Prudential AMC — Analyst

Good morning, sir. Thanks for the opportunity. My first question is on the Engineering business. So last quarter, we had talked about some muted demand from exports. So from Jan ’23 onwards, how has been the trend in terms of exports there?

Vellayan Subbiah — Executive Vice Chairman

As we discussed last time, maybe Q4 was a little bit slower, it is almost flattish but we are able to see a good uptick in demand from Q1. So you will see numbers improving going forward in the Q1.

Saif Gujar — ICICI Prudential AMC — Analyst

Okay. And in term — my second question is on the Metal Formed business. So any traction we’ve started seeing in railways now?

Vellayan Subbiah — Executive Vice Chairman

KRS, you will take this?

K R Srinivasan — President and Whole-time Director

Yes. Srinivasan here. [Technical Issues] railways and they are in the process of making, production scheduling plans, for coach factories. So end of this quarter, we are likely to see the tenders getting released. So we hope the demand to go up in the second quarter, we’ll be getting orders in the second quarter. That is the outlook so far.

Saif Gujar — ICICI Prudential AMC — Analyst

So, in which sub-segments we are mainly focusing on, within railways currently?

K R Srinivasan — President and Whole-time Director

We’ll be focusing on the coach segment — passenger, not [Phonetic] coaches.

Saif Gujar — ICICI Prudential AMC — Analyst

Okay. And anything on freight side? Do we plan to bring in new products or it would be only on the coaches side only?

K R Srinivasan — President and Whole-time Director

Majorly, it will be on the coach side. On the freight side already, we have our product lines. But railways are in the process of finalizing their dedicated freight corridor plans. Once those plans are out, then I know we’ll be ready to take on that demand.

Saif Gujar — ICICI Prudential AMC — Analyst

Okay. And sir, my last question, TI-2 and TI-3, any further opportunities we have identified in there, currently?

Mukesh Ahuja — Managing Director

I mean — so there is nothing specific beyond what we’ve already talked about and at this stage. Like we said, we continue the process of looking at opportunities, but there’s nothing specific in that [Technical Issues]

Vellayan Subbiah — Executive Vice Chairman

And in addition to that, as of now, we are in execution mode for medical subsidiary, Lotus, what we discuss, it is executed and CDMO also is going to, let’s say, start the process in this quarter. Meantime, we are identifying new opportunities.

Saif Gujar — ICICI Prudential AMC — Analyst

Okay. Thanks, sir. That’s all.

Operator

[Operator Instructions] Our next question is from the line of Koushik Mohan from Ashika Stock Broking. Please go ahead.

Koushik Mohan — Ashika Stock Broking — Analyst

Thanks for the opportunity and congratulations for the great set of numbers, sir. Just wanted to understand, while reading the [Indecipherable] trying to understand that long-term borrowings for an aggregate sum of exceeding INR300 crores. Can I understand why is this borrowing is coming, and what has this been used for?

Mukesh Ahuja — Managing Director

Go ahead. Yes, go ahead.

AN Meyyappan — Chief Financial Officer

It’s an enabling resolution which we have got. We have not borrowed anything at this point in time. Our long-term debt is zero at this point in time, and that’s the enabling resolution which we get every year.

Koushik Mohan — Ashika Stock Broking — Analyst

Got it, sir. And another clarity [Indecipherable] on, sir, what is — on a normalized basis, your system [Phonetic], your cash conversion cycle has been very strong. Can we assume this trend to be in the future?

AN Meyyappan — Chief Financial Officer

Yes. We continue to focus — be focused on the cash generation and we’ll continue to deliver on that.

Koushik Mohan — Ashika Stock Broking — Analyst

Thanks for that.

Mukesh Ahuja — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Abhishek Poddar from HDFC Mutual Fund. Mr. Abhishek, your line has been unmuted. You can go ahead with your question. Please go ahead.

Abhishek Poddar — HDFC Mutual Funds — Analyst

Hi, good morning. Sorry, my line was muted. Hi, sir. Regarding this TICMPL, I wanted to understand how should we think about the economic interest that the company will retain in this EV Mobility business. Some understanding that what is today and how it will be shaping up to in the future?

