Varroc Engineering Ltd (NSE: VARROC) Q3 2026 Earnings Call dated Feb. 05, 2026
Corporate Participants:
Tarang Jain — Chairman and Managing Director
Mahendra Kumar — Chief Financial Officer
Bikash Dugar — Head IR and Finance Controller of Business Unit 2
Arjun Jain — Whole-Time Director and CEO of Business Unit 1
Analysts:
Unidentified Participant
Mihir Vora — Analyst
Preet Pitani — Analyst
Ankur Poddar — Analyst
Ronak Jain — Analyst
Aditya Jhawar — Analyst
Sachin Kasera — Analyst
Priya Ranjan — Analyst
Mihir Vora — Analyst
Avnish Tiwari — Analyst
Presentation:
operator
Sat. Sa. Ladies and gentlemen, you have been connected to Varrock Engineering Limited Q3FY26 earnings conference call hosted by Equeria Securities Private Limited. Please stay connected, the conference will begin shortly. Ladies and gentlemen, good day. You have been connected to Varrock Engineering Limited Q3FY26 earnings conference call hosted by Aquarius Securities Private Limited. Please stay connected, the conference will begin shortly. Sa. Ladies and gentlemen, good day and welcome to Varrock Engineering Limited Q3FY26 earnings conference call hosted by Equerio Securities Private Limited. As a reminder, all participant lines will win the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mihir Vora from Equerio Securities Private Limited. Thank you. And over to you sir.
Mihir Vora — Analyst
Yeah. Thank you Palak. So good evening everyone. We are pleased to invite you to the Q3FY26 post results conference call of Werock Engineering Limited. The management team will be represented by Mr. Taranjain Chairman and Managing Director Mr. Arjun Jain, Whole Time Director and CEO Business Unit 1. Mr. Dhru Jain, Whole Time Director and CEOs Business Unit 2. Mr. Mahindra Krumad Group CFO Mr. Bikash Dugar, Head IR and Finance Controller Business Unit 2. And Mr. Vishal Rawan had Financial Controller Business Unit 1. Without further ado, I will now hand over the call to. Because for the disclaimer.
Yeah, because. Over to you.
Bikash Dugar — Head IR and Finance Controller of Business Unit 2
Thank you Mehra. Thank you QDES team for hosting the call. Just a small disclaimer before I request our chairman to give his opening remark. So the disclaimer is that the call today may include statement which may constitute forward looking statements. All statement that address expectation or projection about the future including but not limited to statement about the strategy for growth, business development, market position, expenditure and financial. Results are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future event and involve known and unknown risk, uncertainties and other factors. The actual results, performance or achievement could thus differ materially from those projected in such forward looking statement. So with that disclaimer I’m handing over the call to our chairman.
Tarang Jain — Chairman and Managing Director
Thank you Bikash. And good evening to everyone. I’m Tarang Jain here. So let me start by stating that India has delivered a robust 8.2% GDP growth in July to September 25 period. The highest in six quarters driven by strong performance in manufacturing, services and construction despite global uncertainties and tariff related pressures.
The GST cut introduced during the festival season gave a significant boost to consumption and enabled strong growth for the manufacturing sector. Also, the inflation in India continues to moderate which augurs well for the growth as the central bank can further support growth by easing the monetary policy. The recent featured agreements with the European Union and reductions in reciprocal tariffs with the US shows that the world is recognizing the importance of India both as a market and as a reliable supply chain partner. Also, the automotive industry is also preparing to deal with these uncertainties and geopolitical challenges.
In these uncertain times, it becomes very important for the company to find ways to manage this uncertainty and and grow simultaneously during this period. As evident from the recent stock exchange disclosures we made recently about our VRs program and some of the large order wins from reputed global OEMs, our company is taking some tough decisions to make the cost structure more robust and also focusing on winning large businesses in India and abroad for its future growth. Coming to the performance in this quarter, let’s first understand the industry performance in India in terms of automotive production in India during Q3 of FY26, all segments of the automotive showed strong growth on a year on year basis supported by a strong economic growth and GST reduction.
