AUTOMOTIVE AXLES LIMITED (NSE: AUTOAXLES) Q4 2025 Earnings Call dated May. 21, 2025
Corporate Participants:
Nagaraja Gargeshwari — President & Whole Time Director
Ranganathan S — Chief Financial Officer
Kishan Kumar — General Manager – Meritor, India
Analysts:
Radha Agarwal — Analyst
Viraj — Analyst
Amit — Analyst
Saket Kapoor — Analyst
Devang Shah — Analyst
Samarth — Analyst
Himanshu Singh — Analyst
Sarah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Automotive Axels Limited Q4 and FY ’25 Earnings Conference Call. 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 this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Radha Agarwal from Batliwala and Karani Securities. Thank you, and over to you, ma’am.
Radha Agarwal — Analyst
Thank you, Amshar. Good morning and thanks to everyone who have logged into Access 4Q and FY ’25 earnings call. Now let me introduce to you the management participating with us in today’s earnings call. We have with us Mr Nagaraja, President and Whole-Time Director, Automotive; Mr Rangwan Athen, CFO, Automotive; and Mr Kumar, General Manager, Meritor India. I would now like to turn the call to Mr Nagaraja for opening remarks, followed by Q&A. Sir, you may begin now.
Nagaraja Gargeshwari — President & Whole Time Director
Thanks, Raja. And good morning, everyone. My name is Nagraj. I’m President and Whole-Time Director for Automotive. I, on behalf of Automotive Axels, welcome all of you to this Q4 FY ’25 earnings call. And so along with me, Ranga, who is the Chief Executive Financial Officer, who is there, who will be taking us through the financial results. And we also have Mr Kumar, who will be giving us an overview on the market conditions and how the next FY ’26 is going to look at.
So this year, we ended on a high note in-spite of relatively soft year, there were several headwinds including soft domestic and export market and relatively unfavorable product mix. And in-spite of this, we continue to focus on executing on our product portfolio expansion, MS 185 introduction and ramp-up and also ramping-up other products like MS04 and then continue to work on several cost optimization and margin enhancement initiatives.
So like I said, Ranga will share more on the financial highlights. And before I conclude, one last information, as you are aware, based on the related-party transaction recommendation from the investor, we got into technical and service agreement with MHSL and thereby — and now we have started selling products directly to the OEMs. However, MHSL will help us and provide the market intelligence, customer management and continue to focus on product design, application and testing services that will be offered to automotive. And with that, over to you, Rangar.
Ranganathan S — Chief Financial Officer
Thank you, Nagraj. I’m very good — good morning to all of you. I’m Langan, CFO Automotive Limited. Like I just want to just give you group highlights of the — for the quarter and for the year financial performance.
For the quarter — the financial — the total income is about INR568 crores and an EBITDA of INR12.7 for the quarter. And the last year, the same quarter we did about last quarter we did was INR536 crores. And last year same quarter we did about INR576 crores. So compared to year-on-year basis, one of the high — probably insights I want to give you, the commodity settlement from April to March, we have settled in the Q4. So the commodity is in the reduction trend. So a considerable amount of commodity adjustments, which is a pass-through supplied to the customer, which has been taken care in the Q4. If we remove the commodity adjustment for the quarter, I think quarter-on-quarter we have improved it close to about, I know 6% and compared to last year, though and apparently in the face of it, you show 1.5% reduction. If you remove that, more or less the revenue will be at par with the last quarter — the same quarter last year.
So for the overall year performance is concerned, for the year performance, we had just crossed over the INR2,000 crores and go to the product revenues, but overall revenue, if you look at INR2,104, on face of it, we are down by 6.2%. If I remove the commodity adjustment, it’s about the reduction is about 5.2%.
The EBITDA for the quarter is 12.7 versus 12% last quarter and 12.1% the same quarter last year. In terms of overall operating performance, we have significantly improved and the commodity is also giving a base benefit of close to about 0.3%. We removed that our neutral performance for this quarter is about 12.4%, which is still better than the last year, though the revenue is lower than the last year, the same quarter.
Overall, for the year, the EBITDA is concerned for the INR2,104 crores, we did about EBITDA of 11.9 and last year we had about 11.8 with the revenue reduction in the normal basis about those, the revenue was reduced by 5.8%, our EBITDA still showed better than the last year or are more or less the same level of the last year. So the significant amount of efforts have gone in terms of improving — improving the material and other operating performances, which is able to — which will help us to, you know, improve our overall performance in the operations that resulting in the EBITDA. So that’s the major highlights.
And so the next is about the operating cash for this year. We have significantly improved about INR72 crores of the additional cash has been generated. So the balance sheet is in a very good position. All the debt, there is no debt and all the balance sheet is just showing good. So a lot of corporate governance initiatives this year also there automotive have taken it and we are consistently improving the governance initiatives too apart from the financial performance. That’s a quick highlight the financial performance is concerned, then probably we can take it up the Q&A session.
Questions and Answers:
Operator
Thank you. 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 and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Viraj from Simple. Please go-ahead.
