Ok Play India Ltd (OKPLA) Q4 FY23 Earnings Concall Transcript

Ok Play India Ltd (NSE:OKPLA) Q4 FY23 Earnings Concall dated Apr. 25, 2023.

Corporate Participants:

Rishab Handa — Executive Director & Chief Financial Officer

Analysts:

Supriya Madye — Analyst

Garvit Goyal — Value Research — Analyst

Raj — — Analyst

Ritesh Shah — Investec Capital — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Tanuj Khiyani — Ventura Securities — Analyst

Kunal Mehta — Equirus Wealth — Analyst

Ranadeep SIngh — Individual Investor — Analyst

Anand Vishwakarma — GlobalCapital — Analyst

Bhavik Waghela — ULJK Finance — Analyst

Sunil Jain — Nirmal Bang — Analyst

Puneet — — Analyst

Unidentified Participant — — Analyst

Mohanchand — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Q4 FY23 Results Conference Call of Ok Play India Limited, hosted by Kirin Advisors.

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 [Operator Instructions].

I now hand the conference over to Ms. Supriya Madye. Thank you and over to you ma’am.

Supriya Madye — Analyst

Good evening everybody. I welcome you all on behalf of Kirin Advisors Private Limited. Today we have with us, Mr. Rishab Handa, Executive Director and CFO of Ok Play.

I will hand over the call to Mr. Rishab Handa to give his opening remarks, which will be followed by a question-answer. Over to you, Rishabji.

Rishab Handa — Executive Director & Chief Financial Officer

Good afternoon, ladies and gentlemen. As this is our second conference call, I would first like to brief you about the company and the various business verticals that we operate in.

We are primarily into three business verticals, namely Toys, Automotive Components and Electric Vehicles on the three wheeler platform. The company was established in 1989 by the name of Aquapure Containers Private Limited, wherein the intent was to manufacturer overhead water storage tanks. Soon the company ventured into more of higher quality molding and we acquired a company based out of London called Ok Play, and renamed that as Ok Play India. This is when we had started our journey into the Toy segment in 1992.

In 2003 to 2004, we started venturing into the Automotive segment by converting existing metal and fiber products in the automotive space into plastic, given its inherent advantages. In 2008 to 2010, we had also signed a pact with Ashok Leyland, wherein we have started supplying plastic fuel tanks for the heavy commercial vehicle segment for the medium and heavy commercial vehicles segment with tanks, ranging from 60 liters going on till about 400 liters.

In 2015 we ventured into the electric vehicle space. And it’s primarily into the electric three wheeler space, which comprises of electric rickshaws both on the passenger front as well as the loader front as well as electric auto, which is the L5 version as they call it. If I talk a little bit about the toy scene, we believe that it is very interesting opportunity. We have been one of the oldest players in the toy space, but having the majority of a very small pie. This has largely been due to the competition that was being faced by Indian companies from China. So this has not been the case just with us, but a lot of other companies that have started with us or afterwards.

However, as we speak today, the government has taken a lot of initiatives that have brought in a lot of demand for home grown manufacturers like us in India. This is both domestically, as well as internationally, the frontmost being the launch of the BIS norms, wherein a lot of Chinese companies who were earlier making cheap quality products are no longer allowed to sell in India. They have to go through a rigorous test in order to obtain these BIS certificate which is not very easy for any of these companies. This has then led to a lot of demand, both domestically as well as internationally for companies like us.

If I talk a little bit about the specifics, we have recently ventured into a partnership with one of the largest toy companies in the world, which is called MGA Entertainment, based out of Hudson in the US. They own multiple bands as of which one brand it’s called Little Tikes, which was earlier being distributed in India through the Reliance Group. We have now ventured into a JV with them wherein we would be contract manufacturing products for them for this part of the world. By this I primary mean that we would be supplying to the Indian market, to the Middle East market, to the Australian market, as well as to the Chinese market.

The second major development has been partnership with Hamleys, which is now owned by Reliance brand. Today, our brand is available in all the 150 plus stores in India, as well as abroad. In addition, we have also further strengthened our relationship with them by contract manufacturing for their private label products. These private label products today are supplied domestically as well as exported to their stores in the UK, as well as different parts of Europe.

Another major development that has taken place is our relationship with a company based out of Australia called Kmart. This is a $10 billion group with a major focus on toys. They have audited our facilities and chosen us to be contract manufacturers for one of their renowned brands called Anko. We would be supplying rotational molded, blow molded as well as some private injection molded toys for this company as well.

In the toy space we have initially been institutional brand and now are diversifying and venturing into other streams such as the modern retail channels, the export channel as well as the online market, which is a huge potential for the kind of products that we do.

Going on to the automotive space, today, we command a majority marketshare in the plastic fuel tank industry. We are single source suppliers to Ashok Leyland and have been so since the past 10 years. We have the majority market share of over 85% with Volvo Asia. Today we are in talks with the largest company Tatas to get a substantial share of business from then as well. This can also be seen through our performance this year, where we have considerably grown in the automotive space in terms of top line, largely owing to the bounce back of the CV market in India.

The third segment that we entered into is the electric vehicle segment on the three wheeler platform. Today we have 12 different variants on the L3 version, which is the electric rickshaws with variants such as the passenger vehicle, the loader, garbage collector and so on. And we also have two variants on the L5 which is the electric auto version, wherein we do both the passenger as well as the loader front. Today in the electric vehicle space, we are supplying to the B2C market through a network of dealers as well as targeting the B2B market wherein we are doing last mile deliveries for logistics companies as well as e-commerce companies such as Amazon, Big Basket, Grofers now called Blinkit and so on.

Overall, all three business segments of ours have seen a tremendous growth this year. And a similar momentum is expected in the following years.

If I talk specifically on the financial performance for FY23, our revenues were at about INR182 crores, which is up by 80%. Our EBITDA was about INR33 crores, which is up by 106% compared to last year. Our net profit was at about INR3 crores. Talking about the revenue split, the Toys segment clocked a revenue of about INR45 crores. The automotive segment clocked a revenue of about INR137 crores and the EV segment, which has just recently been commercialized clocked a revenue of about INR2.5 crores.

Talking about quarter four numbers, specifically, compared to the last — compared to FY22 quarter four revenue was at INR54 crores which is up by 26%, EBITDA was at INR10 crores. The EBITDA margin was above 19% and the net profit was at INR3 crores.

I’ll be happy to answer any specific questions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Ravi Swaminathan from Spark Capital Advisors. Please go ahead.

Ravi Swaminathan — Spark Capital Advisors — Analyst

Yeah, hi. My first question is with respect to the Toys business, so we have done close to about INR45 crores of revenue this year. Over the next three to four years, what would be the kind of revenue target that you’d be having with respect to this? And if you can do give any thoughts on what would be the size of orders that can come in from all the export opportunities that you were talking about?

Rishab Handa — Executive Director & Chief Financial Officer

Thank you, Raviji. So see, if I tell you a little bit about the toys market, today the Indian toy market is about INR18,000 to INR20,000 crores, out of which, probably 6% to 7% is only organized, and there is a tremendous opportunity for organized players to grow further. If I talk about our company in specific we have grown at about 100% year-on year. Last year our toys business was a mere INR25 crore business, and this year we have clocked about INR45 crores.

