Amara Raja Energy & Mobility Ltd (NSE: ARE&M) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Delli Babu Y — Chief Financial Officer
Analysts:
Aniket Mhatre — Analyst
Mumuksh Mandlesha — Analyst
Vibhav Zutshi — Analyst
Kapil Singh — Analyst
Mukesh Saraf — Analyst
Balkrushna Vaghasia — Analyst
Joseph George — Analyst
Sanket Kelaskar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Amara Raja Energy and Mobility Limited, hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Aniket from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.
Aniket Mhatre — Analyst
Thank you. Thank you, Steve. Good evening, everyone. Welcome to the post-results conference call of. At the outset, I would like to thank the management team of Amaraja for giving us an opportunity to host this call. From the management team, we have with us Mr Vai Delhi Bagu, Chief Financial Officer of the company. I would now like to hand over the call to Mr Delhi Baku for his opening comments on the company’s Q3 performance, post which we’ll begin the Q&A session.
Over to you, sir.
Delli Babu Y — Chief Financial Officer
Thank you. A very good afternoon to everyone who is on the call. And thank you for your interest and time. During the current quarter-ending on 31st December 2024, the consolidated revenue for the business is about INR3,272 crores with a growth of about 7.5% over the previous year. With the battery contributing about 96% of the revenues and the rest coming from the new energy business, both from the battery packs and chargers.
See, the lead-acid battery business has — has witnessed a revenue growth of about 9% over the previous year-on the back of a strong volume growth from both automotive as well as industrial segments barring the telecom segment where due to a change into the lithium chemistry, the lead-acid volumes have come down compared to the previous year.
The four-wheeler volume growth for the quarter in the aftermarket side is about 11% and the OEM growth in the four-wheeler segment was muted during the current quarter compared to the last year numbers. The export volumes registered a growth of about 8% to 9% during the quarter. There are some order changes, which I’m sure by the year-end we will again pick-up a double-digit growth in the export volumes. The two-wheelers, both in the aftermarket as well as OEM segments have grown around 16% to 17% kind of a growth, continuing the aftermarket growth momentum in two-wheeler even in this quarter.
In the other applications, both tubular batteries and the home UPS systems have grown by about 15% in volumes compared to the previous year. And the lubes business that we have started in the last financial year has also gained some good traction. In the current quarter, the overall revenue is about INR100 crores from the lubes distribution business.
On the industrial segment, both the UPS and the exports have grown significantly. But the overall volume growth is muted because of the dip in the telecom segment. In the new energy business, because of some changes in the OEM uptake, there is a reduction in the overall revenue compared to the previous year-by about 20%, but I’m sure with the localization plans for the getting completed, we are expecting that we will be able to recover this last through the financial year.
And in terms of the overall trading revenue from the business on a standalone basis, this quarter the trading business accounts for about 10% of the total revenue. And when we look at the gross margins, there is a dilution on account of majorly two factors. One is there is a bit of an increase in some of the allied metals like tin and antimony.
And also there is a power cost that we had to provide for in this quarter because there is a fuel purchase cost adjustment that has been done by the AP government for the financial year. So that revision of the power cost has to be provided for in the financials in this quarter. So that’s kind of impacted the operating margins close to about 1% to 1.2%. And in-line with this higher costs that have been levied, we may have to create some more provision for the current financial year in the Q4 of this financial year, which may have impact around 0.4% to 0.5% of operating margin. But going-forward, with the increased renewable portion in our overall power procurement, we expect to reduce this impact in the upcoming financial years.
On the other updates, we have received on the tubular plant that we have restated — reinstating after the fire accident, we received a cumulative insurance claim of about INR275 crores so-far, which is more than the book-value what has been recognized towards this plant in the books, which is where you would have seen an exceptional gain of about INR11 crores in the financial year. And this plant is expected to commence its operations by the beginning of next year — next financial year.
And then on the recycling plant in this quarter, we have commenced the first phase of commercial operations. Of the refining capacity of 50,000 tonnes, we have started the commercial operations in the current quarter and it will continue to operate at a full capacity for the next quarter as well. And then we are expecting to start the smelting operations that is the battery braking operations sometime towards the end of Q1 of next financial year.
