Endurance Technologies Ltd (CN) (ENDURANCE) Q4 FY23 Earnings Concall Transcript

Endurance Technologies Ltd (CN) (NSE: ENDURANCE) Q4 FY23 earnings concall dated May. 18, 2023

Corporate Participants:

Anurang Jain — Managing Director

Massimo Venuti — Director

Akhil Aryan — Co-Founder, Maxwell Energy Systems

Analysts:

Nishit Jalan — Axis Capital — Analyst

Aditya Jhawar — Investec — Analyst

Mumuksh Mandlesha — Anand Rathi — Analyst

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Pramod Amthe — InCred capital — Analyst

Arvind Sharma — Citigroup — Analyst

Vimal Gohil — Alchemy Capital Management — Analyst

Mukesh Saraf — Avendus Spark — Analyst

Aashin Modi — Equirus Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q4 FY23 Earnings Conference Call of Endurance Technologies Limited hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Nishit Jalan from Axis Capital. Thank you, and over to you, sir.

Nishit Jalan — Axis Capital — Analyst

Thank you so much. Good morning, everyone. Welcome to Q4 FY ’23 post-results conference call of Endurance Technologies. From the management team, we have with us Mr. Anurang Jain, Managing Director; Mr. Ramesh Gehaney, Director and COO; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Satrajit Ray, Director and Group CFO; and Mr. Raj Mundra, Treasurer and Head, Investor Relations.

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

Anurang Jain — Managing Director

Thank you, and good morning to everyone. I would like to share details of how we have done in the fourth quarter of FY ’23 and in the whole financial year of FY ’23. In India, in the fourth quarter of FY ’23 as per the CM data, the two-wheeler industry sales de-grew by 4.15% compared to the previous financial year. Scooters grew by 11.9% and motorcycles de-grew by 10.1%. The automotive industry in India had a de-growth of 0.5%. In Europe, in quarter four, there was an increase of 17.9% in the European Union automotive sales.

On the financials, I will briefly talk to you about the fourth quarter of FY ’23 and then the financial year FY ’23. In quarter four, our consolidated total net income grew by 7.8% and was INR22,551.54 million as compared to INR20,914.76 million in quarter four of the previous year. Consolidated EBITDA grew by 13.5% and was INR3,062.1 million as compared to INR2,698.12 million in quarter four FY ’22. Consolidated EBITDA margin was at 13.6%. The net profit grew by 0.2% and was INR13,064.67 million at 6.1%. This includes the Maharashtra state mega project incentive in quarter four of INR3.71 million.

In quarter four, our standalone total income grew by 6.1% and was INR16,595.76 million as compared to INR15,640.65 million in quarter four of FY ’22. Standalone EBITDA de-grew by 0.3% and was INR2058.34 million as compared to INR2,064.65 million in quarter four of FY ’22. The EBITDA margin was at 12.4%. Standalone net profit de-grew by 8.96% and was INR1,045.11 million at 6.3%. This includes the Maharashtra state mega project incentive in quarter four of INR3.71 million.

For the financial year FY ’23, our consolidated total net income grew by 16.6% and was INR88,494.73 million as compared to INR75,901.78 million in FY ’22. Consolidated EBITDA grew by 7.6% and was INR10,816.93 million as compared to INR10,056.76 million in FY ’22. Consolidated EBITDA margin was at 12.2%. The net profit grew by 4.1% and was INR4,795.76 million at 5.4%. This includes the Maharashtra state mega project incentive of INR589.27 million. Our subsidiary Maxwell Energy had a sales of INR180.29 million with an EBITDA loss of INR118.51 million.

In FY ’23, our standalone total income grew by 18.8% and was INR67,957.07 million as compared to INR57,214.81 million in FY ’22. Standalone EBITDA grew by 7.2% and was INR8,074.3 million as compared to INR7,530.52 million in FY ’22 with an EBITDA margin of 11.9%. Standalone net profit grew by 7.1% and was INR4,089.17 million at 6.2% [Phonetic]. This includes the Maharashtra state mega project incentive of INR589.27 million. There was no net-debt and there was a consolidated positive cash available of INR4,193 million.

The detailed financials are available with the stock exchanges and on the Endurance website. I would like to share key points for the financial year FY ’23. In FY ’23, 77% of our consolidated total income, including other income, came from Indian operations and the balance 23% came from our European operations. In India, in FY ’23, INR9,315 million of new business was won from OEMs, other than Bajaj Auto, Hero MotoCorp, Ather Energy, Hero Electric, Mahindra, TVS and Tata Motors. This new business will include INR7,800 million of new business and INR1,550 million of replacement business.

The total business win for EVs till date is INR6,004 million. This includes INR3,765 million new orders for EVs, mainly from Ather Energy, Hero Electric, Greaves Electric with Ampere and Active [Phonetic] in this financial year. This INR$6,004 million of EV business win at Endurance does not include the INR1,290 million of new EV business wins at Maxwell Energy. In FY ’23, EV business wins was 42% of the total business won at Endurance and Maxwell.

I would like to mention that we have INR25,668 million worth of request for quotes from OEMs. Since FY ’20 in India, INR28,880 million business has been won, out of which INR21,060 million is new business and INR7,820 million is replacement business. Out of INR21,060 million new business, INR4,410 million happened in FY ’23 and a further INR6,920 million will happen in FY ’24 and the balance INR9,730 million will happen in the financial years ’25 and ’26.

Some of the new business wins, which will start in this financial year are CBS, INR402 million suspension business which will start at all our Kolar, Karnataka plant from November 2023, Hero Electric suspension business of INR489 million, which will start at our Halol, Gujarat plant from June ’23 onwards. We have won the CBS brakes business of INR273 million from Okinawa, the EV scooter maker, and this business will start from October ’23 at our Waluj, Aurangabad plant. The Greaves Electric or the Ampere suspension business of INR155 million will start from our Kolar, Karnataka plant from August ’23.

Also, the Greaves Electric Ampere brakes business of INR290 million will start at our Waluj, Aurangabad from August 2023. The Ather suspension business of INR150 million will start in June ’23 from our Kolar plant, Karnataka. The Ather brakes business, we have won a very large business of INR1,591 million. Supplies have started and this will reach peak in the next financial year of FY ’25.

Apart from the INR9,350 million business wins, we have received an additional INR1,200 million order from Hero MotoCorp, where supply of front fork shock absorbers from our plant at Halol in Gujarat. This business has started in April ’23, which is last month. The ABS capacity has been now ramped-up to 600,000 single and dual channel ABS assemblies by July 2023. This of course will be at our Waluj, Aurangabad plant. The new 35 dia air suspension forks were supplied to KTM Austria, will start by end of this financial year with the help of KTM technologies from our Waluj, Aurangabad plant. The value of this business will be INR400 million per annum, and will be directly exported to KTM Austria.

