PERMANENT MAGNETS LTD (NSE: PERMAGN) Q2 2025 Earnings Call dated Nov. 15, 2024
Corporate Participants:
Sayam Pokharna — Co-Founder and Director, TIL Advisors
Sharad Taparia — Managing Director
Sukhmal Jain — Senior Vice President and Chief Financial Officer
Analysts:
Keshav Garg — Analyst
Keshav Garg — Analyst
Sanjay Kumar — Analyst
Ankit Gupta — Analyst
Rohit Balakrishnan — Analyst
Sriram R — Individual Investor
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Permanent Magnets Limited Q2 and H1 FY ’25 Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Sayam Pokharna from TIL Advisors. Thank you, and over to you, sir.
Sayam Pokharna — Co-Founder and Director, TIL Advisors
Thank you, Sejal. Good afternoon, everyone. We appreciate you taking the time out to join us today on this call. As a reminder, our Q2 and H1 FY ’25 results along with the press release have been intimated to the stock exchange and are available on the Company website.
To take us through today’s results, we have with us from the management team, Mr. Sharad Taparia, Managing Director; Mr. Sukhmal Jain, Senior Vice President and Chief Financial Officer. We will begin with a brief overview of the quarter and the half year from Mr. Taparia, followed by a Q&A session.
Please note that any forward-looking statement made during this call must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties have been outlined in our annual report.
With that, I will now hand over the call to Sharad sir.
Sharad Taparia — Managing Director
Thank you, Sayam. Good afternoon, ladies and gentlemen. Thank you for joining us today for our quarter two financial year ’24-’25 earnings call. I would like to begin by providing an overview of our performance and key developments during this quarter. We have reported a marginal growth of 4% year-on-year in quarter two of financial year ’25 and a 13% growth for the first half of financial year ’25 on a year-on-year basis.
Our consolidated EBITDA margins for quarter two financial year ’25 stood at 19%, compared to 21% in the corresponding last quarter. On a standalone basis, we have witnessed a reduction in our EBITDA margins both year-on-year and quarter-on-quarter. The primary factor which has influenced our performance this quarter and the margin reduction in the recent quarters is mainly the change in the product mix, coupled with some higher operating expenses related to our ongoing business expansion.
Within product mix change, the softer performance has been on our EV business segment and overall exports, which continue to experience subdued demand. This situation remains largely unchanged from our previous communications. On the contrary, our consolidated EBITDA margin was higher, and this was largely due to execution of a purchase order in our subsidiary, Quantum Magnetics. It is however important to note that while Q2 profitability in this subsidiary was high, it should not be considered as indicative of the future profitability in this business segment. It would be a bit premature to comment on the steady-state margins of the subsidiary level at this moment, given the nascent stage it is in currently.
Additionally, quarter two also proved to be sluggish for our domestic smart metering business. It is mainly due to lesser demand from our customer in the first half of 2024. Despite these challenges, we are actively pursuing several strategic initiatives, and these include product development. We are actively developing additional products and cultivating new customer relationships within our domestic smart meters and alloy business verticals, and we are expecting that efforts made in these areas to yield some breakthroughs in the coming financial year.
Second strategic initiative is the subsidiary progress. We are currently undergoing customer audit, and we are anticipating that this will be over soon and we will secure additional orders in this area towards the end of this fiscal year. While we acknowledge the short-term challenges, we remain committed to our growth strategy, and we are confident in our ability to navigate the current market conditions. We believe that our ongoing efforts in product development and customer relationship building and the strategic expansion will position us well for future growth.
Thank you for your attention. We will now open the floor for questions.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Keshav Garg from Counter Cyclic [Phonetic] Investments. Please go ahead.
Keshav Garg
Sir, very good afternoon. I am your very old shareholder. Sir, so, now — sir, we appreciate that you have always given genuine guidance, and, sir, we understand the ups and downs in business. But if we see then, our revenue — standalone revenues are flat at around INR50 crore since December of ’22. So, basically, nine quarters have passed by and like over two years have passed by, and sir, our margins have basically shrunk. EBITDA has halved from around INR12.5 crore or thereabouts to INR6.5 crore. So, this I’m talking about on a standalone basis. So, in your best judgment, sir, how long will it take for whatever new projects you are working on for them to translate into revenues? And when can we expect a breakout from this INR50 crore range that we have been stuck? And the margins also which have been coming down, when do we expect margins to again go back to over 20% levels?