And you would have also noticed comprehensive income negative about INR132 crores in the financials, that’s more because of the fair-value reassessment of some of the investments that we made into some start-ups. We have done the fair-value reassessments, which is why that loss is seen over there. We are seeing the volume momentum continuing in the domestic aftermarket and also our offtakes to some of the export markets continues to be robust. So with the lead-acid battery business posting reasonable growth over the next quarter as well.
And in the new energy business, we have just commenced our first tranche of commercial deliveries of the two-wheeler packs as well as we have completed the localization of portable charges for two-wheeler and three-wheelers applications. And then we are moving ahead with our first factory work. We expect that the First factory on the MMC side might commence its operations, as mentioned earlier, either towards the end of next calendar year or beginning of 2027.
So with those brief overview, I would now request if you have any specific questions, we can take them up.
Questions and Answers:
Operator
Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star. Participants are requested to use handset while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Mumuk from Anand Rathi Institutional Equities. Please go-ahead.
Mumuksh Mandlesha
Yeah. Thank you, sir, for the opportunity. Starting with other expense, sir, as you mentioned about the electricity cost going up, about 100 bps to 120 bps impact for this quarter. But I still see the other expenses also being higher by around 170 bps Q-on-Q. Can you just explain whatever other expenses had seen increase this quarter also?
Delli Babu Y
Yeah. See, the total Q-o-Q expenses increase is about INR51 crores. Out of that, about INR37 crores is power. The rest of the expenditure are some of the advertising expenditure that we have incurred during the current quarter, which generally on an annualized basis will kind of — the expenditure are incurred based on the activities that we perform in a given quarter. So — and also some bit of increase in our overall freight expenditure considering some of the additional trading business that we have done during the current quarter. Beyond that, there are no other significant increases.
Mumuksh Mandlesha
Got it. And just for next quarter, the — the 40 to 50 bps of impact would be seen for the more electricity provision, right, sir?
Delli Babu Y
Yeah, I’m expecting it could be around 0.4% is what is my estimate at this time, but obviously, we need to fine-tune that estimate that’s the current estimate that I have.
Mumuksh Mandlesha
And next year onward from the current level, it should come down the quarterly —
Delli Babu Y
Should come down because this is more coming on the back of higher procurement cost that the government has taken-up. It should come up — come down both on account of grid power coming back to its normalcy as well as we increasing some more third-party power procurement, both from the renewable side as well as some of the procurement from the power — exchange side. So I’m sure this number should again go down?
Mumuksh Mandlesha
Got it. Sir, coming to telecom segment, can you share what was the revenue-share for this quarter? And considering the shift happening to lithium battery, I mean, any near-term, what kind of fall we expect for this segment?
Delli Babu Y
The current quarter revenue is still about 10% to 11% of the total revenue. But if I look at from the — because in the telecom side, when I look at including my lithium-ion battery packs that we are supplying are still it accounts for about 10% to 11% of our overall revenue. But only on the lead-acid side, if you take because these are still initial days in terms of our overall lithium supply. So around 9% of the revenue from telecom of the overall revenue is from the telecom lead-acid battery business. I think we will see a conversion of lithium into telecom going-forward as well. But this being one of the oldest plants that we have, so it is not a huge drain as far as the profitability is concerned.
Mumuksh Mandlesha
And currently, how much is a fall sir in the telecom sir?
Delli Babu Y
On a year-on-year basis, about 25% to 24%.
Mumuksh Mandlesha
Yes. Got it. Got it. Sir, on the lithium cell plant, just on the ones that commences operation in CY ’27, based on the ramp-up plans and the orders which we have won, what kind of revenue we expect, sir?
Delli Babu Y
See, well, on the PAC side, on the lithium, both PACs and charges, last year we clocked a revenue of about INR500 odd crores. And this year also we expect to meet that number, maybe 10% higher than what the number last year was. So that’s the number that we are looking at. But going-forward in the next year with the new charges that are getting localized and also some of the DC fast charges products that are getting ready and ramping-up some of our battery packs to other product segments, both in the storage side as well as mobility side. We should see some bit of growth, but at this time, it is too early for me to put a number around how much it could be. I mean it should be sizable enough, but at least in my mind, it should at least be in the double-digits. But I wouldn’t be able to put a number right now for the next year’s growth.
