Sterling Tools Limited (STERTOOLS) Q4 FY23 Earnings Concall Transcript

Sterling Tools Limited (NSE:STERTOOLS) Q4 FY23 Earnings Concall dated May. 09, 2023.

Corporate Participants:

Pankaj Gupta — Group Chief Financial Officer

Atul Aggarwal — Whole-Time Director

Jaideep Wadhwa — Non-Executive Non-Independent Director

Arun Agarwal — Deputy General Manager Finance & Accounts

Analysts:

Deepan Sankara Narayanan — TrustLine PMS — Analyst

Abhishek Jain — Dolat Capital — Analyst

Sonal Gupta — HSBC Mutual Fund — Analyst

Manish Ostwal — Nirmal Bang — Analyst

Viraj Kacharia — SiMPL — Analyst

Alisha Mahawla — Envision Capital — Analyst

Chirag Setalvad — HDFC Mutual Fund — Analyst

Chirag Shah — White Pine Investment — Analyst

Rahul Picha — Multi-Act PMS — Analyst

Unidentified Participant — — Analyst

Presentation:

 

Operator

Ladies and gentlemen, good day, and welcome to Sterling Tools Limited Q4 and FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements about the Company, which are based on the beliefs, opinions and expectations of the Company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Group CFO, Mr. Pankaj Gupta. Thank you, and over to you, sir.

Pankaj Gupta — Group Chief Financial Officer

Good morning. Thank you. Good morning, everyone. On behalf of STL Group, I extend a very warm welcome to all of you for our quarter four and FY ’23 earnings call. I’m joined on this call by Mr. Atul Aggarwal, our Whole-Time Director; Mr. Jaideep Wadhwa, Director; and SGA, our Investor Relations Advisors. We have uploaded our results presentation on the exchanges, and I hope everyone had a chance to look at it.

I will now request Mr. Atul Aggarwal for his opening remarks.

Atul Aggarwal — Whole-Time Director

Good morning, everybody. Good to connect with you guys after almost a three months to four months gap. Let me just start with a brief overview of the industry. Firstly, India has surpassed Japan to become the third largest auto market globally with revenue of INR292 [Phonetic] billion and anticipated to reach INR300 billion by 2026. Two-wheelers and passenger cars dominated the market, accounting for about 76% and 17.4% of the market share.

Passenger vehicles grew. We had a dramatic year. It grew by 25% this year FY ’23 as compared to 19% in FY ’22. So I think the numbers have been phenomenal. Improvement is largely driven by growth in utility vehicles, barring a peer group of buyers who prefer innovation, high safety and technology. The steel industry segment is expected to grow by about 5% to 7% in FY ’24. And hopefully, this will be on the back of supply — improvement in supply chain conditions for semiconductor products. Commercial vehicle industry grew 29% in FY ’23, which is supported by increased activity in road construction, mining, improved infrastructure and a lot of spending by the Central and State Governments on improving the e-commerce sector.

Commercial vehicle segment is expected to sustain a growth momentum with scrap it policy likely to drive fleet replacement and encourage new truck purchases. The two-wheeler segment grew at a rate of 9% as compared to a degrowth of 3% in FY ’22. We have witnessed growth, but production is still below pre-COVID levels. The two-wheeler volumes are expected to rise within the range of low to single mid-digit in FY ’24 with steady improvement in rural economy on increasing MSPs for key crops. Premium bikes are expected to maintain growth momentum while exports might continue to be affected in the near-term due to macroeconomic issues.

Coming to business overview. The Company forayed into EV component business with manufacturing motor control units. Currently, the EV space is a sunrise sector, and we firmly believe that it will be the next big thing in the Indian automobile industry. The overall EV sales crossed 1 million mark in FY ’23 and EV’s two-wheeler segment grew at a rapid pace. New launches in the EV two-wheeler pick up — expected to pick up and penetration is expected to improve significantly. Scooters will become a dominant form of two-wheelers. Amidst all this, OEMs need to strictly adhere to safety regulations. We foresee multiple tailwinds in the EV space that will enable STL Group to maintain its leadership positions, coupled with a path towards achieving sustainable profitability in the future.

Our revenue from EV component business grew by 3.5 times from last year. This business secured more than 15 contracts. And now we have initial capacity expansion from 300,000 units to 0.5 million units per annum. Revenue from EV component business increased to INR171 crores in FY ’23 compared to INR38 crores in FY ’22. We are optimistic about our growth plans and we will continue to work towards achieving our vision to become a pioneer in the green energy space.

Now I want to request Pankaj to take over and run through the financial highlights with you.

Pankaj Gupta — Group Chief Financial Officer

Thank you, sir. I’ll now give you the financial highlights for quarter four and for financial year 2023. Starting with the standalone numbers for quarter four of FY ’23 at a standalone level, total income grew from INR140 crores in quarter four FY ’22 to INR159 crores. This is a growth of 14% Y-o-Y. EBITDA increased by 14% to INR21 crores versus INR19 crores. EBITDA margin was at 13.3% in quarter four FY ’23. PBT stood at INR8 crores with a margin of 5.1%. This was impacted due to exceptional items pertaining to liability of INR3.29 crores we recognized upon the foreclosure of our EPCG license. If the Fed exceptional items were not there, the PBT margin was 7% level.

PAT stood at INR5.3 crores. FY ’23 complete year on a standalone level, the total income grew by 27% to INR604 crores in FY ’23, up from INR475 crores last year. EBITDA increased to INR92 crores FY ’23 vis-a-vis INR73 crores, which is about 26% growth in the EBITDA. PBT and PAT grew by 43% and 39% respectively to reach to INR57 crores and INR41 crores in FY ’23.

Coming to the consolidated financials, equally good year, a better quarter four, we had total income increased from INR170 crores in quarter four to INR213 [Phonetic] crores, which is 25% increase in the quarter. EBITDA increased by 30% to INR23 crores vis-a-vis INR18 crores previous Y-o-Y. EBITDA margin increased from 10.6% in quarter four to 11% in FY ’23. PBT increased by 10% is INR10 crores in quarter four. PBT margins were at 4.7%. PAT increased by 13% Y-o-Y to INR8 crores over INR7 crores. The full-year on a consol level, total income increased from INR513 crores to all-time high number of INR775 crores, which is about 51% growth in the total revenue of the Group.

EBITDA has increased by 44%, and we have fresh INR100 crores EBITDA absolute number first time in the history in FY ’23. It was INR70 crores last year. PBT also surged by 82% and at a INR63 crore level, up from INR35 crore last year, and the margin also increased to 8.2%. PAT increased by 87% to INR48 crores in FY ’23 over INR25 crores in FY ’22. PAT margin also improved from 5% to 6.2% in FY ’23.

Thank you very much. We may now begin the question-and-answer session. Thank you.

Questions and Answers:

 

Operator

Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Deepan Sankara Narayanan from TrustLine PMS. Please go ahead.

Deepan Sankara Narayanan — TrustLine PMS — Analyst

Good morning, everyone, and thanks a lot for the opportunity. So firstly, from my side, so what will be the impact on FY ’24 EV volumes sold? With this EV subsidy controversy of government and the pending investigation on these players, so what kind of impact we are expecting? And also what is the impact on our customers? And is there a possibility of Ola gaining more market share from current levels?

Atul Aggarwal — Whole-Time Director

Okay. Good morning. Guys, I’m going to hand this question to Jaideep. Jaideep is a Director on Sterling Tools. He is also the Managing Director of — for our EV business.