Sharad Taparia
Yes. See, initially, when the EV business was going very strong worldwide, we were growing along with that. We had demand from our customers, and that is how the growth was coming very fast. Later on, EV business has become slow and demand from our customers has also correspondingly become slow, while at that time, the domestic smart metering business increased. So, we remained flat. That same trend is today continuing. And whatever new projects that we are looking at, of course, our inception to actual commercial sales, as you know, takes a little bit of time.
So, now to answer your question, when will it break out? My expectation is in terms of growth on the top line, we should expect next year some better growth as compared to this financial year. There are some new projects, which should also have commercial sales in the next year with a little improved margin. May not be the same as the EV-related export margins but may be better than what our domestic sales is giving us at the moment. This is a rough idea that I can give to you.
Keshav Garg
Sure, sir. And, sir, also on the domestic side, sir, if we look at the smart metering players like Genus Power, sir, during the same period, if we see from December ’22 to September ’24 quarter, sir, their revenue has increased from INR200 crore to almost INR500 crore. Sir, so, how is it that we are not seeing any tailwind from the domestic smart metering. And sir, this Genus Power that I am talking about, sir, their order book has increased from let’s say two, three years back from INR1,500 [Phonetic] crores to INR30,000 crore. Sir, so, why aren’t we seeing scale-up happening, whereas other players are? It seems that in domestic smart metering, they are booking orders and revenues also.
Sharad Taparia
We are producing parts specific to customer designs. All these meter manufacturers are not — we are not supplying to all of them. We are supplying to a few. And so, we are dependent on their installations and what they are doing in their particular area, whatever they are doing. So, of course, we are now developing some products, which could be generally used by multiple companies, and that will happen starting from now and will really come into play next year sometime. So, that is the reason you don’t see a straight increase in our demand also because these are specific products built for specific companies.
Keshav Garg
Sir, and are we the single-source suppliers? Sir, or are there multiple suppliers? And sir, if you could name a few other peers in India that are also making the same components as you are, so that will help us increase our understanding about the business?
Sharad Taparia
So, I cannot name any companies. What we are — these are — what we are building is customized products. So, the customer will give us their design, and we build as per their design. And these same products cannot be supplied to any other customer. Every meter company has their own design, and they ask their suppliers to build as per their design. So, I cannot name any competitors at this moment. And many of these companies, they also do imports directly from outside, some Chinese suppliers or some other suppliers. That is also — some people are using those sources also.
Keshav Garg
And lastly, sir, are we supplying to Chinese EV manufacturers, or they are — totally, they have a domestic supply chain?
Sharad Taparia
No, they have a domestic supply chain. We supply to Chinese companies who in turn supply to European and American companies. But we have not got a breakthrough as of now supplying to Chinese EV manufacturers. We have a direction that we are working on for future to build very low-cost solutions, which could be applicable there. But it’s too early to say that. Chinese market is very protected.
Keshav Garg
Right, sir. Thank you very much, and best of luck.
Sharad Taparia
Thank you.
Keshav Garg
Thank you.
Operator
Thank you. The next question is from the line of Sanjay Kumar from ithought PMS. Please go ahead.
Sanjay Kumar
Hi, sir. Thanks for the opportunity. In Quantum Magnetics, the purchase order that we had in Q2, what was the application or the sector, if you could explain?
Sharad Taparia
It is consumer electronics, which we have produced for, and same application we will be supplying to — in near future, once we have our — all our audits cleared, then it will pick up.
Sanjay Kumar
So, the customer audit that’s happening is from the same client, is it?
Sharad Taparia
Yes, same client.
Sanjay Kumar
Okay. And is there any revenue guidance for Quantum Magnetics for FY ’25 and say the next two, three years? This is without the Phase 2, Phase 3, just this base business that we have, how much can we — can it ramp up to? And what will be the sustainable margins? You said Q2 is an aberration.
Sharad Taparia
FY ’25, we will not see much of — much more revenues. It will probably by — we will close the audit and then business will start. So, it’ll be very marginally small business. In FY ’26, we can expect — my judgment is still a judgment. It could be maybe one product, we may be able to do, maybe INR10 crores to INR15 crores, INR20 crores, something like that. But it really depends on how fast the customer moves along with us. Customer is growing very fast. So, how fast? Because this audit takes a very long time. So, any other company to clear this audit — we have a natural barrier to entry in this business. Once we are approved, I think, customer will remain with us, and they should give us a lot more business. This is my judgment. I can’t comment on exact numbers at the moment.
Sanjay Kumar
Sure. Fair enough. But sustainable margin, sir, when — once we do this INR10 crore, INR20 crore?