Mumuksh Mandlesha
Got it, no, I was basically asking for the cell plant, sir, the NMC cell plant in the first year operation, what kind of revenue we see, sir.
Delli Babu Y
See the current price levels of NMC cell is around $70 to $75 per kilowatt-hour. So our Phase-1 capacity out-of-the 2 gigawatt hour, maybe initially we will start with half of that 1 gigawatt hour kind of a number. So it also depends on the offtake. So I mean, you can — that’s the kind of initial revenue what we can expect depending on how the demand ramp-up happens. Thereafter we have to see how it goes.
Mumuksh Mandlesha
Got it. If possible, any kind of order number would you have any key customer wins in recent times, sir in the sales side?
Delli Babu Y
Apart from the earlier announcements what we made-for 21700 cell with a couple of one of the OEMs that we have entered into an agreement, there are discussions with other OEMs because these cells predominantly go into two-wheeler and three-wheeler applications. So there we are in touch with a lot of OEMs. There are interests about the uptake, but I don’t think I’m in a position to give you specifics around it.
Mumuksh Mandlesha
Got it, sir. Thank you so much for the opportunity. That’s all from my side. Thank you.
Operator
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Zutsi from JPMorgan. Please go-ahead.
Vibhav Zutshi
Yes, thanks for the opportunity and congratulations on the strong volume growth. Just coming back on the lithium-ion side, can you just provide some updated timelines of the next plant that is stated to come with — with, where you highlighted that 4 to 6 gigawatt hour could be potential — could be potentially possible because it looks like even the first phase is a bit of a delay because earlier we were planning to commence commercial supplies in FY ’27 and now it looks like we will come up with a 1 gigawatt hour by early CY ’27. So just some updated timelines on the NMC as well as the LFP plant with would be helpful. Thank you.
Delli Babu Y
Yeah, I think on NMC also, I think we earlier mentioned towards the end of calendar year ’26, which is what is getting — maybe there could be a delay of a quarter here and there. As far as LSP is concerned, as I mentioned earlier as well, it will take at least another three to four quarters after the NMC plant commencement because there will be preparation exercises that are currently going on indicate that it may take that much time considering various gestation periods for capital equipment and also some of the software development that is required?
Vibhav Zutshi
Got it. And just as a follow-up to this, I mean in the press release that you mentioned that there are some headwinds in the sector. So I mean what exactly are these headwinds? Is it like the lower sell pricing or overcapacity from China? So what exactly are these headwinds that we’re talking about?
Delli Babu Y
See, I think all these conditions around the war supply and the pricing pressure, volatility in the raw materials, these are all points that I mean, they are definitely there. And as you — as we mentioned in earlier calls as well, that any investment in this will go in a calibrated manner because high capital intensity, we can’t be taking that. So in that way, as I mentioned in earlier also, we don’t mind delaying a bit, but ensuring that the capital that we put in is getting used as early as possible.
So in that sense, we will time the capex in a manner that it is not becoming financially burdensome and it is not that the timelines, whatever we are targeting today, I’m not saying they are not subject to change. We should be changing them given the financial interest and also the way the product offtake has to happen because even the product requirements for various OEMs might undergo a change. According to that, we have to make comments to our own preparation and our own product mix, what we have agreed. So those things keep undergoing a change. I don’t think we can — there is not a business that is — everybody has understood every bit of it. This I think we have discussed multiple times in these calls.
Vibhav Zutshi
Yeah, that’s fair. My second question is on the lead-acid battery business. So just to understand correctly the impact of the higher electricity cost. So if your normal margin level, say, is say, 14% 14.5%, then there could be an impact of 40 to 50 basis-points in the next quarter. Is that understanding correct?
Delli Babu Y
Yes. Yes, yes, yes. Okay. And next quarter also, mind you, next quarter also has this headwind in terms of the currency depreciation because this also impacts the overall lead prices. And we have to see how this goes considering both the metal — the lead staying around INR1,900, but the currency deplating to almost 87.5% to 88, what kind of impact it will have towards the end of next quarter is something to be seen. That’s definitely another factor that is coming up. But I’m sure we’ll find ways and and means to mitigate it through some actions.