On a year on year basis, two wheelers grew by 15%, three wheelers grew by 34.7%, passenger vehicles grew by 19.1% and commercial vehicles grew by 17.5%. On a quarter on quarter basis two wheelers degrew by 1.7%, three wheelers degrew by 4.6%, passenger vehicles grew by 5.4% and only commercial vehicles grew by 9.7%. Sequentially that is quarter on quarter, the growth was not as strong as a year on year due to seasonality effect. Generally quarter three is sluggish in comparison to quarter two due to the model year change in the first nine months of financial year 26.
Also, we saw a similar positive trend across all the segments on a year on year basis. Nine months of financial year 26, two wheelers grew by 8.8%, three wheelers grew by 21.1%, passenger vehicles grew by 9.8% and commercial vehicles grew by 10.4%. Coming to the operational performance during Q3FY26, the company registered a consolidated revenue of Rupees 22.9 billion with a growth of 10.2% year on year with the India operation growing at 12.3%. Our EBITDA for the quarter was around 9.3% as compared to 9.2% on a year on year basis. Our PVT before JV profits was 4.4% of revenue in quarter three of FY26 as against 3.2% in quarter three of FY25.
The revenue from supplying to EV vehicles in this quarter was at 14.3% of the revenues and which grew by 50% on a year on year basis. We had some exceptional items in this quarter. The first one is the launch of a voluntary separation scheme in which more than 400 employees opted for the benefits of the scheme and this resulted in a separation cost of rupees 799 million. We continue to explore such restructuring operations in the near future which will make the company more and more robust in the medium term and the long term. The second exceptional item pertains to change in the definition of the wage as per the new labor code, as a result of which we had to recognize an estimated incremental expense or rupees 225 million towards reassessment of gratuity and leave in cashmere costs.
However, I’d like to bring your attention to the point that the India EBITDA and PBT were strong at 11.9% and 7.6% respectively and grew both on a year on year basis as well as sequentially. I explained earlier, the overseas electronics, lighting and the forging business continues to face challenges due to customer concentration and the macro environment. However, we are winning significant orders for the overseas electronics and lighting businesses already and a turnaround is expected to be visible from half two of financial year 27. The net debt of the company in the nine months of financial year 26 is rupees 4405 million.
This is increased for the first time after many quarters to the one time cash outflow. Pertaining to our the net debt to equity is very comfortable at 0.26 with significant growth enabling investments planned in the coming quarters on back of strong order wins. The net debt and interest costs will only see modest improvements in the coming quarters. In nine months of financial year 26 we achieved net new business wins with an annualized peak revenues of Rupees 20,636 Million. Notable business wins among these in the last quarter are the high voltage electronics business for a range of high performance E powertrain components for a Romanian plant from a global EV player, the four wheeler lighting headlamps and small lamps business for our Thailand plant from a global EV player and the four bit lighting business for our Indian operations from an incumbent OEM for its upcoming EV vehicle.
All these business wins helps us to fill the existing capacity and sweat our assets even more. In this quarter we also had some business wins from the non automotive segment. As emphasized earlier, in this volatile new normal environment, we continue to strengthen our company for a long term growth and performance by taking appropriate decisions and meticulously executing them. With this, I will now ask mk, our group CFO to walk you through the presentation and give more insights into the financial performance in Q3. We have uploaded the investor presentation to the stock exchanges as well as on the website.
Mahendra Kumar — Chief Financial Officer
Thank you Tarant. Good evening everybody. So I will take you to slide number 7 which is about the highlights of Q3. As our same day explained, the revenue was 2288 crores with a 10.2% growth. Within that India operations registered a significant growth of 12.3% year over year. The interesting point here is within this the EV models, the revenue from EV models in Q3 was at 14.3%. As some of you may recollect it was in the range of 10 to 11% earlier. So this actually amounts to a growth of 53% year over year. In Q3 and if you take nine months together, revenue from EV models was at 12.1% and there was a growth of 38% year over year.
Coming to PBT it was at 4.4% compared to 3.2% last year. In the same period of Q3 EBITDA was 9.3 versus 9.2. Another significant highlight is the highest ever new order wins in these nine months which has the annual peak revenue potential of more than 2000 crores which is the highest ever order win for us. And another important point here is 75% of this relates to EV models. Net debt increased this quarter to 441 crores. As you may recollect in the last three years we have been steadily reducing the net debt quarter on quarter but this time because of the VRs spending of close to 80 crores there was an increase in net debt.