We are expecting 80% to 100% growth rate in the next three to four years as well. And this would be contributed through different revenue streams, not just the export markets. Like I said that we’ve always been in the institutional play. So we have now kind of launched a range of products, which are more retail-oriented as well. So we’ve targeted and started supplying to the modern retail channel, for the — such as the likes of Hamleys.

Second is, we have developed a strong strategy on the online front as well, wherein we are doing private label for Amazon, for First Cry, called Baby Hug, from Mom & Me and other home grown brands in India. And of course the major chunk of revenue is expected from the export market, wherein we’ve already made some significant contributions, but the volume of the business will definitely be driven from here.

Ravi Swaminathan — Spark Capital Advisors — Analyst

Got it. And one clarification, so basically we are talking about 80% to 100% growth every year over the next three to four years, have I understood?

Rishab Handa — Executive Director & Chief Financial Officer

Yes, that at a conservative level is what we expect in the toy space.

Ravi Swaminathan — Spark Capital Advisors — Analyst

Got it. And would we be able to maintain the same kind of profitability in the toys business that we are thinking today with the expansion and everything?

Rishab Handa — Executive Director & Chief Financial Officer

So see the profitability may come down by a few points, but I think that’s the offset that we’re okay with, because we are expecting a very high growth year-on-year. And the margin that we demand or that we command from — in the domestic market would not be possible in the export market. But it will still be healthy EBITDA business of 20% to 22%.

Ravi Swaminathan — Spark Capital Advisors — Analyst

Got it. And with respect to your thoughts on PLI, I mean does PLI be part of —

Rishab Handa — Executive Director & Chief Financial Officer

We as a company have worked very closely with the Indian government to launch the PLI scheme, which is expected any moment now. And under the PLI scheme, we are going ahead on the INR100 crores slab, wherein we would be investing about INR100 crores in the next two to three years to further grow this business.

Ravi Swaminathan — Spark Capital Advisors — Analyst

Okay, and whatever target — revenue targets we have now, it includes, I assume some amount of revenue through the PLI. Understanding right or–?

Rishab Handa — Executive Director & Chief Financial Officer

Absolutely, so there would be definitely some amount of revenue coming in through that.

Ravi Swaminathan — Spark Capital Advisors — Analyst

Got it. Thanks a lot.

Rishab Handa — Executive Director & Chief Financial Officer

Yeah.

Operator

Thank you. [Operator Instructions]. The next question is from the line of Garvit Goyal from Invest Research [Phonetic]. Please go ahead.

Garvit Goyal — Value Research — Analyst

Hello. Am I audible?

Operator

Yes, you are.

Garvit Goyal — Value Research — Analyst

Can you throw some light on what will be our strategy, particularly in ascertaining before [Phonetic] to become profitable?

Rishab Handa — Executive Director & Chief Financial Officer

So yeah, if you see our numbers we’ve shown a profit in the last two quarters and this has largely been driven by the top line. The first two quarters were little low for us and there were other factors such as high input costs coming in as well. However, our strategy in FY24 is very clear in terms of all different business segments. We are targeting a topline of about INR300 crores. And on that we should be netting a profit of about 8% to 9%.

Garvit Goyal — Value Research — Analyst

8% to 9% that is your flat margin right?

Ravi Swaminathan — Spark Capital Advisors — Analyst

That is correct.

Garvit Goyal — Value Research — Analyst

And sir, you are particularly focusing on this toy segment. So what is your internal target for ROCE going ahead, considering all the three segments?

Rishab Handa — Executive Director & Chief Financial Officer

So see every business demands a different ROCE. And there is a special focus on the Toy segment, but there is also an equal focus on the Automotive segment as well. Like I mentioned, that in the automotive space, we already sit at a very interesting position wherein we have a majority market share in the plastic fuel tank space.

We have also kind of gone into other segments and derisked ourselves by starting manufacturing for non-automotive companies as well. For example, we have recently started supplying to a German MNC called [indecipherable], wherein we are doing covers, windmill covers for them. We’ve also started supplying to Vestas, which is again a big large windmill company. So there is a substantial amount of business expected from these non-automotive companies as well. And hence the decent growth rate expected on the automotive front as well.

Garvit Goyal — Value Research — Analyst

Okay, all right. That’s it from my side, sir. All the best.

Rishab Handa — Executive Director & Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions]. The next question is from the line of Raj from Ajas Partners [Phonetic]. Please go ahead.

Raj — — Analyst

Yeah. Hello. Sir, for FY24 you are saying you are going to do sales of around INR300 crores, am I right?

Rishab Handa — Executive Director & Chief Financial Officer

That is correct.

Raj — — Analyst

All right. And regarding Ok Play, what do you think is your edge in this overall thing?

Rishab Handa — Executive Director & Chief Financial Officer

Raj, that depends on which business you’re talking about. If I talk about the toys business, like I mentioned in my brief, there are few tailwinds that we all have especially for home grown manufacturers like us. And we being one of the oldest and the largest in this space there is a lot of opportunity coming up, which can already be seen.

Talking about the automotive component space, like how I mentioned that the CV market is uphill. It had been down one year prior to COVID and obviously during COVID, but it has been uphill. And then this year also the CV market is expected to grow at about 12% to 14%. In addition to just being in the CV market, we also ventured into non-automotive companies. So that’s additional growth or revenue expected from that front as well.

The electric vehicle space is fairly nascent for us today. And we have made — today, we have, like I mentioned, we have about 12 different variants, and there are three version. We have two versions already approved on the L5 version. So we’re sitting at an interesting space there as well, because the electric three wheeler market is booming in India. Today majority of the three wheelers sold in India are already electric and even if we get a small percentage of the market share in actual — in absolute numbers, it’s a pretty good and interesting business to be in.

Raj — — Analyst

All right. Fair enough. And since said you are trying to do sales of around INR300 crores, so do you need any further investment into it to attain those numbers?

Rishab Handa — Executive Director & Chief Financial Officer

Absolutely. There wouldn’t be investment into this. So the investment would largely be coming into the toy space, via the PLI scheme and some amount of investment coming into the automotive space, wherein we are right now setting up a plant for was Volvo Eicher at Pritampur.

Raj — — Analyst

Sorry?

Rishab Handa — Executive Director & Chief Financial Officer

I said there would be two sorts of investment coming in, in the toy space as well as the automotive components space. In the toy space, it’s going to be via the PLI, wherein we are going to be investing about INR100 crores in the next two to three years. The second investment, which would be about INR15 crores to INR20 crores would be in the automotive space, which we have already initiated, wherein we are setting up a dedicated facility for Volvo Eicher at Pritampur.

Raj — — Analyst

All right, understood. And another thing I want to ask is, like how much of the sales per piece in all of these three parts like Toys, Automotive end EV?

Rishab Handa — Executive Director & Chief Financial Officer

Are you talking about our revenue breakup for these three different segments?

Raj — — Analyst

No, I’m saying about like sales per piece of items sold in all of the three.

Rishab Handa — Executive Director & Chief Financial Officer

No, see that doesn’t have any relevance in our business, because for example in toys our ASPs start from INR300 and they go on to INR10 lakh as well, which is outdoor play equipment as well. So it’s not a similar range of products that we manufacture. Similarly, even in the automotive component space, I mean the ASPs start from INR2,000, INR2,500 and they go up to INR12,000 to INR15,000.

Raj — — Analyst

All right. Okay, okay. So is there any specific thing which I can track about this company like how do I see growth for a piece or something like that?