Mukesh Ahuja — Managing Director

So I think you all are ending up with the same question. So let us then think through how to communicate this — that you guys get the answer that you’re looking for. We understand kind of what you’re trying to — why you want it. Let us think about how we can kind of communicate it in a fashion that we used to.

Abhishek Poddar — HDFC Mutual Funds — Analyst

Understood, sir. And sir, also about this business, currently it’s EBIT loss, so any internal targets that you want to share, that when it will be breaking even at, let’s say, EBITDA level, at PBT level, timelines or some understanding and how many years it would take?

Mukesh Ahuja — Managing Director

I think it’s very difficult to say at this stage. I mean our current plan basically says that will take a minimum of two years, right. So I think that’s the best assumption we can take.

Abhishek Poddar — HDFC Mutual Funds — Analyst

Right. And should we assume that three wheelers will be the first one to break even and followed by heavy duty and then the tractors?

Mukesh Ahuja — Managing Director

I would say, you can’t determine that but it’ll be something — it will either be heavy-duty or three-wheeler. Yes.

Abhishek Poddar — HDFC Mutual Funds — Analyst

Understood. Sir. Okay. Thank you, sir. All the best.

Mukesh Ahuja — Managing Director

Okay. Thank you.

Operator

Our next question is from the line of Sundar S from Avendus. The line from Mr. Sundar, has dropped. May I request the management we move to the next question? Our next question is from the line of Mr. Manoj Bajpai [Phonetic]. Please go ahead.

Manoj Bajpai — Private Investor — Analyst

Hi. Good morning and thanks for giving me an opportunity to ask the question. This is more strategic in nature, especially on the strategy on the seeding new platform that is T1-2. What I wanted to understand was, are there any earmarked figures from cash flow, which you think that this is amount of — on or percentage wise we are going to deploy over the next three, four, five years into this particular strategy. And what are the kind of timelines you’re looking at, probably stopping this or probably seeing how your investments plan out and then taking the next level of call. So that’s a question which I have.

Mukesh Ahuja — Managing Director

Yes. So as you look at it, this year, about 50% of the cash flow will go towards this and 50% will go towards the existing TI-1 cash flow expansion opportunity. So I think that number can vary between kind of — first off, so the first thing is whatever TI-1 needs, they will get, right? And so then that kind of helps us determine how much we can put towards TI-2.

There are two things we look at, right, which is like we don’t — at least from TI’s perspective, we don’t see — I mean, we’ve always articulated this, right, saying that the maximum will go up to two years negative free cash flow, and we continue to kind of reiterate that same comment, that’s kind of core to our planning. And like you know this far, we’ve been able to manage with pretty much no debt, but that is central to our planning as well.

Manoj Bajpai — Private Investor — Analyst

And in terms of the product portfolio expansion or probably the lines of business which you are looking at. Currently, you have probably invested in two, three similar line of businesses. One is into Mobility, second is into, say, Automotive industry. So are there any specific areas which you are specifically looking into this particular strategy of seeding new businesses?

Mukesh Ahuja — Managing Director

Yes. See, it is — basically it’s focused on — I think we’ve talked about this criterion a couple of times in previous calls, right, which is to basically use — so, some of it is based on kind of where we see India’s GDP growth coming from, where India — how India is going to shift over the next 10 to 20 years. That is the first kind of gating [Phonetic] factor.

The second is, we’ve talked about using India as the market to kind of — to learn the opportunity and then expanding, using that as a way to kind of start exports to the rest of the world, but India being a tough [Phonetic] market.

So there’s several different filters and we’ve talked about these filters in prior calls as well. So none of those criteria are changing, I would say, from our perspective. And we continue to kind use the same criteria and kind of — and the same approach, to filter industries…

Manoj Bajpai — Private Investor — Analyst

Just last one, a small one that, what is the kind of timeframe you are internally looking to give to a particular business, in terms of its success or rather putting the plug on this business if it is not working for you? So you have any sort of internal thought process on that, that maybe three year, four year you’ll give to business and then take a call?

