Olectra Greentech Ltd (NSE: OLECTRA) Q2 2025 Earnings Call dated Oct. 25, 2024
Corporate Participants:
B. Sharat Chandra — Chief Financial Officer
Unidentified Speaker
Analysts:
Amar Kant Gaur — Analyst
Gaurang — Analyst
Yash — Analyst
Deepak Poddar — Analyst
Sudhakar Rao — Analyst
Sanjay — Analyst
Ritvik Gurang — Analyst
Umashankar Mukherjee — Analyst
Nanda Padmarjun — Analyst
Anil Singh — Analyst
Prithvi Bhora — Analyst
Rajiv Marthiv — Analyst
Ayush Jain — Analyst
Sanket Kelaskar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Olectra Greentech Limited Q2 FY ’25 Investor Conference Call, hosted by Axis Capital Limited. As a reminder, all participants’ 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] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amar Kant Gaur from Axis Capital Limited. Thank you, and over to you, sir.
Amar Kant Gaur — Analyst
Thank you, Neha. Good evening, everyone. On behalf of Axis Capital, I welcome you to the Q2 FY ’25 post results conference call of Olectra Greentech Limited. From the Management Team we have with us Mr. B. Sharat Chandra, CFO; Mr. P. Hanuman Prasad, Company Secretary and Compliance Officer; along with teammates from Finance and Strategy.
I will now hand over the call to Mr. Sharat Chandra for his opening remarks, post which we can have the Q&A. Over to you, Mr. Sharat Chandra.
B. Sharat Chandra — Chief Financial Officer
Thank you, Amar. A warm welcome to all of you, who have joined us today for the Olectra Greentech Limited earnings call for the quarter two ’24-’25. We are taking as read the Presentation, which is put on our website along with a Safe Harbor statement thereon.
Before I talk on the key financial highlights for the second quarter, I would like to state that overall results of quarter two have set the trend for the future second half of the year. And we are reasonably confident of delivering the guidance, especially with regard to the targeted volumes for the FY ’25. We have registered our highest ever quarterly revenue, EBITDA, and profit after tax. Till date, we have delivered 2,217 electric vehicles.
I would like to present the key highlights of your company as of 30th September at a glance. Olectra buses have successfully covered more than 28 crores kilometers across the length and breadth of the country. The strong demand continues with the company’s net order book of electric buses stands at 10,503 numbers after delivering 315 buses in quarter two financial year ’25. Our focus continues on increasing our manufacturing capacity and enhancing our technology capabilities. The construction work of the new state-of-the-art plant at Sitarampur is in full swing and your company has transitioned to the new facility, as informed earlier, in quarter one.
Now I will begin with providing the key highlights. Coming to the consolidated financial year for the quarter two FY ’25. On our revenue, Olectra has clocked its highest ever quarterly revenue at INR523.67 crores, marking a growth of 70%, over INR307.16 crores from Q2 of last year. Our EBITDA was at INR85.69 crores, once again our highest ever quarterly earnings, up by 90% from INR45.06 crores in Q2 last year. PAT at INR47.65 crores, up by 156% from INR18.58 crores in Q2 of last year.
On a consolidated basis, Olectra has clocked the highest-ever quarterly revenue at INR514.07 crores — on a standalone basis, sorry — Olectra has clocked the highest-ever quarterly revenue at INR514.07 crores versus INR297.87 crores of the previous year, up by 73%. The company’s EBITDA for quarter two reached an impressive INR83.24 crores, once again our highest ever quarterly earnings, up by 88% from INR44.19 crores in Q2 last year. The PAT stood at INR48.2 crores, up by 130%, from INR20.99 crores in quarter two last year.
So, thank you, and over to the Axis team for the Q&A.
Questions and Answers:
Operator
Thank you. We will now begin the question-and- answer session. [Operator Instructions] The first question is from the line of Gaurang from Utility Unified. Please go ahead.
Gaurang
Am I audible?
B. Sharat Chandra
Yes, please.
Gaurang
Yeah. Good evening. Congratulations on the fantastic set of numbers. It is more than the expectations that the numbers are. Sir, my query is with related to the operational revenue which Olectra gets as a virtue of partly owning the operational firm, EveyTrans. So, I was specifically interested in BEST and MSRTC as that’s where our major chunk of numbers are. So, suppose when we deliver 5,150 buses for MSRTC, and 5,100 buses for BEST, that will happen for the next year, put together that number is roughly around 10,250 electric buses. So, my question is, EveyTrans could be operating those buses at an average of 300 kilometers per day, that is 200 kilometers for BEST and 400 kilometers for MSRTC at an average of INR70 per kilometer. So, if so, am I right in projecting that the yearly revenue of EveyTrans would be around INR7,856 crores for that financial year? And again, if so, I want to know what percent of this INR7,856 crores will be part of Olectra’s profit and loss sheet? And what would be the net margins from this operation that the company has projected?
B. Sharat Chandra
Yeah.
Gaurang
That’s my question.
B. Sharat Chandra
Yes, Gaurang, see basically with regard to the numbers what you have quoted for EveyTrans, I think based on 10,250 numbers at INR70, the turnover will be approximately whatever you have stated. So, as far as we are concerned, Olectra, just to clarify once again, so we manufacture and supply and sell the buses through EveyTrans. So, our revenue is recognized the moment we sell the bus to them. Post delivery of the buses, we take care of the maintenance for the entire project duration, which will be about 12 years. So, during the operations, based on a number of kilometers, whatever EveyTrans buses of 10,250 buses are operating, we will be generating annual maintenance service revenue, which could be approximately, say, about INR5 per kilometer on average.