Sharad Taparia
My current [Phonetic] judgment is — about 15% to 20% could be my judgment. But right now, we are having much more fixed costs. Until we reach a break-even point, we don’t make money in this business. We have done — we have made the plant in much more surplus capacity in anticipation of business from the customer.
Sanjay Kumar
Got it. And second, on alloys business, have we signed any contracts? Are we on track for — I think, we had guided for INR25 crores, INR30 crores in FY ’25. So, given the low — yes, sir.
Sharad Taparia
We are running slow there. For this financial year, I was expecting much more business, but customer took longer time. Meanwhile, we have got some tender business we have won from PSU companies that we are executing. That is also giving us some market feel about government tenders. So, we are doing that, and it will continue in the next year. So, also it’s a different area. So, it’s a very widespread business. My expectation it is that it will do — should do much better quite well in the next — coming financial year.
Sanjay Kumar
Okay. And given the low base, both alloys business and the base business of Quantum Magnetics, can they each do like INR100 crores kind of top line in three, four years from now?
Sukhmal Jain
Yes, it is possible.
Sharad Taparia
More visibility, I see for alloys. Regarding the subsidiary, it could be anything. It could increase very sharply, but it really depends. Right now, we are working with only one customer. So, once that is going on well, then we can expect multi-fold growth there. So, but yes, potential exists for both of them to cross INR100 crores.
Sanjay Kumar
All right. Final question on smart meters. We are seeing new players enter, be it Salzer, and Kaynes has bought a company. So, how many clients do we work just in the smart meters business, total number of clients that we work with?
Sharad Taparia
We have multiple clients, but mainly the sale goes for two or three different clients. Mainly, that is what we are doing.
Sanjay Kumar
Okay. And is it fair to assume that…
Sharad Taparia
We are building a product category, which will cater to multiple more clients and that we will announce — when it is done, we will announce shortly.
Sukhmal Jain
And that will be our design.
Sharad Taparia
Yes. That will be our own design, and it will be applicable to, let’s say, multiple clients.
Sukhmal Jain
More value-added product.
Sanjay Kumar
Okay. And those two, three clients that we have today, will our wallet share be like INR100, INR200 per smart meter?
Sukhmal Jain
Yes. Some of them are more — much more also about — more than that also.
Sharad Taparia
INR400 per client, probably.
Sanjay Kumar
Okay. And the new product that we are working on, what will be the rough cost of it per smart meter?
Sharad Taparia
It could be about maybe somewhere between INR270, INR300, roughly like that, would be.
Sanjay Kumar
Okay. And — but this will apply for many more clients because it’s a modular…
Sukhmal Jain
Yes, many more clients.
Sharad Taparia
But all that — once it is established, at the right point, we will do the required disclosures.
Sanjay Kumar
Perfect. If I could squeeze in one more, any timelines for Phase 2 and Phase 3 in Quantum Magnetics?
Sharad Taparia
Phase 2, we are making progress. So, it should happen within — yes, next — I would say, six months to one year, we should implement. This is my judgment today. Phase 3, we are not commenting at the moment. Once we have done Phase 2, then we decide on Phase 3.
Sanjay Kumar
Okay. So, in Quantum Magnetics, you had said INR100 crores. So, without Phase 2 itself, can we do the INR100 crores? And if yes, how much will Phase 2 sort of add to the revenue potential?
Sharad Taparia
Yes. Without that also — Phase 2 is a backward integration of Phase 1. Phase 1 is the final product that we make and sell to customer. So, once we have demand, we will — Phase 2 will improve the margins, let’s say.
Sanjay Kumar
Okay. So, from 15%, 20%, it can move higher once we are done with Phase 2.
Sharad Taparia
Yes, that sort of thing.
Sanjay Kumar
Okay, sir. Thank you. I’ll come back in the queue.
Sukhmal Jain
Yes. Thank you.
Operator
Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Yes. Thanks for the opportunity. Sir, like this is a longer-term question. I’ve been following this Company for the past six, seven years, and we have built significant capabilities over the years. But, if we look at our performance on the revenue and the bottom line front, FY ’19, we had touched almost INR120 crores. And FY ’25, given how the commentary is, we will end up with INR210 crore to INR220 crore kind of revenue on the higher side. Last six, seven years, we — given the size of our company, the revenue growth hasn’t kept pace with the kind of capabilities we have, the kind of capabilities, plus the kind of clients we have, and — although, I do understand that EV has been — was a major growth factor for us over the past two, three years, which has slowed down. But some of the other old areas, as well as new initiatives like alloys and even Quantum, hasn’t picked up the way that we were expecting. So, would you like to give some thoughts on how as a company being at around INR200 crore to INR220 crore kind of revenue can grow at higher pace of growth, given the capabilities we have developed?