Jaideep Wadhwa — Non-Executive Non-Independent Director

Okay. Good morning, everyone. I think the first question that you asked was if Ola going to be able to gain more market share, I don’t think we are right people to answer that. Those are questions that would be best asked from Ola and the other OEs. We think it’s a great company. They’ve got a lot of product — new product offerings in the pipeline. And they have very ambitious plans and a lot of capacity and a lot of drive. But how it actually pans out in the market, I think we — I think I would leave that to the OEs to decide.

Regarding the same subsidy, it’s — people expect that the same subsidy at the current run rate could run out sometime by the end of October or November this year. The expectation is that maybe the government will extend it till the end of March. What we understand from most of our customers is that they are working very hard to offset some of the losses if the same subsidy is not extended further, and these are again decisions for the government to take. But if the subsidy is not extended further, I believe the OEs will — their strategy will be around cost optimization to a large extent, and there are some tailwinds there that will help them.

For instance, there is excess capacity for batteries in China right now, especially in the formats that are currently used in two-wheelers. So as compared to say a year ago when company like Ola was air-freighting batteries from China, you have a current position today, where the cell manufacturers in China are willing to lock in prices for the next two years to three years because of excess capacity that is available with them.

So I think that’s going to give our customers and the industry some benefit. They are also working very hard on cost optimization. Volumes are healthy. And there may be a — but there may be still after — even after all these optimizations, there may be a price increase that the customers may — they may have to pass on to customers to maintain similar levels of margin. We believe as to our customers that — now that our — the young customers, the early adopters in the benefits of the EV have this riding experience have experienced all the user interfaces that EVs offer, that trend will continue.

I think the government subsidy has done its job and that it’s made EVs very popular. And now it’s not only — I think people understand the benefits of the electric vehicles. And if we can continue to make the total cost of ownership attractive, I believe the industry will be able to do, the industry will continue to grow even without a subsidy if the subsidy is withdrawn.

Deepan Sankara Narayanan — TrustLine PMS — Analyst

Okay, understood. So what will be our revenue growth outlook for this EV business for next year? So where will these growth driver coming from for us?

Jaideep Wadhwa — Non-Executive Non-Independent Director

Yeah. So…

Deepan Sankara Narayanan — TrustLine PMS — Analyst

Which is only for — from these first customer or we are extending our volumes to the second customer or third customer, so that understanding would be helpful?

Jaideep Wadhwa — Non-Executive Non-Independent Director

I think we’ve discussed this earlier that we have 15 customers who have given us with confirmed contracts. Now, volumes on these customers fluctuate a little bit because of various reasons. Again, you have to understand the EV industry is nascent. In the recent months, a lot of volumes have been impacted because of the fact that the government changed the battery standards, and most companies really had to scramble to comply with them. But as this is now all being settled, we expect that these customers that have given us orders which is across two-wheelers, three-wheelers, cargo three-wheelers, passengers and LCVs, we will see volumes go across. Now I’m — I do believe that the growth potential for our business is at least two times from where we are today.

Deepan Sankara Narayanan — TrustLine PMS — Analyst

Okay, okay, okay. And one more question on that EV side. So you have seen a sharp jump in gross margins for EV business. So is that due to product mix changing or some RM price cut which has helped this quarter?

Jaideep Wadhwa — Non-Executive Non-Independent Director

So I — if you look at the overall EBITDA margin, that hasn’t changed much. So there’s also a bit of — in the way we were reporting earlier, we were reporting a lot of the job work that we were doing in cost of sales. We’ve now restated that into other expenses. So I think that’s made a difference. So you will see that most of the jump in the gross margin as you see is a lot of it is offset by an increase in other expenses.

So net-net, the difference — there is not much difference between the two quarters and the margins as they are, are stable. We continue to work on further cost optimization, but it’s not something that is going to give us a very big jump from quarter-to-quarter. It’s something that will be incremental and continuing to work.

Deepan Sankara Narayanan — TrustLine PMS — Analyst

Okay. So lastly from my side, so what is the reason for sharp increase in the surge, consolidated other expenses at INR264 crores?

Jaideep Wadhwa — Non-Executive Non-Independent Director

So I think I’ll let Pankaj answer the question of the sharp increase in consolidated other expenses. Obviously, there is some contribution in that from SGEM because of the factors that I just explained, but Pankaj will go into greater detail.

Pankaj Gupta — Group Chief Financial Officer

Yeah. So I think Jaideep answered consol increase in other expenses on account of EV vertical only. So nothing on the standalone, no change over there.

Operator

Thank you, sir. [Operator Instructions] Thank you. The next question is from the line of Abhishek from Dolat Capital. Please go ahead.

Abhishek Jain — Dolat Capital — Analyst

Good morning, sir, and thanks for the opportunity. So a few questions on the fastener business. So there is a sharp fall in the margin in fastener business. Is it because of the old inventory or they are the other constraints, like that jump in the power cost and other things?

Pankaj Gupta — Group Chief Financial Officer

Yeah, good morning. Abhishek, let me take this point. So you’re talking about the quarter four, right?

Abhishek Jain — Dolat Capital — Analyst

Yeah. Yes, sir.

Pankaj Gupta — Group Chief Financial Officer

So quarter four has one-timers. So there was — for the whole year [Indecipherable], there’s annual volume discounts, which we pass on to the customers. That has been provided in this time. And some year-end provisions also we have made. And the steel prices came down as a part of which the inventory valuation impact is there. So there is no concerning item on the margin drop in quarter four. We continue to — on a yearly basis, if you see, there is hardly any change. We are pretty stable. And these are one-timers in the quarter four, which helps pull the margin down.

Abhishek Jain — Dolat Capital — Analyst

So given the lower steel prices scenario, your margin is always between the 17% to 18% kind of the number in fastener business. This time, it has gone down to 11%. And as you’re mentioning there are some like inventory adjustment and other provisions. So if we normalize all these things, what would be your margins in the first quarter FY ’24?

Pankaj Gupta — Group Chief Financial Officer

Just to correct the data. So it’s not dropped to 11% ever. Anyway, we can discuss that offline. But, yes, our margin of EBITDA around 15.5%, which is a yearly average is where we are today. And we think that’s the number to consider.

Abhishek Jain — Dolat Capital — Analyst

Okay, sir.

Atul Aggarwal — Whole-Time Director

So if I can add to that. Firstly, I don’t know where the number of 11% EBITDA is coming from. I think there may be some communication gap. So you can take it up with us offline and run the numbers with you. Secondly, to add on to what Pankaj said on Q4 numbers, let me just say, yes, it’s down percentage of two points vis-a-vis Q3. And Pankaj explained what the one-time issues were, but I would rather focus on the full-year EBITDA margins, which are still healthy despite the fact, there’s a numerator-denominator effect, inflationary issues on the balance sheet in FY ’23.

Now having said that, steel has softened. Steel has softened, but that does not mean steel has softened giving up dramatic savings, but the trend is on the lower side. There has been a marginal reduction in steel buying prices, but it’s not dramatic to — enough to make a substantial margin impact for next year. Having said that, if I can just spend 10 seconds on next year, we believe our margin structure for FY ’24 will be better than FY ’23 on a full year basis. Quarter-on-quarter, we have issues on inventory valuation depending on RM or other inflationary issues. But on a full year basis, I think our guidance will be that margins improve over FY ’23.

Abhishek Jain — Dolat Capital — Analyst

Sir, what is your margin guidance in the — revenue and margin guidance for FY ’24, sir?

Atul Aggarwal — Whole-Time Director

For fastener business?

Abhishek Jain — Dolat Capital — Analyst

Yes, sir, fastener business.

Atul Aggarwal — Whole-Time Director

So I think we are at 15% plus right now. I think we’ll be close to 16% as well.

Abhishek Jain — Dolat Capital — Analyst

16%. And top-line growth, sir, I mean revenue growth?