But this particular initiative as our CMD explained is going to strengthen our cost structure further and this will give us a payback within four years. Coming to patents, in the nine months we filed close to 15 patents taking the tally to 130 plus. And within the order wins we also have these three significant order wins which we also announced the stock exchanges earlier. There is one HV high voltage PCBA order which is going to be met by our Romanian entity for a global EV OEM we also have order wins in four wheeler lighting. One is from the global EV OEM which will be met from our Thailand entity and another one is in India.
The next slide is about the industry trends. Our CMD already explained these numbers in detail. So there was significant growth in Q3 largely helped by the GST reduction plus the elimination of that rare asset constraint which we had in Q2. So that also helped us help the industry across different segments to the significant growth. Moving to the next slide which is about the consolidated financials of Q3. So as I mentioned, 9.3% was the EBITDA in terms of PBT you really see it’s about 101 crores compared to 66 crores of last year which is more than 50% growth.
So PBT went up by almost 53%. To be precise, the exceptional items had two parts. One is the new labor code impact which most of the companies are picking up this quarter. So that was about close to 23 crores. We also had VRs impact of 80 crores as I explained in the previous slides. So the PBT growth was largely enabled by significant PBT growth was also enabled by the interest cost reduction over a period of time and also strict capital controls which enabled us to control the depreciation charge also. And coming to the nine month numbers in the next slide, close to 8% growth in the top line.
EBITDA at 9.3% and PBT at 4.2%. Here again about more than 30% growth, 33% growth was there in the PBT in absolute terms. The next slide we are continuing this trend which we started last time of showing the split between India business and overseas businesses. As you can see the India business growth was pretty strong top line growth of 12% but EBITDA growth was 30% and PVT growth was more than 80%. The overseas businesses of course they have the challenges but we explained it in the previous meetings also. So this will now be a temporary phenomena.
With the strong order winds which we got in the recent times, this picture should look significantly different next year and the following years. And the third bar denotes the investment or the spending which we are doing on the RD activities. The next slide we have the net debt trend. As I mentioned we have been reducing net debt significantly in the last many quarters. This time we see this as a temporary blur, temporary phenomena. But before end of the year also we may not see a significant change in the net debt level. It will more or less continue at this rate because we are also planning for some land purchase.
Part of that may come this year and part of may come to this below to next year. But our effort will be to move to a zero debt status by end of next year. Next slide we have the revenue breakdown more or less similar to what we have been showing earlier. The two one three wheelers now add up to 76% and customers segmentation if you really see Bajaj adds up to 46% and within India 89% versus 11% outside. On the next slide we have given the details about the order range. As you can see the annual peak revenue potential of new orders which we have taken in the last nine months had so up to more than 2000 crores and of this nearly about 982 crores.
We’ll move to SOP this year. In terms of the split. If you. Really see the two wheeler and three wheeler that’s about 34%. So here it is the other way. Four wheelers and others add up to more than 66% and EV orders also add up to 75% which actually indicates the strength of our EV product portfolio. So let me stop here. The subsequent slides are more about the product information, some other generic details. Thank you, we’re happy to take your questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Preet from Incred amc. Please go ahead.
Preet Pitani
Hello. Thank you for the opportunity. Yeah, thank you for the opportunity. My first question would be on line of the revenue growth of the India business. It was around 12%. We have seen that industry wise revenue growth was somewhat in the range of 15 to 20%. So what led to the underperformance in respect to industry?
Tarang Jain
Yeah, so I would say there’s a. Couple of different topics. I think if you think about our portfolio from the perspective of ICE and evolving. Yes, I think on ice I think driven by a customer mix driven also by. Driven also by some significant models undergoing changeovers. We had a muted impact on growth over there. However if you look at our EV performance, EV performance we have grown by almost 53%. So yeah, I would say it is just a question of. It’s a combination of. It’s a combination of weaker performance on ice versus EV for us and also I would say driven really by mix and model changeovers.
Preet Pitani
Thank you sir. That was helpful, helpful. And second question on the line of the new order win which we have got, when we, when do we expect our overseas business to be breakeven?