Rishab Handa — Executive Director & Chief Financial Officer

I think you need to consider growth from a industry standpoint rather than a per piece standpoint. You need to be probably doing more research on the segment that we’re in and how focused we are in that respective segment.

Raj — — Analyst

All right. And another thing, in Q4, you have other expenses of INR8 crores. So what are some major items?

Rishab Handa — Executive Director & Chief Financial Officer

So there are a list of expenses, but largely these are some turnover discounts also that we offer to some of our OEMs.

Raj — — Analyst

Turnover discounts. All right. Yes, it’s fine. Thanks guys.

Operator

Thank you. The next question is from the line of Ritesh Shah from Investec Capital. Please go ahead.

Ritesh Shah — Investec Capital — Analyst

Yeah, hi. Sir, thanks for the opportunity. Couple of questions. Sir, how would you disect the number of INR300 crores for different segments? Sir, that is one. And for each of the segments is it possible if you could bifurcate how one should look at the margin profile and the return ratio profile?

Rishab Handa — Executive Director & Chief Financial Officer

Okay, so when I talk about our projections for FY24, about a INR175 crores is expected from the automotive space. About INR100 crores as expected from the toy space and the remaining INR25 crores to INR30 crores is expected from the electric vehicle space. If I talk specifically about margins, about 20% to 22% EBITDA is expected in the automotive space. About 24% to 25% is expected in the toy space. And about 12% to 13% is expected in the electric vehicle space.

Ritesh Shah — Investec Capital — Analyst

Sure, and from a ROCE standpoint?

Rishab Handa — Executive Director & Chief Financial Officer

So from a ROCE standpoint, it’s a little difficult for us to answer, because today we also have certain facilities which are common for different businesses though we are also in the process of separating out these facilities. So for example, a machine, a rotational molding machine maybe manufacturing a toy component as well as a auto component together at the same time. So it’s a little tricky to answer from a ROCE perspective, as of now.

Ritesh Shah — Investec Capital — Analyst

Okay, if I have to put it the other way around for the incremental CapEx what you indicated, like a INR100 crores probably whenever the PLI comes in and other wise INR15 crores to INR20 crores, what is the incremental threshold ROCE that we look at if we had to commit any incremental CapEx?

Rishab Handa — Executive Director & Chief Financial Officer

So see, in the automotive space when we are talking about a INR15 crore to INR20 crore investment we can expect a ROCE of about 30% to 35% starting. Because in the automotive space, this will be — it’s more of a conversion facility that we’re setting up for Volvo Eicher. The basic investment that goes into research and development has already been done in this space.

Talking about the toy space, this is something which is going to building over the next 3 to 4 years. We plan to invest INR100 crores in the next three years out of which 60% is the rebate that we would be getting back from the government as per the PLI scheme based certain milestones that we attain. If you factor in those rebates, then of course our ROCE will be very high.

Ritesh Shah — Investec Capital — Analyst

Okay. And is it possible for you to detail how we look at the commercial terms, when we are into toys like is it something which is pass through. If you are dealing with a global major, do we invest in malls or they supply the mall. How does the accounting work?

Rishab Handa — Executive Director & Chief Financial Officer

So see, this varies from customer to customer. Now, I’ll give you a small example like we do private label for the Reliance Group, the Hamley’s as well. So they have invested for the tools and it is basically their properties sitting on our premises wherein we are doing contract manufacturing only for them, and obviously exclusively for them because they own the tools.

Then there are some companies where we do private labels, but they do not own the tools which are kind of amortized. And those products we also sell to other companies, wherein we change the color, the packaging of the product and offer it to other customers as well, because we as a company own those tools. So it depends a lot on which customer you’re dealing with, what kind of the product segment you’re dealing with and what is — what is the kind of requirement that they have.

Ritesh Shah — Investec Capital — Analyst

Right. The reason I ask this is I just wanted to understand whether is this a cost-plus mechanism that we are looking at, right? So if are dealing with Hamley’s or some global major, if you supplying toys to them, do we have a pass-through mechanism, because, I think in the initial remarks, you did indicate that there was the raw material pressure in first half of the year.

So how well-protected we are when it comes to margins and different ratios?

Rishab Handa — Executive Director & Chief Financial Officer

So see we primarily do try and work on a cost-plus basis. For example, our entire automotive business is on a cost plus basis. But then yes, there are certain hits that one has to take at times. It’s nothing very substantial, because it’s is something which is market-driven. If the price goes up, then it’s not just us it’s for everyone. But it is not entirely and purely on a cost-plus basis if I talk about it right?

Ritesh Shah — Investec Capital — Analyst

Okay, if I can just turn to — if you permit. I’ll ask a couple more if it’s okay, or I can turn back to the queue. Great. So I just wanted to understand, you did indicate exports. And I was just checking with the prior transcripts, wherein we even export to China. So what is the moat like, is it the labor cost or is it efficiency, or is that the CapEx intensity that is lower, or is it the freight?

What benefits Indian car manufacturers to take the box when it comes to exports?

Rishab Handa — Executive Director & Chief Financial Officer

So see, I’ll put it this way. Now India, especially in terms of costs, and specify refer to labor cost is very competitive compared to China. The advantage that China has today is that they are being compensated a huge amount of subsidies by the government, and hence they are also way ahead of us in terms of toy exports. But this is something which is changing and the PLI coming up would be a game changer for companies like us, wherein you probably the able to offer anywhere from 8.5% to 9.5% subsidies or I would say, reduction in prices to our customers as well. This is one.

Second, if I’m talking about the company that we’ve got in to a partnership with, this company earlier had a similar facility in China. Now this company is very similar to our company in the sense that we do a very similar kind of product portfolio. So these are voluminous product, they are rotational molded products and because they are voluminous they are not freight-friendly.

So they earlier had a facility, a contract manufacturer in China, but like how India is moving away, I see that a lot of other global giants too are kind of de-risking themselves and hence they decided to choose another countries in India, and we being the frontrunners in rotational molding they have chosen us here to supply to this part of the world.

Ritesh Shah — Investec Capital — Analyst

Just have — just two more questions. How many companies would potentially apply for the PLI scheme from the government? What I’m trying to gauge is the competitor intensity in that space, like are there many players who can deploy like INR100 crores or is it only a few handful?

Rishab Handa — Executive Director & Chief Financial Officer

I’ll answer your question. So we have — by intent drafted the PLI scheme in a way that has kind of benefit and invites a lot of companies. So even though the details are not out, but what I can mention to you is that there are four slabs starting from INR5 crores to INR25 crores to INR100 crores and INR200 slab. So it is not that a company would have to — you’re absolutely right. There are very few companies within India, especially in the toy space who can probably invest upwards of INR100 crores. But I’m sure there are lot of companies, who would be willing to apply for the INR5 crores slab.

So the government has moved the PLI scheme in a manner that is very friendly to all companies of different kinds.

Ritesh Shah — Investec Capital — Analyst

Sure, this is helpful. And lastly, you did indicate, large market size, unorganized is pretty huge. I would presume imports will also be a big variable. Is there anything on BIS standards, quality checks that government is actually implementing which will help a shift from unorganized to organized over the next 5 years, 10 years.

Rishab Handa — Executive Director & Chief Financial Officer

So like I said, the government has already launched and already implemented this. So there has been very strict checks going on at the ports as well. There was recently a news where even 15,000 to 18,000 -plus different SKUs were seized from a retailer like Hamley because there were not carrying out the BIS, the mark on the toys. So there has been very strict measures being taken by the government and hence — and this can also be seen in terms of numbers, where in FY23, India has become a net exporter of toys rather than always being a net importer.