Atul Aggarwal — Whole-Time Director

So we are looking at for top-line growth, let me just dive — I want to drive into a lot more data before I get into guidance. Let me just say that the industry going forward, like I said in my opening remarks, PV industry is expected to grow at 5% on a more aggressive side, but most — that’s our estimate, but most indications by SIAM or other industry bodies are looking at about a 2% to 3% industry growth in PV segment.

Farm equipment expected to be flat. And two-wheeler industry is up, maybe 9%, but that’s also changing the mix what’s happening there. Two-wheelers also not expected to grow to anything more than what 5% odd or so this year. So keeping in mind, industry growth, I think we are looking at growing anywhere between 17% to 20% for next year.

Abhishek Jain — Dolat Capital — Analyst

So how is the mix for the fastener revenues comes from the two-wheelers, passenger vehicles, PVs and…

Atul Aggarwal — Whole-Time Director

If you say that again, please?

Abhishek Jain — Dolat Capital — Analyst

How has the mix for the fastener revenue in terms of the two-wheelers, passenger vehicles, PVs and farm equipment FY ’23, sir?

Atul Aggarwal — Whole-Time Director

So — let me have the numbers right, industry segment ratio.

Pankaj Gupta — Group Chief Financial Officer

Industry segment ratio.

Atul Aggarwal — Whole-Time Director

Give me a second.

Pankaj Gupta — Group Chief Financial Officer

Just give us a second.

Abhishek Jain — Dolat Capital — Analyst

Yeah, sir.

Atul Aggarwal — Whole-Time Director

So I think just to give you a sense while Pankaj is opening the data for himself, we are at — in FY ’23, we are at about 20% in two-wheelers, in passenger vehicles, we are at about 24%, 25%, commercial vehicles, we are at a similar number, farm equipment is at about 11%, and aftermarket is at about 14%, 15%. Just to give you a sense where we are. So I want to dive into another data point out here, which is a, we — and I didn’t mention that the commercial vehicle industry grew 29%. But our revenue in the commercial vehicle segment has gone up by 62%. Two-wheeler industry grew 9% last year.

We have grown 36%. Farm and tractors, the fund has grown 12% last year, we are up 36%. Passenger vehicles are up 25% last year, we are up 35%. Overall, we are up 28% in revenue terms over last financial year. I just wanted to put that data out there that Sterling has grown faster than the industry in all segments of the business. And I think that is why we have grown by 28% in revenue terms in FY ’23 over FY ’22. Yeah.

Abhishek Jain — Dolat Capital — Analyst

Great, sir. And what is the volume growth…

Operator

Excuse me, sir, I would request you to kindly rejoin the queue, sir. There are many other participants waiting for their turn. May I request you to…

Abhishek Jain — Dolat Capital — Analyst

Okay. I will come in the queue.

Operator

Yes, sir, please. Thank you. The next question is from the line of Sonal Gupta from HSBC Mutual Fund. Please go ahead.

Sonal Gupta — HSBC Mutual Fund — Analyst

Hi, good morning, and thanks for taking my question. So just coming back to the margin side, right, like a couple of quarters back, you had guided that the fastener business margins would be in the range of 16% to 19%. And I would imagine that these annual volume discounts are like — seems like an annual practice. So this should have already been worked into your estimates.

So just trying to — and now you’re talking about 16% EBITDA margin, which is the lower end of your guidance. So just trying to understand what has changed here in terms of your cost structure, etc., and like you just mentioned, I mean, like you are gaining market share, you are outperforming the industry in all segments. So just trying to understand like why the sort of downgrade on the margin expectation?

Atul Aggarwal — Whole-Time Director

So a good question, Sonal, but let me just say, yes, our guidance is always between 16% and 19%. We are giving a guidance of about 60% [Phonetic] for FY ’24. But I want to — to your question of a past guidance, now there’s one — there are two, three big factors. One is a mathematical issue. Steel has gone up by roughly about 23,000 [Phonetic] metric ton, 24,000 [Phonetic] metric ton, which is almost 35% of — from the base prices.

Now just because of that mathematical numerator-denominator effect, we have got full compensation from our customers for steel price moving up. But just because of the mathematics the way it plays out, the margin structures fall. For example, on a low base of steel, our margins were over 18% plus. If we keep the similar cost structure and the steel goes up, there is a numerator-denominator effect of about 2.5%, 3% on that. So that’s causing additional pressure mathematically more than anything else.

Second part of the equation which gets impacted is because of inflationary cost pressures, where costs have gone up on other inputs, could be chemicals, energy, people, etc., etc. In FY ’23, we were working with a lot of customers to give us price increases. Those price increases were a long time for negotiation. We’ve been able to conclude a lot of the price increases with our customers, which are kicking in, either in 1st April this year or which have kicked in just a couple of months ago without giving us a full year impact.

So I think that both price increases on account of inflation cost increases on top of steel price increases are going to kick in for this full financial year. Now having said that, I would still give a guidance of 16%. Once the steel prices soften more, I think this can go up to 17%, 18% from a more normal range. But I — from the current indications we have, steel prices are not expected to soften so much to give us that benefit.

Thirdly, what I would say is that this year the industry they’re only expected to grow in the commercial vehicle segment only. We don’t see much growth coming in other areas. And having said that, we’re still giving a guidance of 17%, 18% revenue growth this financial year on a — so the numbers which you’re hearing from me on 16%, I will not say the change in guidance, I would still say it’s very much in line of 16% to 19%. If that steel softens a bit and the numerator-denominator effect will automatically bump it up to 17%, 18%. If you like, and I’ll tell Pankaj to set up a separate call with you just to explain to you how that equation works.

Sonal Gupta — HSBC Mutual Fund — Analyst

Yeah, great, great. Thanks a lot, Atul, [Foreign Speech]. Sir, the second question I had was on the — sequentially, if I look at the X — I mean which is the EV business essentially consolidated. Revenues have also been flattish. So it seems to indicate that the EV revenues have been also sequentially flattish despite the fact that we’ve seen clearly some of — I mean, one of your largest customer having a significantly increased sort of shipment, etc. So just trying to understand that why have we not seen a benefit in terms of revenues?

Pankaj Gupta — Group Chief Financial Officer

Okay. So we’ve grown between quarter four ’22 and quarter four ’23, we’ve grown 83%.

Sonal Gupta — HSBC Mutual Fund — Analyst

I was talking Q3 to Q4.

Pankaj Gupta — Group Chief Financial Officer

I know that. I know that. The — if you look at — I know that — and our large customers has grown in the low double-digits between quarter three and quarter four, okay? But you have to — and we continue to have a 100% share. There is a difference. I mean what is inverted on — what is inverted by the customer, what their stocks were, there is some level of fluctuation that takes place, okay? So all that we’re seeing there is that we had the stocks at the beginning of the third quarter at our customers’ place was significantly higher than the stocks at our customers at the end of the fourth quarter for a number of reasons.

We are trying — we — both customer and us are trying to get back up to a higher level. So you will see that we will possibly have higher shipments to them in this quarter than they will have to their end customers. But I think quarter-over-quarter, there will be — there are some changes that take place, and these are — there are a number of factors for this. But there is — we continue to be 100% of the business. And it’s just — it’s just, like I said, a factor of their inventory movements and the way their productions have panned out versus how our productions have panned out.

Sonal Gupta — HSBC Mutual Fund — Analyst

Got it. And just on this, I mean the last question I had was, when do you see the three-wheelers and LCVs sort of customers the orders that you won sort of ramping up, when do you see the launches happening?

Pankaj Gupta — Group Chief Financial Officer

So three-wheelers have already started moving up fairly well. I think — and I think we had a good quarter in the fourth quarter. LCVs are — we don’t see volumes really picking up until probably the third quarter of this year, right? What we’re selling is in tens and low hundreds, it’s not in the thousands.