Vibhav Zutshi
Yeah. Got it. That’s very helpful. Thanks. I’ll come back-in the queue.
Operator
Yeah. Participants who wish to ask a question may press star and one. The next question is from the line of Kapil Singh from Nomura. Please go-ahead. Good afternoon, sir.
Kapil Singh
Hi, Kapil. Hi, sir. So on the telecom segment, just wanted to understand if one is to take into account the overall revenue opportunity, including lithium-ion as well as lead-acid. Is the market growing or it’s not growing? I mean any assessment there?
Delli Babu Y
You are asking in terms of margins?
Kapil Singh
No, no. The industry is industry revenue, is it growing if you take both the lead-acid and the lithium-ion put together? Is the demand growing in the industry?
Delli Babu Y
The part the part size is not because see the lithium procurement prices are marginally higher than the lead-acid by about close to 10% to 15%. So in that sense, the overall potential of the telecom segment as such is not undergoing any significant change, either upwards or downwards?
Kapil Singh
Okay. Sir, but what I was trying to understand is, is there — like is there demand — what kind of demand growth are you expecting if you put together both lithium-ion and lead-acid.
Delli Babu Y
From overall revenue perspective, it may be completely muted considering that the new tower expansion as such is not growing in such large numbers. Whatever comes is going to be a replacement demand and lithium will have a longer replacement cycles as compared to lead-acid. So I don’t see much of the growth rate coming up in the telecom segment as such in the immediate future.
Kapil Singh
Understood. And sir, is there any plan to sort of repurpose these capacities or to use them in future because the way things are moving, it looks like over a longer-term, this at least the telecom segment may not need lead-acid batteries, right? So how are you thinking about using these capacities?
Delli Babu Y
See, this capacity is, as I said, this is the first factory that was put in by Amar Raja about, 20 25 years ago. So from that point-of-view, the current capacity utilization around 65% to 70% is actually not taxing on the overall profitability margins as such. But yes, we will see if there are other opportunities where we can use that machinery, but generally being LERLA batteries beyond telecom, there are very few applications where those batteries are new. We are also looking to see if there are any export opportunities for that particular product, but we will see if there is other product segments that we should think about and then repurpose those missions. But as such, they’re being very old missions or maybe we are better-off going for a newer and advanced machinery than repursuffing them because the overall net block that I’m carrying on that factory will not be more than INR50 crores.
Kapil Singh
Okay. Okay. Understood. And on the pricing of the batteries, can you give an update because the currency has been depreciating, as you said, there how much cost pressure are you observing at — right now? And is there any pricing change we have done in the last few months?
Delli Babu Y
No, we have not taken-up any price change as of now, but I’m sure we’ll have to see which way the leg moves from here. That’s an important aspect for us to consider. And moreover, there is a lag that will be there for about maybe a month, month and a half before the high-cost lead hits us and also some of the lead that we are procuring through the internal — for the compliance of BMR rules what the scrap that we are procuring, the domestic scrap procurement is also steadily increasing. So we have to look at this mix and then if there is a prominent increase in the raw-material cost, then we have to deal with it appropriately. And as you know, anyway, we have these pass-throughs with the B2B business, but aftermarket is something we need to take that decision at an appropriate time.
Kapil Singh
Sure, sir. And just last question, I wanted to check for NMC facility that is coming up for the sales, what is the EBITDA breakeven level of production that we — that we need to do to sort of breakeven?
Delli Babu Y
See, as I mentioned earlier, MMC plant per se at the 2 gigawatt hour level will not deliver when we said that the entire lithium capacity has to mature to a level of at least 7 gigaw to 8 gigawatt hour kind of a number for it to really deliver the targeted EBITDA margins in the lower double-digits. But at the initial level for this plant, at least for — until we stabilize on the throughput and process craft, et-cetera, it will have some bit of pressure at least for two to three years, only then we will see that some positive margins coming up. But this is a long game. I don’t think I can give a number around what EBITDA margin that I will immediately hit on the day-one of the factory commencing its operation.
Kapil Singh
Yeah, sure, sir. I was actually not looking for EBITDA margin, but the production — capacity utilization at which you achieve EBITDA breakeven.