Ritesh Shah — Investec Capital — Analyst

Sure, this is very helpful. I’ll join back the queue. Thank you so much about. Wish you good luck.

Rishab Handa — Executive Director & Chief Financial Officer

Thank you. Thank you.

Operator

Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Hello.

Operator

Go ahead, Deepak. You are audible.

Deepak Poddar — Sapphire Capital — Analyst

Yeah, thank you very much, sir for the opportunity. First off I wanted to understand, you did mention right for next three, four years we are looking at maybe 100% to — 80% to 100% kind of a growth on the topline basis.

Rishab Handa — Executive Director & Chief Financial Officer

Yeah, that I mentioned for the toy space.

Deepak Poddar — Sapphire Capital — Analyst

That is only for the toy space, right?

Rishab Handa — Executive Director & Chief Financial Officer

That is right.

Deepak Poddar — Sapphire Capital — Analyst

And on the overall basis?

Rishab Handa — Executive Director & Chief Financial Officer

See, on the automotive components space you can expect a 12% to 15% growth. And on the EV space you can probably expect a higher than 100% growth.

Deepak Poddar — Sapphire Capital — Analyst

Okay, okay, so okay, I understood. So that’s the CAGR, we might look at over next three to four years?

Rishab Handa — Executive Director & Chief Financial Officer

Yes.

Deepak Poddar — Sapphire Capital — Analyst

Okay, understood. And how do you see the margin trajectory? I mean, if I have to see three to four years down the line, what sort of margins do you see, will be a steady state margin for our kind of business. I mean on an overall basis?

Rishab Handa — Executive Director & Chief Financial Officer

So compared to the entire blend and the businesses that we’re in, we can assume 18% to 20% EBITDA on the conservative level.

Deepak Poddar — Sapphire Capital — Analyst

18% to 20% rate?

Rishab Handa — Executive Director & Chief Financial Officer

That’s right.

Deepak Poddar — Sapphire Capital — Analyst

And the PLI scheme investment is about INR100 crores that we are looking at over next two to three years?

Rishab Handa — Executive Director & Chief Financial Officer

Yes.

Deepak Poddar — Sapphire Capital — Analyst

Okay. And then do we have any kind of sense what sort of revenue that can accrue from those scheme so over next two, three years?

Rishab Handa — Executive Director & Chief Financial Officer

See, like I said that even today, we are investing through internal accruals. Plus we are also in the process of raising some funding for the toys business. We are anyways expecting a 80% to 100% growth on a conservative level. We’re in talks with a few companies which are some of the largest retailers in the world. And if we’re able to crack that business then the growth will be exponential.

Deepak Poddar — Sapphire Capital — Analyst

Okay, understood, understood. And my final question is on your EV space. I mean, is there any plan to — I mean, separate that business in a separate subsidiary? I mean to demerge it or any kind of fund raising?

Rishab Handa — Executive Director & Chief Financial Officer

We have already separated that. So we have a subsidiary called RIRA Electric Vehicles, which now houses the electric vehicle business. We had done this in March of ’23.

Deepak Poddar — Sapphire Capital — Analyst

Okay, and what sort of fundraising plan we have in that segment?

Rishab Handa — Executive Director & Chief Financial Officer

In the EV space we are not looking at raising funds as of now. We have already invested a substantial amount of funding into the space. We have also been funded by HPCL, which is in the Sun [Phonetic] Petroleum in the EV business through one of our subsidiaries. We are today sitting at a position where we already have a portfolio of products ready with us. And what we are focusing on at the moment is developing our sales and marketing channels. And by the sales we mean the dealer network to expand and grow this business.

Deepak Poddar — Sapphire Capital — Analyst

Okay, understood, understood. And that’s it from my side. All the best sir. Thank you so much.

Rishab Handa — Executive Director & Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Tanuj from Ventura Securities. Please go ahead.

Tanuj Khiyani — Ventura Securities — Analyst

Hello, good afternoon. I just wanted to understand productivity and utilization level of the plants? And what sort of export potential that we see in the next four to five years.

Rishab Handa — Executive Director & Chief Financial Officer

So see, if I talk about utilization, today, we have two plants. One is in Mewat in Haryana, which currently would be sitting at a capacity of about 50% to 85%. Then we have another facility in the south, which is Ranipet in Tamil Nadu, which will be at a capacity of about 70% to 75%. But we have ample space in terms of land to further expand our lines of businesses, both in north as well as the south. So our growth plan going-forward would not be kind of compromised in terms of setting up another facility.

Though in the automotive space, yes, we have to be close to the customer. So like I mentioned previously, we are in the process of setting up a plant at Pritampur for Volvo Eicher and we would also in the next 1 to 1.5 years setting up another facility for Tatas either at Jamshedpur or at Pune.

Tanuj Khiyani — Ventura Securities — Analyst

Okay. And regarding the export potential that we see in the next 5, 4 to 5 years?

Rishab Handa — Executive Director & Chief Financial Officer

See I believe you’re asking. With respect to the toys business. So in that the export potential is humongous. Today India contributes less than 0.5% of the entire toy global market. And keeping in mind that India is one of the largest countries in terms of having a young — largest youngest population plus with the government support coming in, and a lot of big retailers such as Walmart, E-Mart and other big toy companies looking at India as a positive source of manufacturing, we are pretty well-positioned to become a toy manufacturing hub in the next by 5 to 10 years to come.

Tanuj Khiyani — Ventura Securities — Analyst

Okay, and do we have any advanced technology or know-how of rotary, rotatory molding?

Rishab Handa — Executive Director & Chief Financial Officer

So it’s rotational modeling and that’s what we’ve been in since inception. So when we had started with toys, today a lot of our toys are rotational molded. All our fuel tanks are rotational molded. And this is where today our expertise lie in as a company. We are today known one of the premium rotational molders, not just in India but across the world.

Tanuj Khiyani — Ventura Securities — Analyst

Okay, thank you. That answers all my questions.

Operator

Thank you. Next question is from the line of Kunal Mehta from Equirus Wealth. Please go ahead.

Kunal Mehta — Equirus Wealth — Analyst

Yeah, hi. Thanks for the opportunity. I have few question. Can you tell me about on — something more on the working capital cycle for both the businesses, automotive as well as toys.

Rishab Handa — Executive Director & Chief Financial Officer

The automotive business is — usually the working capital cycle in days is about 45 to 50 days. And in the toy space, it’s about 30 to 35 days.

Kunal Mehta — Equirus Wealth — Analyst

Okay, and one year period you spoke about putting up a dedicated facility for Tatas at Pune or Jamshedpur. This is for Tata Motors passenger vehicles or CVs, or what is it about?

Rishab Handa — Executive Director & Chief Financial Officer

No. So in the automotive component space, we are largely in the MSCV space in the medium and heavy commercial vehicle space. So the fuel tank, the fuel tank that we do which are rotation molded are not for the passenger vehicle. It’s only for the commercial vehicle segment.

Kunal Mehta — Equirus Wealth — Analyst

Okay, thanks a lot. Thank you.

Rishab Handa — Executive Director & Chief Financial Officer

Absolutely.

Operator

Thank you. [Operator Instructions]. Next question is from the line of Ranadeep SIngh, Individual Investor. Please go ahead.