Mahendra Kumar
I think in some of the markets like electronics in Romania, we may reach break even cash break even by next year. Full PBT level break even may happen in the following year.
Preet Pitani
Thank you sir. Join back in.
operator
Thank you sir. The next question is from the line of Ankur Podar from Swan Investments. Please go ahead.
Ankur Poddar
Hi sir, my first question is regarding the VSS cost which you have taken of 80 crores, the one time expense in this quarter and in the presentation it’s mentioned that the payback period for this is for. So is it safe to assume that this leads to annual saving of around 20 crores in the employee cost for you?
Mahendra Kumar
Yeah, yeah, that’s right. Could be a little more than that, but yeah, that’s a safe number to go with.
Ankur Poddar
All right, thank you. And my next question is about our gross margin which have declined during this quarter. So is it due to increase in RM prices And if so like are we, will we be able to pass them on with a lag or what’s the lag with which we can pass it on?
Mahendra Kumar
No, it’s not because of the raw material changes.
Tarang Jain
So. So yeah, so I would say on the raw material there’s definitely a level of topic with respect to certain commodities and also forex. But. But those are largely pass through and I would say majority is also pass through.
Mahendra Kumar
Yeah, it’s largely driven by these mix changes, product mix as well as market mix.
Ankur Poddar
All right, understood. And my last question is about our debt level. So our net debt has increased which you have explained. So can you give me the gross debt level currently as at the end of December 2025 and also what do we see as our total interest expense for the entire year which for nine month is close to 100 crores and do we see this going in FY27?
Mahendra Kumar
Yeah. So gross debt, you can add another 300 crores to it which is what we keep in cash. So about 750 crores was the gross debt in terms of the interest cost like what I mentioned, there won’t be a significant reduction between now and end of the year. It will more or less be in this range. So based on this you can compute for rest of the period next year. By next year end we should come close to the zero debt levels. So there will Be should be a gradual reduction, maybe largely happening more towards or more between Q2 to Q4 because the Q1 also may have some land purchase.
I mean, part of the consideration for land purchase and all may go during Q1 of next year. So you will again start seeing some good reduction in net debt starting from Q2 of next year to Q4.
Ankur Poddar
All right, understood. Thank you. That’s all from my side.
operator
Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Ronak Jain from Aquarius Securities. Please go ahead.
Ronak Jain
Yeah, thank you so much for giving me this opportunity. So my first question is. So the growth was very strong in the E Mobility and HMI division. So what has driven this growth? And how much of this growth was due to non Bajaj customers? Like how is the traction with non Bajaj customers currently?
Tarang Jain
So I would say. Sorry, what was the first part of the question?
Mahendra Kumar
How much of the EV growth was.
Tarang Jain
No, that was the second part. What was the first part? Hmi. And so I would say one big driver for the growth in particular on E Mobility is on. In E Mobility is the fact that we’ve been able the crisis around rare earth magnets has been solved for. So there is definitely a level of backlog also that was covered up through this quarter. So that has been one big driver of remobility. Further from the standpoint of Bajaj versus non Bajaj customers, there is growth in both. There is growth in both of these segments.
Ronak Jain
Okay, so during the quarter also both non Bajaj customers and Bajaj customers contributed to the growth.
Tarang Jain
Sorry, I have a clarification. Do you mean the E Mobility segment we report or are you talking about sales into EV models?
Ronak Jain
E Mobility segment that you report.
Tarang Jain
So E Mobility segment is driven today purely by Bajaj.
Ronak Jain
Okay, that is purely Bajaj. So are you getting any traction from non Bajaj customers? Like are you in discussions with non Baghaj customers?
Tarang Jain
Yes. So we have business wins, one of which we should be soping sometime soon. We also have further formal engagements with other customers as well. And you know, I think our strength really is the ability to ramp from business wind to SOP very quickly. So we feel confident that we will see through FY27 further customer, further customer additions in revenue.
Ronak Jain
Okay, got it. So my second question was. So lighting was a drag during the quarter. So was it mainly due to the overseas subsidies? Like overseas business?
Tarang Jain
Yes.
Ronak Jain
Okay. And any color on the New orders like both in the domestic and export segment. On the lighting side, new orders.