Gaurang
Okay. Got it.
B. Sharat Chandra
I think, I hope, I have clarified your question.
Gaurang
So, the revenue realized for Olectra would be into — per kilometer into INR5, and what will be the net margins on this that we have projected?
B. Sharat Chandra
So, net margins on this will be about around 15%.
Gaurang
Okay. Thank you. And my second question is related with Chennai bus tender which recently got completed, where Switch won the tender for 500 electric buses. My question is whether we participated? Because Switch has quoted some INR70 or INR80 per kilometer for the non-AC and AC buses, respectively. So, did we participate? And if we did, were we, like, really high in the bid that we could not give it to this tender or what is the reason?
B. Sharat Chandra
So, one second. Just I will ask my colleague to just clarify this question.
Gaurang
Yeah.
Unidentified Speaker
Hi. Good evening. EveyTrans Private Limited has participated in this tender since it is a GCC tender. And we have provided — from Olectra side, we have provided our bus cost and all the — bus cost and AMC cost to EveyTrans, and they have taken a call. And as per their calculation, they have bidded this tender.
Gaurang
Yeah, but the bids were around INR74 for non-AC and INR80, I think, for AC as per the article in one of the newspapers that I read. So, is it that we have lost the competitive touch or is it because the delivery schedules were very stringent that we were not considered?
Unidentified Speaker
I think, this is as per the EveyTrans and EveyTrans calculations, we can’t comment on that.
B. Sharat Chandra
Okay. See, Gaurang, just to clarify, EveyTrans at the time of bidding uses manufacturing authorization form of Olectra. And based on the project metrics with regard to number of kilometers, the number of buses, the project duration, and all the scheduled trips, so we provide the cost — tentative cost. And based on that, they bid.
Gaurang
Got it. Understood. So, probably this time there were a lot of technical specifications that were added and probably we could not probably outbid them. This is what is my understanding. Okay. Yeah. Thank you. Those were two questions. Thank you. Thank you for the clarification. And all the best for the H2.
B. Sharat Chandra
Yeah. Thank you.
Operator
Thank you. The next question is from the line of Yash from JM Financial Limited. Please go ahead.
Yash
Yeah. Hi. Good evening. My first question is on receivables. So, what sort of receivable days should we work with? And how much time will it take to liquidate the receivables? I assume it’s from EveyTrans only, most of it. So, that’s the first question that I have.
B. Sharat Chandra
Yeah. See, as far as receivables is concerned, if you see the past three quarters or four quarters, the receivable is coming down. So, currently it’s about five and a half months. And overall net working capital cycle is less than three months. So, we expect maybe in couple of quarters, improvement in the working capital cycle.
Yash
But the receivable number will stay elevated, the receivables number?
B. Sharat Chandra
See, as we increase our sales, the receivable numbers obviously will go up, but in terms of overall number of days, it will come down.
Yash
Okay. And what are the risks that you carry? I mean, in case of this receivable in the worst case, is there any risk?
B. Sharat Chandra
We do not foresee any risk. And the other good thing is all the contracts, new contracts, the customer, EveyTrans has secured sanctions in terms of term loan facilities. And we hope, accordingly, the working capital cycle to come down.
Yash
Okay. Just to delve a little on this. What is the amount of guarantees that Olectra has given to EveyTrans, if any, corporate guarantees against the loans?
B. Sharat Chandra
No, we have not given any corporate guarantees.
Yash
Okay. And my second question is, what is the sort of volumes we are looking at for the second half? And is the new facility which you mentioned, is it now completely running or what is the status of it if you could provide some?
B. Sharat Chandra
Yeah. As communicated in the last earnings call, we have met the target for Q2. And Q1 and Q2, it’s in line with our guidance. And we are aligned and on track with our target of executing about 1,500 numbers in this financial year.
Yash
So, that means about 1,000 in H2 that you are targeting?
B. Sharat Chandra
Yeah, that is what is the targeted volume. Yes.
Yash
Okay. And the new facility is up and running or what is the status of it?
B. Sharat Chandra
Yeah. We have — it is up and running. As well as partially we have started the facility, and we have shifted from the old facility. And currently, we have the capacity to meet this target.
Yash
And in the second quarter, what was the number from the new facility if we could give that?
B. Sharat Chandra
See, the entire numbers are from the new facility, we have delivered about 315 numbers.
Yash
Okay. And the last question is, what is the bid pipeline like for the next two quarters, three quarters? Any material bid pipeline that you have for the new orders?
B. Sharat Chandra
So, you are talking about new tenders?
Yash
Yeah, new tenders. New tenders.
B. Sharat Chandra
Yeah. One minute.
Unidentified Speaker
Currently, we are L1 for one of the tenders. And also, we are also expecting tenders from — the CESL tenders are there in pipeline, and there is a tender from NW Karnataka, and we are also expecting tenders from some other new states also.
Yash
So, what is the quantity of the L1 that you mentioned?
Unidentified Speaker
You can say that the tenders will be about 2,000 to 3,000 buses.
Yash
That you are L1 in?
Unidentified Speaker
L1, we are L1 for about 327 buses.
Yash
Okay. Thank you. Good luck.