Ranadeep SIngh — Individual Investor — Analyst

Yeah, thank you for the opportunity. The toy figurine industry, right, it’s big globally as I understand. Do we aspire to enter this segment, especially there is a target pool, especially in adults, especially —

Operator

There’s a bit of background noise coming from your line.

Ranadeep SIngh — Individual Investor — Analyst

Is it better?

Operator

It’s still there, sir. May I request you to a different location where there is less noise.

Ranadeep SIngh — Individual Investor — Analyst

Okay. Am I better? Is it audible now?

Operator

Sure sir, go ahead. Okay, so yeah, my question is with respect to figurine industry, do we aspire to enter this segment especially where there is a target pool in the adult space, where F1 racing collectibles, CSAW collectibles? And a connected question to that is, there is also a global trend of mystery box. So do we aspire to enter that space? Thank you.

Rishab Handa — Executive Director & Chief Financial Officer

I’m sorry, but your voice is not audible. Could you please repeat that again?

Ranadeep SIngh — Individual Investor — Analyst

So my question is with respect to the figurine toy industry, which is very big globally and especially in the adult space you have F1 racing collectibles, CSAW collectibles, which are big globally. So do we aspire to enter that space? And a connected question to that was, there is the concept of mystery box, very popular globally, where you have the box which has multiple collectibles and you don’t know what’s in it. So are we are aspiring to enter those space in the toy space as well?

Rishab Handa — Executive Director & Chief Financial Officer

So Mr. Singh, I’ll put it this way that in the toy space there are lot of categories within the toy space. For example there are plush toys, there are soft toys, there are plastic molded toys, there are injection molded toys, there are wooden toys. And you have these diecast cars et cetera that I think you’re referring to. So there are different categories.

What we are primarily into is the plastic space, which kind of has a majority in the toy space. So we do rotational molded toys. We do blow molded toys, as well as injection molded toys. So what I mean by this is that, for example if I talk about rotational molded toys, we do slides, rockers, see-saws, all of that. Coming on the blow molded space we will do ride-ons, like bike where I give ride-ons and other multi-purpose product.

And of course then coming on the injection molded space where we can do a lot of different products because that all restricted to the kind of tools that you produce. So it’s largely being in the plastic products space where we do battery as well as non-battery products. And of course, any kind of toy that we can manufacture through that process.

Ranadeep SIngh — Individual Investor — Analyst

Okay, okay, fair enough. Can you throw some light in terms of plans of Ok Play India when it comes to the toy clusters that are expected to come up across India? Especially where are we setting up those plants and what kind of scale are we imagining.

Rishab Handa — Executive Director & Chief Financial Officer

We, as we see it now, there are clusters being set-up in multiple states. For example, there is one which is already active in the south, next to Bangalore. Then there is another one which is coming up in Noida. So we are still in the phase of deciding where to set up the next plant, because this has to be keeping in mind our plans for the export market.

It has to be logistically efficient from that perspective as well. As of now, like I mentioned, we do have ample space in terms of land available at our existing facility in the South, where we have about 20 acres plus of land, and which is about half an hour away from the port, hence making it very export friendly as well. So it’s not certain that we would be setting up a plant in one of these clusters coming in. But, yes, down the line that’s definitely a possibility.

Ranadeep SIngh — Individual Investor — Analyst

Fair enough, fair enough. My next question is. I think you mentioned in the last call that we are now going to be aggressively going towards B2C. And if I have to pull global counterpart, LEGO is we see the name that comes in. Like LEGO has a fan following globally and they have built a brand with various initiatives, right. So if we aspire to be the LEGO of India, can you share some thoughts about brand-building exercises of Ok Play India?

Rishab Handa — Executive Director & Chief Financial Officer

So I’ll put it this way that our strategy is not just one-fold, wherein we are just going to be doing a brand building exercise. Of course, we have developed a very renowned and trustworthy brand over these past 25 years, especially in the institutional space. Today for example, there is no school or pre-school in India, which would not carry our range of products, despite being a slightly more expensive brand compared to its peers, because of the quality of products that we do.

But a lot of demand in the toy space will come up from doing private label. This is where the volume of the business lies. So it is company like us or for example, other companies who are doing or manufacturing products in other brands or in-licensing brands, So for example, if we have a license of Disney, or Pepper Toys or any other character, then we could definitely do products in that and source it to the private labels with Hamleys or First Cry or in the export market like I mentioned, Kmart, Anko.

So this is where the majority of business in terms of numbers would clock in And then of course, whatever that we’ve been doing on the brand-building space is something that we will keep continuing, and building up that as well.

Ranadeep SIngh — Individual Investor — Analyst

Sure, thank you so much. This is helpful and appreciate having this call. Wishing you all the best. Thank you.

Rishab Handa — Executive Director & Chief Financial Officer

Thanks.

Operator

Thank you. The next question is from the line of Aman from GlobalCapital. Please go ahead.

Anand Vishwakarma — GlobalCapital — Analyst

Hello. Hello, am I audible?

Operator

Yes, you are.

Anand Vishwakarma — GlobalCapital — Analyst

Yeah. So yeah, the business seems promising. I just had one question which is on the debt front. So how do you see the debt evolving over the time? So do you have any plans of paying the debt down with the years of — are we going to see a lot of debt piling up with expansion plans and stuff?

Rishab Handa — Executive Director & Chief Financial Officer

No, I don’t think that we will be taking the debt route. If you run-through our numbers here on, you must-have seen that our debt has also come down significantly. And we have recently raised about INR75 crores via a preferential issue. So we would be raising money as and when required and whichever instrument makes sense to us at that time, keeping in mind the business as well as the growth aspect we would be going ahead with that. But as of now, and. I think going-in future we are pretty comfortable in terms of repaying our liabilities.

Anand Vishwakarma — GlobalCapital — Analyst

Fair enough, sir. That’s all from my end. Thank you.

Rishab Handa — Executive Director & Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Bhavik Waghela from ULJK Finance. Please go ahead.

Bhavik Waghela — ULJK Finance — Analyst

Hello, am I audible?

Operator

Yes.

Bhavik Waghela — ULJK Finance — Analyst

Sir, can you just throw some light towards your automobile space? That — you are manufacturing the diesel tanks by itself or you are just molding them?

Rishab Handa — Executive Director & Chief Financial Officer

So from design, so we work very closely with OEMs in terms of design and applications. And we manufacture the complete product. So we are the suppliers to OEMs. So we sell directly to say Ashok Leyland or Volvo Eicher in terms of the plastic fuel tanks.

Bhavik Waghela — ULJK Finance — Analyst

Okay sir, and sir, this comment on that auto space, previously you said that you had battery function issue. So you have this recall and stop the auto e-recharging. So how is that going right now, the battery front.

Rishab Handa — Executive Director & Chief Financial Officer

See we are not in the battery space. What I had mentioned before was that time the electric vehicle market in India was at a very nascent stage, and there were very few companies, even bigger companies such as Exide or JP Minda, who have developed an application for the e-rickshaw [Phonetic] specific. However from that time to now, there has been a lot of development on the battery space as well, both by the mentioned companies, as well as by a lot of start-ups coming in play.

So the technology in general has improved. There are lead-acid batteries being offered, there are Lithium-ion batteries being offered. There are other specific different types of batteries being offered today, both on the fixed version, as well as the swappable version. So we are working with multiple battery operators. So we are confident that today in terms of the battery or the issue that we have faced four, five years prior would not come in again.