Viraj
Yeah. Thank you for the opportunity. Couple of questions. First is on the approval for the — I mean the approval that you — the press release which we came up at the end of March on the service — service and technical fee arrangement with Meritar HVAS. Can you just broadly give some More color in terms of what is the service fee, you know, which is agreed-upon? Is it a percentage of sales versus an absolute fee annually, what kind of a free payout we would be to make to Meritor HVS India? That is one. And since now all the domestic OE sales rotated directly through automotive axle. If I have to take FY ’24 or a normalized year of the sales which were made to Meritor HVAS earlier, usually what proportion was OE and what proportion was export and aftermarket to them? There are two questions to start with.
Nagaraja Gargeshwari
Ranga, would you like to take the first question?
Ranganathan S
Yeah, actually we have signed-up an agreement and with a technical and management fee basically in-principle we agreed it. We are in the final stage of signing-up the final value and we will be getting to know in a month or so. It’s going through the assessment process. Definitely, we need to have a fair-value in terms of announced length. We want to do that. In-principle, technical fee and management fee agreement has been signed-up and more or less the — on the — on the quantum of it, we’ll be it in a month or so.
Viraj
But would it be an absolute trigger or will it be a percentage of approach or easily what is the thinking here?
Ranganathan S
No, what I’m thinking is about basically we need to respect the HVAs, the services what they are doing. And now this — the purpose of — I think we have mentioned enough times in the past, the Metro is in India is basically to accelerated product presence in India. So since automotive already established a very strong manufacturing base with this investments. So we continue with the current structure and Meritra’s expertise in terms of new product development, engineering design, product development, product testing, very important point in any products like us to the market and the market condition that is about very process.
It requires very R&D center, which Meritra has it. So all this responsibility, including marketing, branding with the customers, market relation — there is a customer relationship, branding, new product development with the customer, all these activities taken over. So with due respect to these activities and don’t have this present, I don’t think actually able to gain that expertise. So basically, that’s what we have — we have respected that. And for to that we need to have a fair-value that is basically being worked out but we definitely will be paying to them definitely fee which is compensated all of their efforts. That’s what is that we wanted to do it in a much better way. So we are engaging with an expertise in the market. So the quantification will happen very shortly and — but agreement has been signed-up.
Nagaraja Gargeshwari
But for the last quarter. Just to add to what Ranga has mentioned, it will be a fair-value, it will be according to the prevailing market standards. So I’m not sure whether we’ll be able to share the absolute number because of the confidentiality of this agreement, but it will be a very fair market in our prevailing in charges.
And to add to your — to answer your second question, yeah, definitely, there is going to be a top-line growth that is going to happen. Our focus right now, it could be on the high digits of a single-digit high digits. That’s what we are expecting. In the terms of overall profit, there will be an increase compared to vis-a-vis or a baseline. And so our focus right now is going to — how do we continue to meet the customer expectation and then continue to transform our company so that we are ready when the market revives.
Viraj
Sure. Sir, just two clarifications. One is for the quarter gone by because this RPD expired in Q3, for the quarter gone by, was there any provision made-for the payment to Meritar India? And second, when you say there is a growth in top-line and profit, that is assuming the base sales of 25 cells because of this change in model or you’re talking about more in terms of the end-market growth and us also performing in-line of better?
Nagaraja Gargeshwari
And just to bring in the clarity, the RPT ended on 31st of March. So the last quarter, we didn’t pay anything to the MHVSL. So the service and technical and service agreement kick-started from 1st of April. So to answer your question, it started only this quarter. And whatever I talked about the top-line growth, that is what is going to happen, you know this year, that is financial year ’26.
Viraj
No, that is assuming that even if the sales were to remain flat, purely because of the model change or you’re talking about more in terms of the end-market and us performing better than
Nagaraja Gargeshwari
It’s a bit of — it’s a bit of both.
Viraj
Okay. Got it.
Nagaraja Gargeshwari
Okay. Can we move to the next question, please?
Viraj
Sure. I’ll come back-in queue.
Nagaraja Gargeshwari
Thank you.
Viraj
Thank you.
Operator
Thank you. The next question is from the line of Amit from H.G. Hawa. Please go-ahead.
Amit
Good morning.
Nagaraja Gargeshwari
Good morning.
Amit
Hello. Hello, good morning. Am I audible, sir? Yeah, thank you. Thank you, sir. Thank you for the opportunity, sir. Sir, sir, how much of the FY ’25 capex was dedicated to R&D or EV specific product development?
Nagaraja Gargeshwari
Okay. So right now from automotive, we are mainly — all our capex is going into the manufacturing infrastructure and then also certain supplier tooling where I mentioned earlier that MS-185 is a product we ramped-up. So we had to get all the supplier toolings made available and also update our line so that we can meet the volumes increase. But however, our CapEx is, you know, related more on the manufacturing and you know, excellence rather than the product. So we haven’t spent much money on the at this point of time.