Sharad Taparia
We see most — in the earlier years, most of our business is supplying parts as per customer design. And while, originally, the Company was in the magnets business, we transitioned from there based on the capabilities to these newer products. Then we have — then we got a good growth due to EV business, which slowed down, and parallelly metering business went up. Now we are sluggish in both the situations. Ultimately, our position has to be that we are not dependent on any one particular segment. That is the way we have to position this company and that is the direction we are moving in. Alloys is one such direction. Alloys — this is the first year, we have done commercial sales because we have now installation has happened recently. So, alloys is not a story of the last four, five years. It is a very recent story. Then my expectation is that it will pick up — should pick up quite fast because that business is not the same as what we are doing today. Today, we produce as per customer design, which takes six months to maybe one year to sometimes even two years from inception to commercial sales. Alloys is not like that. Alloys is already being used by the customers. When we come in, we come in as a second supplier, and we give a price advantage to the customer. So, it can pick up much more faster as compared to the existing business that we are doing. So, in conclusion, we — going forward, our direction is not to be dependent on any one particular segment. We will move towards more and more generic products so that less demand from one particular customer does not affect us. That is the direction, and that should make our growth much more faster.
Ankit Gupta
The metering growth slowdown that you are talking about, it’s because — it’s for our export customers, or you’re talking about domestic customers?
Sharad Taparia
Our domestic customers.
Ankit Gupta
Okay. Because we — our major sales on the smart meter or the metering side was largely to exports, right? And the domestic has picked up just over the past year or so.
Sukhmal Jain
Yes.
Ankit Gupta
But in exports also, we are seeing some challenges on the smart meter side?
Sharad Taparia
No, exports, our growth was better. The energy meter sales was better, export.
Ankit Gupta
And are we growing there on a Y-o-Y basis?
Sharad Taparia
We are growing there on Y-o-Y basis. There also, we are trying to get more products approved. But again, it is specific customer to customer. It takes time to — from design stage to, let’s say, commercial sales.
Ankit Gupta
Sure. On the EV front, we have seen Tesla improving its guidance recently. And so, what — how are we looking at this segment? How are we looking at revival in this segment or the next — in the near to medium term?
Sharad Taparia
It is the same as the other EV segment. So, Tesla is one of the companies who is growing. Other companies — every company has their own — they are going into the EV segment. They are launching their cars, two-wheelers. And so, we are trying to meet these customers, understand their needs and build products accordingly. That is what we are doing.
Ankit Gupta
But how is the demand revival expected in some of the programs we were part of on the EV side?
Sharad Taparia
So, whatever products we had built, the forecast that they had given us initially got reduced much more. So, what they are doing is that same platform, whatever products we develop, they are trying to use for their other cars, whatever they are developing. So, to fulfill whatever customer had promised us, they had fixed up prices with us based on a certain forecast, which was not fulfilled. That was a much more increasing forecast. So, they are trying to — they are telling us that they are, they will consume the parts by using into other platforms. But they are also facing slowdowns in their end. Particularly, I’m talking about European, American companies. Chinese companies are doing well in EV.
Ankit Gupta
Sure. But we don’t have presence there, so like on the China…
Sharad Taparia
We don’t have presence in China at the moment.
Ankit Gupta
Sure. And sir, we’ve seen a lot of automotive companies slashing their, like, expectations on the EV front, as well as launch — they’re delaying or even canceling their launches for new products on the EV side. So, is that happening with some of our products as well?
Sharad Taparia
Yes. Our product, the demand has reduced. So, what they do, they give us a forecast for the full year, month wise. Later on as the month progresses, the purchase orders come as per that forecast, but they keep changing the forecast. So, right now the forecast is reduced. That depends on the inventory levels they have and their final customer demands. It all depends on that.
Ankit Gupta
Sure. Sir, any progress on the module front? Like, have we been able to get some breakthrough there?
Sharad Taparia
Module development is going on. That is for mainly — bigger modules is — seems to be better right now, which are for heavy commercial vehicles. And those programs are progressing. Typically, the starting date is a little — start of the projects are a little futuristic. So — but we are making progress there. Some sales have started, and some more programs will come into play next year and some more the year after that.