Bhavik Waghela — ULJK Finance — Analyst

Okay, sir, any plans for manufacturing battery by yourself?

Rishab Handa — Executive Director & Chief Financial Officer

No, that is not our forte.

Bhavik Waghela — ULJK Finance — Analyst

Thank you. And in the future?

Rishab Handa — Executive Director & Chief Financial Officer

As of now we do not intend to diversify.

Bhavik Waghela — ULJK Finance — Analyst

Okay, okay. That’s all, sir. All the best.

Operator

Thank you. The next question is from the line of Sunil from Nirmal Bang. Please go ahead.

Sunil Jain — Nirmal Bang — Analyst

Yeah. Thank you for taking my question. Sir, my question relates to whatever the investment you are planning to do, generally with that investment, how much revenue you can generate like you had said that you can do investment — you are planning to do investment in — or per segment, and then also in the — INR300 crores total investment in — INR15 crores to INR20 crores you were planning in auto segment and then PLI, you were to invest around INR100 crores. So this INR100 crore investment, how much revenue it can generate?

Rishab Handa — Executive Director & Chief Financial Officer

So on a stabilized level, you can expect of a 5x return on the investment.

Sunil Jain — Nirmal Bang — Analyst

Okay, but if I see your past growth block, I don’t have of ’23, but ’22 the gross block was over INR300 [Phonetic] crores. And you were talking about capacity utilization of somewhere say 65%, 70%. So is there anything which is non-productive assets which is there in the gross block.

Rishab Handa — Executive Director & Chief Financial Officer

Yes, there may be some amount of machinery for the electric vehicle space, which of course would be productive in the years to come. But not necessarily as such. And. I think one would need to consider the net block here, rather than the gross block because the company has been in this — in different lines of businesses since over 30 years. So there are assets being depreciated as well.

Sunil Jain — Nirmal Bang — Analyst

Okay. So this investment in toy business which you are talking about, that will be there in the near term or once the PLI scheme announced and then only you will be investing in that?

Rishab Handa — Executive Director & Chief Financial Officer

We would be doing it when the PLI scheme is announced which is as we speak today sitting for final approval from the ministry. So it should come in anytime.

Sunil Jain — Nirmal Bang — Analyst

Okay, and you talked about few things like you got supplier in India — supply to Hamleys. So can you talk about customer concentration like top customer how much revenue contribution in toy or top three customer, how much it is?

Rishab Handa — Executive Director & Chief Financial Officer

Yeah. I would not like to disclose customer wise numbers on this call, but like I have mentioned that we have some top customers, the names of which I’ve already mentioned. It would not be right on our part to disclose numbers in terms of customer-wise breakups.

Sunil Jain — Nirmal Bang — Analyst

No, no. I don’t want to name wise customer. Only thing our dependence on one, two, three or maybe…

Rishab Handa — Executive Director & Chief Financial Officer

No we are dependent on multiple customers. We are not dependent on any one customer, not any one customer has the majority of business with us. Though we do have x number of large customers who do contribute a major amount of business.

Sunil Jain — Nirmal Bang — Analyst

So if I put the question in another way round, like top customer is contributing less than 25% of your revenue?

Rishab Handa — Executive Director & Chief Financial Officer

The top customer today would be contributing not more than 15% to 18%.

Sunil Jain — Nirmal Bang — Analyst

Okay, fine. That’s all. That was what I was looking, the dependence on a single customer is not so big.

Rishab Handa — Executive Director & Chief Financial Officer

Yes.

Sunil Jain — Nirmal Bang — Analyst

And any, in your business, any order book which you runs like you get an order for next three months, six months?

Rishab Handa — Executive Director & Chief Financial Officer

So we get a schedule in terms of the upcoming season. And we are awarded POs accordingly. But there is no order book which is given to us say for the entire year. It depends upon the PO, and then subsequently, depend upon the performance of that respective PO.

Sunil Jain — Nirmal Bang — Analyst

Okay and domestic and export market seasonality will be different, like maybe having…

Rishab Handa — Executive Director & Chief Financial Officer

They are two different market altogether.

Sunil Jain — Nirmal Bang — Analyst

So Q2 will be for international market and Q3 for domestically. Am I correct?

Rishab Handa — Executive Director & Chief Financial Officer

No, I mean there is no — not quarter-wise segmented. For example, the institutional market in India starts from December goes on till July, but the retail market is always there, and it’s at a boom during the New Year or prior to New Year during the Christmas time. Similarly in the export market, it’s season, they order season wise. So there are two seasons for a particular big customer or three seasons per year for a particular customer.

So it’s all-year round market. It depends on what kind of product and which customer you’re dealing with.

Sunil Jain — Nirmal Bang — Analyst

Okay, any shipments quarter it can influence the seasonality or no?

Rishab Handa — Executive Director & Chief Financial Officer

Keeping in mind that we’re now getting into a blend of different products and a blend of different revenue streams, I don’t think that there should be any kind of the seasonality in that number.

Sunil Jain — Nirmal Bang — Analyst

Okay and this auto segment how many products are there? One is this fuel tank, any other product?

Rishab Handa — Executive Director & Chief Financial Officer

Yeah, so apart from fuel tanks, we do a lot of other plastic products as well. We do JCB roofs. We do windmill covers, we do consoles, rear consolers, front consoles, cabin part. There are markets other parts.

Sunil Jain — Nirmal Bang — Analyst

Okay, okay, fine. I’ll come back to you.

Rishab Handa — Executive Director & Chief Financial Officer

Thank you.

Operator

Puneet, may I request you to unmute your line from your side and go ahead with your question please.

Puneet — — Analyst

Yeah, am I audible?

Operator

Yes.

Puneet — — Analyst

Yes sir, you mentioned about the INR100 crores investment that we will make in the coming two to three years. So how would this be funded? Will this be funded by long term debt?

Rishab Handa — Executive Director & Chief Financial Officer

So that is something that we are finalizing as of now. It would be a mix of debt and equity coming in.

Puneet — — Analyst

Got it. And the investments will be made in the next two to three years. So you mentioned that we can expect five times returns on this. So when can we expect that to be in-place? I mean, within the next three years or five years, any timeline for that??

Rishab Handa — Executive Director & Chief Financial Officer

You see that is — like I mentioned that, that is something that we have already started as of now. We are already Investing a certain amount through internal accruals into this space. And hence, seeing the growth, a very positive growth percentage as well coming up in this space. Obviously with the PLI scheme coming in there are certain rebates and certain measures that have been set-up, wherein about, like I mentioned, about 60% to 62% of our investment is something that we get back in terms of incentives or subsidies, based on certain milestones that we attain.

Puneet — — Analyst

All right.

Operator

Puneet, do you have any follow-up question?

Puneet — — Analyst

Yes, so in terms of — I mean in terms of the deadline, the internal deadline that you have, about doing this five times the investment that you’re making. So I mean, can we expect that in the next four years or five years, I mean —

Rishab Handa — Executive Director & Chief Financial Officer

Yes, absolutely. So this investment of INR100 crores is not — it’s not going to be a one-time thing. It’s going to be over the two to three years and suitably depending upon the amount of CapEx being invested the returns would be coming in, which can be — which should be basically, from the day that we make the investment itself.

Puneet — — Analyst

Okay, perfect. That’s all from my side. Thank you and all the best.

Rishab Handa — Executive Director & Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Sunit Deora [Phonetic] from Vallum Capital. Please go ahead.