Our battery management system assembly line, that’s the SMP line, will start operations from July ’23 at our Waluj, Aurangabad plant. The value of the business when it reaches its peak will be at INR800 million per annum.

For the EV scooters, we are ramping up our capacity to 240,000 per annum for the battery pack and the motor house in [Phonetic] EV aluminum castings. The total value of this business won is INR1,000 million per annum, which will start in this financial year and will reach the peak in next financial year. For Ather Energy, we have started fully machine-type channel aluminum casting at Vallam plant with a full business value of 200,000 per annum and the value of INR410 billion. This business will peak in this financial year.

For our aluminum forging business, which we started with our collaboration with FGM Italy, we are increasing the capacity from 280,000 parts per annum to 600,000 parts per annum at an additional business value of INR750 million from our Waluj, Aurangabad plant. This business — this additional business will start in this year and reach peak in FY ’25.

At our Chakan plant near Pune, we are installing machines for structural aluminum castings like swing arms, subframes and structural bearings for both EV and ICE models which are going in for lightweighting for Bajaj Auto, KTM, Piaggio and TVS. This business starts in this year and will peak in next financial year of FY ’25. The Suzuki scooter front fork business of INR1,398 million, which we won in the last financial year, will start from our Waluj, Aurangabad plant in the next financial year of FY ’25 and we are installing 1 million front fork numbers new line for the same.

Apart from Bajaj Auto and RE [Phonetic], we have now added TVS for supply of inverted front forks. The supplies will start in quarter one of FY ’25 and the business value is INR212 million.

I would like to mention that our customers now recognize Endurance as a trusted and capable partner in the value chain in terms of both technical and financial strengths. The electronic vehicles market continues to offer significant opportunity for growth in the auto component industry. It estimated that the Indian EV market will touch INR150 billion by 2030, growing at a CAGR of 90% in the next decade. Therefore, at Endurance, we have taken a major step towards the same to harness this opportunity by executing by share subscription and purchase agreement for acquiring 100% of equity share capital of Maxwell Energy Systems Private Limited in a phased manner. We have concluded the acquisition of 51% stake in Maxwell in July 2012. Maxwell, as you know, is business of advanced electronics, particularly in the battery management systems, or the BMS, for two-wheeler EVs and automobile and two-wheeler battery packs.

We are happy to inform you that we have won INR700 million order of BMS from Hero Electric and INR495 million of business from Greaves Electric. These supplies will start in July ’23 and September ’23 of this financial year. We have won new BMS business of INR1,290 million in FY ’23 and INR496 million till date in financial year 2024. And we have a pipeline of RFQs of INR1,310 million. Till date, since FY ’22, INR3,286.2 million business has been won by Maxwell, which is expected to fully realize in the financial year ’26. With the current order book, order pipeline and technical space between Endurance and Maxwell, we are confident of achieving our goals in the embedded electronics space. In FY 24, we are focusing on a substantial sales growth and a positive EBITDA.

To help our overseas operations to grow in the European two-wheeler component propel aftermarket business, we have acquired an Italian company Frenotecnica in July ’22. This company is in the business of friction materials and components for braking systems like brake pads for two-wheelers. Also in November ’22, we acquired Italian company New Fren Srl. New Fren is engaged in the business of breaks, sensitive clutches, pads and break shoes for two-wheelers. The acquisition of a past Italian collaboration with Adler and Grimeca for clutches and brakes in 2020.

Frenotecnica in 2022 and now with this acquisition of New Fren, we are creating a Center of Excellence in Italy for the business of premium components in the two-wheeler segment, getting profitable growth opportunities for the Endurance Group. Last year, we had a sale of approximately EUR50 million and we want to double this in the next few years.

As this brake assembly business is growing with addition of Bajaj, TVS, Royal Enfield, Yamaha, Hero MotoCorp, Ather and HMSI. Our second plant in Waluj, Aurangabad has already started operations. With this new plant, our disk brake assembly capacity has increased to 6.2 million numbers per annum and the brake disk capacity has increased to 8.1 million numbers per annum.

As you’re aware, the supply of two-wheeler ABS assemblies to Bajaj Auto and Royal Enfield have started. We have reached a run-rate of 400,000 ABS assemblies per annum. As you are all aware, competition is mainly from Bosch, which controls the major market share in this Indian ABS two-wheeler market. We are also in the process of supplying our dual channel ABS, also by quarter two of this financial year, and we have scaled-up additional assembly lines by 200,000 ABS assemblies per annum, which will take our capacity to 600,000 ABS assemblies per annum.

We are further planning to increase the volume to 1.2 million, both simple and dual channel ABS assemblies per annum for the second-half of the next financial year, which FY ’25. We have in March ’23 also started manufacturing the ABS valves, which is an important substitute, which is not only a technology component, but will help on substantially lowering our cost. Also due to increased orders from Bajaj, Yamaha India, TVS and Hero Electric, we have added a new plant at Jharkhand to help increase our supplies and volumes to 4.5 million wheels per annum from 2.8 million wheels per annum. This plant has already started in July ’22. We will reach peak supplies in quarter two of this financial year.

As far as Europe is concerned, in FY ’23, we have won EUR83.87 million new business, mainly from the Volkswagen Group, Daimler and Stellantis. In the last two years, EUR158 million of business has been won. I would like to point out that Endurance both in India and Europe is actively pursuing its focus on gaining access to new technology and focusing on new product organic and inorganic growth.

As mentioned earlier, Endurance has also entered technician product areas, for aluminum forging axle clamps, for inverted front forks, with the help of a collaboration with FGM Italy. We already started supplies to Bajaj Auto and directly to KTM. We have also won orders for stem assembly under bracket aluminum forging for Hero MotoCorp and we are actively engaged on new business wins with other OEMs for supply of aluminum forgings other than inverted front forks. As you know, this is used by EVs for light-weighting also, and that’s why the capacity has been increased from 280,000 parts per annum to 600,000 parts per annum in this plant at Waluj, Aurangabad.

The second product of course is the wire steel-braid hoses for ABS application for mid and high-end bikes. This supply already have started from last year. Both these projects are helping us in a profitable growth. In FY ’23, aftermarket sales grew by 2.91% from INR4,189 million in the previous year to INR4,310.9 million in financial year ’23. We are now exporting aftermarket parts to 31 countries and aftermarket growth is a large focus area for us. In FY ’23, our export sales for India standalone business de-grew by 5.6% to INR2,241.19 million in the previous year to INR2,116.23 million in FY ’23. The major impact was due to lower export sales in countries — in the regions of Africa, South America as well as our neighboring countries.