Mukesh Ahuja — Managing Director

So I think in between two and three years, we have like what we would call a go, no-go check, right, and that is basically seeing whether we continue or not, right? But that doesn’t necessarily mean that the business has to scale within that timeframe. It just means that the conditions with which we went in, need to be maintained and we need to continue that we are convinced that, that business continues to be a good opportunity. So that’s basically how we’re looking at it.

Manoj Bajpai — Private Investor — Analyst

Okay, thanks. Thanks. That’s all from my side. Thank you very much.

Operator

Thank you. Our next question is from the line of Mr. Sundar S from Avendus Spark. Please go ahead. Please go ahead.

Sundar S — Avendus Capital — Analyst

Good morning, sir. Am I audible?

Mukesh Ahuja — Managing Director

Yes, yes.

Sundar S — Avendus Capital — Analyst

Yes, thank you. Sir, the first question is on the standalone business. I just want to understand, has all the raw material impact been passed on or should we see some impact coming through for the next few quarters too?

Mukesh Ahuja — Managing Director

We have various — with our various customers. I mean, some part is already passed on and something will happen in the Q1 also. It is not that entirely is passed on.

Sundar S — Avendus Capital — Analyst

Perfect, sir. Thank you. And the second one, Mr. Vellayan, can you — so there are some parts in terms of the venture into the CDMO, because this was something that was not discussed earlier. What was the thought process here and how should we look at this business from a three year perspective?

Vellayan Subbiah — Executive Vice Chairman

So the — you know that — so basically, we’ve been having discussions with Govind, who has basically kind of helped found the business with us, I would say, for over — close to between 18 months now almost I would say. The reason really is that we see CDMO as a huge growth opportunity for the country itself. As you know, globally, a lot of it has been done in China and the large CDMO people in China, I would say, are almost like 10 times the size of the largest player in India.

With what’s happening kind of geopolitically, a lot of that is beginning to shift now towards India, and I would say, strongly in India, it [Indecipherable]. So our belief is that over the next decade, it is a good opportunity to kind of grow this business. And like I said again about the businesses — we are really taking — a 25 to 30 year view, so that is our thinking kind of going into this. And specifically towards our plan for the three years, Govind, do you want to jump in and kind of provide your perspective?

Unidentified Speaker —

Yes. I think three years is a period like it is too short on the manufacturing per se in the [Indecipherable] because we have to get the plant ready, and file the product and get it inspected, and that is a timeframe by which I think all this would happen, so that I think we’ll be able to promote the manufacturing business more with the customers, including emerging pharmas and medical device [Phonetic] companies. And by that time, I think the lab would have started delivering the FTEs, is what I would say what the three year period looks like.

Sundar S — Avendus Capital — Analyst

Right, sir. Thank you for that perspective. And one last one on TICMPL, should we assume that TI’s investments into TICMPL would be limited to 7% growth rate, commented as of now?

Mukesh Ahuja — Managing Director

Yes, we have already said that.

Sundar S — Avendus Capital — Analyst

Okay. So, it wouldn’t exceed beyond the INR750 crores that we’ve committed?

Mukesh Ahuja — Managing Director

No.

Sundar S — Avendus Capital — Analyst

Perfect, sir. And last one is on the FAME subsidy, with several state governments indicating that they would want to pull out of the FAME subsidiary, how do you look at this impacting the TICMPL, specifically on the three wheeler side?

Mukesh Ahuja — Managing Director

So, Yes. So, like we said in our other platforms, both on tractor and on heavy-truck, FAME is not there. But even on three wheeler, we have not — we don’t have any FAME in our business plan and assumptions beyond March ’24.

Sundar S — Avendus Capital — Analyst

But you don’t see that impacting the penetration of the category itself, because the breakeven significantly widens once you remove the FAME subsidy?

Mukesh Ahuja — Managing Director

See, we believe that all of these categories have the ability to kind of breakeven over time, right. Now, kind of — would it accelerate? Absolutely. So would we support it if FAME was extended? Absolutely. But does it mean that we will not kind of have — we’ll pursue the business if FAME was not there? No, we will continue to pursue the business.