Ankit Gupta
Sure. And on the domestic metering side, any revival or any improvement in forecast we are seeing over the next few quarters?
Sharad Taparia
Yes. That will, as soon as, our customers — when they get more order — there are two things. One is they get — they should get more orders. Second, the implementation, execution should be faster. That is what they are working on. And as soon as they have something more concrete that they have, then they — it will — immediately, we will get the result. Elections are also going on. There are many other political factors are going on. So, in specific states, demand is sometimes slower, sometimes faster.
Ankit Gupta
Sure. Just on the — just one metric that we internally, as well as, some of the investors who have been tracking the Company track, is the — is your project funnel, the number of projects we are working on, which are progressing to next stage. So, like given how things have slowed down, at least on the EV, as well as on the domestic metering side, have we seen some reduced in this funnel over the past year or so, or has that increased?
Sharad Taparia
No, that funnel is increasing only. In fact, the learning for us is that, that funnel should be much more bigger so that we don’t get impacted by these things — by these segment changes because we have two methods of that we are growing. One is the funnel that we have, pipeline, and second is the capability-based projects like alloys and let’s say other businesses. So, this funnel actually should grow at a much more faster pace. That is what we are working upon.
Ankit Gupta
Sure. And any — like you don’t need to name the customer. Like over the past, let’s say, two, three quarters, have we added some significant big clients on EV or metering or alloy side? Like if you can talk about some of the wins that we might have or some of the new customers that we would have entered? How many of them have we entered? If you can elaborate on that?
Sharad Taparia
On the metering and EV, we — not many. I don’t think we’ve added much, but in the alloy side, we got some business from big PSUs, so that — on that front, we have developed relationships with them to — of course, it’s through a tendering process. So — but at least when you do some supplies, you get to know about that quality levels, everything else. So, that has happened.
Ankit Gupta
Sure. Okay. Thank you, and wish you all the best, sir.
Sukhmal Jain
Thank you.
Sharad Taparia
Thank you
Operator
Thank you. [Operator Instructions] The next question is from the line of Rohit from ithought PMS. Please go ahead.
Rohit Balakrishnan
Yes. Good afternoon, sir. Most of the questions have been answered. I just have a few clarifications and follow-ups. So, sir, on this module, you said that the overall project is developing well, but from a sales point of view, like, significant or decent contribution for us will be — when you see that happening? And is it largely again dependent on EVs turning around? Or is it agnostic of that as well?
Sharad Taparia
The main modules that we are working on currently are related to — mostly related to heavy vehicles, commercial vehicles, and that programs are going on. I think demand for those vehicles is different, as compared to the passenger cars. So, those programs are still progressing. We are — but those are very — the start of project for the customer themselves is a little longer. So, some are in let’s say ’25-’26, some are ’26-’27, some are ’27-’28, even very long term programs also we are developing. Mostly, the large volumes of sales have not come because they — the customer themselves have other things to fix, so their start of production only is planned in future years.
Rohit Balakrishnan
Understood, sir. So, when do you — based on what your current understanding, when do you think this will start contributing significantly to our business?
Sharad Taparia
I feel that maybe the year after next ’26-’27 could be much, much bigger, just on the module side.
Rohit Balakrishnan
Right. Understood.
Sharad Taparia
And ’25-’26 could be small growth, my judgment as on today.
Rohit Balakrishnan
Sure. So, then on the alloy side, so you mentioned that we won some business with the PSU, and you also mentioned that this business will continue in the coming year as well. But, you are working with some other customer, which is taking a longer time. So, two questions here. In terms of the size of the business, what could be with the PSU, if you can share that? And two, why is it taking a longer time with the customer? Just to understand where we are and where is the issue as such.
Sharad Taparia
There the value-add with the customer is much more higher. The process is more complex because we are doing a sort of using their scrap and addition of newer materials to produce a fresh raw material for them. So, therefore, margins are better. And for that process, there are some trials going on, and it’s all — till now, everything has been successful. But for customer to implement this — final customer is an export customer, international. So, to implement this, it took — it is taking a little more time. But once it is done, it will be a regular business, which will, let’s say, fill up our capacity for the next year. This is my expectation. For the PSU, we have executed — I think, one order we have executed, and the other one, we are — I think it’s under execution.
Sukhmal Jain
Yes, under execution.
Sharad Taparia
I think INR70 lakh, INR80 lakh was the order for the one order that we got with one PSU. But that business is a — regularly, they are buying. It’s all — they are going through tendering process, and it’s all price-driven. So, whoever is L1 — of course, subject to your technical qualification, whoever is L1 gets the business. So, that is another method by which we can fill up our capacity. But our direction is to do a higher margin business by more value addition.