Amit
Okay. And second question was like sir, can you share any productivity improvements or cost-savings achieved from new industry 4.2 enabled Excel and subly line?
Nagaraja Gargeshwari
Ranga, you want to take that?
Ranganathan S
Can you say it again, sir?
Amit
Yes, sir. Can you share any productivity improvements or cost-savings achieved from the new Industry 4.0 enabled Excel assembly line?
Ranganathan S
And I think 4.0 initiative is basically a — it’s a long-term. Really look at it in one of the lines, we have aligned to for Industry 4.0 in the year 2019 ’20, okay. So — and we are working on with the industry for not implementation, other value streams and this year we started with an housing line. And like that, we will be introducing the industry for not the initiative slowly all the value stream. So — and basically do to see that the industry for not zero initiatives definitely will lead you long-term.
To refer to your question on the capex, the most of the capex what we are trying to invest today is in, three aspects. Another aspect is about reducing the overall throughput time of manufacturing through automations and introduction of Industry 400, this not only improved the productivity, but also increase the capacity. So though the market is not significantly improving on year-on-year basis. We consciously making a decision. Imagine the automotive actually is about 43, 44 years-old organization. Some of the investments which really require revamping due to the current conditions and also the current quality and delivery expectations of the customers.
So we wanted to make sure that the automation brings the speed, accuracy and quality and that basically improve the customer side. That’s basically is what we are driving most of them at this moment of time. Any investment we make, be conscious about it in terms of the profitability improvements and productivity and capacity improvements what it creates. Some of them you may see it in the P&L and some of them will take it when the market volumes really goes up, seamlessly, we are able to meet the customer expectation that will probably the benefit in the future date.
To answer your question, overall basis, we have very focused strategic approach in terms of the cost-reduction initiatives, every year, we definitely — we have a focus both on manufacturing and in the sourcing side, very key — very key initiatives. We take it. We drive — we improve the profitability Every year, a cost-reduction programs every year. Some will be internal, some in agreement with the customers. So overall basis, no, we — we definitely, you know, bring about 0.8% to 1% improvement to mitigate the inflation and other pressures and so the profitability improvement.
Amit
Thank you for the deep and follow-up through this.
Operator
Sorry to interrupt, sir, but I may request you to rejoin the question queue for follow-up questions to rejoin the queue.
Amit
Okay, right. Thank you, sir.
Operator
Thank you. Before we take the next question, we would like to remind the participants to press star N1 to ask a question. The next question is from the line of Saket Kapoor from Kapoor; Co. Please go-ahead,
Saket Kapoor
Namaska team and thank you for this opportunity. I’ll just sum-up my questions, sir. First, sir, firstly, if in your opening remarks, if you could — you did mention about lower RM prices flow-through to our revenue being lower. So if you could just firstly outline to us how the business environment has been in terms of the CV market and the bus market where we cater to, we also spoke about new product introduction. So if you could give some more color?
What are the offerings for FY ’25, ’26 in terms of introduction of new product, improved volumes and some more — some more color? And also where are we in terms of our Five-Year the program of doubling the revenue, if you could just give some more color into all these aspects and then I have said the second question. Thank you.
Nagaraja Gargeshwari
Okay. So may I ask Kishan to take-up the first part of it. In terms of transformation, I will answer that after Kishan explains on the market condition and our new product development and our readiness.
Kishan Kumar
Yeah, sure. Thank you, Saket, for the question. Coming to the first part of your question, which is related to the market, the two key indicators for the economy, right? One is GDP and then there’s the industrial production rate. Both have been relatively softened compared to where we started the year 2024 2025. And ending March, I think we look — we saw a growth of about 6.3 GDP, even though we surpassed Japan, that was probably at a much slower rate than the previously anticipated their expectations.
Coming to the industrial production ending March, we were at 4. But the good news there was the core industry started doing better only in the recent quarter. So the core industries, industrial production growth was around 6.6%. Now how that translates to the market, which is the 7.5 tonne and above, which is where we are present. So last couple of years, I think after COVID, the typical six to eight-year cycle of peak and the dip what we see, that seems to have reset.
So when I say reset, we used to see in the past the highest-volume of, 80,000 vehicles in 2018, ’19. And if we take that six to eight years, we should have seen a peak and a deep to buy now. But what has happened is the COVID has actually reset and also the axle re-rating has actually reset the norms of the industry. So for last three years, if you start from ’23 onwards, FY ’23 onwards, the market has been relatively povering around 400,000 to 420,000 vehicles. But it is always delivering the tonnage capacity required by the industry, which means both these impacts, fleet efficiency, axle re-weating, that is probably reset the low — probably we are in the low cycle right now.
So last year, for example, 2025 — FY 2025, we ended 414,000 production of vehicles, which is 2% down from FY ’24. And moving forward, even 2026, we have a very moderate softened look considering how the industry is moving and some of the trends that is coming up. So we are expecting the industry to be around INR400,000. So that’s again a 3% degrowth. Now there are — I think you also asked about the new products. So the trends that I mentioned, which we are closely monitoring.