Sonal Gupta — HSBC Mutual Fund — Analyst

Got it. Great. Thanks a lot. I’ll join back the queue. Thank you.

Pankaj Gupta — Group Chief Financial Officer

Thank you.

Operator

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

Manish Ostwal — Nirmal Bang — Analyst

Yes, sir, thank you for the opportunity. And I have only one question because most of the questions already answered by the management team. So for the quarter three to quarter four, the rise in the other expenses, what is the component of one-off in that drives incremental numbers?

Pankaj Gupta — Group Chief Financial Officer

You’re talking of EV consol level or standalone?

Manish Ostwal — Nirmal Bang — Analyst

I’m talking about consolidated other expenses line item, sir?

Pankaj Gupta — Group Chief Financial Officer

Sorry, just can you repeat? You are talking of standalone or consol?

Manish Ostwal — Nirmal Bang — Analyst

So I’m talking about consolidated financials, sir, and I’m talking about the other expenses remained from quarter three numbers to quarter four numbers. So there is a substantial increase. So what is the one-off component in that?

Pankaj Gupta — Group Chief Financial Officer

So if you see the published results, I think other expenses this time is including power and fuel and consumption of store and spares. That’s the presentation part. I hope you have factored that in.

Manish Ostwal — Nirmal Bang — Analyst

Yeah, yeah, yeah. Yeah, yeah.

Pankaj Gupta — Group Chief Financial Officer

Suffice that as Jaideep just mentioned in the EV business, so there is a — this expense relating to — which COGS has come down and other expenses have gone up. So the nature of the expenses is like our job work, selling and distribution expenses, labor costs, and general administration expenses because there is a ramp-up in SGEM, so these expenses are falling in other expenses, and that is the reason it is going up. But we should also see that the proportion overall, there is no impact.

Manish Ostwal — Nirmal Bang — Analyst

Well, you were talking on the one-off cost or what — is there any quantification of the numbers, sir, one-off cost on the other expense increase?

Pankaj Gupta — Group Chief Financial Officer

In the presentation, the details which are available, and it will — broadly as a item, these are heads which I mentioned.

Manish Ostwal — Nirmal Bang — Analyst

Okay, sir, thank you, thank you.

Pankaj Gupta — Group Chief Financial Officer

Just for your better understanding, as I said, that’s job work, selling distribution, labor cost, and general administration expense.

Manish Ostwal — Nirmal Bang — Analyst

Yeah. Actually I better understand you clubbed many external this quarter, that I understand sir. But if you take the operating margin movement from the quarter three to quarter four basis which is a drop. So there is a…

Pankaj Gupta — Group Chief Financial Officer

So if you see the year as a total, it will be a better picture. And as I said these — because of the volume increase in the electric vehicle segment, these expenses in the absolute term will go high.

Manish Ostwal — Nirmal Bang — Analyst

Sure, sir, thank you. Thanks a lot. Thank you.

Operator

Thank you. The next question is from the line of Viraj from SiMPL. Please go ahead.

Viraj Kacharia — SiMPL — Analyst

Yeah. Hi. Am I audible?

Operator

Sir, your voice is a little bit muffled. I would request you to use your handset, please.

Viraj Kacharia — SiMPL — Analyst

Hello?

Operator

Yes, sir, please continue.

Viraj Kacharia — SiMPL — Analyst

Yeah, just a couple of questions. First is on the fastener business. You talked about outperformance first in FY ’23 versus various end segments. So is that a value outperformance or you’re talking in terms of volume?

Atul Aggarwal — Whole-Time Director

Let me take that up. Atul here.

Viraj Kacharia — SiMPL — Analyst

Hi, sir.

Atul Aggarwal — Whole-Time Director

We’re up 28% in revenue FY ’23 in our fastener business. 21% has come through volume growth, 7%, 8% has come through a combination of price increases and product mix improvement. That’s just to give you an overall Company data point.

Secondly, the values which have shown increase, they’re substantial increases. For example, I mentioned, commercial vehicle is up 29% at the industry segment, we’re up 62%. So these outgrowing each segment is substantially on account of volume increase we have been able to see because of new product development which kicked in, new negotiation we did for our customers for share of business changes, etc., etc. We are up across all the four segments in the automotive industry because of the same reasons.

Viraj Kacharia — SiMPL — Analyst

Okay. And when you say 17% to 20% growth in FY ’24 despite the industry being muted, that’s at the fastener business level or you’re talking more at the consol level?

Atul Aggarwal — Whole-Time Director

I’m talking about the fastener business level.

Viraj Kacharia — SiMPL — Analyst

Okay. So will the — so, again, that will be largely volume growth driven right, sir?

Atul Aggarwal — Whole-Time Director

That will be largely driven through a combination of new product development, share of business changes in our favor from customers.

Viraj Kacharia — SiMPL — Analyst

So if you can just provide a little more granularity in terms of ways, end segments, what was our share we now have with major customers, how has that changed in the last one-year or two years? So that will be very helpful.

Atul Aggarwal — Whole-Time Director

So just to give you a sense, let’s talk about — if I talk about two-wheeler segment, stock bridge [Phonetic], there our share of business has marginally improved or we have been able to maintain with the largest customer, which is Honda Motors and Scooters. We were able to acquire a lot of new business at Suzuki Motorcycles, which is part of Suzuki Group. I think that business went up almost 50% for us over last year. That give us a huge bump in our business.

If you look at in the passenger vehicle space, we were up 35%. We have been able to grow marginally again with our main customer, Maruti Suzuki. But we were able to grow substantially in Mahindra & Mahindra’s Automotive Division. At Mahindra, we’ve done a lot of product development work with Mahindra over the years, which translated into substantial volume and value increase in this financial year. As we all know, Mahindra has done very well in this Automotive Division.

So I mean there are two reasons. In farm equipment, we were always a strong player with Mahindra. We have grown dramatically at Mahindra Tractor Division, and we had acquired John Deere as our customer two years, three years ago. Those values for our new product development kicked in, in FY ’23, which will improve in FY ’24. Those are the two big reasons where it went up, plus we did business — our business with off-highway with JCB has also gone up dramatically. We are up almost 100% with JCB, again on the back of new product development and work we have done in the last two years, three years.

In commercial vehicles, the industry is up 30% — 29%, we were up 62%. Growth came on the back of Leyland, where we’ve done a lot of new product development in the last two years, three years where the values have gone up. I think we are up in Leyland almost 100% over the last financial year. We are up about 35% on Tata Motors, and we are up about 40% odd in Volvo — Volvo Trucks as well. So in summary terms, all I call say is a lot of new product development work done in the last two years, three years, that has kicked in, plus because I think we’ve been able to work with the customers to improve our share of business across the board.

Viraj Kacharia — SiMPL — Analyst

So just to kind of go a little deeper on this, and just two parts on this. One is, as you said, it takes a couple of years for the new product development to kick in and to materialize. So based on the efforts which we are making in the last two years, three years, even if the industry volume were to remain subdued or — even in that environment, do we have enough pipeline in place which can keep us sustain this growth rate, not just in ’24, maybe even in FY ’25?

And a related question is also in the sense in terms of margin. So when we kind of bid for these new projects, which we are looking to commercialize, inherently, I mean in the past also, we have been very conscious in terms of the profitability in the products which we bid for. So in that sense there is no change in those margin thresholds, which we traditionally looked at before when we look to bid for new projects?