Tarang Jain
I think, as you will have seen in our presentation also, I think two of our biggest business wins are actually in the lighting space. One in India, one abroad. I would say our order pipeline or lighting is extremely healthy. Passenger car lighting, two wheeler lighting, both is extremely healthy. And from an India perspective, lighting has grown fairly strongly for us.
Ronak Jain
Okay, so you mentioned in the PPT that one of the orders for lighting is from the Thailand facility. So like by when do you expect the Thailand capacity to ramp up to optimal levels?
Mahendra Kumar
So I would say that definitely in 2027. So I’ll say in 2027 is when. When, you know, is when the revenue will increase for this location. From 2027.
Ronak Jain
Okay, thank you so much. So that’s it from my side. Thank you.
operator
Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Aditya Jawar from investech. Please go ahead.
Aditya Jhawar
Yeah, thank you for the opportunity. Congrats on good set of numbers and good order wins, especially in the overseas business. My first question is, you know, the VRs, the quantum seems to be relatively bigger in terms of the number of employees, almost about 5% of our workforce. Do you expect any impact on revenue in the near term? And these employees were part of which business division? If you can, throw some light.
Bikash Dugar
So the VRs is already fully executed now. So we have been living in the new reality for approximately a month and a half and we have not seen any impact. And of course that is really driven by the fact that we have transitioned the touch wood. We have been able to transition the workforce quite effectively. Secondly, I would say a bulk of 95% of the headcount here really comes from our ICE powertrain product group.
Tarang Jain
Let me add, Aditya, that we are not doing this from the point of view of any business going down. Nowhere has a business gone down. It is just that it’s an initiative from our side to make better our cost structure going forward, you know, because a lot of these plants are our older plants, you know, and we just wanted to mitigate the cost impact moving forward. And we have never done a VSSS before in this company. So it was for us the first time while a lot of the other companies have done it over the years.
So we felt it was probably the right time to take a call, you know, in this regard, just improve the cost structure.
Aditya Jhawar
Yeah. Okay. That’s quite helpful. Now second question is, you know, in the overseas business when you look at it, you know, of course a lower base will kick in hopefully in the next couple of quarters and you will start seeing some of the new orders from Romania will also start coming on stream in 27. If you can split the business overseas overall business into the premium two wheeler lighting IMEs and the Romania part. And if you can help us understand so Romania clearly as mentioned that second half of next year you will see start that business flowing into numbers.
But the current business that we have, whether it is premium two wheeler lighting imes, where are we in terms of the base? Are we seeing the hurdles? You know, for example one of the customer had started doing insourcing, the customer was also losing market share. So what is the way ahead of, you know, the other overseas business other than the Romania business? Yes.
Arjun Jain
No, no. So I’ll just, I’ll just comment on the different overseas locations. So when it comes to premium 2B lighting, I think here you’re referring to maybe the, the Vietnam and the Italy locations and of course there was a decoup here as well. And however there are some, there’s actually an upcoming launch of certain programs. So we’re actually expecting this, you know, so we’re, so we’re expecting actually a revenue growth in the coming fiscal year compared to the current fiscal year. However the big wins are more with respect to our and I think what we’ve also mentioned earlier is more with respect to our Romanian plant for electronics and the Thailand plant for lighting.
And so while even the, while there are new business wins that are coming into production in each of these locations, of course the bigger growth is going to be with respect to Romania and Thailand compared with the Vietnam locations. And this is, I’m not referring to Ms. Here, I’m only referring to the other.
Tarang Jain
Locations on this and also this tourer lighting where these two, the lighting, premium lighting business, we have seen a degrowth last three years I would say but now we are looking at doubling the growth in the next four years and we have some new customers also here in the two wheeler premium lighting segment starting from the next financial year. So here also we have won certain significant orders going forward. So we’re looking at a growth not only in the future in Romania and Thailand where of course the revenues will be of a much, it will be much in a much bigger, in a much bigger way because it’s in the formula segment but a two wheeler also we are looking at a good level of growth on the back of new customers and not really relying only on Piaggio over here when it comes to I think imess.