B. Sharat Chandra
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
Yeah. Am I audible?
B. Sharat Chandra
Yeah.
Deepak Poddar
Yeah. Thank you very much, sir, for this opportunity and many congratulations for a good set of numbers. Sir, I just wanted to understand how would we see the ramp up in our volumes? I mean, this quarter, I think, we delivered about 315 buses, is that right?
B. Sharat Chandra
Yes, correct.
Deepak Poddar
Yeah. So, how do we see ramp up going into third quarter and fourth quarter? And what sort of volumes we are targeting for FY26 and ’27, yeah?
B. Sharat Chandra
Yeah. As indicated earlier, Q3 and Q4 will be better than H1. So, we — for the target for this year it is 1,500 numbers, and next year we are targeting more than 2,500 numbers.
Deepak Poddar
Next?
B. Sharat Chandra
Next financial year, 20 — [Foreign Speech] you are talking about ’26-’27. ’26-’27 definitely will be 5,000 plus numbers.
Deepak Poddar
’27 is 5,000 plus, and ’26 is 2,500 buses, right?
B. Sharat Chandra
Yeah. We are targeting anywhere between 2,500 to 5,000 numbers.
Deepak Poddar
Okay. Because, I mean, the — our current order book is about — close to about 10,000 buses, right?
B. Sharat Chandra
Correct.
Deepak Poddar
And that we need to deliver over 1.5 to 2 years?
B. Sharat Chandra
Correct.
Deepak Poddar
So, ideally, isn’t that your — I mean, delivery in FY26 would have to be much higher than what we are indicating?
B. Sharat Chandra
That’s what in — we are actually planning to complete this 10,500 numbers in the next two financial years.
Deepak Poddar
Next two, FY26 and ’27; that’s what you are saying?
B. Sharat Chandra
Right.
Deepak Poddar
Okay. Understood. And what are the margins one should look at? I mean, we saw some movement in your margins, right? I mean, with the increase in volume you are getting some operating leverage advantage as well. So, your margin currently is at 15.6% EBITDA margin in the second quarter. So, how should one look at the margin traction going forward?
B. Sharat Chandra
See, the margins quarter-on-quarter will be — will depend on the product mix. And as we see larger volumes, when we talk about 10,000 numbers, we expect the margins to stabilize around anywhere between 10% to 12%, because we have to be in line with the competition, in line with the volumes. Because the fixed cost will also go up, and whatever additional contributions we earn from the revenue and the fixed cost absorption will be there. And on the near-term future, the margins could be like this, what we are earning now. But over a long-term, the margins will come down in percentage terms, but in absolute numbers, as you are aware, it will be very high.
Deepak Poddar
Okay. So, what you are trying to say in the near term, this 15.5% margin can be sustainable, but as we go towards executing this entire product mix of 10,000 buses, your margins would, I mean, range between 10% to 12%.
B. Sharat Chandra
Yeah. See, it all depends on — see, we are working towards localization, we have been working on reduction of our raw material costs. So, that is where we are seeing better margins in this quarter. So, it all depends on various variables, which are going to be there. So, we would give the guidance around 12%.
Deepak Poddar
12%, okay. On an average, for this 10,000 buses as a whole, right?
B. Sharat Chandra
Correct.
Deepak Poddar
Okay. And generally, what is the realization we get per bus?
B. Sharat Chandra
If you look at the product mix, on average, it’s about INR1.5 crores.
Deepak Poddar
Okay. Understood. And how do we see the debt scenario? I mean, do we have to get more debt for executing? Because it’s working-capital intensive, right, so as you increase the volume, you would need some capital for working capital. So, how are we placed there?
B. Sharat Chandra
As of now, we have sufficient limits to take care of the next six months to one year. And what we are seeing is, basically, our customer, EveyTrans, there — all the new projects, the financial sanctions or financial closures are already in place in various stages of the documentation. So, what we anticipate is, basically, our working capital requirements will not increase as all the financial sanctions and all the financial closures are completed for all these — for these two major contracts.
Deepak Poddar
Okay. So, do we expect an increase in debt going forward?
B. Sharat Chandra
So, as of now, basically, our debt will increase with regard to the term loan, where we have availed for the new facility. So, on utilization of this facility, we have actually a sanction of INR500 crores. So, by utilizing this facility, our term debt will increase, which over a period of four to five years, we expect the repayment should happen.
Deepak Poddar
Okay. So, term debt is of INR500 crores, right? Am I right?
B. Sharat Chandra
Yeah.
Deepak Poddar
Okay. So, that will increase effective when?
B. Sharat Chandra
It’s already in place, we have started availing in this quarter.
Deepak Poddar
Started availing in this quarter. Okay. Understood. Fair enough. I think that would be from my side. All the very best. Thank you so much.
B. Sharat Chandra
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sudhakar Rao, an individual investor. Please go ahead.
Sudhakar Rao
Good evening, gentlemen. Can you hear me?
B. Sharat Chandra
Yeah. Very good. Yes, we can hear you.
Sudhakar Rao
I am Sudhakar from Hyderabad. Hearty congratulations for the excellent results for this quarter. I have a few questions, sir. The gross margins were very good at 15.65%. Was it due to improved operational efficiency and localization of components, or due to the composition of the type of buses delivered and restricted only to this quarter? Or whether we can expect the same margins in the future also?