Delli Babu Y
See, utilization level generally in this segment, they deliver the optimum margins if we are able to achieve around 85% or so, but that will definitely depend on two variables. One is the demand. The other is obviously the plant a ramp-up as well.
Kapil Singh
Sure, sir. Thank you. And I’ll come back-in the queue.
Operator
Thank you. The next question is from the line of Mukesh from Avendus Spark. Please go-ahead.
Mukesh Saraf
Sir, good evening and thank you for the opportunity. First question is on pricing. We kind of — some of our checks suggested that competition is hiking prices by up to 3% in the aftermarket for this month itself. So would kind of be following suit there on the price hikes?
Delli Babu Y
Mukesh, you know I can’t give a pricing decision over an investor call. But nevertheless, as I mentioned earlier, we will definitely review those prices and then see what decision to be taken in the aftermarket in the light of the dollar appreciation.
Mukesh Saraf
But directionally, the call will be to kind of preserve margins over any kind of market-share or any such target there?
Delli Babu Y
See, I don’t think we are going to dilute the margins for any higher market-share as such, I think sure. That direction is clear for us.
Mukesh Saraf
Sure, sure. Got that. And I think most of my other questions were answered, but if you could just give an update on capex for how much we have done and what could be the next year’s capex.
Delli Babu Y
See, this year, including the tubular restatement, which is close to about INR400 crores. In addition to that, as I mentioned earlier, we may have to spend another INR300 crores to INR350 odd crores. So the total capex for the current year could be around if I leave the cubular numbers aside, we may touch about INR400 crores in the overall capex outflow and maybe another 100 odd crores, INR100 crores to INR200 crores on the — sorry, INR200 crore to INR300 crores on the new energy business. So that’s the capex outflow. Next year, we should see at least about on the lead-acid side, I need another INR300 crores to INR400 crores of capex. And in the new energy side, I may need about another 500 crore to INR600 crores. So next year may see INR1,000 crore kind of outlook.
Mukesh Saraf
Got it, sir. All right, sir. Thank you. I’ll get back-in the queue.
Operator
Thank you a reminder to all participants that you may press star N1 to ask a question. The next question is from the line of Bal from Investment Management. Please go-ahead.
Balkrushna Vaghasia
Good evening, sir. My first question is related to lead asset business. So how are you anticipating the demand in terms of volume as well as a total revenue perspective in the next financial year.
Delli Babu Y
See, as we have discussed earlier, both the four-wheeler segment, we have always seen the overall market demand around 8% to 9% kind of a growth and two-wheeler demand growing around 11% to 12% or in some quarters it has even gone to 12 to 13% as well. And we will see the UPS segment in the industrial side still growing at 6% to 7% kind of a number, but export market is where we believe we can grow at least another 13% to 14% kind of a number next year as well. So given all this volume backdrop and also the traction what we are seeing on our news business, I think we should continue with the revenue momentum of anything around 11% to 12% even going-forward on the lead-acid battery side, yes.
Balkrushna Vaghasia
The second question is related to like overall at the industry level in the lithium-ion business. So we recently saw the report on you know, on the players who bid in PLI scheme, it appears that they will not be able to get any incentive because they would not be able to meet the targets of localization or production level. So do you think will this be or let’s say, that will, you know put us at the par level or how does it impact the industry players who did not get to participate in PLI schemes? And will it make any difference in the competitive landscape?
Delli Babu Y
See, I see BLI scheme obviously had certain conditions with respect to start commencement of the commercial operations. So when we quoted, we are being realistic to when we can actually do this. But nevertheless, that’s going to be an advantage even as per the scheme for a period of about three to four years where our estimate was if we get the best of the subsidy, then it may make about $3 to $4 per kilowatt-hour of sales.
So to that extent, for a period of three to four years, maybe people would have enjoyed that benefit. But even that — even without PLI or with PLI, the overall strategy of getting into this battery segment was intact. I don’t think it is — it is materially going to alter the decision-making of any player who is really interested to come into this segment.
So from that sense, in a long-term perspective, I don’t think that will make a very serious difference to the competitive landscape. Yes, maybe there could be some players who may think otherwise. But I believe if you look at large players commenced long-term commitment to this business, I don’t think it will undergo a significant change.
Balkrushna Vaghasia
Thank you so much for answering my questions.