On the environment front, I would especially like to mention that Endurance is striving to be carbon neutral in its plants, by effective use of solar power and wind power, creating of carbon sinks by driving tree plantation and thereby creating dense forests and also by driving use of natural gas and LPG in place of electric power and furnace oil. As mentioned earlier, the use of furnace oil has been completely stopped at Endurance. We achieved a carbon-neutral percentage of 22.6% in FY ’23, and our aspiration is to reach 50% in the next three to four years. We’re also focusing in lowering hazardous waste generation and to achieve zero waste to landfill.

At Endurance, it will be a continuous endeavor to grow through organic and inorganic growth with a focus on technology upgradation, quality improvement, cost and environmental health and safety. We will do our best to fulfil all our stakeholder expectations by following our five values of Customer Centricity, Integrity, Transparency, Teamwork and Innovation.

We, at Endurance, are very positive — we have a very positive outlook based on our new large business wins, including for electric vehicles both in India and Europe.

With these opening remarks, I would like to now invite questions from all of you. We have one of the Maxwell founders, Mr. Akhil Aryan, and Maxwell, CEO, Mr. Vishwas also on the line for taking your questions on Maxwell. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] The first question is from the line of Aditya Jhawar from Investec. Please go ahead.

Aditya Jhawar — Investec — Analyst

Yeah. Thanks for the opportunity. Congratulation for resilient performance, and thanks a lot for putting out a detailed presentation. My question is on the European business. Massimo, if you can highlight that what was the government contribution, government in Q4 for the energy prices. And considering the energy prices have come down, what is our expectation for support in FY ’24?

Massimo Venuti — Director

Yes. So, in the previous quarter — in the third quarter of 2022-’23, we closed with more or less 17.8% of EBITDA, and we recovered 100% of the increase of energy cost, considering the subperformance of our customer and also the incentive from the government. Only for the fourth quarter of the previous financial year, the Italian government take in the company 35% of credit asset. And so, thanks to this 45% plus the contribution from customer, we offset the impact for this reason we came back to normal, let me say, profitability for the European [Technical Issues].

Starting from the first overhead [Indecipherable] government, we reduced this contribution from 45% to 20%, and certainly it’s more or less an impact considering the same volume of the previous quarter of 1.2 million. So, the expectation for the future month is, for sure, a reduction due to this reduction of contribution, but please consider that the energy cost is going down bottom way, only to give you an idea of today in the market. Yesterday, the energy closed with 120, and the gas with 35. So it means more or less 25% less compared to the previous block. So, my expectation is that we can try to offset this reduction of contribution from the government with the reduction of energy cost into the market.

Aditya Jhawar — Investec — Analyst

Okay. That’s quite helpful, Massimo. So, overall, what is our expectation for margin in FY ’24?

Massimo Venuti — Director

The expectation for sure is to improve the profitability compared to the previous year. This I can guarantee. We closed the total financial year with 14.5%, and please consider that with the same level of aluminum of the previous financial year, the profitability in terms of EBITDA should have been 14.9% and 5.1% in terms of net result. My expectation, considering that in this moment I’m absolutely positive for the situation in terms of volume and also energy cost is to improve the profitability compared to the previous financial year for sure.

Aditya Jhawar — Investec — Analyst

Okay. That’s quite helpful. My final question is that, how is the outlook shared by the OEMs in Europe? Are you seeing a higher level of wholesale dispatches to replenish the inventory? How is the situation in terms of the consumer sentiment on the ground?

Massimo Venuti — Director

So, our first [Indecipherable] is not so positive as you can imagine due to the high level of inflation. We are waiting recession because this is the situation to the market, not only in Europe but probably also in United States. The previous quarter, we closed with an increase of registration of 18% and the total financial year with an increase of 2.9%, but we are so far from the volume — normal volume of pre-COVID situation because considering the 2019, the market growth will be minus 24% compared to 2019. The positive outlook is that also, it was positive. More or less, the market in Europe closed with a 17% increase. An important impact is due to the increase of production in Germany, [Indecipherable] in January, the market closed with an increase of 29% of production, in February 24%, in March 67%. So from my point of view, in this moment, we had a benefit in terms of registration due to the delivery of the [Indecipherable] in the last 18 months before several programs, as you know, supply chain for semiconductor and so on. Now, the OEM is increasing the [Indecipherable] the situation in terms of demand. But in this moment, the sentiment is not positive due to the actual inflation.

Aditya Jhawar — Investec — Analyst

Perfect. Thank you. All the best, team.

Massimo Venuti — Director

Thank you.

Operator

Thank you. The next question is from the line of Mumuksh Mandlesha from Anand Rathi. Please go ahead.

Mumuksh Mandlesha — Anand Rathi — Analyst

Thank you so much for the opportunity, sir, and congratulations on the good performance. Sir, you’ve indicated the new orders for both standalone and Europe that would be ramped-up in the next few years. So this would be a gross addition, right? And can you indicate on net basis considering rundown of old orders, what kind of growth outperformance you see over the industry in both India and Europe?

Anurang Jain — Managing Director

See, as far as India is concerned, it’s very difficult to know what will be phased-out, and we know what is going to be added. And that also depends on the volumes, which I mentioned in the LOIs or in the purchase orders. But I can only say that we will always outperform the industry, which we have done, if you see even last year. The two-wheeler industry sales were 8.3%, automotive industry sales were 11.8%, led by, I think, passenger cars. But Endurance sales growth was 18.8%, Europe also — the EU industry sales last year was 2.9%. We have grown 12.7% in euro terms. So, I can only say that we will outgrow. See, there would be — it’s very difficult to say the impact of sales going down because of — I mean, on existing. That’s why I always say, there is a replacement business under the new business. And also in my opening remarks, I mentioned that the new business which we have won, how it is going to increase in the next two to three years. So, very difficult to say, I can only say we will grow higher than industry. And that’s why we are taking a lot of orders, and that’s why I emphasized on that, both total order wins as well as EV business wins, both India and Europe.

Mumuksh Mandlesha — Anand Rathi — Analyst

Got it, sir. Thanks. And on the — on the EV-specific company, so we have made inroads into BMS, and what are the plans to look at other EV-specific companies going ahead, sir?

Anurang Jain — Managing Director

See, right now, we are looking at other electronic components also. But right now, our major focus is to create and grow and become profitable in Maxwell. And that is our focus, and that’s the reason we have won a lot of new business assets since FY ’22. And this year, we want to be positive at the EBITDA level with a substantial growth. So we need to see that we really strengthened Maxwell and make it a very financially strong company, with the customer strength in the company. So that is the focus of, of course, Mr. Akhil Aryan and Alex [Phonetic] founders, our CEO, Mr. Vishwas, as well as all of us at Endurance.