Sundar S — Avendus Capital — Analyst

Fair enough, sir. And one last one, can you throw some light on the capacities that we currently have on the EV side, on three wheeler, HCV as well as on tractor? And where are we looking to ramp it up with the cash flow that’s come in?

Mukesh Ahuja — Managing Director

So three-wheeler — Okay. Go ahead, Paul.

Kalyan Kumar Paul — Managing Director of TI Clean Mobility Private Limited

On three wheeler, we have a capacity of 90,000 three wheeler annually. On the tractor side, the capacity is about 25,000 in the Phase 1, so is for the heavy-duty trucks. So in in terms of capacity, a year, year and a half — first half, we’ll see how things pan out.

Mukesh Ahuja — Managing Director

Heavy duty will not be — heavy-duty won’t be 25,000. I think you said, will be 25,000. Heavy-duty will be 2,500.

Kalyan Kumar Paul — Managing Director of TI Clean Mobility Private Limited

2,500, but on three shift basis, we just talked about two shifts.

Mukesh Ahuja — Managing Director

But not — so 2,500. 2,500 on the heavy-duty side, 2.500 to 3,000.

Sundar S — Avendus Capital — Analyst

Perfect, sir. Thanks for the clarification and all the best.

Mukesh Ahuja — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Abhishek Ghosh from DSP. Please go ahead.

Abhishek Ghosh — DSP Investment Managers — Analyst

Yeah. Hi, sir. Thank you so much for the opportunity. A few questions. Sir, on the standalone part of the business, you have a substantial contribution from two wheeler, which is kind of coming in. So any outlook on that industry? Any thoughts in terms of recovery on that and sustenance of the volume growth? Any thoughts on that, sir?

Mukesh Ahuja — Managing Director

Abhishek, maybe, let’s say, like, we know that we can’t control the industry. What we can do is internal, how do we — even the industry is not growing, how can we focus on the other, let’s say, industry. Like CV is doing pretty well, EV is doing pretty well. There is a good exports opportunities available, and government is spending huge money on the construction side of the story. How we can leverage that? So we are working on that. At the same time, we have sufficient capacity, even two wheeler does well, we will be able to participate in that. And there, we are working on some new product development, because the introduction of EV and the light-weighting, is going to have some opportunities. So we are going to participate in that also.

Abhishek Ghosh — DSP Investment Managers — Analyst

Okay. So it is fair to assume, sir, the standalone capex that you’ve spoken about, 50% of that INR800 crores, majority of that will kind of go into these segments which are seeing growth areas, and not so much into two wheeler? Is that the way to look at it?

Mukesh Ahuja — Managing Director

There is no more investment in the two wheeler side — capacity.

Abhishek Ghosh — DSP Investment Managers — Analyst

Okay, great. That’s helpful. Sir, the other thing is, to one of the OEMs whom you already provide some of the products, they have spoken about a large investment in Chennai. You think that can be beneficiary to you? I think last week they’ve announced that, so you think that can be beneficial to you over the next three to five years? Any thoughts on that?

Mukesh Ahuja — Managing Director

Over the years. Like, you know, that maybe — TI participates, all the OEMs, maybe were clearly present. So any investments planned in the new, whether it’s in the South or West, we are surely going to participate in that.

Abhishek Ghosh — DSP Investment Managers — Analyst

Okay, great. Sir, just one question to Vellayan sir — in terms of — if you look at the new investments in last 12 to 18 months, you’ve got into medical devices. You also have spoken about electronics, now CDMO, EV also, it’s kind of ramping up. So obviously you’ve also spoken about many more areas, but for now, is it fair to assume that over the next 12 months, you would want to consolidate and bring all these incubating businesses to a certain level. And then when you look at investments into new or how should we look at it? Just your thoughts there, sir.

Vellayan Subbiah — Executive Vice Chairman

Yes. I mean, obviously, kind of these businesses now are going into execution mode. And so, that is definitely the intent, right? So, like we’ve said with some of these, you can time all of these perfectly. What we will do is continue to manage our cash flow with the criteria that we have specified to you, right? But you are right in the sense that with a lot of new businesses now, our focus is moving more to the execution mode and being able to kind of get performance on [Technical Issues].