So one of the trend what we see is the high-horsepower vehicles. So as we speak, we are already in the advanced-stage of — in fact, we have already launched one of the product, which is 185 last year and we have ramped-up to a significant level last year and we expect that, that volume will grow and that is where the trend is moving, the high-horsepower engines.
The second one is the bus market, which we have discussed in the past as well. There is a slight product gap, which we want to cover, not just for the bus, but also for the immediate commercial vehicles, which is 16 to 19 tonnes. So the product that we have been talking about the 109, that is in almost its final stage of development and the validation. So we will soon start the field trials and which will enable us to reduce the product mix impact. So typically when the on-highway vehicle market is at that 400,000, the product mix impact is actually on a higher side if you don’t have the right product for the market. That’s exactly what we predicted and forecasted two years ago and started the journey of introducing the high horsepowering engine actions, which is 185 and the 160 tandems. And then also on the ICV and the bus side, we started developing the 109 upgrade. So Nagalj, over to you. I think this is probably what Saketch was looking for.
Nagaraja Gargeshwari
Okay. Okay. Yeah, just to add to that, one is like we are ready with the new product, we have completely tooled up and then testing everything is done and we are waiting for the customers to ramp-up. From the transformation perspective, we’re also looking at the next five years horizon.
As we mentioned, we are investing a — in the capex, there is about INR120 crores that will be spending it. We already started it by end of next year and we’re completely modernizing our housing a line and then also gear manufacturing line. So that should really help us to start looking at potential export opportunities and expand our horizon there as and when the Europe and the US market comes back. Right now, as you are aware, they are soft. And so to tell you probably like what Krishan mentioned, I think we have to get through this year and next year, once the European market and the North American market — they start you know producing, you know the numbers are going up and that should really help us to achieve that INR5,000 crore in our revenue.
Saket Kapoor
Sir, my just continuous question on second part is about the tonnage part. For investors, we look at the tonnage as the — as the base of understanding how the growth has been because the revenue number may be a misnomer based on RM mix and RM pass-through. So if you could just give us the tonnage part in terms of the growth which we may have executed — exhibited for this financial year and the tonnage growth expectancy going through for the next financial year, if that number if you could share the ballpark number would be very helpful.
Nagaraja Gargeshwari
Let me try Kishan. Yeah, Akishan, you want to do that. Go-ahead.
Kishan Kumar
Yeah. So I’m just clarifying. When you say tonnage, you’re talking about the tonnage carrying capacity of the segment, right? That’s what your question is.
Saket Kapoor
The tonnage in terms of our revenue translating when we are exhibiting revenues of — yeah, there should be a tonnage backup on that. I was just looking at the tonnage and your outlook on the same thing. Yeah.
Kishan Kumar
Yeah. So I will translate that to in a more simplified way. So when you say tonnage, like I mentioned about the peak of 2018, 2019, 480,000 vehicles. The market dynamics and the product mix and the vehicle mix in terms of GBW was around 8.7 ton million ton, okay. Now with the market of 400,000, we are at 8.6. That means in terms of the industry vehicle tonnage, we are already there.
Now what has happened is for a 470,000 or 80,000 vehicle, we were probably selling around 130,000, 140,000 actions, okay, on an average. But today, it has come down to, 1100 in those areas. That means our per axle realization, if you look at our revenue and the industry growth or de-growth and the tonnage, our per axle realization has significantly improved to, 13% to 20% 25% in some cases. So this is very consistent with how the Western world has evolved.
So that is why our product roadmap has been very clear that we want to focus on the high-horsepower, high tonnage vehicles applications, which is eventually where Indian M&ACV market will also shift. So that’s the reason we are not seeing a big — like you said, the commodity keeping aside. If you really look at per axle realization, we are only growing per axle realization. So I hope that Answers the question.
Saket Kapoor
Okay. So lastly, sir, so how should we are looking this year in terms of — you painted up — you explained to us the background of what the MHCV market is and also about the product introduction. So taking all those factoring into account and the efficiency which you have outlined, what should investors factor-in, in terms of the EBITDA trajectory for the current financial year any trajectory which you would guide us to going ahead?
Nagaraja Gargeshwari
Ranga, would you like to take that?
Ranganathan S
Say it again, sir,
Saket Kapoor
I am trying to understand for the company automotive, what should be FY ’26 looks like in terms of improvement in profitability because of the initiatives and the initiatives taken and which are in the annual. So if you could just give us how the EBITDA may shape up going ahead depending upon the factors which you people have just explained to us?
Ranganathan S
So it is like this, sir. So if you see on the initial answer one of the questions we said, we are very focused in terms of improving operating performances every year, okay. The 2026, we are coming out with a new model whereby you know the end-customer billing will happen through automotive axles. And as I also mentioned that the technical and management fee, what we need to pay to our meritors and other variable, which is definitely to be quantified very shortly and we will be incurring that.