So, right now, I think, focus is even though a huge opportunity, the way probably the two large orders we won, we have a pipeline of orders and RFQs. So we are just going after orders. Many things I’ve not mentioned, but we are really focused on really growing this company. So, other electronics, we are — it is there in our mind. So if a good opportunity comes, we will take it side-by-side, but right now the focus is on the BMS.

Mumuksh Mandlesha — Anand Rathi — Analyst

Thank you. Just last question, how do you see the two-wheeler industry growth for this year? How is demand picking-up, sir?

Anurang Jain — Managing Director

See, to be honest from what the customers tell us, it can be 10% to 12%. But having said this, question is very difficult because there are so many uncertainties in the future, very difficult to say whether what the growth will be. So, as far as we, Endurance, are concerned, what is in our control is to take new order wins, and that’s what we’re doing. We are just going after orders at both India and Europe, which I’ve been mentioning it also the last one year. And we’ve been very fortunate to get very, very good business wins, both for EV as well as break suspension castings. And so, I can only say that.

Mumuksh Mandlesha — Anand Rathi — Analyst

Thank you so much for the opportunity, sir.

Operator

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

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Hi, sir. Could you also check on a couple of things? One is, for the European business this quarter of 17.8% margin, which we’ve reported, now obviously there is some bit of seasonality to it, but is that — are we now back to normalcy or the energy side related compensation as it reduces or increase some further moderation?

Anurang Jain — Managing Director

Okay. I will request Mr. Massimo Venuti to answer that.

Massimo Venuti — Director

Can you repeat the question? Because I didn’t understand, sorry.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

The EBITDA margins from this quarter is 17.8%.

Operator

Sorry to interrupt, sir. Mr. Gandhi, your voice is a little muffled. I would request you to use your handset, please.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Yeah. Is it better?

Operator

Thank you. Please continue.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Yeah. My question is on European margins, the 17.8% EBITDA margin for fourth quarter. Any sense on how it would have been without compensation from the Italian government? And in that context, how do we see the trend over next couple of years on the European margin?

Massimo Venuti — Director

Yes. So, first of all, regarding the incentive from the government, as I told you before, in the first quarter, we received 45% of the total energy costs, only for the previous quarter, that is from April 1, the incentive reduced to 20%, okay? This was the incentive from the Italian government. In Germany, they fixed a price cut with EUR150. And so, it means that in this moment we are not receiving nothing from the Germany government due to the fact that the price of energy is lower compared to the price cap, okay? And so, the profitability in the last quarter of this financial year with the previous financial year was more or less normal considering the standalone results [Phonetic] overseas because we have been able to offset 100% of the increase of energy cost.

Regarding the future, our expectations to increase the profitability compared to the previous year due to the fact that in this moment, the energy cost is going down in an important way. The gas reached in this moment is more or less EUR30 compared to EUR15 of the pre-COVID situation 2019, and then EUR120 compared to EUR15. So, it’s a completely another world [Phonetic] compared to the previous financial year. If you consider that in the previous financial year, the leverage of electricity was 180, today we are seeing about 120.

Speaking about gas, the level, it was 120 and today we’re seeing about 30. So, if the price will remain more or less the same with the stability of volume from my point of view, can come back in the normal profitability.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay. So this 17.8% is on near normal margins for us. Going forward…

Massimo Venuti — Director

Normal margin, in the previous quarter, we closed — we’ve been selling EUR67 million of turnover, EUR58 million is normal. So, 40% [Phonetic] compared to the previous year. And certainly, in our profitability comfortable to the previous year, we have to consider a good — In fact, the volume and also an important reduction in energy cost. It will depend from the volume in the next month. If the continues to be higher compared to the previous year, I’m pretty optimistic to maintain the same level of profitability.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay, got it. And Massimo, can you talk about what was the fact — what’s the profit — net profit?

Massimo Venuti — Director

Yes. In the previous quarter, we closed with EUR4.5 million, 6.7%. And if I speak about the total financial year, we closed with EUR12.1 billion, 4.9%.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Got it, got it. Thanks. Thanks for this. Second question to you Mr. Jain. With respect to the India business on the aluminum die-casting, we have started to get good orders on the scooter side as well. So, any sense on the electric scooters, the content now what it is, the IC scooters — in the past, you indicated it is broadly similar. Now, but since have got the orders, is it in line with what we were looking at earlier?

Anurang Jain — Managing Director

So, definitely orders which you have got from, say, if energy in fact — or from Hero Electric, Okinawa, definitely Greaves Electric, so the thing is definitely the orders for brake suspension, this is main brakes and suspension. Somebody has been asking, Ather has also given us the die-channel casting. So, the question is, of course, whatever we are speaking is in line with — it is in line with the value of business wins, or I would say, per vehicle content, which should be for brake suspension and castings, it is there. But of course, this is only a start, because we really got into the market for taking new orders, just about 1.5 years or two years ago maximum. We were a bit late in the fray. But now we are really, like I said, [Technical Issues] last year. So we are not going very, very aggressively, so I would say, take time to really add castings to all the OEMs. So it’s just a start of a journey. We have a long way to go, including for BMS also. We have done good order wins. We’re still a long way to go.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay, okay. Got it. And lastly, on the India business margins, so clearly we have the impact of commodity prices along with lower volumes in the Kolar site. But some recovery in two-wheelers and commodity prices seeing some moderation. Would it be fair to say we should be back in early teams now coming here and then moving towards 14%, 15%?

Anurang Jain — Managing Director

Yeah. I think it will depend a lot on the aluminum and steel prices how they behave. In fact, aluminum prices are still going up. It’s almost doubled compared to FY ’21. And that’s the reason, well, in FY ’21, RMC percentage in India was 62%, EBITDA margin I think in that year was 15.57% we closed that year. Now, it is 66.7%, 4.7% higher, and we closed that 11.9%. So, I think a lot has to do with, I think, the RMC percentage also. On the cost front, of course, we are doing everything, whether it’s other expenses, employment cost in terms of efficiency of people. Of course, I mean, we are doing everything to see how we can sweat our assets, improve OEs in our planned original equipment efficiencies. So there’s a lot of work going on, but I am told that the EBITDA margin amount in FY ’23 has been the highest so far reported at Endurance, not the percentage, the amount. It’s the absolute amount if you see. So that also indicated that we have done better in spite of challenges that we [Technical Issues].