Abhishek Ghosh — DSP Investment Managers — Analyst

So I was more trying to understand on the — on your bandwidth cash flow, and we have seen the way you have executed, But on your bandwidth, just from that perspective, so that’s the only way we are trying to understand.

Vellayan Subbiah — Executive Vice Chairman

Yes. I think your statement is fair. But like this — like I said, the exploration side is something that will always be an ongoing exercise right, because it’s part of kind of identifying things for the long term. But the majority of my time is going to be spent kind of now on kind of ensuring that the execution of the existing businesses happens more.

Abhishek Ghosh — DSP Investment Managers — Analyst

Thank you so much and wish you all, all the best. Thank you.

Operator

Thank you. Our next question is from the line of Prithvi Raj from Unifi Capital. Please go ahead.

Prithvi Raj — Unifi Capital — Analyst

Sir, I just have one question. So right now we are getting into many new businesses. So maybe five years down the line, how do we see these revenues contributing to the — overall to business? I mean, any rough sense on some percentage number?

Mukesh Ahuja — Managing Director

See, it’s a bit tough to predict. I think we’ve always kind of guided that TI-1 — our current belief is that TI-1 will grow at between 12% and 15% a year, right? Somewhere in that range. But TI-3 has kind of always been — it’s been a bit kind of — it’s very difficult to kind of predict what that revenue contribution would be, right. As you can see kind of consol, now our other businesses are kind of as large as TI, and maybe even larger.

So it’s a bit difficult because of the lumpy nature, but obviously, our broad view is that each of these businesses has the potential to be at least as large as TI is today, which is why we are getting into that, right? So whether they reach that potential within five years or eight years, we need to see. But that is the belief with which we are going into it, right, with each of these new businesses.

Prithvi Raj — Unifi Capital — Analyst

Okay. And one question on TI Clean Mobility, is it possible for you to quantify the losses in this quarter and in this financial year? I mean, TI-3?

Mukesh Ahuja — Managing Director

Losses for the quarter were about INR28 crores.

Prithvi Raj — Unifi Capital — Analyst

And for the year?

Mukesh Ahuja — Managing Director

We can’t predict for the year.

Prithvi Raj — Unifi Capital — Analyst

For the previous…

Mukesh Ahuja — Managing Director

For the previous year…

Prithvi Raj — Unifi Capital — Analyst

’23 full year?

Mukesh Ahuja — Managing Director

INR102 crores.

Prithvi Raj — Unifi Capital — Analyst

Okay. Thanks, sir.

Operator

Thank you. Our next question is from the line of Dhruv Bhatia from Bank of India Investment Managers. Please go ahead.

Dhruv Bhatia — Bank of India — Analyst

Hi. Good morning, sir. Sir, actually my question is on Shanthi Gears. Though, I understand that you don’t like to answer on them, but let me try my luck. I you know — generally on a quarterly basis, you do provide the order inflow and order book for Shanthi Gears. But this time, you haven’t provided it. If it’s possible to share that data?

Operator

Ladies and gentlemen, please stay connected, the management line has dropped. We’ll reconnect them quickly.

The line for the management has reconnected. Mr. Dhruv Bhatia, you can go ahead with your question. Could you please repeat your question?

Dhruv Bhatia — Bank of India — Analyst

Sure. So sir, actually, my question was on Shanthi Gears, and I was saying that I do understand you don’t like to answer questions on Shanthi Gears on this call. But let me try my luck. Actually, generally, you provide the quarterly order inflow and order book for Shanthi Gears but this time around, you haven’t provided. Is it possible to share the order inflow and order book for Shanthi Gears?

Mukesh Ahuja — Managing Director

I would say, again, because again, we don’t want to start this off with again, the same kind of trends [Indecipherable]. I would just suggest you can write — do we have kind of — you can write to kind of even TII Investor Relations if you want. And with that — with your specific questions and if it is shareable data, then we can see — we have to disclose it in the public domain to everybody, so will think about how to do that.