Atul Aggarwal — Whole-Time Director

So let me answer your first part, yes, you’re right, it takes two years to three years for a new product that has to translate to value. The guidance we have given for FY ’24 on revenue growth is despite the fact the industry is not growing. And going forward, by FY ’25, FY ’26, we were already working on product lines, where we have visibility as to what is going to kick in, in terms of value and bump up revenue for us.

So I think we will share with you as we go forward in the year. Some stuff, I can’t share with you right now because of competitive reasons, but I can only assure you that our revenue growth plans for FY ’25 and FY ’26 is also robust, keeping in mind the activities we have going on. On your second part of the question, especially, again was on — can you repeat the second part? Yeah, on the margins, so, yes, as a Company philosophy, we have — we believe in that margin retention is very critical in what we are trying to do. So our philosophy remains the same. We are not compromising other structures to find this growth. We are looking at more and more critical part development, will help us not only margin retention, also improve our competitive position with our customers.

Viraj Kacharia — SiMPL — Analyst

Okay, that’s good to hear. Can I just squeeze in one more question. On the EV part…

Operator

Please, sir…

Viraj Kacharia — SiMPL — Analyst

Yeah.

Operator

I’m sorry to interrupt. Sir, I would request you to kindly wait for follow-up questions, please.

Viraj Kacharia — SiMPL — Analyst

Sure, sure. Thank you.

Operator

Thank you, sir. The next question is from the line of Alisha Mahawla from Envision Capital. Please go ahead.

Alisha Mahawla — Envision Capital — Analyst

Hi, sir, good morning. Thank you for taking my question. Sir, my first question is that we are talking about 17%, 18% growth on the fastener side, that seem to be anywhere between INR700 crores to INR750 crores, which I believe is the peak revenue we can do. So do we have any incremental capex plans on the fastener side?

Atul Aggarwal — Whole-Time Director

So we are — I think we are investing about INR30-odd crores incremental capex this year. I don’t have the exact number, but guidance will be between INR25 crores and INR30 crores. So yes, we are adding incremental capacity for some specific products and certain balancing equipment. So that’s an ongoing capex — that’s an ongoing capex we are doing, which will supplement capacities.

But I think our revenue, we had given a guidance of — sometime back of maybe, I think about INR800 crores. We have not given a revenue guidance of INR750 crores on a full basis. My sense, if I remember correctly, it’s more like INR800 crores. And this maybe before we had price increases kick in. So this number may be north of INR800 crores as well, including the capex we are doing this year and going forward, we will do incrementally to support the growth of the business.

Alisha Mahawla — Envision Capital — Analyst

Well, just to clarify, this INR800 crores is including the INR30 crores capex that you’re planning to do this year?

Atul Aggarwal — Whole-Time Director

No, no. I think INR800 crore capex is based on the old numbers. The INR30 crore capex is on top of that, and which will help us increase our capability to grow beyond INR800 crores and do certain other products which are not currently — our equipment is not currently capable of manufacturing.

Alisha Mahawla — Envision Capital — Analyst

Understood. On the fastener side, we said that apart from the annual volume discount, we also had some amount of inventory loss because of production of steel prices. Is it possible to quantify what was the inventory loss for the quarter?

Atul Aggarwal — Whole-Time Director

No, I don’t — I think Pankaj or Arun can help me. But my sense on the inventory loss is not an inventory loss. It’s more of a valuation exercise loss. Pankaj, do you want to explain that? Arun, do you want to take it over?

Pankaj Gupta — Group Chief Financial Officer

Yeah, so basically, whenever the steel price changes, it gets to flattening your closing inventory, and we said with the large inventory, the valuation change is what is captured in quarter four. So there is no loss per se on inventory. It is a valuation which is having an impact. And these are timing differences, as you move forward, prices change. Again, these things will keep reflecting in the results.

Alisha Mahawla — Envision Capital — Analyst

Is it possible to quantify this amount?

Pankaj Gupta — Group Chief Financial Officer

I think it’s bundled along with. Right now, I don’t have numbers to share with you. Maybe we can connect offline to do.

Atul Aggarwal — Whole-Time Director

If I can add on top of what Pankaj is saying, these are valuation exercises which are done quarter-to-quarter. So that if you — you will find some quarters, the cost of inventory goes down, some quarters, it goes up, it depending on the buying prices we have done in the last quarter or the quarter before that, because there is a large pile of inventory at finished goods level, there’s inventory at our work-in-progress level, which is revalued quarter-on-quarter depending on the buying prices and cost of production for that quarter.

Yes — yeah. So yes, the — at times, the quarter may look bad, at times, the quarter may look very good. So what we trying to do as business owners here on the businesses, I would — we’d like to focus on the annual numbers, which are more representative of the true nature of the numbers.

Alisha Mahawla — Envision Capital — Analyst

So while I understand that it will be different from quarter-to-quarter basis, and it makes sense to look at the annual number. Just trying to understand if this has started the new reduction in steel prices where the margins can be. My last question is on the consolidated side, we’ve done about 10.5% kind of margins. And for fasteners, we’ve said that we’re looking at doing 16% lower end of our band for ’24. On consol, what is the kind of sustainable margins we can do?

Pankaj Gupta — Group Chief Financial Officer

So for the quarter, yes. If you see the blended for the complete year on a consol is around 13% EBITDA margin, right? Just to — so as we advise on the fastener business, margins should be in the range of around 16%, and for the EV business, we currently are at a 6.5% EBITDA margin for the last year, and 6.5% to 7%. And our — as we move to the next year, our advisory earlier was also in the range of 8% to 10%. So there is going to be about 2% to 3% improvement in margin in EV, about 1% of margin in fasteners, blended, whatever comes will be an outcome of that.

Alisha Mahawla — Envision Capital — Analyst

Okay.

Pankaj Gupta — Group Chief Financial Officer

It will definitely be better than 13% by…

Atul Aggarwal — Whole-Time Director

So I think also if you look at the mathematics in the last quarter, the EV business did a revenue of probably close to INR60 crores, which is almost 30% of our revenue of fastener business. In the fastener business, we did INR150 crores, and 33% — and EV did close to INR60 crores. So about 35% revenue as a percentage came from the EV business.

Now I just — that automatically, mathematically, the ratio is staying and that puts pressure on the consolidated margin structure. Having said that, these margins are expected to go up. I just want to mention, since you’re talking about margin structure, we got to keep in mind, the two separate businesses, fastener business and EV business, I think one data point we need to address would be return on capital employed. And I think the return on capital employed in the EV business is dramatically better, despite the lower margin structure in that business, that ROCE there in that business is about 35% in FY ’23. So I think we need to factor in and we need to keep an eye on ROCE as well as margin structures while looking at the business overall.

Alisha Mahawla — Envision Capital — Analyst

Okay, great. Thank you.

Atul Aggarwal — Whole-Time Director

Thank you.

Pankaj Gupta — Group Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions] Thank you. The next question is from the line of Chirag Setalvad from HDFC Mutual Fund. Please go ahead.

Chirag Setalvad — HDFC Mutual Fund — Analyst

Yeah, hi, good morning. Just a clarification on the growth numbers. So on one hand, you mentioned growth of 17% to 20% in fasteners and then subsequently, there was a number of INR800 crores, and if I get this right, your fasteners revenue is roughly about INR600-odd crores in FY ’23. So if you could help clarify that?

Atul Aggarwal — Whole-Time Director

No, so I think the question by one of the members on this call was INR800 crores is what the number that understanding on a full capacity basis, it was not for FY ’24.

Chirag Setalvad — HDFC Mutual Fund — Analyst

Okay. So that’s on full capacity, you can do INR800 crores?

Atul Aggarwal — Whole-Time Director

INR800 crores plus. Like I said, we are adding — we have done — we are doing incremental capex this financial year. So the guidance on the full capacity will be INR800 crores plus north — much north of INR800 crores.