But overall profitability perspective, our aspiration definitely is to improve the EBITDA. And because of the new model, we don’t — I know at this moment of time with what little visibility we have today is about we — we are not expecting a great breakthrough in terms of the EBITDA improvement because of the new model. But our efforts on the cost-reduction and all the investments definitely will yield that will definitely we have — we are pretty confident about improving the profitability.
Overall basis, if we really are looking at a larger guideline, probably it might be the — as Krishan said, the market is considered to be soft in the next year. The variable which will bring us a better benefit in terms of absolute growth is — come through the new product development and our initiatives to improve the aftermarket and our export business. And so overall basis, there’ll be a marginal improvement definitely will be there in the bottom-line. But unless the market improves or volume improves, the significant improvement in the EBITDA level may not be seen, sir. So whatever we have reported today, definitely, there will be an improvement, but it will be very marginal considering the market is going to be softened next year.
Saket Kapoor
Thank you, sir. I’ll join the queue and listen to your commentary. Thank you.
Ranganathan S
Yes, sir.
Operator
Thank you. The next question is from the line of Devang Shah from SHC Mehta Investment Intermediates Limited.
Devang Shah
Yeah, hi. Good morning, sir. It’s regarding the last participant asked the question about the EBITDA level. So sir, by considering the scenario, as you are saying, it depends upon the market, we are coming out with a new product, it seems like from a last three years after 2023, that was in which we did a significant progress after COVID — post-COVID.
Then after our relative performance more or less remains stable as far as EBITDA or net profit is concerned, whatever, although we maintain our margin, but you know this some kind of improved growth kind of thing, that’s what we have not seen significantly, although there is a growth, but not a significant level, it is some kind of flattish level. So just my question, so in FY ’26 also, we may see some kind of flattish environment to continue or we may see with this new product and the opportunity that’s been mentioned by — you are saying bus electric bus kind of thing that will make some kind of meaningful difference over here and we may see an improvement as far as overall performance is concerned.
Nagaraja Gargeshwari
Yeah, maybe I’ll take this. So like what Ranga mentioned and also Kishan mentioned, we are kind of a little bit highly dependent on the market conditions. As you — mentioned from 424 levels, 424,000 levels, we are coming down to 400,000 levels. That’s almost, as you can see, about 13% drop, okay. And then also export and then North-America and European markets are softer. So we had a little bit of unfavorable product mix and also the soft market conditions. So in-spite of that, we have been able to grow by increasing the value content per Axel and then also introducing some of these new products on a timely basis and timely manner. So while we are looking at this particular this year, FY ’26 is a little bit flattish.
Our focus is to, you know, strengthen our operations, you know, strengthen our product portfolio to an extent when the market comes back, which we are expecting, which is going to happen sometime in FY ’27 and FY ’28, that’s when all the efforts that we have put it into our operations will become visible, both in terms of our share of business improvement, top-line growth and also EBITDA improvement.
Devang Shah
Okay. Okay. So you mean to see, then after you are seeing the way the next level of growth will come. That’s what we have seen after post-COVID scenario.
Nagaraja Gargeshwari
Yes. Yes.
Devang Shah
And sir, as far as export is concerned, due to this tariff scenario that’s right now prevailing, especially for auto ancillary player, will it be ever any kind of impact to you guys also?
Nagaraja Gargeshwari
Yeah, definitely, there is a bit of impact, but the thing is like we are in a very niche area supporting some of the Cummins drivetrain business. So that way our impact is more due to the softer market there rather than the tariff impact. As you can see, this tariff is right now it is not very steady, you know, it is changing every week.
So we are just waiting watching how it completely unfolds in the next few months. But as far as we are concerned, as you know, we are working — looking internally how to keep ourself a competitive both from the cost perspective and also quality and then capacity perspective and so that you know to the possible extent, you know we are insulated from those tariff impacts.
Devang Shah
And my last question, sir, that on the way we are seeing the electrification in a — particularly at a state-level as far as public transport is concerned in the form of the buses, do you feel, sir, the way — the way we are seeing many orders been now with the OEMs, reputed OEMs and in which you — they are your clients also. So this will be some kind of big opportunity for you in a coming year as well. And something if I’m not — if I’m wrong, then let me know also this is my understanding to correct.
Nagaraja Gargeshwari
Kishan, will you take that up?
Kishan Kumar
In-between, I got disconnected. What was the last part? Can you please repeat?
Devang Shah
Yes, sir. Regard to this public transport and which state being given us some kind of push for electrification of the budge. So the way the improvement we are seeing last couple of years and it seems like it is going to continue. It would be a big opportunity to some kind of opportunity for players like you to have a — because many of your OEM clients are tapping in the terms of this opportunity that’s work.
Kishan Kumar
Yes. Yes. Thanks. I didn’t hear the state part. So it goes like this. Yes, that is definitely very clear that electrification will happen through the buses, mainly the state transport to be very specific and we are already seeing it. But the projected volumes and the tenders that has been out there and the number of buses really in working in the real-world, there is a significant difference.