Dhruv Bhatia — Bank of India — Analyst

Sure. Thank you so much.

Mukesh Ahuja — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Hardik Doshi from White Whale Partners. Please go ahead.

Hardik Doshi — White Whale Partners — Analyst

Yeah. Thank you for taking my question. My question is actually related to the CDMO business. Typically, most of these diversifications or acquisitions may be done, it’s been more towards auto or auto-related or [Indecipherable] hard manufacturing that’s done. I just want to understand from the CDMO perspective, what is the TI’s value addition out there?

Mukesh Ahuja — Managing Director

See, I mean, again, when you think from a multiple — I always think of it as kind of, you take so many guys who have grown, right? I mean like — I mean, like you know kind of one of our models is Danaher, right? And when I look at Danaher, what they really bring to the table is, their approach to the business what they called DBS, right, called Danaher Business System. And we are trying to kind of define the same for ourselves in what we call TI Way, right? And so, actually what makes Danaher kind of our view as competitive as it is, is the fact that it can bring DBS to every business that it goes into. And similarly, the way we look at it in terms of new businesses, we see it as an opportunity to bring that kind of thinking to every business we go into. And that specifically then kind of adds implications for sales and marketing, for operations, and for R&D, and our approach to sales and marketing and how we can help.

So having access to kind of, you know, what I would — a larger and more scalable global organization, obviously, kind of helps you think very differently from how a startup would approach it, right. And so, I think that that has inherent advantages. So those two things, kind of the access to the global organization and using TI Way just like Danaher uses DBS, I think is the core to kind of how — what we can bring to it.

Hardik Doshi — White Whale Partners — Analyst

Just continuing on that TI Way. Have we, like, kind of — I mean is that DTA kind of guidelines [Technical Issues] plan of something a deal is already formulated, and is it possible for us to like kind of accept that or see that?

Mukesh Ahuja — Managing Director

No. It is something we use internally. It is kind of continuing to involve as we continue to work with Shingijutsu and other leading consultants in that process. But it’s not something that we share in public domain, like Danaher shares DBS.

Hardik Doshi — White Whale Partners — Analyst

Okay. Great. Thanks so much.

Mukesh Ahuja — Managing Director

Yeah, thank you.

Operator

[Operator Instructions] Our next question is from the line of Vimal Gohil from Alchemy Capital Management. Please go ahead.

Vimal Gohil — Alchemy Capital — Analyst

Sir, thank you for the opportunity. My question on TI Clean Mobility has been answered. I just had a question on the standalone piece regarding the Others segment. My belief is that we include our industrial chains export business in this. The YoY slight decline that we see in these businesses would largely be explained by that, or is there any other segment which might have contributed to that? Thanks.

Vellayan Subbiah — Executive Vice Chairman

As you rightly mentioned, actually, it’s not just industrial chains exports, the entire industry chains that’s part of the Other segment. They are [Indecipherable] in terms of decline in the exports is — okay. I mean, is correct.

Vimal Gohil — Alchemy Capital — Analyst

Sir, could you provide some more detail around the other products that are included in the other segment? What was the performance there?

Mukesh Ahuja — Managing Director

So, I guess — that our Other businesses was — which were incubated in the others which has now been consolidated, which is our TMT and certain other businesses, along with the industrial chains.

Vimal Gohil — Alchemy Capital — Analyst

Right. And how are these businesses doing, excluding the industrial chains, that the TMT, the others…

Mukesh Ahuja — Managing Director

I guess, it’s a commodity business at the moment, but we are kind of — we’ve reached a stage where we know how the business is performing. So we are still evaluating as Mr. Vellayan said, we are looking at a three year to five year timeframe that we decided in terms of how we want to do — go ahead and do this business there. So, Yes. So we are in that phase where we probably — we have a dedicated business team which is handling it, who will take an appropriate call on that. As of now, there is no systemic concerns or whatever.

Vimal Gohil — Alchemy Capital — Analyst

Understood. And the export business will — is expected to improve. When you said that the overall exports, that would include the industrial chain exports as well?