B. Sharat Chandra
Okay. Thank you, Mr. Sudhakar. Basically, it’s a mix of both. So, in terms of we have been working towards localization and our cost of efficiencies we are bringing in. So, that is one reason, and also the product mix. It’s a combination of both which has given us this margin. And we expect — overall, if you look at the gross margins, we expect on a company as a whole between 25% to 28%.
Sudhakar Rao
25%?
B. Sharat Chandra
25% to 28% the gross margins. When we talk about gross margins, I am talking about the material versus the sales.
Sudhakar Rao
Okay. [Foreign Speech] Have you finally drawn the plans to raise equity through QIP and other things? You are going ahead with the debt only for the new project?
B. Sharat Chandra
As of now, we are actually funding the project through internal accruals and debt. So, the management is yet to decide on the — any kind of fundraising activity. So, at an appropriate time, whenever there are internal clearances, the management is going ahead for a fundraise, we will definitely notify the shareholders.
Sudhakar Rao
So, still there is a possibility, even though we are almost halfway through the new project implementation?
B. Sharat Chandra
Not now, Mr. Sudhakar. Basically, as we are growing, in the future.
Sudhakar Rao
Okay. Future, you cannot say, okay. For the present project on hand with greenfield one, I think you are already tied up for the debt. So, you might be mostly going ahead with that. [Foreign Speech] Regarding the deliveries and your capacity, present capacity, and when the full capacity of 5,000 buses will come, there is a lot of confusion. In each con calls there is a different story I get. Last time you said that you will be doing 1,500 buses in this financial year.
B. Sharat Chandra
Correct.
Sudhakar Rao
But so far, the deliveries are not so promising, and will you be able to reach 1,500 in this financial year?
B. Sharat Chandra
Mr. Sudhakar, actually we have given a guidance of about 300 numbers in this quarter. Against that, we have done about 315. Overall, H1, we gave a target — or we are in line with the guidance whatever we have given for H1. And we have indicated also, H2 will be the biggest half year. And we are confident of meeting the guidance of 1,500 numbers at this juncture.
Sudhakar Rao
Okay. Earlier on, you said that the total capacity of 5,000 will be ready in this financial year by March. That was the last time you had said that.
B. Sharat Chandra
Yeah, we have mentioned that.
Sudhakar Rao
Just now I heard you say that next year’s capacity will be only 2,500. How come they do not match at all?
B. Sharat Chandra
No, I have not said capacity. I said the target. Capacity, we are building to 400 buses per month by the end of this financial year. What I mentioned is the target for this year is about 1,500 numbers. Next year and the next two years we will complete this — the order book 10,500 numbers, we are planning to complete within the next two financial years.
Sudhakar Rao
So, from April ’25 onwards, sir, there can be deliveries of 400 buses per month, April ’25?
B. Sharat Chandra
That is our target. That is our target.
Sudhakar Rao
Okay. [Foreign Speech] One more thing, this one, other expenses have doubled to INR12 crores from INR6 crores. Any extraordinary items or any —
B. Sharat Chandra
In line with the growth in operations, in line with the growth, there is no extraordinary items, extraordinary expenses.
Sudhakar Rao
[Foreign Speech] One more small request, sir, the financial figures in the quarter, they are given in lakhs. Considering the growing size of the business, if the figures are given in crores, it will be easier to read and understand. Please consider this if there’s no law prohibiting.
B. Sharat Chandra
Yeah. We will just examine and then we will discuss with our auditors and then do the needful.
Sudhakar Rao
Yeah. Okay. That’s all from me. Thank you.
B. Sharat Chandra
Thank you. Thank you, Mr. Sudhakar.
Operator
Thank you. The next question is from the line of Sanjay from SK Securities. Please go ahead.
Sanjay
Hello? Am I audible?
B. Sharat Chandra
Yeah.
Sanjay
Yeah. Hi. Good evening, and congratulations on a good set of numbers. I am very happy that this time whatever number we have committed and really you got the number, so congratulations to your whole team. My question is, you just mentioned about in H2 you are targeting delivery of around 1,000 buses. So, any — in Q3, what number you are targeting?
B. Sharat Chandra
The overall Q3 will be better than Q2, that much I can say as of now.
Sanjay
Okay. And generally, this Vahan Portal generally gives a 90% accuracy of numbers, because some numbers are not there. In October, it showed number in about single digit. So, any challenges, any delay in delivery, because there is not much delivery happening in October month?
B. Sharat Chandra
I think, we have clarified in the past about the Vahan Portal. So, as far as Olectra is concerned, we manufacture and deliver our buses to our customers. And the customer completes the other process of registering and getting the approval from the STU. And there will be a time lag between delivery and the registration. So, that is one aspect. Second is, tilll recently some of the states are not included in the Vahan Portal, so there could be differences because of these reasons.
Sanjay
Sure. I can understand. But there is no challenge in the production and delivery so far in October? It’s going smoothly, right, in the new facility?
B. Sharat Chandra
Yeah, it’s going on smoothly in the new facility, yes.
Sanjay
All right. Great, and wishing you all the best. Thank you.
B. Sharat Chandra
Thank you, Mr. Sanjay.
Operator
Thank you. The next question is from the line of Ritvik Gurang, an individual investor. Please go ahead.
Ritvik Gurang
Sir, it is that the Q2 results are indeed amazing. And I am very happy to know that Q3 will be much better than Q2. So, congratulations on the performance of Olectra Greentech. Hello, sir?