Operator
Thank you. The next question is from the line of Aniket from Motilal Oswal. Please go-ahead.
Aniket Mhatre
Hello, sir. Just quickly around your market-share trends on a segmental basis. Could you just help us understand where we are? Are we losing share? How will you face the competition?
Delli Babu Y
No, I think we are stable with respect to our market-share. In fact, on the aftermarket side, we believe we must be gaining some bit of market-share considering last two quarters growth momentum, what we are seeing on the four-wheeler as well as two-wheeler side. But that’s an estimate we generally revise on a yearly basis. But we believe currently we should be around, 33% 34% kind of a market-share in the aftermarket side.
Maybe in the two-wheeler, we may be a little higher, maybe around 35%, 36 and as far as the industrial is concerned, we continue to have on a combined basis, both lithium and lead put together, we should be having about 57% 58% kind of a market-share in the telecom. And the UPS business, we continue to be around 40% to 43% kind of a market-share.
On the OEM side, in two-wheeler, we are around 25%, maybe marginally higher this quarter. In the — on the other applications, which is the inverter batteries, I think considering the fact that we don’t have the manufacturing facility today, we still command about 10% to 11% of the overall market-share in the in metro batteries.
Aniket Mhatre
Sure. And sorry, did you mention about telecom?
Delli Babu Y
Yeah, I did. Both lithium and lead combined, we are at about 57% to 58%.
Aniket Mhatre
Okay. So that trend — I mean that trend. I mean we have not share even in telecom segment this year.
Delli Babu Y
Yeah, but considering the fact that we have so many players that are coming up in lithium and then currently most of — all of us are patter with capacity to be coming in. Maybe we will see some bit of a dilution in the telecom market-share with merely because there are 2 million number of players currently operating.
Aniket Mhatre
Right. And in terms of the utilization levels at the moment, be it two-wheelers, four-wheelers and industrial, could you just help us understand where they stand today and if you would need any capacity in any of these segments?
Delli Babu Y
So see, we are almost using about 85% to 90% of our four-wheeler capacity and about close to 90% of our two-wheeler capacity. And only in the LVRLA, our capacity utilization will be around 65% to 70%, whereas the, that is the industrial UPS batteries, we should be around 85% or so. Thanks to some of the throughput enhancement initiatives that our teams have taken-up, we are able to realize more throughput out-of-the existing lines, which was one of the objectives that we have set for ourselves, how to get more out-of-the existing lines through some of the automation as well as industrial engineering initiatives.
I think they are paying us well. I think in some of the units, we are able to increase the throughput considerably almost to 5% to 6% of the existing capacities we were able to add without making much of a capital investment. So I think as of now, we are self-sufficient with respect to the capacities that we need for both all the product segments that we are participating. Once we have the tubular facility coming up with close to 1.2 lakh to 1.3 lakh battery capacity, that should be sufficient for our inverter battery demand as well because we talk we always top it up with some bit of trading sure.
Aniket Mhatre
Sure. And as far as the capex for INR300 crore to INR400 crores for FY ’23 is concerned that is that maintenance capex or that includes some capacity addition for some of these segments?
Delli Babu Y
Yeah, there are couple of lines that we are taking up in our four-wheeler side, it will have some bit of capex requirement on that side. And rest is basically the regular capex and also some of the automation related capex in terms of automating some of our activities in the factories area, we may need to put some more investment around the digitalization of it. So that’s where the rest of the amount is going to be spent.
Aniket Mhatre
Got it. Just one last bit on from my end. Just to clarify on the lithium-ion part, you the NMC line will start closer to CY26 end or early CY ’27, which would mean by FY ’25, we will start NMC and it is likely to take, say, at least a year or so to ramp-up and then you would start the LSP, right? So by the time LSP starts, possibly we should look at FY ’29 of around that timeline?
Delli Babu Y
See, at this point of time, we believe there could be a — if commercialization is done on X date of NMC, it may take X plus nine to 12 months from the date of commercialization. We should have the commercialization of LFP as well is what is our current working show, but if there is any change, I will let you know in due course.
Aniket Mhatre
Okay. So by FY ’28, we should commercialize LFP in which way?
Delli Babu Y
Yeah, you can take 12 months difference between NMC and LFP commercialization.