Vellayan Subbiah — Executive Vice Chairman

Yes. Mr. Mukesh already alluded on that. I think he mentioned that we can see some uptick in Q1 — Q1 and onwards.

Vimal Gohil — Alchemy Capital — Analyst

Understood, sir. Thank you so much and all the very best.

Vellayan Subbiah — Executive Vice Chairman

Thank you.

Operator

Thank you. Our next question is from the line of Mr. Anupam Gupta from IIFL Securities Limited. Please go ahead.

Anupam Gupta — IIFL — Analyst

Yes. Just continuing on the exports fee, sir. Firstly, what was the total exports share for the standalone business in FY ’23?

AN Meyyappan — Chief Financial Officer

It’s about 17%, Anupam.

Anupam Gupta — IIFL — Analyst

Okay. And if you were to split it between engineering and industrial chains, so what was the share if you are sharing that?

AN Meyyappan — Chief Financial Officer

Generally, we report together, Anupam, as of now, we — at the TI level, export numbers and we’ll continue to do that.

Anupam Gupta — IIFL — Analyst

Sure. And do you — would you say that this target to maybe double in three years in terms of share, is that target still on or do you see any changes to that?

AN Meyyappan — Chief Financial Officer

Surely. We want to double it. But maybe three years will be a little tougher. But we are working on that.

Anupam Gupta — IIFL — Analyst

Okay. Okay. Understand. Sir, the second question is, you said the capex for standalone would — capex and investment for standalone is INR800 crore for FY ’24, is it right to assume that it includes the INR285 crore for CDMO and INR233 crores for Lotus in that, or is it separate?

AN Meyyappan — Chief Financial Officer

Yes, it is inclusive of that.

Anupam Gupta — IIFL — Analyst

Okay. So the balance, approximately INR250 crores, which you will do, apart from these 2, is targeted towards what sir, in terms of the standalone business?

AN Meyyappan — Chief Financial Officer

It is the existing businesses. Maybe, let’s say, what we do with Engineering, Metal Form will go towards those capexes.

Anupam Gupta — IIFL — Analyst

Okay, I understand. And the INR300 crore to INR400 crore capex which you said for TI Clean Mobility, what is that directed towards? Any specific thing which you can highlight there?

AN Meyyappan — Chief Financial Officer

As Mr. Vellayan already mentioned, it is going towards the product development and building manufacturing plants. It’s going to go towards that.

Anupam Gupta — IIFL — Analyst

Okay, understand. And just one last question, sir. Any update on the optic business which was — which you had trials on for?

AN Meyyappan — Chief Financial Officer

So Anupam, it is still going on. Maybe we have made progress internally in terms of quality and all those things. In acquisition of customers, maybe still work is in progress, and we’ll share with you once we are able to crack that.

Anupam Gupta — IIFL — Analyst

Okay, fine. Thank you. That’s all from my side, sir. Thank you.

Operator

Thank you. Our next question is from the line of Hrishit Jhaveri from Pi Square Investments. Please go ahead.

Hrishit Jhaveri — Pi Square Investments — Analyst

Congratulations, sir, for the good set of numbers. So I wanted to know your growth outlook for FY ’24 for the standalone segments.

AN Meyyappan — Chief Financial Officer

Generally, you know, maybe Hrishit, we don’t share forward-looking numbers. But we are confident to grow better than the industry growth, that’s how maybe I can give an indication as of now.

Hrishit Jhaveri — Pi Square Investments — Analyst

Okay. And also to mention that the Bicycle business had seen a demand pull-out from the market. What’s your take there? Are you seeing any demand uptick in the next two quarters?

AN Meyyappan — Chief Financial Officer

Yes. As of now, let’s say, this is a tough business, the way demand is contracting. So we are internally focused how to cut down costs and do it — work whatever we are doing for existing business like Export Development, that work we have started to build capabilities and we are hopeful to revive it.

Hrishit Jhaveri — Pi Square Investments — Analyst

Okay, sir. Thank you so much and all the best.

AN Meyyappan — Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead.