B. Sharat Chandra
Thank you, Mr. Ritvik.Yeah. Thank you, Mr. Ritvik.
Ritvik Gurang
Yeah. I have a question, sir. My first question is regarding the insulator business. In future, do you have any plans of demerging the insulator business into a separate entity? Because in the world of mergers and acquisitions, I see companies demerging their original business and focusing on the new business. For example, in case of Unilever, they are demerging their ice cream business into a separate entity. So, any plans of demerging the insulator into a separate entity?
B. Sharat Chandra
Mr. Ritvik, as of now, there are no intentions of demerging the insulator into a separate entity.
Ritvik Gurang
Okay. Because the insulator business is growing at a snail pace compared to the bus business, bus business is growing very fast. So, that is why I asked that question.
And my second question is regarding the gratuity funding. I have seen your annual report where your gratuity liability has shot up from INR2 crores to roughly around INR3 crores. Your liability is growing. So, any plans of creating a trust and funding the liability to the trust? As you know that there are tax benefits for funding the liability?
B. Sharat Chandra
Yeah. As of now, we are actually providing based on the actuarial valuation. So, as we grow we may have to deliberate this internally. As of now, we have no intentions of creating a separate trust.
Ritvik Gurang
Yes. I understand, sir. But you can do a part funding of the trust. And you can do a SIP and fully fund the liability.
B. Sharat Chandra
Your suggestion is noted, Mr. Ritvik. We will deliberate internally.
Ritvik Gurang
Maybe in two years it would be a good idea to start gratuity funding.
B. Sharat Chandra
Noted, Mr. Ritvik. Yeah.
Ritvik Gurang
Okay, sir. Thank you very much, sir. I look forward for great performance of Olectra. I have been invested since September 2017, and 2020 — since 2020 the time is magical for Olectra.
B. Sharat Chandra
Thank you. Thank you so much.
Ritvik Gurang
I hope it shoots up like a Tesla.
B. Sharat Chandra
Thank you. Thank you. We definitely — with the support of shareholders we hope to reach those milestones.
Ritvik Gurang
Thank you very much, sir. I have no other questions.
B. Sharat Chandra
Thank you so much.
Operator
Thank you. The next question is from the line of Umashankar Mukherjee, an individual investor. Please go ahead.
Umashankar Mukherjee
Good evening, everyone. So, congrats, sir, for the great results. And I have a question — two questions, small. One is that, we have — apart from BYD, are you planning for any vendor for our battery technology from India? And secondly, are you targeting any small player — private player for our contract like apart from the transport, state transport? Any private, are you targeting small, small customers and getting orders? That’s it. Thank you.
B. Sharat Chandra
Yeah. Mr. Shankar, thanks for the query. Basically, we have a very long-term relationship with BYD. And currently, we are sourcing for all the STU related from BYD. And we are also — I think we have indicated in the past, we have a strong R&D team and we have been working on an alternative platform and we have delivered in the past on working on an alternative platform. So, there is no such restriction as such per se.
And with regard to private players, we have in the past — last year we have sold about 19 buses to a private player known as Fresh Bus. We continue to engage with private parties. This market is slowly picking up, the traction is yet to happen. But there are a lot of opportunities, definitely the opportunities will be much higher than the STU markets, maybe in two, three years’ time. So, we are working with various private customers, and we hope to finalize the contracts in the near future.
Umashankar Mukherjee
Thanks. Thank you, sir. Sir, the follow-up question would be like, BYD, I know you have a contract till 2030. But seeing the geopolitical issues across the globe, and China especially have a relation with India, so is it possible to have an alternative Indian partner, Indian manufacturer of getting suppliers for batteries to be in the safer side; is that what you are saying?
B. Sharat Chandra
Yeah, definitely. Basically, in the recent past the government of India has sanctioned PLI scheme, and a few Indian companies have started in the manufacturing batteries. So, it will take another two or three years’ time, definitely which our company will explore, based on technology and the cost and economics. So, definitely, this will help in the long term.
Umashankar Mukherjee
Okay. Thank you, sir. For e-tippers, any update on e-tippers, any new order, e-tippers or hydrogen? Reliance, we got some news, tie-up, do you have any update on this?
B. Sharat Chandra
E-tipper, we have delivered till date about 51 numbers. We have been conducting a lot of demos and trials across various project sites. The traction is yet to happen. We expect the traction to come in in the next six months to one year.
As far as hydrogen — your question on hydrogen is concerned, as these technologies are at a very nascent stage, we have decided to discontinue and — considering the current economic viability. And as we have a very huge order book, we are now focusing on completing the delivery for this order book [Phonetic].
Umashankar Mukherjee
Thank you, sir. Thank you very much. All the best, sir.
B. Sharat Chandra
Thank you.
Operator
Thank you. The next question is from the line of Nanda Padmarjun, an individual investor. Please go ahead.
Nanda Padmarjun
Thank you. Congratulations on a great set of numbers. Q2 numbers are really, really good. I have two questions. The first one is, in Q1 you updated that we sold five buses to Microsoft. Did we sell anything in Q2? If yes or no, are there any further pending orders from the same entity?
The second question is on margins. The — I am assuming that the rate that we fixed with Evey is fixed per bus for each of the contracts pre-signed. And over time, the industry believes that the battery rates will come down, which would mean that the overall cost should come down significantly, which implies that the margin should actually expand as we grow with time. Is there anything fundamentally wrong in my assumptions?