Chirag Setalvad — HDFC Mutual Fund — Analyst

Sure. So the guidance for this year for this INR600-odd crore revenue business to grow by 17% to 20%?

Atul Aggarwal — Whole-Time Director

Correct.

Chirag Setalvad — HDFC Mutual Fund — Analyst

Right. The second is on the EV business. Can you help explain the competitive advantages that the Company has, because my extremely limited understanding, I’m not sure how value-added this product is, how much is — what is the sort of value-add, the Company is doing and how easy or difficult is it for competition to enter into this area?

Pankaj Gupta — Group Chief Financial Officer

Okay. So obviously, let me first start by just explaining, and I hope I’m not being too repetitive for all the members on the call. The motor control unit is a factor — is — and I’m talking the architecture defers from different — for different vehicles in different vehicle classes. But let’s just talk about a high-speed scooter because that’s where the bulk of the market is right now.

In a high-speed scooter, the motor control unit basically interfaces with the battery pack and the BMS there. It interfaces with the vehicle control unit. It drives the motor and it interfaces through the vehicle control unit with the instrument cluster. So the most important part of — if you — I mean any — every part of our vehicle is important because without everything coming together, it doesn’t work, but the motor control unit has a large software component to it, both which drives the performance and efficiency of the controller, but also the overall vehicle performance.

So — and that’s a differentiator in some ways. And that’s why we also talked about the fact that there is a lot of stickiness, because while it is possible to replace a controller, there is a lot of software work that is required to do so, because of all the interfaces that are there with different aspects of it. In terms of the value-add and what is our competitive advantage. We understand — with the three years since we’ve started this Company and five years since we’ve been working on this project, we understand the competitive landscape — we understand, sorry, the vehicle architecture is very, very well. We understand how — what is required to get the vehicle to do what the — our customer, which is the OE wants it to do.

And our ability to provide that engineering support to the customers and to get the vehicles to where they want it to be, I think is a key factor, and there’s a lot of experience has been built in. We have developed an ecosystem of suppliers to allow us to ramp up to the volumes. We’ve gone up pretty much from a standing start to 180,000 units and more, and we are continuing to expand. We locked in suppliers for DSPs, MOSFETs and other key components. So we built an ecosystem that enables us to be able to cater to our customer requirements. So at the end of it, we’ve got the engineering edge out there, and we’ve got the supply chain in the ecosystem in place. So yes, there will be competition, competition will increase, no doubt about that, but we will — I think we are well placed to be able to maintain our competitive advantage in this space.

Chirag Setalvad — HDFC Mutual Fund — Analyst

And where do you see revenue — last question from my side, where do you see revenue in the EV business this year?

Pankaj Gupta — Group Chief Financial Officer

I had mentioned earlier that we are looking to at least double.

Chirag Setalvad — HDFC Mutual Fund — Analyst

And this year was INR170 crores, right?

Pankaj Gupta — Group Chief Financial Officer

Yeah.

Chirag Setalvad — HDFC Mutual Fund — Analyst

Great. Thank you very much.

Operator

Thank you. The next question is from the line of Chirag Shah from White Pine Investment. Please go ahead.

Chirag Shah — White Pine Investment — Analyst

Yeah, thanks for the opportunity. Sir, I have, first, a few housekeeping questions out of that clarification. So, one, when I see your presentation, you include other income in your EBITDA calculation. Is it possible to indicate what is just — because when I look at the annual report, a large part of this appears to be treasury income, fixed deposits, interest and all those kind of things. So that is first question. Because if you exclude other income then the pressure on margin seems to be slightly higher, either annual or quarterly. So that is one. That is the first housekeeping question.

Pankaj Gupta — Group Chief Financial Officer

So, yeah, other income is interest on treasury, plus sale. And this time we had about INR2.5 crore of dividend we received from Haryana Ispat, our subsidiary company. So this is not a substantial amount. I mean in terms of percent in margin, yes, you can compute with revenue from operation basis than total income, in fact, the margins will improve if you do that, the denominator is going to reduce, right?

Chirag Shah — White Pine Investment — Analyst

Okay. Sir, second question is, you indicated that there was some mark-to-market valuation negative impact on inventory. So in the past, is it that we also had a positive impact on quarterly basis because when steel prices were going up?

Pankaj Gupta — Group Chief Financial Officer

Yeah, that is true, because that is how the steel behaves and that there’s, of course, there has been benefit in the past.

Chirag Shah — White Pine Investment — Analyst

So as a request sir, is it possible if you can highlight that in presentation whether a gain or a loss, it will help us to understand the quarterly numbers also reasonably better. And sir, last question, if I can. This is more on the product side. So on the fastener side, you indicated that there had been market share gains. For example, in Ashok Leyland, you indicated, in M&M, you indicated because of product development. Can you indicate what these products were, what kind of products were you referring to?

Atul Aggarwal — Whole-Time Director

So, same fastener. See, if you look at any vehicle for that matter, there are about 300 different kind of part numbers, SKUs, which go into make — go into making a vehicle. So we have not developed or know the fastener maker has developed the entire range of 300 fasteners. So that development activity is an ongoing one, but we try and focus on more, more critical parts to do that. I think that’s — that has given us. Our customers are already buying that from competition or maybe it is for a new product or a new model, they were launching to replace an old model, it’s combination of those things.

Chirag Shah — White Pine Investment — Analyst

Okay. So what I was referring to is, are there more engine-related fasteners or chassis-related fasteners, if you can indicate or are they very different in terms of the thickness of the fine-tuning that you do, are they far more that you are not making? So what exactly are these going ahead, what kind of development you are making, without going into the strategic information which you can’t share?

Atul Aggarwal — Whole-Time Director

Yeah. These developments are more for transmission and for engine application.

Chirag Shah — White Pine Investment — Analyst

For transmission and engine applications. And we assume that this process will continue, it’s not a one-off thing, right?

Atul Aggarwal — Whole-Time Director

Right, right, it’s an ongoing process. That’s how we are able to do what we do. It’s an ongoing process.

Chirag Shah — White Pine Investment — Analyst

And I’m referring to the pace, I was referring to the pace the way we have scaled over last two years in terms of market share, and I’m referring to volume market share in general, I’m more referring to that perspective. So that process continues.

Atul Aggarwal — Whole-Time Director

Process continues, and in fact, our objective is to intensify it more and more going forward.

Chirag Shah — White Pine Investment — Analyst

And does that have a negative rub-off on your margins in the initial phase in, say, year one or something like that?

Atul Aggarwal — Whole-Time Director

Can you repeat that question?

Chirag Shah — White Pine Investment — Analyst

So the new SKUs that you introduced with the customers, does it have a negative impact on margins in year one when you introduce them? So suppose you introduce a new SKU or a new fastener, say with MLM, just as an example, does it have a negative impact?

Atul Aggarwal — Whole-Time Director

The margin structures don’t get impacted on account of that. The only thing when the volumes are being ramped up and the first year, volume is slow is that — the changeovers we need to do on our cold forging machines go up. But that’s a marginal thing. That is not really margin — it doesn’t impact our margin structures in any meaningful way.

Chirag Shah — White Pine Investment — Analyst

Okay, sir, okay, okay. Okay, thank you, and I’ll come back for more questions.

Operator

Thank you. The next question is from the line of Rohan Samant from Multi-Act PMS. Please go ahead.

Rahul Picha — Multi-Act PMS — Analyst

Yeah, thank you. This is Rahul Picha from Multi-Act. Again, coming back to the standalone P&L. So sequentially, we see an increase of raw material costs from 42.8% to 47.5%. As you have explained, it seems that this increase is largely led by the inventory revaluation exercise that we have done. So firstly, wanted to understand that, is this understanding right that is largely led by the inventory revaluation? And secondly, the revaluation exercise is done on a quarterly basis or we do it every year in Q4? That is my question.