Aniket Mhatre
Fair. Thank you, sir. Thanks for the clarification and all the best. That’s all from my side.
Operator
Thank you. The next question is from the line of Joseph from IIFL. Please go-ahead.
Joseph George
Thank you, sir. I have two questions. One is in relation to the tubular batteries that you’re selling now since the plant will come online-only in the first-quarter of FY ’26. What is the revenues that you are generating now which will get converted into own manufacturing once the plant bec comes online?
Delli Babu Y
Once we start converting, it should result in a revenue on an annualized basis about INR1,100 crore to INR1,200 crores.
Joseph George
Okay. So right now the run-rate that you’re hitting is about say 1,100 crore INR200 crore, which is low-margin because you’re not manufacturing it yourself. But next year, hopefully you’ll hit that run-rate with a higher-margin because we’ll be manufacturing it yourself. Is that right?
Delli Babu Y
We will see because of lack of manufacturing capacities, we will not be able to get the entire revenue because trading obviously will limit the entire opportunity that we can do. So it will be little lower trading revenue that we’ll be looking at this year. Okay. But it will increase by at least another 20% once we start our own manufacturing. But because we are starting this production in the Q1 of next year season, next year season, we may not be able to participate fully with our manufacturing volumes. So once we commence the operations, the season thereafter, I think we should be in a position to meet all the required demand.
Joseph George
Understood, sir. Sir, the second question that I had was in relation to the lithium-ion business. So you mentioned that once you start the NMC operations, it will take two or three years for operations to completely stabilize and start thinking about maybe an EBITDA breakeven, et-cetera. So when I think of the total investment that is going into, say, NMC, is it right to assume that you will have the initial capex that goes in setting up the plant and machinery and all of that? But — and in addition to that for a period of the first two or three years till you are EBITDA-positive, you will have to continue funding the cash losses. So effectively, the total investment till you reach breakeven might be much higher than the initial capex.
Delli Babu Y
See, simultaneous to the cell venture, the new energy business is also purchasing the PAC business, right? So if we are able to meet the expenses — the revenue expenses what we incur at least partially through the money what is earned by the PAT business, we should be able to mitigate some of those cash losses at least at the entire new energy business level. But if they are beyond that, yes, they need to be funded. But at this point of time, our target is to see that is as minimum as possible. But you are right, if I — because at the 1 or 2 gigawatt level, I believe we will still be able to make-up that number with the other businesses what we will be doing and then if when it ramps-up to a larger-scale, then I’m sure there will be a pain at least for a couple of years before the entire thing gets stabilized.
Joseph George
Understood, sir. Thank you you.
Operator
Thank you. The next question is from the line of Sanketh from Ashika Stock Broking Limited. Please go-ahead.
Sanket Kelaskar
Thank you for the opportunity, sir. Sir, my question is on AGM batteries. So recently there was an announcement where we will start supplying AGM batteries to Hyundai Motor India. So are you getting any orders from other OEMs as well? And my second question is, what is the price difference between the AGM batteries and the conventional CMF batteries? And what is your view on agent batteries or is there is a possibility that these batteries will be getting replaced by the conventional CFF batteries as well?
Delli Babu Y
See, AGM batteries, as far as other OEMs are concerned, I think while there are — some OEMs have shown interests and then some of them are trying to look at possibility of conversion, but that will take some more time before it is fully done. From the realization point-of-view, yes, AGM batteries will give a higher realization, but I don’t want to put a number now because we should look at that number only when it ramps-up to a significant number. Only then I think it is right for me to discuss those numbers in the calls.
But over a period of time, whether migration will fully happen from floodded to AGM, there are possibilities, but it is going to take some more time because it has happened in two-wheelers, flooded to AGM conversion that has started and then it happened in a big way, which was basically driven by at that time. But I’m sure it will take some more time before all OEMs accept and then we also offer the product to the aftermarket side of it.
Sanket Kelaskar
Sure, fair enough, sir. Sir, we may know what are the exact reasons why the OEMs are not shifting to these AGM batteries because the pros are better than the existing technologies.