B. Sharat Chandra
Yeah. Basically, you are right in saying that the battery costs are expected to come down. Yes, we also have the same expectations. As far as the margin percentage is concerned, margin percentage — what we gave a guidance is basically it could stabilize around 12% based on competition and volumes. And as far as we operate, I think you must be aware on cost-plus model. So, if the cost comes down, the sales price will also come down accordingly. If the cost goes up, the sales price will go up. And these are all based on mutual discussions and agreements. So, when we are talking about 10,500 numbers, there will be a mutual agreement between both the companies and accordingly the price is fixed at cost-plus.
Nanda Padmarjun
Okay. And the other question on Microsoft deliveries?
B. Sharat Chandra
Microsoft deliveries, we completed whatever order we had in hand, but we are still in discussion with various other parties, private customers. Maybe we will soon finalize based on — we are in advance stage of discussions.
Nanda Padmarjun
Okay. Thank you very much, and all the very best.
B. Sharat Chandra
Thank you.
Operator
Thank you. The next question is from the line of Anil Singh, an individual investor. Please go ahead.
Anil Singh
Good evening, Mr. Sharat.
B. Sharat Chandra
Good evening, Mr. Anil.
Anil Singh
You mentioned that by March 2025, we will have a capacity of 5,000 buses per year.
B. Sharat Chandra
Yes.
Anil Singh
Is it correct?
B. Sharat Chandra
Correct, yeah. Yes.
Anil Singh
But you are giving a projection of delivery of only 2,500 buses for FY 2026. [Speech Overlap] 50% on [Speech Overlap]
B. Sharat Chandra
No. Basically I clarified. I will clarify again. It will be 2,500 to 5,000 numbers, anywhere between that range. And we expect to complete the existing order book in 2025-’26 and ’26-’27.
Anil Singh
So, my question is that you are saying the capacity of 5,000 buses will be ready by March 2025. Why cannot we say with full confidence that we will be delivering 5,000 buses or 80% of the capacity, that is 4,000 buses in the next financial year? It’s a huge gap, I mean, to say that. Even if you want to be conservative, 2,500 buses next financial year is a very 50% of the capacity, which we are building by March 2025 itself. So, I just want to need a clarification whether [Speech Overlap]
B. Sharat Chandra
Yeah. See, on a conservative note, 2,500 number is what I have indicated, but our target is to reach anywhere between 4,000 to 5,000 numbers.
Anil Singh
Yeah. That gives us good confidence. And we want that the positive side of the company should be spoken very openly so that we can get rid of these kinds of confusions. Second thing is, like, you are seeing that the other segment of e-truck business has already taken off, and there are many competitors who are getting the orders from different players. Are we also gearing up for that, or we are still just focusing only for delivering these e-buses, and just happy with that?
B. Sharat Chandra
No, no, we are continuing to work on the e-tippers. We have been doing a lot of demos and trials across various project sites. So, parallelly, our teams are working on that, and with more priority and focus on delivering the existing order book on buses. And e-trippers are definitely there in our portfolio, and we expect orders to come in, because the traction is yet to happen in this business.
Anil Singh
Okay. Now, even e-truck business also is getting good traction. The government of India itself is focusing a lot on that in the next two financial years. Are we focusing for that?
B. Sharat Chandra
Yes, definitely.
Anil Singh
So, is there any — like, what is the capacity we will have, like, in terms of buses and trucks? Can we say that by March ’26 we will have 10,000 buses capacity?
B. Sharat Chandra
We are targeting.
Anil Singh
Okay. And do you think that the internal accruals will be sufficient enough to build a capacity of 10,000 buses, or we will be going for the funding — fundraise?
B. Sharat Chandra
We expect the cash flows to improve significantly by doing these numbers, when we talk about 4,000, 5,000 numbers. As of now, there’s no plans of any equity fundraise. So, the debt, the sanctioned debt which we are availing now, we expect the numbers, the planned capacity to be ready for 5,000 numbers. As far as civil is concerned, we are building up the capacity up to 10,000 numbers. Whatever additional plant and machinery, balancing equipment is required, we may need maybe around INR100 crores to INR200 crores…
Anil Singh
Okay.
B. Sharat Chandra
…to increase from 5,000 to 10,000 numbers.
Anil Singh
Okay. Sir, recently, government of India announced that they are looking for INR1.75 lakh crores of budget for these e-buses and e-trucks. Do you think that we are just by building 10,000 buses order book or 10,000 buses capacity, is that sufficient that we are trying to be in the top five players of the country? It’s way behind, isn’t it?
B. Sharat Chandra
See, today, if you look at it, all — entire India, taking into consideration all the capacity of all the players, it’s definitely below the market’s demand and market expectations. So, we are going step by step, we are first targeting to reach 5,000 and 10,000 numbers. And if really the market demand and market expectations comes into reality, we will accordingly take a decision to increase our capacities.
Anil Singh
Okay. I think that that gives good confidence to all of us that we are gearing up for the future capacity requirement as well. Thank you very much, and all the best to the entire team.
B. Sharat Chandra
Thank you. Thank you, Mr. Anil.
Operator
Thank you. The next question is from the line of Prithvi Bhora, an individual investor. Please go ahead.
Prithvi Bhora
Hello. Am I audible?
B. Sharat Chandra
Yeah. Little — actually a little breaking noise is there.