Rohit Balakrishnan
Sure, sir. So, the value addition business that we are trying to do with the customer, so what kind of margins do you think? Will it be, like, closer to the number that we’re doing right now? Or is it lower than that? Any sense?
Sharad Taparia
No, it will be lower than that. So, that I can’t comment exactly on the margin right now, but it is better than just pure melting of metals and then making an alloy where the margins are much lower here because you’re doing a little more value addition. Margins are a little bit better, but I can’t comment exactly on the percentage margin right now.
Rohit Balakrishnan
Sure. And in terms of the smart meters — sorry, actually in terms of — so my next question was on the subsidiary, Quantum. So, Phase 2, you said probably will take about 6 to 12 months. What is the kind of capex that will go into that? And while Phase 3 is not decided, but tentatively, any sense on what kind of capex that will outlay?
Sharad Taparia
We are still deciding at the moment, but approximate number is about INR25 crores — INR20 crores to INR25 crores is roughly what we are seeing today. But, we have still not decided that as yet. So, that depends on how this Phase 1 picks up and how we are going there, all that is still under discussion with the customer.
Rohit Balakrishnan
This is you said put INR20 crores, INR25 crores of Phase 2, right?
Sukhmal Jain
Phase 2, yes.
Rohit Balakrishnan
And Phase 3, any thoughts?
Sharad Taparia
Phase 3, we have still not decided anything. The initial plan was about INR200 crores was the Phase 3, but we have not decided that now. We will take that call after Phase 2 is implemented.
Rohit Balakrishnan
Okay. Got it. And, sir, just a couple more. So, in terms of smart meter, so I was a bit confused. So to an earlier participant, you mentioned that the reason why we haven’t really gotten the growth is because the customers that we are working, they have not been able to get the orders or we have not been — because we are focusing on exports and hence, we are not very much in the domestic market. Hence our customer roster was not very widespread. Hence we are not able to get that growth. Is — sorry, I missed that. If you can, sorry, explain that again?
Sharad Taparia
No, the customer — our customer did not — they have a lesser demand due to their own order issues and their own execution issues. So, once that is — it is not — the limitation is not due to us. We are ready with all the capacity and everything. So, it is up to them only.
Rohit Balakrishnan
Okay. And you mentioned also to another participant that you are working with — so today, your smart meter business is probably three, four players, right?
Sukhmal Jain
Yes, two, three customers.
Rohit Balakrishnan
Okay. And is there — and you’re trying to add more customers there or what…
Sharad Taparia
Yes. Because we are right now producing as per their design, they give us a design, we make as per that. We are working on a product which will be common design across all the meters they needed. So, we are working on that. And small customizations we are going to do there, but that will increase our customer base in the domestic meter. More number of customers will come in our portfolio.
Rohit Balakrishnan
Right. Got it, sir. Finally, sir, I think a year or two back, I think, we were sort of looking at all cylinders firing for us and sort of now things are a bit more challenging with some segments sort of taking more time and some segments really sort of reversing. So, if I look at not the immediate term, let’s say not the next 12 months, but slightly longer term, let’s say two, three years out, what are your aspirations for the business? So, we are at INR200 crores to INR220 crores today, like, given wherever we are in terms of the different things that we are doing and the strategic initiatives that you mentioned in the beginning, and I’ve been tracking this Company for almost four, five years now. So, I just wanted to get your sense over the next two, three years, how do you see the business evolve?
Sharad Taparia
Our vision is to achieve — our next step will be to achieve a top line of INR500 crores and then from grow there. But I feel that the potential that we have in all the segments that we are present, the market size or whatever we are catering to is very, very large. And we are nothing. We are very small as compared to what we can do. So, any significant order or any significant breakthrough can give us a huge jump, and that can happen as soon as the customer is ready or anything. So, I am quite optimistic that — this is a lumpy growth whatever we are experiencing. Even in the past few years or whenever we grew, it was a jump — sudden jump. And then, it’s a stagnation for some time due to one sector going down, other sector going up. So, I am overall quite optimistic in the areas that we are working on. Now, when the result comes — we are putting in all our effort, and when the result comes is really up to customers and the market how they perceive and how well we are able to convince them. It is the question. We are trying to be very aggressive in terms of the effort and the investment that we are doing.