Atul Aggarwal — Whole-Time Director

I think firstly, let me — if I can correct you, and Pankaj, you can back me up on that. Our raw material content has gone up from 40% to 42.15% on a Sterling standalone basis — Sterling fastener standalone basis.

Rahul Picha — Multi-Act PMS — Analyst

Okay.

Atul Aggarwal — Whole-Time Director

So I don’t know what number you are referring to. But that’s what — for the fastener business, it’s currently at 42.15%, up from 40%.

Rahul Picha — Multi-Act PMS — Analyst

Okay. The numbers that I have seems to suggest that it’s gone up from 42.8% to 47.5%. Maybe I clarify it offline.

Atul Aggarwal — Whole-Time Director

I think you’re looking at only from a Q3, Q4 perspective.

Rahul Picha — Multi-Act PMS — Analyst

Yes, correct.

Atul Aggarwal — Whole-Time Director

You’re looking at — you’re looking at Q3 FY ’23 and Q4 FY ’23, I think that’s what you’re looking at.

Rahul Picha — Multi-Act PMS — Analyst

Correct, correct.

Atul Aggarwal — Whole-Time Director

It’s gone up from 43% to 46.5%, 42.63% to 46.45%.

Rahul Picha — Multi-Act PMS — Analyst

Okay.

Atul Aggarwal — Whole-Time Director

But on a full year basis, it’s gone up from 40% to 42.15%.

Rahul Picha — Multi-Act PMS — Analyst

Okay. So this is largely due to the inventory revaluation that has been done?

Pankaj Gupta — Group Chief Financial Officer

No, see, and there are two factors, the inventory valuation is a very small part of the total year, it will be 2% [Phonetic]. The global impact which we keep mentioning our call, please understand, Rahul, whenever the steel prices will go up, high percentage margins are bound to drop and vice versa. And unfortunately, we have not come across price reduction on a permanent basis on steel in last at least two and a half years to three years. So there is a downward trajectory of the margin in percentage term.

So as you were mentioning about INR24 a kg has been a increase in last two and a half years on steel. So this really kills the percentage margins. However, we get our price increases and in absolute terms, we are intact, and that is why we are able to maintain our EBITDA margin and all.

Rahul Picha — Multi-Act PMS — Analyst

Yeah. So, Pankaj, [Foreign Speech], actually my question was more from the movement that has happened from Q3 to Q4. So just wanted to understand that this inventory revaluation that you do, is it done every year in Q4 or is it done every quarter, because the impact in Q4 seems to be material and this was the same in last year as well. So that is why I’m asking?

Pankaj Gupta — Group Chief Financial Officer

Arun, do you want to take that?

Arun Agarwal — Deputy General Manager Finance & Accounts

So actually, there are two components in it, okay. First one, the margin impact that Pankaj, sir, already told, it is very nominal. Second one is that the inventory gap, if you see our inventory has gone down. So what has happened because of reduction in inventory, the — my RM content is going up. I hope I’m able to clarify you.

Pankaj Gupta — Group Chief Financial Officer

It’s a case in total stock. We can — let me discuss offline in detail. Yeah.

Rahul Picha — Multi-Act PMS — Analyst

Okay.

Operator

Thank you. We have the next question from the line of Tanya Gupta [Phonetic] from G [Phonetic] Portfolio. Please go ahead.

Unidentified Participant — — Analyst

Hello, good morning, everyone. Thank you for the opportunity. I just want to understand, I was going through the PPT, where the product mix for the EV segment, the three-wheelers and LCV stood at 11% [Phonetic] each. I just wanted to understand who we are supplying in the three-wheelers and LCVs space? And subsequent to that are these products — are these orders are in prioritized nature or commercial scale orders? And what is the potential product mix and how can we grow, if we took for the long-term span, maybe FY ’28, FY ’29, it’s very long-term. So how are we targeting in terms of product mix and EBITDA margins from these, particularly three-wheelers and LCV segments? This is my first question.

Pankaj Gupta — Group Chief Financial Officer

Okay. So the three-wheeler and LCV segments while they are relatively small right now are very important because these are segments that we see a very good penetration of electrification. This is where the TCO has been proven of — at least in the case of three-wheelers has proven to be very favorable, and in the case of LCVs too, which is expected to be very favorable. So there are many expectations that an gasoline-powered three-wheeler will become a part of history sooner rather than later, and what you’ll really have is either CNG or electric.

So the potential is very good. Yeah, there has been — we’ve got business from, I guess, the leading companies in this space. I’m just going to — I’m going to just take a minute to talk to my team here to figure out if I can share the names. So we’ve got — we are in production with companies like Oiler, which is one of the leading companies in India, and we have contracts from companies like Mahindra. So there is — if you look at that case, we have business across the spectrum and there are a number of other small companies — are we online? Is there a — yeah, okay.

So I said, we’ve got business from established three-wheelers and as well as from, we call as, start-ups. In the LCV space, except for — I rather than giving out names, what I’ll say is that except for Tata Motors with whom we continue to work, every single LCV manufacturer has given us a contract for at least one of their models. So it’s just a matter of the models coming into the market and for their sales to ramp-up and you’ll see our sales ramping up also.

Unidentified Participant — — Analyst

All right. If I could — also the content in the product, is that increasing? I mean, how we are seeing the content in the product that we’re supplying to three-wheelers and LCV parts, and what about the product mix? Since, currently, there is 19% [Phonetic] two-wheelers and 11% [Phonetic] is in municipal. So if we took a long-term, are we like looking for a balanced conclusion on this EV segment?

Pankaj Gupta — Group Chief Financial Officer

So I mean, I think the way to answer that, first of all, I’m not sure what you mean by content. Could you explain that to me, please?

Unidentified Participant — — Analyst

Since you have mentioned of fasteners, like we are doing and other peers are doing 300 fasteners, the product segment that we have in the fasteners, we are supplying almost 300 fasteners and more or less on that. So are we looking with the same perspective for the EV part, I mean the product that we updated, the MCU part, are we increasing the content, so that we can have higher wallet share from the suppliers?

Pankaj Gupta — Group Chief Financial Officer

Okay. So there is only one MCU and unless there is — typically, there is one MCU per vehicle. I mean, I won’t get into vehicle architecture here. But you can take that as a standard and that’s what we — and therefore, we can’t increase the content with MCUs alone. But as we have stated in the earlier calls, it is the intent of the Company to look for other EV, other parts of the EV powertrain. So that we are — we’ll become a more — maybe become more significant partner to our customers.

So yes, expansion of the portfolio is definitely a part of our strategy, but it’s not that the MCUs will become a bigger part of the [Technical Issues]. Now if I — if you take — if I can just take a minute and looking at what we did, what happened in last year, the total sales of EV was 1.18 [Phonetic] million, right? EV sales were 1.18 [Phonetic] million, of which 63% was electric two-wheelers. Now e-buses was 6.06% [Phonetic]. Electric three-wheeler cargos or three-wheeler cargo was 4%.

Now, passenger vehicles is 28%, but I have to say that that’s not a pure number because that has some e-rickshaws in it. So our share of business from two-wheelers is not — in some ways is not identical, but what’s happening in the industry, yes, we would definitely like to have a greater — we like to have a greater participation from other segments as the segments grow.

Unidentified Participant — — Analyst

All right, all right, sir. Your voice was breaking, actually, I couldn’t hear the last statement.