Prithvi Bhora
Is it slightly better now?
B. Sharat Chandra
Yeah. Yes.
Prithvi Bhora
Yeah. Sir, good evening to you, sir. I just wanted to understand what is the current localization and how do we see it over the next two years?
B. Sharat Chandra
As far as the localization is concerned, we have been working continuously. It’s a continuous process, except the battery cells and the — some of the power train components, other components are localized in India. We have developed various vendors. And localization is a continuous process. So, what we speak today will be different after three months, six months. So, we continue to strive to localize as much as possible.
Prithvi Bhora
Correct. So, do we meet the government of India requirements to claim for the subsidies?
B. Sharat Chandra
Yes.
Prithvi Bhora
Okay. My second question, if and when BYD decides to set up a manufacturing plant and sell the e-cars in India, the electric cars in India, if and when, will it be through the same company or will it be a different entity, which will be formed?
B. Sharat Chandra
As of now, Olectra, we are focusing on electric buses and then electric truck segment. We do not have any interest in passenger vehicles.
Prithvi Bhora
I am talking of commercial vehicles, sir.
B. Sharat Chandra
Correct. Even commercial vehicles, we have not — we do not have any focus. We do not have any interest as of now.
Prithvi Bhora
So, Olectra is only for e-buses and the trucks and the pickup, that’s it?
B. Sharat Chandra
Correct. Yes. Correct.
Prithvi Bhora
So, one last question from my side. I am missing the question. I will let it go if somebody would want to go ahead.
B. Sharat Chandra
Okay. Thank you. Mr. Prithvi.
Prithvi Bhora
Thank you.
Operator
Thank you. The next question is from the line of Rajiv Marthiv, an individual investor. Please go ahead.
Rajiv Marthiv
Hi, sir. Good evening, sir.
B. Sharat Chandra
Good evening.
Rajiv Marthiv
Sir, my first question is, what is the run rate per month from October?
B. Sharat Chandra
What is it, run rate?
Rajiv Marthiv
Yes, per month bus manufacturing.
B. Sharat Chandra
See, next October to March we are targeting about 1,000 numbers. So, it could — so it will progress from October onwards it will go up, so that we meet the target of 1,000 numbers, this is H2.
Rajiv Marthiv
Now, what is the revenue projection for 2025 and ’26?
B. Sharat Chandra
I could not hear. Can you repeat?
Rajiv Marthiv
What is the revenue projection, 2025 and ’26?
B. Sharat Chandra
Next year?
Rajiv Marthiv
Yeah. Yes, 2025, the current year. Yeah, it’s about 3,500?
B. Sharat Chandra
Current year, turnover — the top line we expect around 2,500.
Rajiv Marthiv
And next year?
B. Sharat Chandra
Next year, it will be more than — somewhere between 5,000 to 7,000 numbers. It all depends on the volume. We are targeting about 4,000 to 5,000 numbers. Accordingly, the top line could be about 7,500 numbers, gross.
Rajiv Marthiv
Okay. Thank you, sir. Thank you. Wish you good luck.
B. Sharat Chandra
Thank you.
Operator
Thank you. The next follow-up question is from the line of Gaurang from Unified Unity Search. Please go ahead.
Gaurang
Thank you. I hope I’m audible.
B. Sharat Chandra
Yeah.
Gaurang
Yeah. I rejoined the line. Yeah. So, I have a couple of questions. My first question is, the last new product that we had launched was way back in April 2022, that was an electric tipper. So, my question is, are we working on any new variant of that tipper, like a trailer or something that we would be showcasing any sooner?
B. Sharat Chandra
See, we are working on a truck sides. Tippers is a dumper, so we are working on the — yeah, we are working on various products in fact. And in appropriate time we will be notify. In the truck segment itself, our R&D team has been working on various products.
Gaurang
Okay. So, when can it fructify, probably say another years time [Phonetic], or will it take a little more time?
B. Sharat Chandra
See, any R&D actually will take about two to three years, but we expect that the duration could come down.
Gaurang
Okay. My follow-up question is, in the AGM, Mr. KV Pradeep bhai had mentioned about battery energy storage systems. So, I feel that it’s one of the upcoming segments, where there will be a lot of talk about renewable energy getting contracted and government of India is particularly interested in it. Since renewable energy will require battery energy storage systems in huge numbers, so where have we reached in terms of battery energy storage systems? What are the current strategic plan?
B. Sharat Chandra
So, as of now, basically we have an idea. We have deliberated internally, so it is at a very, very nascent stage. At appropriate time we will revert back to the investors.
Gaurang
Okay. Great to know about this, but I would love to hear about this in probably the next few quarters, because I think this has some huge potential. Okay. My other question is the electric tipper that we have made is, I believe, not from the BYD technology, but it’s a homegrown technology within the R&D team. And it has a CATL battery, am I right on that?
B. Sharat Chandra
Just one minute. Yes, you are right on that part.
Gaurang
So, we can say that we are no more dependent on any foreign technology. We have an in-house technology, and we can use it, right?
Unidentified Speaker
Our CFO said that still we are dependent on the foreign technology for the powertrain components as well as the cells, battery cells.
Gaurang
Okay. Understood. Okay. My last question. So recently I read in a Mid-Day article that Megha Engineering is going to conduct this Borivali-Thane tunnel project. It is the contractor which has been finalized. And in that article it mentions that that project will require approximately somewhere around 1,200 tipper trucks, because there is a lot of soil that is going to be dug, because it’s an underground tunnel. So, my question is, whether our Olectra team has been in touch with Megha Engineering team for these particular 1,200 trucks? Because I feel this is a huge opportunity, which we should cater to.