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Sure. But going-forward, at least the product mix will also be improving given that full machine casting for EVs and ABS?

Anurang Jain — Managing Director

You’re right. It depends on the volumes of the product mix, ABS upside-down front forks, brake systems which you are putting up, all this will definitely help. So, of course, we are very highly focused to increase these margins. We must come back to at least 13.5% to start with. So that is our focus, and we’ll do our best to achieve that.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Sure. This is very helpful, and thanks to the team for putting up a very detailed presentation. Thanks.

Anurang Jain — Managing Director

That was important I thought — we thought.

Operator

Thank you. The next question is from the line of Pramod Amthe from InCred capital. Please go ahead.

Pramod Amthe — InCred capital — Analyst

Yeah, hi. Thanks for this opportunity. First one is, with regard to the aftersales parts, I think you indicated you plan to nearly double the contribution to sales to around 10%. Where is this confidence coming? What action you are taking up? Because your sales is organically growing and you plan to increase your contributions, it will be almost like 2.5 times to 3 times the current sales run rate which you want to achieve in two years. So you just some color on that?

Anurang Jain — Managing Director

So, [Technical Issues] so either the percentage to India sales is concerned, it is at 6.5%. Our expectation is to go to 10% for sure. Now, the question — and that was the plan for FY ’23 to go step-by-step from 6.5% to 7.5%, 8% and then take it forward in the next few years, which happened last year was, which we met the budget in February and March of 2022, we’ll expect the issues which were in Africa, South America, Sri Lanka, Bangladesh, there were a lot of issues related to available of currencies, the macroeconomic factors. So there were many points like this where we could not — I mean, the sales did not happen to those markets. So, I assume — so we are definitely confident that this year, starting from I think June-July, already things have improved in Sri Lanka, Bangladesh we see. Africa also, we are seeing an improvement. So, we feel that this year, of course, will be a much better year than last year. That’s the plan. But — and it’s a very, very area because it is a very important area for us. So, we — our target actually just to correct you was 10% of India sales by FY ’26 is what we had mentioned, FY ’26, which tend to — India sales is also growing, as you are seeing, 8.8%. So, every year, that’s going to grow. So expression of that we want to reach in FY ’26.

But of course, exports forms a very important part also of our sales growth, we are exporting to 31 countries. We want to add another five countries in this financial year. We’re in the process of doing that. So, I can only say, it remains a very large focus area for profitable growth and we are doing everything. If you see, our domestic sales, that has really done quite well in this year. So, I mean, I’m very optimistic that this year will be a much better year than last year.

Pramod Amthe — InCred capital — Analyst

Sure. So, I thought — I agree with you that you had focus. I thought since there was a course correction in FY ’23 and, again, you are saying [Phonetic] the same. So, is there a further concrete action on the ground to support those medium-term targets? That was a broader question.

Anurang Jain — Managing Director

Yes, yes. So there are a lot of actions happening in Indonesia and Brazil. We have actually launched very special type of shock absorbers for Honda and other Japanese OEMs. And they are very different from the suspension or shock absorber we supply in the Indian or the other markets. So, we are slowly gaining entry into these large markets where we were not there. So that itself is an effort, it takes time for us to realize good volumes and good sales value. But there is a lot of effort, even going into Tier 2, Tier 3 towns focusing pan-India for all our products to keep good growth in all the four parts of India. So there are many, many initiatives happening on that front.

Pramod Amthe — InCred capital — Analyst

Sure. The second one is with regard to your transmission parts business. If I’m right, it contributes around 5% of your sales. Considering the transition to EV and the risk, what is your — what are your thought process in terms of taking this business in the medium terms? Are there any new products possible there to make it a substantial part of the business?

Anurang Jain — Managing Director

No. Here, I think — see, in this 5.5% of business, 80% is for motorcycles. There, we are not seeing any traction — much of a traction into EVs. So, our transmission business, what we are planning is to get new customers in. And also, like we have done for, say, ABS or [Indecipherable] we’ve gone into making aluminum forgings for that. As well as for ABS, we have started with steel-braided hoses and now — from March, we have started. So similarly, we are planning to even start a paper manufacturing plant by July ’23, which will help us be more profitable and lower the, I would say, dependence on imports from the US or from China. So, this effort is going on as far as the transmission plant is concerned. So question is, how we can increase the business, especially for motorcycles.

And I would also say for three-wheelers, with the three-wheelers we supply to everybody. So once three-wheelers become fully EV, could happen by 2030 or maybe earlier, I don’t know, but luckily 80% of this 5.5% business is for motorcycles where I don’t see anything happening to be honest to be able to lower this business. In fact, we are trying to focus to get more volumes on the clutch business or adding more customers.

Pramod Amthe — InCred capital — Analyst

Sure. Thanks. And the last question is to Maxwell Promoters. Why to check, after the Hero Electric win, we haven’t had anything substantial, one, even though the industry has moved on to new AI standards. So I wanted to get your feel in terms of what is the actual changes the industry has taken [Indecipherable] and what role natural has played or plan to play in next one year? Because my sense was, this was a crucial point for changing DMS and part of the systems and you could have played a role. So if you can explain that, that will be helpful.

Akhil Aryan — Co-Founder, Maxwell Energy Systems

Yeah. So just clarifying that the question is, how are we responding to the movement on the AIS standards and how we are using this as an opportunity to grow our order book in the business. Is that the question?

Pramod Amthe — InCred capital — Analyst

Yeah.

Akhil Aryan — Co-Founder, Maxwell Energy Systems

Okay. Yes. So, I think that you’re absolutely right. The new AIS standards are, firstly, very important for the industry and, secondly, an opportunity for us to enter into long-term contracts with significant OEMs. And like Anurang mentioned, we have won that business even from our focus, like I said, even on previous calls, is to become long-term partners — these meaningful partners, volume creators of 2025 or 2030. So that’s the horizon that we operate on, meaning that we are not trying to go after all of the OEMs that are making, say, a few hundred vehicles every month or so, basically focusing on the big business things that we believe are going to lead to really the EV revolution at the current level.

So if you see the win that we’ve had with Hero Electric, which is one of the significant players already on the road, they are making a big move with Maxwell transitioning even the vehicles that are currently, their current models that have been deployed in hundreds of thousands of units every year will moving forward be using Maxwell BMSs. Another one is, Ampere, again, like one of the significant volume creators after the acquisition like Greaves, they have actually doubled down their capacity, their team, their plan for new vehicles and so on. And with both of these companies, not only are we working with them on new vehicles, but also helping them transition their existing vehicles to AIS 156 compliance standard, along with localization of their DMS, which was previously being bought from another country.