So there are practical challenges. It’s — the role what we play today in the current architecture of electric buses is similar to what we play a role in the regular diesel bus, which means the powertrain is still very conventional. So you are — the OEMs are just replacing the motor — the engine with the motor, rest of the powder is in.
So for us, what it means is our axle, because we know the duty cycle so well, it is already ready for these electric vehicle applications. So the OEMs that presently are in case of bus, obviously is number-one when it comes to the diesel buses, right? And they also have a very good market-share in the electric buses. So the offerings from us are already ready. So even the new axle that we mentioned about 109. We took a little bit more time to do the redesign Redesign, mainly specifically for addressing the electric market — electric bus market. So we know the trend, but it probably will not be in the numbers that we see typically in tenders and otherwise in the news. But definitely, 2028, ’29, we will expect that almost 25% to 30% of the state unit transports will only operate on electric. And again, Tier-1, Tier-2, the primary.
Devang Shah
Okay. So in a medium-term perspective, definitely there will be some kind of opportunity and growth that’s what you are anticipating, right?
Kishan Kumar
Yes. Yes. And our current products, mechanical products are ready. They are already electric vehicle ready.
Devang Shah
Yes. Thank you so much, sir.
Operator
Thank you. Thank you. Thank you. The next question is from the line of Ritu Shah from Janak Merchant Securities. Please go-ahead, ma’am.
Samarth
Hello, sir. Samarth here. So can you talk more about — we have a product and suspension systems. So can you talk more about that?
Nagaraja Gargeshwari
Kishan, would you like to take-up?
Kishan Kumar
Yeah. Sure. So I’m presuming the suspension you’re talking about is the slipper-ended suspension which we developed and launched for India, right? So this suspension is a result of probably 10, 12 years of research, doing lot of field trials, understanding the end-customer pain points and finally designing something which is totally new for India, right? So currently, where we stand. So this suspension is now in-production since 2019 and there are new developments to cater to some of the new applications. So the platform is ready. And we launched this with, primarily because it was easy for us to integrate with our axle because we understand those applications where we are already selling our axle. We enjoy a good share of business with them. So we developed for lab and we are also in discussion with some of the other OEMs, which have shown interest.
So typically, the suspension is not treated as a technology. So there’s a lot of effort required from — from our end also to educate to the end-customer, how critical role it plays when it comes to tire life, pure economy, serviceability, downtime. So it’s an education, it’s a journey. So was the first one to grab. Now we are working with other potential OEMs where we have an opportunity to launch it with them as well.
Samarth
Yeah. Got it. Sir, any means sales that we are targeting here and how much we generate presently from this product?
Kishan Kumar
We have already know in the series production for us of Clear. So I can give you the numbers in terms of volumes, but may not be the revenue breakup. So we are doing almost like 12,000 to 15,000 suspensions in a year. And this is specific to multi-axles. So only a category of multi-axles this suspension is applicable.
Samarth
Got it. Sir, second on the export opportunity. So generally these actions are sourced locally. So when we export, will we only export the axle housing or we have opportunity to sell a completely assembled access? And can we do — can we have — do we have export opportunity even for breaks.,
Kishan Kumar
You want me to take this one?
Nagaraja Gargeshwari
Yeah, go-ahead.
Kishan Kumar
Yeah. So great question. So export — before we talk about the products for export, what we need to understand is the difference is that the Western world, Europe and North-America and South America and the architecture what we have here in terms of whether it is engine, GVW, obese condition. So there is always domestic versus international, right? That element is always there.
Having said that, there are products that we already have in India, which are on par with what the Western world uses. So we have — in terms of capability, in terms of the opportunities that come to us, we get component, let’s say, agile housing alone. That business also we do. And then we do for certain regions that drivehead and together. So it purely depends on the need or the capacity, layered capacity, what the other regions are looking for and the product doability from a stand — manufacturing standpoint. That is number-one.
Number two is, if you look at the — specific to the brakes question, okay, we are still predominantly drumbrake, whereas the Western world, most of them even including North-America today is on the disc brick. So that’s a product that even though we have the know-how, we know that whenever the Indian market gets ready, we can put a plan together and industrialize it for India. Today, we are not doing that. So the drumbrakes per se, the opportunity is limited. Again, some component level opportunities are there, but because the market is so different, that’s not a primary area for — in terms of people to or the regions to import from India because the products are very different.
Samarth
Sir, last question from my side. So the — so you’re saying that there will be some regions where we can sell a fully assembled axle, right?
Kishan Kumar
That’s right. So we have different versions of that. We can supply the dry rid, we can supply the axle separately. It purely depends on what is the domestic value that region has to demonstrate. So it depends on that. That’s how it works.
Samarth
Got it, sir. Any specific export opportunities we have for selling to the commence network? Like manufacturing in India and selling it out?
Kishan Kumar
Yes, yes, there are many. There are many. I think the pipeline is growing, it’s just that the market in those regions have to be really supporting us because the installed capacity there probably is enough for the current market trends. So it’s purely when the peak comes and we are also in discussions of some — some of the products, why not India be the sole supply base. So these are all long-term discussions. So that’s the growth strategy which Nagaral. When we are doubling the revenue, export will play a major role there.