B. Sharat Chandra
From time to time, we are in discussions with [Technical Issues]
Gaurang
Yeah. Hello.
Operator
Ladies and gentlemen, we have lost the management line connection. Please stay connected, while we reconnect them. Thank you. Ladies and gentlemen, we have the management line back on the call.
Gaurang
Yeah. Should I repeat the question or?
B. Sharat Chandra
Yeah. You were talking about 1,200 numbers of Megha Engineering, right?
Gaurang
Yeah. I feel [Speech Overlap]
B. Sharat Chandra
As of now, see, we have a continuous dialogue with Megha Engineering. As of now, there is no discussion happened on the 1,200 numbers. So it’s a continuous process.
Gaurang
Okay. Understood. I will definitely share that article with Mr. Hanuman Prasad, probably you guys can internally discuss, because I feel it’s a fantastic opportunity that the company should to cater to. So, I will share that article with Mr. Hanuman Prasad so your team can then go over it.
B. Sharat Chandra
Yeah. Thank you so much for your input.
Gaurang
Yeah. That’s it from my side. I wish you all good luck for the next financial year.
B. Sharat Chandra
Yeah. Thank you so much.
Operator
Thank you. The next follow-up question is from the line of Sanjay from SK Securities. Please go ahead. Mr. Sanjay, your line has been unmuted. Please go ahead with your question.
Sanjay
Sorry. Thank you for the opportunity again. I already got answered for my question in previous questions. Thank you for that.
Operator
Thank you.
B. Sharat Chandra
Thank you.
Operator
The next question is from the line of Ayush Jain, an individual investor. Please go ahead.
Ayush Jain
Hi. Congratulations for a good set of numbers. I want to know, how much loan amount have you utilized up to date as a term loan and as a working capital?
B. Sharat Chandra
So, as of now we have utilized about INR50 crores term loan.
Ayush Jain
How much, sir, sorry?
B. Sharat Chandra
INR50 crores term loan as of now we have utilized.
Ayush Jain
Okay. And what about, sir, working capital?
B. Sharat Chandra
Working capital, we have utilized about INR75 crores to INR80 crores.
Ayush Jain
Okay. Thank you, sir. Thank you.
Operator
Thank you. The next question is from the line of Sanket Kelaskar from Ashika Stock Broking Private Limited. Please go ahead.
Sanket Kelaskar
Hello, sir. I hope I’m audible?
B. Sharat Chandra
Yeah. It’s audible. Yeah. You are audible.
Sanket Kelaskar
Yeah, sir. Thank you for the opportunity, and congratulations for a great set of numbers. I just have one question. What is your growth plan for the long term with respect to being — staying ahead of the curve like with respect to your R&D or with respect to growth? For example, many of your competitors have been tied up with foreign entities in order to scale up their technologies, so on that front.
B. Sharat Chandra
Yeah. Thank you, Mr. Sanket. Actually, to clarify your question, we are tied up with the world’s largest EV manufacturing company, BYD. Our agreement is till December 2030. So, they invest huge money in R&D. And whatever technologies they have on their platform, we do have access. So, we have that advantage by having the strategic and technological tie-up with BYD, which is the world’s largest EV manufacturing company. I hope this clarifies.
Sanket Kelaskar
Okay. Thank you, sir. I am having one more question. Sir, this would be the last question. I wanted to know like what kind of initiatives are we talking with respect to safety and hazardous on our vehicle?
B. Sharat Chandra
All our buses, we have basically safety as one of our key initiatives. We have our own SOPs with regard to safety. And our buses meet the highest safety standards in terms of battery and in terms of other features.
Sanket Kelaskar
Okay. Thank you, sir. That’s all from my side.
Operator
Thank you. The next question is from the line of Prithvi Bhora, an individual investor. Please go ahead.
Prithvi Bhora
Sir, good evening, once again. The question I missed that time, I think I just recalled. I wanted to understand if the industry works in the fashion in which currently Olectra is executing such deals like the one in Mumbai, where Olectra manufactures and sells it to a company, let’s say, EveyTrans, who then gives it to the end customer. Is this how it is across India, or is it some special kind of a set up only for Olectra?
B. Sharat Chandra
Yeah. Just to clarify, NITI Aayog, when they drafted this policy and the same, they brought in the model called GCC, Gross Cost Contract, model. So, under this Gross Cost Contract model, there is — there are three parties involved. One is the manufacturer, second is the operator or owner of the fleet, third is the state transport utility, which is the end customer. So, accordingly, as per this model, not only Olectra, all the other companies also use the same stream of operations.
Prithvi Bhora
Okay. Thank you. Thank you for this. I think that really helps. Thank you. That’s it from my side. Thank you.
Operator
Thank you.
B. Sharat Chandra
Thank you, Mr. Prithvi.
Operator
[Operator Instructions] As there are no further questions, I would now like to hand over the conference to the management for closing comments. Management?
B. Sharat Chandra
Yeah. We thank all the shareholders who have participated and have been very supportive in your company’s growth journey and the patience and the faith you pose in your company. We expect good growth and profitability in H2 of this financial year. Thank you very much.
Operator
[Operator Closing Remarks]