Over and above that, you already know we have significant business. We are the sole supplier to Hero MotoCorp on their VIDA platform. We are also currently in conversation with a few large OEMs on their new vehicle launches as well as helping them transition to AIS 156. So, I want to just sort of reemphasize on the fact that — as it stands, Maxwell has been and is in a very strong position to enable OEMs to get a 100% localized BMS that is compliant with AIS 156 that is functionally safe. And the new products that we recently introduced, which has enabled us to win these businesses, which is CT-lite [Phonetic] is a product that is especially designed to be both cost and quality focused for the Indian two and three-wheeler markets. So, I think that we are absolutely living up and exceeding our plan on new orders in using the opportunity of AIS 156.

Pramod Amthe — InCred capital — Analyst

Sure. Thanks for the detailed answer. And the last one is — thanks for the detailed presentation. A small request is, since your order book is improving, like the other segments, you have indicated sales convention from this order book, if you can give the next two, three years’ outlook in the PPT, how this order between converting to sales, that will be helpful [Indecipherable]. Thanks.

Anurang Jain — Managing Director

Yeah. See, I think overall, we have mentioned how it’s increasing — will increase in future. Have you mentioned that future? Whatever order — I think that has been put up.

Pramod Amthe — InCred capital — Analyst

Yeah, I think the total order of INR6 billion you mentioned, but how that will come out into sales each of the year, like you have talked about other?

Anurang Jain — Managing Director

I think that’s been mentioned. How do you convert — you have mentioned [Technical Issues] not given. But we have given overall behavior. Okay. So we’ll have an internal call — discussion on that.

Pramod Amthe — InCred capital — Analyst

Sure, sir. Thanks, and all the best.

Anurang Jain — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Arvind Sharma from Citigroup. Please go ahead.

Arvind Sharma — Citigroup — Analyst

Yeah, hello. Hello. Good morning, sir, and thank you for my question. First question would be on the EV business again. How do these new orders or new revenue from EV business compared with the ICE business in terms of margins?.

Anurang Jain — Managing Director

It’s a very sensitive question, but I think I’ve answered it in the past calls. I would say it’s good.

Arvind Sharma — Citigroup — Analyst

Okay.

Anurang Jain — Managing Director

It’s where I don’t make money.

Arvind Sharma — Citigroup — Analyst

Sure. Sure, sir. Sir, second would be, you shared the revenue for European business in rupee term. I know you can back calculate. But if you could, just for the sake of accuracy, also share the revenue, EBITDA and PAT in euro terms the way we normally do?

Unidentified Speaker —

First, let Mr. Jain finish the answer to the first question, Arvind. Okay?

Arvind Sharma — Citigroup — Analyst

Sorry. Sorry, there was some communication gap, sir.

Unidentified Speaker —

[Indecipherable] conventional ICE business profitability, and EV products versus ICE products profitability.

Anurang Jain — Managing Director

Okay. So I’ll just put it this way, that definitely the profitability is good. Otherwise, we wouldn’t be taking this business. I would say, the main, I think, focus also for Endurance, business wins in our plants where the capacity being used is less, and that’s why I specifically mentioned the new orders that are coming in our Kolar plant in Karnataka, Halol plant in Gujarat. Plants which have a lower capacity being used. So, we are reinforcing this new additional order because it’s not a part of the INR9,350 billion, business of INR200 million has been a really a good run from April ’23 onwards. It will really help us in get economies of scale and really improve the profitability in these plants, which have been dragging us down last two years. You know what I’m saying. So these are also the focus areas and we are putting our EV business wins in these plants, because we are doing the similar business of suspension or castings or brakes.

Unidentified Speaker —

Okay. Arvind, can you [Technical Issues] exactly which numbers of Europe you were looking for?

Arvind Sharma — Citigroup — Analyst

Normal revenue EBITDA and PAT — PAT I think you’ve shared EUR4.5 million, the revenue and EBITDA.

Unidentified Speaker —

So you’re talking about quarter four or full year?

Arvind Sharma — Citigroup — Analyst

Quarter four, sir.

Anurang Jain — Managing Director

Okay. We closed in the quarter four with EUR67.4 million of income compared to EUR62.6 million of the previous financial year, an increase of 7.6%. Speaking about EBITDA, we closed with EUR12 million, 17.5% compared to EUR7.9 million of the previous financial year, 12.6%, with an increase of 51.9% in terms of EBITDA. Net result, EUR4.5 million, 6.7% in percentage compared EUR2.7 million of the previous financial year, with an increase of 63.4% compared to the previous year.

Arvind Sharma — Citigroup — Analyst

Sure. Thank you so much for this, and apologies for the communication lag on the first question.

Anurang Jain — Managing Director

No problem.

Unidentified Speaker —

It’s okay, it’s okay, it’s okay.

Operator

Thank you. The next question is from the line of Vimal Gohil from Alchemy Capital Management. Please go ahead.

Vimal Gohil — Alchemy Capital Management — Analyst

Right. Thank you so much, sir. My question is on the engine casting business. Now what I’m looking for is, specific differential between your content per vehicle in the engine castings for ICE vehicles versus your aluminum casting for battery cases, how are these two in terms of comparison? Is the content higher or lower?

Anurang Jain — Managing Director

Yeah. So I already mentioned this in the past that if you see our EV — if I compare ICE with EV, like-for-like for ICE have say seven parts. The prime cases are two, covers are two, cylinder block, cylinder head cover, here we have — there’s a battery housing upper and lower. There is motor housing, there’s plates, upper and middle, terminal ground, terminal part, terminal base, base MCU, there are nine parts. But here, the weight is 2 kg less, but the value add is just 5% less. You know what I’m saying. I’m just trying to give you some idea.

Now when you come to three-wheelers, we have the similar seven parts, but here, we have 11 parts. Because you also, the case transmission, left and right, which is added to the nine parts. And here, the venue is, of course, much higher to almost is 25%, 30% higher on weight, which is 1.5 kg lower. So, in fact, these businesses are very good. And when I just say that, these are very good businesses, which we have been. And that’s why I said [Technical Issues] of castings. Mainly for the battery housing, motor housing and all these other smaller ones, which I didn’t mention.

Vimal Gohil — Alchemy Capital Management — Analyst

Understood. Understood, sir. Sir, just one follow-up there. When you say that your total ICE-dependent business, if it would include your clutches and your engine casting parts? Can you just give me the break up there? How much is that as a total percentage of your stand-alone business?