Delli Babu Y
So I don’t think there is any resistance assets to migrate, but I’m sure they will have to make their own before they give the final content to the entire process. But I’m saying it may take some more time before I can tell you that all the OEMs or which are the major OEMs who have agreed to go with this product because it also depends on their own vehicle requirements as well, right? So it is not that every product can be — it is not a simple replacement of flooded to AGM? There are other things that are to be taken care before that migration happens.
Sanket Kelaskar
Okay, sir. So if I’m not wrong, we are the only one which is currently manufacturing AGM batteries in India. Is it okay.
Delli Babu Y
I may have to come back to you on that because I really don’t know for sure whether is making it or not. I may have to check and come back to you.
Sanket Kelaskar
Okay, sir, my last question is, so we are expected to supply these AGM batteries in Q4 onwards. So what is the expected additional revenue from this segment particularly?
Delli Babu Y
No, it’s basically in the OEMs, whatever vehicles that were going with the flooded when they do the conversion, they will get replaced with the AGM. So from an incremental revenue point-of-view or volume point-of-view, I don’t think there is a significant number that is going to come in. So once the migration happens, then I can tell you how much of is moving to AGM. But I don’t think there is going to be a significant incremental volumes that I can comment on.
Sanket Kelaskar
Okay. Sir, lastly, what is the capacity of — of the plant which is manufacturing these batteries?
Delli Babu Y
We currently have — I mean, because these capacities are fungible with some bit of minor changes. We currently have about 2 million capacity to make these AGM batteries. Okay. Thank you, sir. That’s all from my side you.
Operator
The next question is from the line of from Anand Rathi Institutional Equities. Please go-ahead.
Mumuksh Mandlesha
Yeah. Thank you, sir for giving the opportunity again. Sir, just coming back to the levy, sir. I just want to understand what was the levy for full — this quarter? And I mean, last quarter was INR15 crore and there was a INR37 crore increase this quarter, right, sir. So INR52 crore would be the levy, right, for the Q3 quarter?
Delli Babu Y
Yes, yes. Yes.
Mumuksh Mandlesha
Out of which, sir, how much would be for any previous period, sir?
Delli Babu Y
Maybe? Yeah, I said, see, current quarter about INR35 crores to INR37 crores is all belonging to previous year and additional amount about another approximately it should be about INR14 odd crores for the next quarter.
Mumuksh Mandlesha
Okay. Okay. So currently this quarter INR52 crores was the levy out to which INR30 crore INR35 crore is of the previous periods. So the incremental is that INR17 crore INR18 crores is for the normal run-rate, which is something we’ll continue going ahead, right, sir?
Delli Babu Y
Yeah, that see that number cannot be said for the future period because it’s a post-facto revision that every — every state government does. In some years, it is material. In some years, it was not material. So it all depends on the challenges of the power sector of that particular state government. I don’t think I can say this is a run-rate with which the levy is going to continue. That’s not possible.
Mumuksh Mandlesha
Okay. But by Q4, sir, all the previous levies — previous year levies would be completed, right, sir?
Delli Babu Y
Yeah, yes, yes, yes.
Mumuksh Mandlesha
Got it. Got it, sir. And sir, lastly, you have announced this quarter increased investment in the ARCS and the ERPS. Can you just help us what was — what is the increase for sir?
Delli Babu Y
Yes. Yes, the CSPL is our recycling battery venture where we have invested about INR500 crores so-far for the Phase-1, which is what has just started the commercial production. And then we have said that we have taken the approval of the Board for inclusion of additional 200 for the next phase, but the actual will depend on the project progress. And as far as Amar Raja Power Systems is concerned, that is the entity which is into charger manufacturing business, where we have taken an unsecured loan approval for about INR50 crores, which we will infuse depending on the fund requirement. That is not an equity investment that we are proposing at this point of time.
Mumuksh Mandlesha
Understood, sir. Thank you so much for this.
Delli Babu Y
Thank you for your questions.
Operator
Thank you. Ladies and gentlemen, that was the last question for today’s conference call. I now hand the conference over to Mr Aniket for his closing comments.
Aniket Mhatre
Thank you, Steve. On behalf of Aswal Securities, I would like to thank Ms for taking out time for the call. Thank you very much, sir. Thank you to all the participants for joining the call. Thank you and have a great week ahead.
Delli Babu Y
Thank you. Thanks. Thank you, everyone.
Operator
On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.