Unidentified Participant — — Analyst

Yeah, hi, good afternoon. Two questions. One is, you were talking about going from about INR170 crores, INR180 crores this dynamic here. Are you seeing the contracts that you have are going to start firing in two quarters from now, because your growth in this particular quarter versus the last year is about 25%, 30%.

Rishab Handa — Executive Director & Chief Financial Officer

See. Our growth has been coming up in different business segments this year. For example last, quarter four of FY23, we had a top [indecipherable] of INR50 crores. Going-forward I have already mentioned this split also that we are expecting business segment wise and how we would comprise the 300 number. Obviously, we are not giving — I mean keeping in mind the current quarter as well. We are pretty much in line to attain our target. Though majority chunk of business is expected in-quarter three and quarter four.

Unidentified Participant — — Analyst

Okay sir, So the seasonality build towards the second half of the year, so a lot of the numbers will–

Rishab Handa — Executive Director & Chief Financial Officer

It’s not about seasonality. So if I talk about the toys business, I had mentioned that we have impacts of certain large customers, which you know and when we deal with these kind of customers there’s a certain on-boarding process, there’s a certain time to — for a vendor to get on-boarded onto their systems. There are certain validations, audits et cetera that are required. So those things take time. And once commercialized, then the numbers start showing.

So hence, I mentioned that the numbers would rise up in-quarter three, quarter four. Though as we speak today, we are at a — we are growing month-on month anyway.

Unidentified Participant — — Analyst

Okay and I have one follow-up question, it’s something that was asked earlier on funding side. You raised INR80 crores through this potential listing [phonetic]. In addition to this, do you see any requirement for further equity raising.

Rishab Handa — Executive Director & Chief Financial Officer

Like I mentioned that we may — the PLI scheme coming in where there are certain rebates et cetera being offered, we are yet to finalize. But we would do it through debt and equity both. Nothing is finalized as of now, but I think it all depends on where the company is at that respective stage, and what is the money being raised for.

Unidentified Participant — — Analyst

Okay, thank you.

Operator

Thank you. Next question is from the line of Garvit Goyal from Invest Research. Please go ahead.

Garvit Goyal — Value Research — Analyst

Yeah, it’s already been answered. So nothing for now.

Operator

Thank you. Okay. Next question is from the line of Ritesh Shah from Investec Capital. Please go ahead.

Ritesh Shah — Investec Capital — Analyst

Yeah, hi. Thanks for the follow-up. A couple of questions. First is, when we say PLI is on toys, what does it mean? Does it also take care of the components? I would understand there would be a lot of electronic components also, which is used. So how does that work, and second is, I would presume that the GST rates, I’m not very sure are there differentials over there? How should we understand the math over here?

Rishab Handa — Executive Director & Chief Financial Officer

So see what I can disclose is the PLS scheme has four slabs coming in. It will start from a INR5 Cr investment going till INR200 Cr. And there are — and the percentage of rebate for each slab vary, starting from 5 to 25 to 100 to 200. And this rebate also varies depending upon certain milestones and the eligibility of each company, in terms of say a certain topline, a certain bottom line as well as a certain CapEx, et cetera that they’re willing to put in. So it depends.

And there are certain clauses to it, but there are substantial amount of rebates that are being generated for each slab that a particular company would be investing in.

Ritesh Shah — Investec Capital — Analyst

I appreciate that. My question is, when we say PLI, it has to be on a certain percentage of value addition, right. So I understand there is a big labor component over here that India realizes growth. There will be probably assembly part, there is injection molding, obviously we just spoke. So when we say PLI on a particular value, what is the value addition part that we are looking at?

Rishab Handa — Executive Director & Chief Financial Officer

So see — so for example we as a company are investing in a INR100 crore slab, there are certain revenue targets, subject to certain multiple criterias. For example, the employment generation being one, and other factors that would lead us to these rebates. So it’s not any one factor or it’s not just linked to a certain production in terms of numbers.

Ritesh Shah — Investec Capital — Analyst

Okay, if I just rephrase the question, as if the input materials, the input can be Chinese, and be still assembled over here.

Rishab Handa — Executive Director & Chief Financial Officer

So no, so that — so I understand your question. The PLI today is not being offered just on the components. It is being offered on the entire product which classifies as a toy.

Ritesh Shah — Investec Capital — Analyst

Okay, so would it mean that we will also get into the components, which could be electronics or how should we look at it, or we are taking only the polymers basically rotational molding, injection molding, what you indicated on the call?

Rishab Handa — Executive Director & Chief Financial Officer

Yeah, absolutely. So for example — so this is another reason why the government is coming up with multiple clauses, because there would be different companies doing all sorts of products in all sort of the same components and eventually assembling it and selling it out. So that the PLI today is not being offered just for example, on a company who is manufacturing the electrical component, rather being offered on the company who will be assembling and selling this as a product, which would be termed as a toy.

Ritesh Shah — Investec Capital — Analyst

Sure, that is helpful. I have two more questions. One is but broad-based. You indicated FY24 broad numbers on auto, toys and EV. If I had to fast forward, say five years or say seven years out, how would you visualize the segmentation, like would you wish toys to be like 50%, 70% of the business? What’s the thought process or the current mix that we see, is it more a focus to sweat the assets, that’s how we look at it? I’m just trying to understand the thought process.

Rishab Handa — Executive Director & Chief Financial Officer

You see, I mean, we are bullish on all different business segments, and internally also the management is focusing on different business segments. There are different management personnel focusing on different business segments. But yes we are most bullish on the toy space as we speak today. This is keeping in mind that many advantages and the development that I have mentioned previously, during my call. And keeping in mind our growth rate and keeping in mind the customers today that we are dealing with or getting into a relationship with, we should be expecting a substantial amount of growth, and of course the majority share coming from this business.

Ritesh Shah — Investec Capital — Analyst

Sure, this is helpful. I think we didn’t touch upon two parts on the call. One is, I don’t know whether you can lay out how many SKUs that we have in toys. Is that a right question to look at realization per SKU. And is there some method in which we are looking to increase this realization per SKU. That’s one. And second is on the distribution side, how many distributors, retailer touch points that we have? And is that a broad bifurcation of say INR120 crore toys, how much would be through our own channel and how much would be say be like B2B? Those are the two product questions. Thank you so much.

Rishab Handa — Executive Director & Chief Financial Officer

So to address your first question, see, like I mentioned now we — when I say toys we are into toys which has an average selling price ranging from INR300 going up till INR5 lakhs or say INR7 lakh wherein we do the large outdoor places. You must have seen these big play centers installed at builders or bigger schools.

So we don’t really see this business as a realization per unit, because of the fact that the price per unit varies a lot, both within the toy segment we can sub classify it into three categories. One being toys. Second being pre-school furniture that we do, and the third being outdoor play equipments. And then you could probably evaluate it with respect to this methodology that you just mentioned.

Coming on to your second part of your question, we initially had been an institutional-oriented company, and now focusing and our major growth coming in from different segments. The retail segment being one. The export market being the second, and the online market being the third. Going down the line in terms of numbers or volume what we expect a large number of — the major part of business coming in from would be direct contract manufacturing for the bigger brands such as say doing it for Kmart or doing it for Little Tikes or doing it Hamley’s for that matter. And of course at the same time parallelly building your brand as well.

So there are both strategy that are being adopted.