Rohit Balakrishnan
Sure. Sir, sorry, I said last but this is finally the last question. On the EV side, the previous participant also asked, so the Europeans are going through a tough challenge because of the competition from the Chinese in their markets. And some US players are also sort of backtracking on their EV plans. So, sir, from a again longer-term point of view, how do you see this business? Is it just a cyclical blip here? Or there are some structural issues in the end customer — in the EV market itself? From your vantage point, how you are seeing this?
Sharad Taparia
EV companies are going through this period, and they will ultimately reinvent themselves in terms of their cost structure, whatever, to align with the market, how the market wants, and I believe ultimately, they will be successful. So, this demand will come up again. When it will come up, I don’t know, but it will — it should because ultimately, the product is the right thing to happen. And whatever EVs are there in the market, perception is pretty good. It is non-polluting, lower operating cost. The capital cost is higher for the customer. So, once that is, let’s say, at par, what we are experiencing with the Chinese EVs, that should happen ultimately with the American-European EVs also. So, ultimately, it should be — it should come back to the normal growth what we saw earlier. It should come back to that growth. This is my judgment. But I don’t know about the overall market. My judgment.
Rohit Balakrishnan
Sure, sir. Thank you very much. You’ve been very patient. Thank you.
Sukhmal Jain
Yes. Thank you.
Operator
Thank you. [Operator Instructions] The next follow-up question is from the line of Sanjay Kumar from ithought PMS. Please go ahead.
Sanjay Kumar
Hi, sir. Thanks for the follow-up. The consumer electronics product that we supplied in Q2, what will be the global market size of that product you’re supplying? Not the consumer electronics itself, just the product that you’re supplying. What will be the market size or the purchase that your customer is currently doing from other sources?
Sharad Taparia
It’s a large — it’s quite large. The application is quite large. So, I don’t want to comment on the specific application there because once we — once that audit and all is completed, everything is done, then we can make some announcements. But right now, I do not want to comment on the — on what product we are doing. And so, I think we can — maybe in the coming few quarters, I can comment, okay?
Sanjay Kumar
Sure, sir. And just on the same subsidiary, we were to do neodymium magnets for EV, wind turbine applications. So any update there, or these will start only after Phase 2 or Phase 3?
Sukhmal Jain
Phase 2, not Phase 3.
Sharad Taparia
Phase 2, because Phase 1 we are going ahead with this customer and it is done. Then we will start supplying, and there, we are going to buy the neodymium magnets, and Phase 2 will be a little bit of backward integration, and Phase 3 will be full backward integration. Then, at that time, we will see what other applications of magnets we are going to supply.
Sanjay Kumar
Okay. And second on alloys, the export customer, if you could talk about the application of the product? You said the exporting, is it for — what kind of application, if you could…
Sharad Taparia
I don’t want to talk about that right now.
Sanjay Kumar
Sure. And…
Sharad Taparia
Specific applications, so that we will — I can’t reveal that right now.
Sanjay Kumar
Sure. Fair enough. And PSU, what is the annual purchase value of the product that we supplied? Not our tender. In a year, how much do they roughly buy this material for?
Sharad Taparia
These are made mostly cobalt and nickel-based alloys which the PSU are buying. So, you can yourself calculate how much. It’s quite a large demand from the PSU. But they have various requirements. Some require only melting. Some require some additional processing. So, we are — we have not decided what our next investment in the alloy space is going to be. Whether it is going to be just expansion of the same capacity or we are going to do some additional processing on that, that we are taking a call after certain sales have happened. So, then we will take a call and decide the next investment.
Sanjay Kumar
Okay. So, is it possible to share how much capex will be needed for alloys to scale up to, say, INR100 crores kind of a top line? Or you’ve not finalized any capex plans for alloys?
Sharad Taparia
INR10 crore to INR15 crore you can say tentatively what we look at. It could be more also.
Sanjay Kumar
Okay. And in EV business, how do we become more relevant for our customers or how do we go up the value chain? Do we have to do the sensor designs or the current shielding designs in-house or do we have to say backward integrate into shunt resistors or something like that so that we form a bigger part of their value chain or the product?
Sharad Taparia
Our customers are tier 1 companies who are automotive companies. They are doing EV, as well as non-EV. What we are doing is that we are pitching all the capabilities to them and telling them whatever business they can give us, whatever development we can do, EV or non-EV, they — we are open to doing that. And they are giving multiple new projects. It is — we are not — we are just pitching the capabilities. So, we are not saying we want to do only EV. We are open for everything. We are hungry for business right now.