Samarth
Got it, sir. Thank you. That’s all from my side.
Operator
Thank you. Thank you. Before we take the next question, we would like to remind the participants to press star and one to ask a question. The next question is from the line of Himanshu Singh from Baroda BNP Paribas Mutual Fund. Please go-ahead.
Himanshu Singh
Hi, thank you so much, sir. Sir, you mentioned that the MNHCV segment volume should be soft this year, FY ’26. However, the OEMs are guiding for like mid-single digit kind of growth. So why do you think there is a discrepancy in the estimates or the outlook? Any idea?
Kishan Kumar
Yeah, I can take this. So we are not — I do understand the numbers that probably have seen from coming from major OEMs, we are not far apart. So what we are looking at is the production and the sales is a totally different number. So when we said the MLXV production will be around 400, the sales may be around another 3%, 4% more. That’s what even the OEMs are predicting, the low-single digits or the medium single-digits. So we are not very off, but we typically focus on production rather than the vehicle sale because vehicle sale, there are many other dynamics involved there. The current one, if you really see the AC cabin launch, which is expected soon. So that is dealt differently by different — by different OEMs. So we are only focusing on the production levels. Sales is a different story and which can be 3%, 4%, 5% here and there.
Himanshu Singh
Yeah. Okay. Thank you. And sir, in terms of your revenue mix, can you just like highlight which all segments contribute how much to your revenue kind of MLCV and other segments?
Kishan Kumar
, you want to take that up?
Nagaraja Gargeshwari
No, you want a segment means you want MHCV and other segments you’re talking about.
Himanshu Singh
Yes, sir.
Nagaraja Gargeshwari
No, we are serving only the MHCV. We are not present in LC. Only in ICV that is bus segment, we are actively filling a gap. So if you really see ICV and is predominantly the total portfolio what we are handling into both axles and bricks.
Himanshu Singh
Okay, sure. Thank you so much, sir.
Nagaraja Gargeshwari
Yeah.
Operator
Thank you. Participants who wish to ask a question may press star and one now. The next question is from the line of Viraj from Simple. Please go-ahead.
Viraj
Yeah, thanks for the opportunity. Just two, three questions. So one is, you talked about the open-market being soft, a degrowth of around 4% in unit terms and probably higher in tonnage. But you’re still expecting an EBITDA growth and an EBITDA margin improvement. So just trying to understand what would be the drivers for that? That is one.
Ranganathan S
Yeah. Are you looking at the margin enhancement, how we are achieving it?
Viraj
My understanding that Yeah, the EBITDA growth we are trying to achieve despite an environment of sales degrowth or maybe even higher-end of the tonnage in FY ’26.
Nagaraja Gargeshwari
Yeah. So I think regarding the product mix or the value content, Kishan already explained how there is a bit of favorable in terms of product mix we are having when it comes to the domestic market. But other than that, as Ranga mentioned, we have been continuously looking at our productivity improvement, our operational efficiency and especially in the supply-chain, we have been doing a lot of work-in terms of you know, doing a great due-diligence in the area of make versus buy, where exactly we can buy it from outside and then where we have to do it in-house.
So it is not just one initiative, it is a several initiatives. That is really helping us not only to offset a certain fixed-cost absorption or increase in the fixed-cost or increase in the salary cost. We have been able to offset it effectively through all these initiatives.
Operator
We have seemed to lost the connection with Mr Viraj. The next question is from the line of Sara from UVR Investments. Please go-ahead.
Sarah
Hi, sir. Thank you for the opportunity. Sir, in buses, currently, where-is Ashok sourcing its access from? And is there also an opportunity to make access for VCV, Tata and SML ECVU? Thank you.
Nagaraja Gargeshwari
I can take this question. So in terms of our share of business with Ashok, we have about 65% to 67% depending on the product mix. Again, it varies every year. But that’s our typical average share of business with them. And they of course, have a dual sourcing strategy. So even though we enjoy 100% share of business on some actual models, they — because of their dual sourcing strategy, they also have our competition supplied to them. That is the first part of the question.
Second is the TML and DECV in particular. So at one point in time, going back seven, eight, 10 years, we did supply axles to them, both of them. And their strategy has been to develop products for their own application. That’s how today where we stand is except for the export market where they need a branding like Meritor. Otherwise for all domestic applications, they use their own in-house axle.
Now that doesn’t mean that we don’t have an entry opportunity, but that has to come with the right technology, which we have for the future generation of axles when the Indians move to 400, 500 horsepower like the Western world, when the axile efficiency becomes very important. Light weighing is becoming very important. And that is the time I think will be a right opportunity for us to work with them and demonstrate that the knowledge and the experience we have from rest of the world is readily available for the domestic use. So we are in discussion with them, but it’s going to take three years, four years depending on how they strategize their game plan and how we can align with that.