I think here we do not really see a very great you know we are of course looking at the moment of turning around this business from a profit standpoint that a lot of work is going on. We have made investments in the past to you know, recondition some machines, replace some machines. So we will see some good momentum from a point of view of profitability in the next financial year. But going forward in the long term we’ll have to find a good solution over here because this is also more a non auto business where we are not really that focused.
Aditya Jhawar
Very encouraging to be. Clearly we are talking about growth rebound in the overseas business and also profitability excluding the Romanian operation in FY27.
Tarang Jain
Yeah.
Mahendra Kumar
Romanian operations also should show improvement. It will be more like a cash break even next year.
Aditya Jhawar
Okay, okay, that’s good. And you know and congratulations on the four wheeler, you know lighting win for a Bev. I’m sure this would really help in overall our contribution from four wheeler and EV in next couple of years. So that’s it from my side. All the best.
Mahendra Kumar
Thank you. Thank you Aditya.
operator
Thank you sir. The next question is from the line of Sachin Kasera from Swan Investment Managers. Please go ahead.
Sachin Kasera
Good evening everyone and congratulations on a good number especially in India. I had two, three questions. One was if you see the India numbers as per the presentation, we seem to have seen some margin improvement there. Can you just comment a bit on that one? Is it sustainable? Secondly, was it driven by gross margin or operating efficiencies or both?
Mahendra Kumar
It’s a combination of both. But mainly if you really see the fixed cost part of it, I think there was a good amount of cost control which we did there. If you really see the year over year increase in fixed cost it was pretty less. We took some toughness Q4 of last year in terms of cutting down some headcount. Plus we also had some strict controls on the other elements of its cost. So that operating leverage is getting magnified because of that. So that’s the main reason.
Sachin Kasera
So we should see this more sustainable. There’s no one off in that and the India numbers are more or less something which you can look to be sustained. It should give us flexibility to do maybe point 2.3% this year that way
Mahendra Kumar
. But yeah, directionally
Sachin Kasera
, yes, sure. Secondly, I think there have been a couple of questions and you clarified on the versus operations but just to again get a clear more clarity I believe your presentation mentions that there are two parts which are dragging the profitability. If I see you reported 160 crores of PBT in India and around 35 crores is the negative delta from overseas operations and some 2728 crores from the R D initiatives. For mainly I again believe for your global. I think for a. You mentioned that Romania will start to break even or do you mention about the entire aftermarket versus market breaking on in second half of next year.
Mahendra Kumar
I mentioned Romania for cash breakeven next year. See see within this overall businesses, overseas businesses the two wheeler business is already making profit. It’s not incurring losses. And the remaining part is ims. Ims as our CMD explained we have. We are taking some actions that should also improve EBITDA significantly next year. But for it to turn to profits it will take some time.
Sachin Kasera
So currently what will be the drag because of Romania in the first nine months or before the quarter, if you could give some sense on that of the losses that we reported in overseas operations.
Mahendra Kumar
Sorry, come again.
Sachin Kasera
What would be the drag from Romania to the profitability for the quarter? Because that’s what you said will turn around from next year.
Mahendra Kumar
I mean that country level breakup we generally don’t give. But you will anyway see the result coming in.
Tarang Jain
No, but basically as you say that Romania at present the utilization is very low of the capacity and you will see that with all the new lot of new orders kicking in from the second half the revenue growth will be significant, you know from the second half and of course it will then grow even more in the following year. And these are some of the big businesses that we have won actually. You know, so compared to where we are today, it will be a lot more going forward. So Romania will really this thing do do exponentially.
Two wheeler lighting is already very profitable even at a lower base that will also see a growth next year because we have new customer over there, a significant new customer. And when it comes to our Thailand facility that only will start in the calendar year 27 that business is, you know in automotive cycle is one and a half, two years after you win a program. So that will only start you know in the calendar year 27, you know, somewhere in the second quarter or something. And then you will start seeing that utilization and you know, numbers coming in the Thailand facility and lot of this cost which you see, you know the R and D and all are actually being incurred in the last one year mostly to win these programs you need a very strong R and D team we have created a very strong engineering team in China also.