Pankaj Gupta — Group Chief Financial Officer

So I — what I said was that as of today, electric — so the electric three-wheelers is 4% of the total EV market. LCVs are non-existent in electric vehicles today. Therefore — and 68% is from electric scooters. So therefore, while we have our share of electric scooters is higher, what I would say is that the — it in some ways mirrors — our sales pattern mirrors what’s happening in the industry as the industry matures and electric three-wheelers, LCVs, etc., as they become a bigger part of the overall electric vehicle sales in India, you will see that our sales will also grow.

Unidentified Participant — — Analyst

Sure. All right, sir. My second question, sir…

Operator

I’m sorry to interrupt, ma’am. I would request you to kindly rejoin the queue, ma’am, there are many other participants waiting for their turn.

Unidentified Participant — — Analyst

Sure. I will join the ring. Thank you.

Operator

Thank you, ma’am. Thank you. We have the next question from the line of Sonal Gupta from HSBC Mutual Fund. Please go ahead.

Sonal Gupta — HSBC Mutual Fund — Analyst

Hi, thanks for taking my follow-up. Just one question, like what Atul [Foreign Speech] mentioned, I mean in terms of — we seem to have grown faster than the industry in all segments by a substantial margin. And I think like you mentioned, CV, 62% [Phonetic], two-wheelers also, and everything is about 20% or more like 30%, but our overall growth is 27%, 28%, and like you mentioned 21% of that is volume. So price and mix has also been a positive contributor. So just trying to understand like what’s the missing thing, right, like if everything is growing closer to 30% or higher, then why is the overall 27%, 28%?

Atul Aggarwal — Whole-Time Director

So good question, Sonal. I think the missing piece here, where we are underperforming could be our export segment. I think that has degrown for us substantially. I think if I — Arun, what was the number in FY ’22 on exports?

Arun Agarwal — Deputy General Manager Finance & Accounts

INR47 crores.

Atul Aggarwal — Whole-Time Director

Yeah. So we have degrown in our export segments. I think that value was INR40 crores plus in FY ’22 is closer range at INR10 crores, INR12 crores. So we have lost, I think — or rather we say — I won’t use we lost some customers, there has been a shift of buying philosophy, some of the customers we’re working with. So I think that’s the missing thing. That’s domestically have grown dramatically as you’ve seen the numbers, but we lost growth opportunity or in fact, we didn’t grow in that export segment.

Sonal Gupta — HSBC Mutual Fund — Analyst

Got it. Got it, great. That’s all my questions. Thank you so much.

Pankaj Gupta — Group Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Abhishek from Dolat Capital. Please go ahead.

Abhishek Jain — Dolat Capital — Analyst

Sir, how much revenue growth in the two-wheeler segment in partner business, sir, in FY ’23?

Atul Aggarwal — Whole-Time Director

In FY ’23, one second. So in the two-wheeler segment, we’re up 36%.

Abhishek Jain — Dolat Capital — Analyst

So PVs is at 25%, EVs 32% [Phonetic], two-wheeler, 36%, and farm equipment is also 36%?

Atul Aggarwal — Whole-Time Director

That’s right.

Abhishek Jain — Dolat Capital — Analyst

And export — but earlier it is used to be the 2%, 3%, export used to be 2%, 3%. So is this a indirect export or direct export?

Atul Aggarwal — Whole-Time Director

No, no, no, I think in FY ’22, our exports almost were about INR45 crore to 10% of our revenue. I’m talking about specifically FY ’22. In FY ’23, we have done INR11 crores. So there has been a degrowth, you can say about INR35-odd crores we lost in export segment in FY ’23.

Abhishek Jain — Dolat Capital — Analyst

Okay, sir. And my last question is on the two-wheeler MCU segment. So you have — as the Simple Energy has started production, how much share of business do you have and how much it will boost your revenue in the MCU segment?

Atul Aggarwal — Whole-Time Director

We have 100% share of business.

Abhishek Jain — Dolat Capital — Analyst

What is that target revenue on the volume from the first quarter FY ’24 from Simple Energy?

Atul Aggarwal — Whole-Time Director

I think we should — so they have given us some forecast. So I think that’s a question you should ask Simple Energy.

Abhishek Jain — Dolat Capital — Analyst

Yes, sir.

Atul Aggarwal — Whole-Time Director

We have 100% share of business.

Abhishek Jain — Dolat Capital — Analyst

Okay, sir. Thank you, sir.

Atul Aggarwal — Whole-Time Director

Thanks. Michelle, we’re running tight on time. I just want to make a couple of more comments on — as follow-up to our last few investor calls we’ve had, just for the entire participants today that one of the concerns raised by the investor community was our contingent liability in terms of EPCG obligations. Now we have addressed that dramatically this year in FY ’23, our obligations are down by almost 70%, for FY — going forward, that’s why if you see our as an extra line item we have before was a line, we have taken a provision of about INR3-odd crores as EPCG obligation monies we’ve paid to the authorities.

We were able to mitigate obligations, availing some government schemes by — at the same time, we have to pay some penalties to do that. We have taken a proactive effort to reduce our obligations and minimizing dramatically the contingent liability on EPCG going forward. Pankaj, yeah.

Pankaj Gupta — Group Chief Financial Officer

So as we shared last time, pretty good progress on the EPCG side, you will see in our Annual Report, and in next three months’ time to four months’ time, this entire obligation on account of EPCG which has been a concern, we will stand cleared on that. This is from my side.

Atul Aggarwal — Whole-Time Director

On a second thing, I think few meetings back, we had already for commercial paper on from the Board. We are not going to activate that product at all. And that much of time, commercial paper looked attractive vis-a-vis our current borrowing. Currently, we are borrowing short-term money, that’s about 5.5%, 6% or maybe going up to 7%. But obligations for commercial paper and the tightness in scheduling for that, we will not be activating that. I just want to put it on record, we would not be activating vehicle product at all. So just to give you a sense, these two areas where from an investor perspective, there [Technical Issues] contingent issues on cost, etc., and risks, we have on EPCG, we have reduced that, on the commercial paper side, we are dropping it completely.

Last — just announcement, if you could sense as to what we are doing in our EV business, motor control unit business specifically, [Technical Issues], we have spent — our engineering spend last year was close to couple of crores on engineering. Going forward, this engineering spend is going to go to between — is going to go up to between INR6 crores and INR7 crores. We are upping the investment, building on engineering spend, both in terms of engineering headcount capabilities and also in terms of testing, validation, competence as well.

So we are increasing our engineering spend by [Technical Issues] more. Just to say that we want to strengthen that business. We want to be — we want to maintain the head-start we have vis-a-vis competition. We want to maintain the advantage we have as a first-mover and doing more and more investment going forward. We have also opened a Bangalore tech center, where our engineering reside, not only to upgrade the current product lines, also build new product lines going forward.

Lastly, we will be — I think one of the questions which came off what on the spend per vehicle. We’ll be strengthening our EV product portfolio beyond motor control units, something that in the pipeline. But my apologies, I will not be able to tell you more details of that. Hopefully, we’ll have some more announcements in the near future telling you what we are trying to do in that. That’s — these are the things I wanted to update you guys as to what’s happening.

Operator

Thank you very much, sir. Sir, can we close the call now?

Atul Aggarwal — Whole-Time Director

I’m good, I’m good. Yeah, go ahead.

Operator

Thank you very much, sir.

Pankaj Gupta — Group Chief Financial Officer

Thank you everyone for joining the call. And I hope we were able to address all the queries you had. In case of any further clarification, please reach out to us or to SGA, we’ll be happy to support you. Thank you very much.

Jaideep Wadhwa — Non-Executive Non-Independent Director

Thank you.

Atul Aggarwal — Whole-Time Director

Thank you.

Operator

[Operator Closing Remarks]