Sanjay Kumar
Perfect. Okay. And in annual report, we had mentioned development of motors and generators. I think we already do stator rotor. Is there any update on motors and generators?
Sharad Taparia
Stator rotor is a part of the motor only, not generator, we have not done anything till now. On motor, we are progressing because all the subcomponents we are already doing like stamping, winding, molding and magnet. We already have a plan. These are the parts of a motor, stator and rotor. So, there we are making progress. The first project that we have done, that sales is slowly, slowly increasing. And new — we are advertising that capability to other companies and other applications and trying to get more inquiries at this stage. But once it grows, it will become a separate division of the Company.
Sanjay Kumar
Correct. But by also planning magnets, will we have advantage over the other motor manufacturers? Because they kind of only do assembly of sorts, whereas we can do end-to-end motors. So, can we have an advantage in the [Speech Overlap] motor?
Sharad Taparia
Yes, we should because we will be producing our own magnets. So, there should be an advantage.
Sanjay Kumar
Okay. And final question, sir. When do you think we can hit the INR500 crores top line that you had answered in a previous question?
Sukhmal Jain
I can’t comment on a specific time frame, but the desire is as early as possible. But if we get one or two solid breakthroughs in any one of these areas, these are large, say, order values, we will be able to hit it. That’s — that much faster whenever we get that. So, I can’t comment on a specific timeline.
Sanjay Kumar
Got it. Thank you, sir. Looking forward to it, and all the very best.
Sukhmal Jain
Yes. Thank you.
Operator
Thank you. The next question is from the line of Sriram R [Phonetic], who is an individual investor. Please go ahead.
Sriram R
Sir, thank you for the opportunity. Sir, if you can just break down the first half revenue into shunts, Hi-perm and magnetic assemblies, and also if you can just tell us how is this breakup changed post-COVID?
Sharad Taparia
For first half, I can break it down by application-wise. So, application-wise, about — first half, about 50% was electricity meter business, about 25% was automotive, and magnets and alloys was about 12%, and others was about 17%.
Sriram R
What is the composition of this other, 17%?
Sharad Taparia
These are all other applications other than the CTs and other including some gas meter also, all these everything else put together.
Sriram R
Okay. You’re including gas meters, actually. Yes. And sir, regarding this alloys division, where do these alloys go into in terms of sectoral application? Can you just tell us?
Sharad Taparia
We are generally doing the cobalt-nickel alloy, which is used for high temperature applications, so super alloys, oil and gas, powder metallurgy, defense application. These are the applications.
Sriram R
Okay. Great, sir. Thank you so much. Thank you.
Operator
Thank you. The next question is from the line of Keshav Garg from Counter Cyclic Investments. Please go ahead.
Keshav Garg
Sir, I wanted to understand that, firstly, sir, did I hear it correctly that per smart meter, you are expecting a contribution of INR270 to INR400 per smart meter?
Sharad Taparia
The product that we are working on, yes.
Keshav Garg
Okay. Sir, so if that be the case, so there is a requirement of 25 crore smart meters in the country approximately. Sir, so even if we take INR300 crore — INR300 per smart meter, so it’s around INR7,500 crore opportunity for our — basically the TAM for us. Sir, so out of the 25 crore smart meters, what kind of market share you think that you are capable of capturing in terms of percentage?
Sharad Taparia
See, we are planning to build the product with such a quality that all customers should come to us to — instead of buying from other suppliers. So then, depending on what they need, we’ll have to set up capacities and all that. So, market share, how much can we get? I can’t comment at the moment. The desire is to fulfill everything, whatever we can do. We have to just set up capacity accordingly. Once we have the product ready, we will advertise to customer about the quality. And of course, it’s a price-driven market also. Some customers may not be interested in the best quality. They would be — they may be working with a lower quality, lower price. So, that will not be our segment.
Operator
Thank you.
Sharad Taparia
So out of this 25 crore — sorry. Okay. Go ahead.
Operator
No, sir, please continue.
Sharad Taparia
Out of this 25 crore installations, we do not know how many are doing with a lower quality. But I would say that top companies should be interested in buying from us. They may also have a decision-making to do, whether to buy 100% from us or whether to keep two suppliers. All that will come into play.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Sharad Taparia for closing comments.
Sharad Taparia
Okay. Thank you, everyone, for participating in the call. I hope I have been able to answer the questions and queries, whatever you had. And as we have done in the past, we will keep the investors updated about whatever the Company is doing. And thank you very much.
Sukhmal Jain
Thank you very much.
Operator
[Operator Closing Remarks]