Sarah
Okay, sir. Sir, with respect to the competitive intensity in MHCV axles of automotive axles versus American Axles, which was acquired by Bharat Forge, is there a difference in terms of access applied for particular tonnage category for each company? And how do you see both these businesses operate simultaneously going-forward?
Nagaraja Gargeshwari
I can answer the first question. Probably second question is something probably within the AL and MHASL purview, we are not the right person to answer. The first — the question — the answer for the first question is, it’s been approved by CCI, right? So that means due-diligence has been done to ensure that we don’t become largest or monopoly as a group company.
Having said that, American Axle typically plays in the light commercial vehicle or a lower tonnage vehicle, which is where we are not present. Having said that, they do have one or two products which comes in the heavy commercial vehicle segment, which is where the OEMs more than what American Axle or Automotive Axels wants to do, it’s more of an OEM strategy where they are very clear that they can’t keep one source of supply for access. They need multiple sources. And apart from that, I think even the CCI report, if you see, it’s very clear that we don’t compete in any other segment. It’s just that one specific small percentage of American Access product that they are catering to India.
Sarah
Okay, sir. Thank you.
Operator
Thank you. Participants may press star and one at this time to ask a question. The next question comes from the line of Viraj from Simple. Please go-ahead.
Viraj
Yeah, thanks for the opportunity. I got disconnected earlier. So the question was a follow-up to the you know, I don’t know what the you know, having a promoter having two different companies or two different company structure competing in the same-space. So from a long-term alignment in the interest of minority shareholders, is there any thoughts between Meditor and the Kalani Group in terms of further simplifying this or to address this potential conflict in terms of interest. Any thoughts you can give on this?
Nagaraja Gargeshwari
No, I think you know, like what Kishan mentioned, it is very clear that we are having a different product portfolio and interest in different product segment. However, there is one small percentage where we are having a probably competitating product. But again, as you need to understand that automotive axles is not — we are having two promoters.So there is always a check and balance.
And the second thing is, we have a very well-defined product portfolio, our customer and the brand value. So we continue to focus on, you know, building on those you know the product designs and building on those brand values and continue to meet our customer expectations. So our focus is on what we and how efficiently we can meet customer expectation and then turn those opportunities into a real business. So that way, you know, I feel that you know, this is a very well professionally run company like Ranga mentioned, there is a lot of government — governance mechanism is there. And so I think I would say that investors, they really don’t have to worry because last 43 years, this company has clearly demonstrated in. We have a good product, we have a good process and we have a good strategy and our focus is to deliver and then meet all the customer expectation and also all the stakeholders’ expectation.
Viraj
No, I understand there may be no overlap in terms of competing portfolio currently in MHCV, but is there some now is some kind of no compute and MHCV between American Action and automotive action. So is this some kind of agreement which stops them completely — competing us with us directly heads-on in the MHCV market? Or because globally, if you look at the kind of portfolio they have, they have a — other than LCV, they have a good coverage and other.
Nagaraja Gargeshwari
Yeah, probably can add to that. The current the sale agreement, what we understand from the published sources. It is focusing only on one set of India business and that to only domestic business and this is not the entire global business.
Viraj
Right. Second question is on the action any color you can give whether that will be routed to the listed entity and similarly in terms of new technology or product interventions in the future from Meritor,
Nagaraja Gargeshwari
You know, maybe in the interest of time, I’ll just take it quickly. As we have mentioned earlier, at this point of time, the current domestic requirement, we already have a mechanical, which has been fine-tuned and updated to meet the electrification requirement. This is basically most of the electric vehicles what we are seeing not just in India, but rest of the world is remote mount type.
So we already have a product for that. And then when the new technology comes in, at that point of time, again, it is going to be a decision or we’ll be looking at you know-how efficient or how easy for us to get that technology and then deliver it to the customer . So at this point of time, I would say that it may be a little bit premature because it is not just the, it is a much bigger piece, including controllers, battery management and lot of modules. And so we kind of look at it where we can be more efficient with our current capabilities and also the potential future capabilities that we are trying to build. And so I think we need to wait for some time before we can correctly and-answer those questions.
Viraj
Thank you. Good luck.
Nagaraja Gargeshwari
Thank you. Thank you.
Operator
Thank you. Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr Nagaraja for closing comments.
Nagaraja Gargeshwari
Again, thank you very much. I really appreciate all of you taking time and then joining this conference call. And then it is also helpful for us to know your concerns and then also how we can continuously and you know, formulate in our strategies so that we can always meet your expectation and in fact try to exceed your expectation.
So like we said, the last year we ended on a good high note. And this year we have a very clear plan both in terms of our product and capacity readiness, but also on the journey that we have taken to transform our operation to become a kind of a best-in the class or world-class in the next five years and then also delivering on the promise of achieving a 5% growth revenue. Once again, thank you very much and have a great day.
Kishan Kumar
Thank you.
Nagaraja Gargeshwari
Thank you all.
Ranganathan S
Thanks.
Operator
On behalf of Automotive Axels Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you