Jinesh Gandhi — Motilal Oswal — Analyst

Hi, sir. A couple of clarifications. There is other income which has gone up quite substantially in this quarter. Is there any one-off or this includes dividends from some of the subsidiaries?

Vellayan Subbiah — Executive Vice Chairman

Yes. We have received dividends from CG Power, INR133 crores is included in that.

Jinesh Gandhi — Motilal Oswal — Analyst

Okay. Okay. Got it. And secondly, when you look at the optics lens business, we are clearly focused on glass lenses. But with the evolution of mobile manufacturing scenario in India, are we also looking at plastic lenses given that opportunity also will be very large?

Vellayan Subbiah — Executive Vice Chairman

Yes. So not at this stage, right? So first, let’s see if we can stabilize this business and we can look it up.

Jinesh Gandhi — Motilal Oswal — Analyst

Got it, got it. And lastly, with respect to the INR1,200 crore fund raised through the private equity on the EV side, our investment requirement in the foreseeable future would be about INR750 crores in the three businesses put together, right?

Mukesh Ahuja — Managing Director

No, no. So just to clarify, if you talking about TI’s investments into it?

Jinesh Gandhi — Motilal Oswal — Analyst

Yes.

Mukesh Ahuja — Managing Director

TI’s investment into it. The incremental investment amount is only about a INR120 crores

Jinesh Gandhi — Motilal Oswal — Analyst

And I’m sorry, I meant

Mukesh Ahuja — Managing Director

The rest INR750 crores has already gone into the business.

Jinesh Gandhi — Motilal Oswal — Analyst

Yes, I’m sorry, what I meant was, that the emissions [Phonetic] requirements of these businesses. During the past, you had be indicated to INR50 crores per business on the EV side, the capex requirement or the investment requirement of each of those businesses. So in that context, I was just trying to understand is there any change in plan, we are accelerating our capex in those businesses, given the opportunity which is there, or INR750 crores numbers for the three business still holds true?

Mukesh Ahuja — Managing Director

So again, what we had articulated was, when we talked about the three wheeler business, we said that we’ve got that business up and running for around INR300 crores right. As you know, with both the truck and the tractor, we acquired companies. So there was an outlay towards that acquisition. The second outlay is towards manufacturing and development. So if you include manufacturing kind of your — the full stack development team, and the acquisition costs, obviously that combined is going to be more than INR300 crores for each of the business — in the market.

Jinesh Gandhi — Motilal Oswal — Analyst

Okay, got it, got that. Thanks, and all the best.

Mukesh Ahuja — Managing Director

Thank you.

Operator

Our next question is from the line of Mr. Anupam Gupta from IIFL Securities Limited. Please go ahead.

Anupam Gupta — IIFL — Analyst

Yeah. Thanks for the opportunity, sir. Just one last question I had. So margins obviously in this quarter benefited from the raw material pass-through, which you did. Incrementally, let’s say, if you assume raw material largely to be a non-event, what sort of margin expansion do you think can happen over the next three years in the core business?

AN Meyyappan — Chief Financial Officer

We will continue to maintain the current margin, maybe, let’s say because we are closer to what we have given in the guidance in the past, and that [Indecipherable]

Anupam Gupta — IIFL — Analyst

Okay, fine. Fine, I think we don’t have any further questions, we can close the call. Vellayan, if you have any closing remarks, we can take that and then we can close the call.

Vellayan Subbiah — Executive Vice Chairman

No, Anupam. I think that’s good. Like I said, the important thing for us is, TI-1 continues to perform strongly and so we think that, that performance will continue in this financial year. And like you said, kind of, it is going to get important for us to now, especially — I think the first one out of the gates will be Clean Mobility. So to start seeing some growth in that, this financial year, which we believe we will start seeing. So that’s our general kind of outlook. So we continue to be quite optimistic about things going into this year and we look forward to catching up in the next call.

Anupam Gupta — IIFL — Analyst

Sure. Thanks a lot. Thanks a lot for the management for the time and all the participants as well who joined the call. Thank you.

Vellayan Subbiah — Executive Vice Chairman

Thank you.

Operator

[Operator Closing Remarks]