Ritesh Shah — Investec Capital — Analyst

Sure, this was very, very helpful. Thank you so much.

Rishab Handa — Executive Director & Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Mohanchand from — individual investor. Please go ahead.

Mohanchand — Individual Investor — Analyst

Hello. Yeah, hi. Thanks for giving me this opportunity. I have couple of questions. In the recent investor presentation which was released for this quarter earning, there was a specific mentioned that their is a strategic tie-up happening with HPCL. And with the specific remarks that HPCL has been invested in one of the Ok Play Group company. So would it be possible for you to clarify, what kind of investment is it and what exactly is this strategic partnership?

Rishab Handa — Executive Director & Chief Financial Officer

See HPCL, so we’ve been working with HPCL, since a long-time now, and we have basically developed customized three wheeler for them for transportation of their LPG gas cylinders. So if I tell you a little bit about HPCL, they have to be about 75,000 distributors, who transport these cylinders to households as well as commercial places. And each distributor has about 10 to 12 of these electric three-wheelers, which are being used today for their business.

So it’s a captive opportunity of about 45,000 to 50,000 three wheelers, which over a period of time. HPCL intends to convert to electric. Today, these are largely IC engine vehicles being say Piaggio loaders or Bajaj Maximas. And the vehicle that we developed for them is a replica of these vehicles, but on the electric powertrain. So hence the running cost comes down. And from a TCO perspective, which is the total cost of ownership perspective, it makes a better value proposition for the end customer.

Here by customer. I mean the distributor of HPCL. So for this, they had invested an amount of about INR1 crore into our company, which was just as a reassurance for us to be their mobility partners in this strategy or goal of theirs to convert their fleet to electric. So this is what we’ve been working with them since the past two to three years now. And down the line, intend to sell these electric vehicles, all these are electric vehicles to the HPCL dealer.

Mohanchand — Individual Investor — Analyst

Okay, okay. And is this investment in the form of equity investment in one of the Group companies or —

Rishab Handa — Executive Director & Chief Financial Officer

It’s equity investment

Mohanchand — Individual Investor — Analyst

In which company.

Rishab Handa — Executive Director & Chief Financial Officer

This is in a subsidiary called RMRS Electric Vehicles.

Mohanchand — Individual Investor — Analyst

Okay, okay. And you also mentioned that in the first phase we will be delivering some 1,000 — deploying some 1,000 vehicle across Delhi NCR. So. What is the total — I mean, do we have some binding agreement or contract with them or — and what is the overall quantity we are looking at? I mean you have mentioned about 80,000-plus opportunity size. But do we have something, some MOU or something in place or it is the estimation that we are doing.

Rishab Handa — Executive Director & Chief Financial Officer

So see, these distributors, they are HPCL distributors, but they are not bound by the company. For that matter any distributor is not bound by the company to In one way, just place the vehicle that has been suggested. So HPCL is more of a facilitator is how I see it. We work with HPCL to do the marketing of the product together and eventually would generate the sales hype, so between HPCL, us and the third-party, which is a battery swapping. operator, we have signed an MOU, wherein we plan to deploy 1,000 of these.

Now, whether we deploy 1,000 or 2,000 or 500 that remains to be seen. But we plan to deploy 5,000 in Delhi NCR as a pilot case and further grow this business.

Mohanchand — Individual Investor — Analyst

But it will be optional to these distributors?

Rishab Handa — Executive Director & Chief Financial Officer

Absolutely.

Mohanchand — Individual Investor — Analyst

Okay, okay, sure. And one thing is what I understand now broadly, we have this EV segment in-place and then auto segment in place and the toy segment. But unfortunately, we do not have this segment wise revenue and revenue and profit breakup. Wouldn’t it be great if we start disclosing these segment numbers?

Rishab Handa — Executive Director & Chief Financial Officer

We will definitely do that as well. I’ll take it up internally.

Mohanchand — Individual Investor — Analyst

Any number do we have currently -in terms of what would be the broad revenue and how fast do we disclose it?

Rishab Handa — Executive Director & Chief Financial Officer

I have already mentioned the revenue breakup in my call. But as far as the profitability is concerned, I’ll have to get back to you on that.

Mohanchand — Individual Investor — Analyst

Sure. And one more thing, sir on toy side, within this presentation and you also mentioned in your last call as well, this strategic partnership with the global company. So what kind of partnership, is it? Is it only contract manufacturing or we are obviously working as a distributor for them and then exporting to rest of the country.

So could you just elaborate what exactly does this partnership is with NV Entertainment.

Rishab Handa — Executive Director & Chief Financial Officer

This is a contract manufacturing play. We would not want to work as a distributor, because like I mentioned that the products that we do are very voluminous and its not freight friendly. Hence there is a substantial amount of cost coming in. Secondly, the import duties in India are very high on toys. So the landed cost goes up tremendously. And we have chosen to be — in fact they’ve chosen us to be their contract manufacturers in India and supply to the Indian market, the Middle East market, the Australian market and Chinese market.

So the reason of doing this, and of course the manufacturing cost comes down tremendously. The margins obviously the commission that we as a company make on the product is much less compared to what it would anyways costs them to deliver the product to the respective countries. So that is the whole idea of getting into this relationship.

Mohanchand — Individual Investor — Analyst

Okay, and what’s the duration of this contract? I mean. And any —

Rishab Handa — Executive Director & Chief Financial Officer

There is timeline. It depends entirely on the performance and we’ve already commercialized one SKU which we started selling in India through Hamleys and we are in the process of commercializing several other SKUs as we speak. And it depends entirely on the performance of a particular product as well as of course the company.

Mohanchand — Individual Investor — Analyst

Okay, okay, understood, sir. And one last question from my side. This quarter the quarterly numbers we have seen this deferred tax provision being there which — I mean approx INR4 Cr. But this was not there in earlier quarters. Is it something — I mean considered in this quarter only or what exactly was the reason for creating this buffer type planning [Phonetic]?

Rishab Handa — Executive Director & Chief Financial Officer

Sorry, your voice was a little unclear during the last two lines that you spoke. Could you repeat that again, please?

Mohanchand — Individual Investor — Analyst

Yes, yeah, yeah, sure. Is it better now?

Rishab Handa — Executive Director & Chief Financial Officer

Yes, it’s better now.

Mohanchand — Individual Investor — Analyst

Okay, so basically in this quarter we have noticed that there is this deferred tax liability, which is basically approximately around INR4 Cr. And this was not there in earlier — I mean, there is no provision there in earlier quarters. So what is the underlying reason for doing this?

Rishab Handa — Executive Director & Chief Financial Officer

Yeah, so I’ll tell you. This is as per the income tax rules. We had certain accumulated losses in the past few years, hence we are not liable to pay tax up to that amount. And — but however following those income tax rules, you have to portray it in a certain manner. The current tax liability in actual is negligible. So this is a deferred tax liability that is being — that is being shown on the balance sheet.

Mohanchand — Individual Investor — Analyst

Okay, okay. Okay. Yeah, that’s it from my side, sir. Thank a lot. Thanks a lot for giving this opportunity

Rishab Handa — Executive Director & Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions]. As there are no further questions, I’ll now hand the conference to Ms. Supriya Made for closing comments.

Supriya Madye — Analyst

Thank you Rishabji for being on the call and talking to investor and thank you all the participants on this call. On behalf of Kirin Advisors Private Limited, that ends the call. Thank you very much.

Operator

[Operator Closing Remarks]