Anurang Jain — Managing Director

No. See, I have not completed this because castings are so varied, two-wheeler, three-wheeler, four-wheeler, that breakup. I cannot answer that. I can only — I have answered you transmission is 5.5%, with 80% is motorcycles, where I’m not seeing much of a traction, to be honest. I don’t see anything happening if you ask me to lose that clutch business. But I’ve just given you a sense of the pricing versus the rate. Do you know what I’m saying? Number of customers. Beyond this, it’s not correct to give no more details, to be honest.

Vimal Gohil — Alchemy Capital Management — Analyst

Understood, sir. Lastly, a question for the Maxwell Promoters just risk, sir, to the BMS business overall, if you — do you see some of these OEMs actually taking their battery management in-house? How do you see that as a risk to our business? Will they sort of continue to get support from players like us? Or like in the passenger vehicle industry, we have seen that most of the battery management has been taken in-house. So, how do you see that as a risk? Thank you.

Anurang Jain — Managing Director

So I’ll request Akhil to answer that. Akhil or Vishwas?

Akhil Aryan — Co-Founder, Maxwell Energy Systems

Yeah, sure. So I think I’ve spoken about this subject quite a few times. The reality is building a BMS, it is a higher risk and low value opportunity for OEMs, if you think about it, right? So, BMS is a critical component that goes inside of the factory and it’s not just sort of an analog device which has — with hardware, but there are algorithms and software that need to be built both for safety as well as accuracy. So whether it is state of charge, state of health, state of energy, state of power, all of these algorithms need to be designed.

There need to be different configuration parameters that need to be put in place for working with different types of charges, safety parameters for acceleration, for range estimation, for charging control, so on and so forth. So what we have seen — and also I think you made a statement saying that passenger vehicles, most people are designing it in-house. I don’t think that’s accurate. I think that there is also a significant opportunity for us to enter four-wheelers in the near future.

In my understanding, there are components that OEMs are trying to build in-house but when it comes to safety critical components, they are relying on companies that have spent like at least in our case between — all of us, we spent over, what, eight years building the technology that we are putting out in the market today. We’ve deployed it over hundreds of thousands of vehicles at millions of kilometers validated with no failures on the road.

So that credibility is something that really helps us build a narrative in front of OEMs, but when they’re designing new vehicles instead of taking a bet on building something that could be detrimental if there was any issue on the road even to their brand or to their product line. They choose to work with people who have, I would say, domain and index knowledge as well as technology that is tried and tested on the road, which is why we are seeing success with significant OEMs. Now, the OEMs that you might be referring to that has built their own BMSs, as perhaps OEMs that started much before. For example, when you were, let’s say, a Tesla or an Acer or someone like that, and you started 10, 11 years ago, at that time, we did not have a mature offering of Tier 1 OEMs bringing this technology to. So they are basically forced to design the technology in-house and build it themselves.

But any of the OEMs that are launching, say, even the significant OEMs that are launching their EV products today, there is actually, to some extent a fight against time, right? You don’t have five years to design your own BMS and design every single product and build sort of vertically integrated technology. So at least from the perspective of OEMs designing their own BMS, we don’t see that as a risk. What we do see is OEMs wanting to design their own battery. They want to own the IP on the battery level. And so, they typically want to — so would the cell design the electromechanical assembly and buy a BMS from a company like [Indecipherable] and assemble it by themselves into a proprietary design. So that’s what we are seeing on the two-wheeler side. I think that, that trend will continue.

There will be other advanced electronics like Anurang mentioned, that we are also venturing into beyond the DMS. So it’s not like we are putting our head in the sand and saying, okay, BMS will be here forever. We are also exploring other advanced electronics beyond the BMS that we will be bringing to market very shortly under the Maxwell umbrella. And the goal primarily is to, like I say, our mission is to escalate the transition to an all-electric future. And for that, there will be various different advanced electronics required. BMS is our flagship sort of offering today. And I think that will continue both for two-wheelers as well as passenger vehicles in the near future.

Vimal Gohil — Alchemy Capital Management — Analyst

Thank you. Thank you so much for — this was very helpful. Thank you so much.

Operator

Thank you. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead.

Mukesh Saraf — Avendus Spark — Analyst

Yeah. Thank you for the opportunity. My first question is on the castings business. Could you give a sense of currently what proportion of the castings are fully finished and probably how do you think that proportion can look in the next couple of years based on what you’ve mentioned on that business going forward?

Anurang Jain — Managing Director

So, I would say that 75% are either selling finished or fully finished. Our target is, of course, there are some sticky customers who still want to do it in-house where most of the OEMs are getting it out, but they don’t want to get into issue of rejections being sent back after machining. So I think, today, if you see fully machined, I think it would be more at about 40%, 45%, I think, that’s the guess I’m taking.

Mukesh Saraf — Avendus Spark — Analyst

Right, right.

Anurang Jain — Managing Director

But fully — but to go — if we go to fully machined at 75%, 80%, that would be a good target to achieve, which in fact many customers are asking us to do that. And that requires investment also. So we will go [Indecipherable]. I can’t give — by then in future. But definitely, I can only say that all the new business we are taking is only with machine castings. And the historic based on the investments we want to do, we look at good step by step on the business.

Mukesh Saraf — Avendus Spark — Analyst

And this is the outside of Bajaj Auto, sir. These customers that you’re talking about who are getting…

Anurang Jain — Managing Director

No, no, this I’m telling you, total figure with Bajaj Auto. But of course, I see, I would say, Bajaj Auto, there are certain which are fully machined also, there are certain which are not machine also. So we have to still — the non-machine people, we still have to go to semi-finished or fully finished because our mindset is to do it in-house with a few of them. Bajaj is a leader in doing fully machines. And also four-wheelers is largely fully machine only unlike Tata Motors, Mahindra, it’s largely fully machine, which is a very good thing. That’s an exception but largely fully machine.

Mukesh Saraf — Avendus Spark — Analyst

Right, right, sir. And my second question is on the EV business that you’ve been mentioning, these order books that you have 6 billion-odd. How about kind of looking at this same subsidy probably not being extended, and how are we safeguarding, say, the volume targets because these are based on peak annual basis — production basis. So, is there — I mean, do you see a risk of subsidy not being extended and the production at the OEMs falling? We have seen some of these OEMs in the subsidies podcast, the volumes actually fell quite a bit. So how are we looking at that angle?

Anurang Jain — Managing Director

See, one of our customers, Ather, already you have seen in the papers last week that they want to get a frame subsidy, there’s no issue there. Future, what happens beyond FY ’25, I cannot say. But see, at Endurance, we have to invest in the journey of EV where there is a large focus by the government and by the OEMs and for environmental reasons. So, as far as we are concerned, our job is to take the business, which we are doing. What happens in the future? To be honest, I mean I can’t comment whether they’ll extend the subsidy, what happens to these companies, I have frankly no idea.

Mukesh Saraf — Avendus Spark — Analyst

Actually, sir, my question was more towards on the profitability side. How have we safeguarded if the volumes actually are much lower than what the company — what the customers have indicated? I was actually looking at that aspect.

Anurang Jain — Managing Director

Yeah. So, I see — so, the question is, if the volumes don’t happen, of course, we’ll do I mean, less sales. But most of these orders, like I mentioned, are from existing plants. We are trying to increase sales and profitability from the existing plants. We’re not setting up a new plant. And then, most of the capacity is already are there. Assembly or it’s for other processes, we already have the — I mean the investment that — so the best part of this is that we’re doing it from our existing plants. I don’t need to add much to do this business. And that’s why I mentioned in the opening remarks from this plant, we are doing it, all these products which I mentioned.

Mukesh Saraf — Avendus Spark — Analyst

Right, right, right. Great. So that makes sense. Thank you so much.

Anurang Jain — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Aashin Modi from Equirus Capital. Please go ahead.

Aashin Modi — Equirus Capital — Analyst

Yeah. Thanks for the opportunity. Sir, my first question is regarding — so we have two products in testing and validation, one is CVT with HMCL — dual channel, ABS with Bajaj and RE [Phonetic]. So if you could tell us where are we on that?

Anurang Jain — Managing Director

See, as far as the CBT is concerned, it is still at HMCL, but that is — I would admit is going a bit slow. The kind of traction we were expecting is not happening. And also, what is happening with scooters going in the EV way in Hero MotoCorp, we are also having a review whether to invest time and money on this or not, to be honest. As far as the ABS dual channel, that will go very fast. In fact, it is our customer, Bajaj is asking us — I mean, the other one is RE, to be honest. So the ABS will happen fast. Like I mentioned, we want to start by quarter two of this financial year, supplies to the dual channel. That’s our target.

CBT, we are still evaluating whether to invest that time and money because there are a lot of other projects we are doing. So that’s the question coming up. But it’s not that — we are still continuing with the process with HMCL.

Aashin Modi — Equirus Capital — Analyst

Okay. Thanks. And then, my second question is on the EV side. So where we have seen — we have got good traction in the e-two-wheeler space. So, could it be repeated in the e-three-wheeler space as well? And what sort of a content difference can we see — for us in ICE three-wheeler versus a EV three-wheeler?

Anurang Jain — Managing Director

I see, I just mentioned that, I told you about castings…

Aashin Modi — Equirus Capital — Analyst

No, I’m talking about three-wheeler.

Anurang Jain — Managing Director

Yeah. So three-wheeler, in fact, I mentioned that there are 11 parts versus 7 parts. The 11 parts are 1.5 kg lower on to our castings now with a much higher value add, what I’m saying. So similarly for brakes, we’re already supplying to Mahindra Electric and this month, we are starting with Bajaj Auto for the three-wheeler EV brake system. And we are in touch with others, whoever is getting to three-wheelers, we are in touch to take new business. Right now, it’s Mahindra and it’s Bajaj, which is where we are going forward on the three-wheelers. It’s for castings and it’s for brakes and of course, front fork shocker also. I would say, front shocker and rear shocker [Indecipherable] in three-wheeler, what we are supplying.

Aashin Modi — Equirus Capital — Analyst

Okay. Thanks. Thanks, sir, for the opportunity.

Operator

Ladies and gentlemen, this would be the last question for today, which is from the line of Aditya Jhawar from Investec. Please go ahead.

Aditya Jhawar — Investec — Analyst

Yeah. Thanks for the opportunity again. My first question is to Akhil. So, in case we are working with a construct where the OEM designs, the battery and Endurance provides the battery management system. So in this construct, how should we think about warranty liability? Will OEM except the warranty claim in the sense, any issues where the BMS is designed completely?

Akhil Aryan — Co-Founder, Maxwell Energy Systems

Yeah. So, like I said, there are typically clear handovers between the BMS and the battery. So, when we say the battery is designed by the OEM, it is essentially the electromechanical assembly. So whenever — let’s assume that there is a warranty claim, you have to be able to do a root cause analysis and figure out whether the failure was due to a design defect on the electromechanical assembly or whether it was a failure of an electronic board not able to, say, open or close a MOSFET, for example, in a specific case. Now on our side, we — at least before we supply all of our BMSs, we do a very significant and complete testing of all functionality on every single board.

So because we want to be extra careful and we want to protect, of course, our reputation as well as Maxwell, we’ve been able to supply hundreds of thousands of units without having any significant failures on road so far, which is, of course, one of the big pieces by OEM structure. So, before we ship out our BMSs, we actually do functional tests of every single feature before we flip it out. And we also provide our customers with benches on their side where they retest all of these features, along with the battery after battery integration before they install inside it inside the vehicle. So, they test the safety critical functionality before they put it inside and that’s basically where the handover happen. But if for whatever reason that is a field issue, then there is a very detailed process and procedure to identify the RPA or the root cause analysis of the issue. And it has to be attributed either to a design defect on the battery integration, battery design or design defect on the hardware or software of the BMS. So where these hard line, which will allow you to segregate whose warranty climate will be, so to say.

Aditya Jhawar — Investec — Analyst

Okay. That was quite helpful. My final question is to Anurang. So, in the presentation, you had given a target of aftermarket reaching 10% by ’26. Similarly, can you give some sense that how should we think about four-wheeler contribution in India revenue, which is now about 7.5% by ’26, where can we reach?

Anurang Jain — Managing Director

See, we are — see, right, in India, the major business is aluminum castings where four-wheeler is about 7.5%, which is only aluminum casting. What we are looking at is opportunities for inorganic growth in the four-wheeler segment and technical collaboration in the four-wheeler segment. Because if I have to do brakes, clutches or any other proprietary product in future, definitely we need a good technology — a good technology partner. So this is what we are actively pursuing to really take the share of business up because it has even the two-wheeler growth because of these value-add products is really going up and supplying all our products to all our OEMs, all our core products to all the OEMs and even BMS becomes a large focus for growth, we own the products.

So, four-wheeler, what we are looking at is to answer your question is inorganic opportunity as well as collaborations in terms of JVs or collaboration agreements to enter this area is what we are looking at right now.

Aditya Jhawar — Investec — Analyst

Perfect, perfect. Okay. That’s it from my side. All the best.

Anurang Jain — Managing Director

Thank you.

Operator

Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to turn hand the conference over to the management for closing comments. Over to you.

Anurang Jain — Managing Director

So, I have no further comments. I’d just like to thank everybody on the call. Thank you.

Operator

[Operator Closing Remarks]