We already had in Poland and in India people supporting, you know, these four wheel electronics and lighting. But now this lighting, I mean lighting electronics team in China is for us a game changer because it’s cutting edge and that’s what will drive more of business wins also going forward. And without this investment, we call it as a big investment, it’s not a cost for us, you know, it’s a big investment for future exponential growth. And that’s what we already, we already see the wins coming because of, you know, the team in China also playing a very big role here.
Sachin Kasera
Sure. So just to understand R and D beat this R and D, what we mentioned in the presentation on 27, 28 crores of negative on the PVT debt will remain. But because of this investment in R D we will see improvement in the core ebitda, the PBT at the India as well as the overseas operations. Is that the way to look at the combined numbers in the next few quarters?
Tarang Jain
I think it will be more abroad, I would say, which is this thing. I think this engineering team is there of course even for part of the India projects on four wheeler. But mainly it is for, you know, including for also for India definitely for lighting and all for India also. But basically yes, it will drive a lot of growth abroad also, you know, which today is quite low. Revenues abroad are quite low. But I think going forward we are looking at a much bigger level of revenue abroad.
Sachin Kasera
But just to understand, you mentioned that overseas lighting is already profitable and Romania will see breakeven next year. But despite that we are seeing overall PBT will still take some time for break even. So does it mean that Thailand and Italy are a larger part and hence that is the reason why, you know, even next second half, next year also all at the, you know, breakeven level, it will be challenging for us to become breakeven today.
Tarang Jain
That wheeler lighting business is already profitable and that’s the main revenue at the moment. Today we hardly have any revenues of Romania and almost negligible in Thailand. So basically all this investment in R and D has led to many quite a few big business wins which will start playing out from the second half of the next financial year for us. And therefore and all these business wins and revenues coming out of there will cover a lot of all these R and D costs which we have incurred already.
Arjun Jain
Maybe I’ll just try to clarify something for you. So our two B lighting plants are the ones that are already profitable. We also have a New four wheel lighting plant in Thailand. This is the one which will ramp up only in calendar year 2027. So maybe I don’t know that clarifies that the entity that we said is profitable is more the 2B lighting plants where of course Vietnam is one of the bigger drivers of the profitability. But the Thailand plant for passenger vehicle lighting is a new plant so that will only ramp up next year.
Sachin Kasera
Sure. And lastly on the capex you mentioned about some land being acquired. So are we looking at a fresh round of Greenfield capex and what is like the plan for the next two three years on the land that we are looking to acquire?
Mahendra Kumar
Yeah, I think we explained in the previous calls also. So our plan to invest close to about 150 crores in land. This for of course greenfield facility near Pune in Pune Entire thing may not come and hit us in Q4 this year. Part of it may come this year and part of it must be lower too. Q1 of next year My question was.
Sachin Kasera
For about over and about the land. How many of land is basically like the basic infra for the greenfield. So my question was more in terms of the capex over and about the land in the next two three years on that parcel.
Mahendra Kumar
I mean next year let’s talk about could be in the range of maybe 300 to 350 crores. Then in the outer years it should moderate to maybe 250 to 300. But it also depends upon the new programs we win. If we win a significant program overseas then we may have to invest temporarily for those programs.
Sachin Kasera
Sure. Thank you very much for answering all the questions and wish you all the best.
Mahendra Kumar
Thank you.
operator
Thank you sir. Ladies and gentlemen, to ask a question please press star and one now Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Rahul Kumar from Vicaria Fund. Please go ahead. Mr. Rahul, your line has been unmuted. Please go ahead. Mr. Rahul, your line has been unmuted. Please go ahead. As there is no response we will move to the next question. The next question is from the line of Priya Priya Ranjan from HDFC amc. Please go ahead.
Priya Ranjan
Right. Thank you. Just couple of clarification tarunk since we have win decent orders and lot of probably the programs is going to start from for overseas operation probably in 2728. So how should we look at in terms of the balance of the business going Forward from say 88 12% to India overseas? So do you see substantial change in terms of the mix of the business in next two, three years down the line.
Tarang Jain
Definitely you will see a better share coming from a business abroad. But today I think largely the revenue is all mostly coming from India. More than 90% is coming from India. You know, so going forward with all the business wins and all and a focus on select businesses, you know, certain formula electronics, certain, you know, lighting, both two wheeler, four wheeler lighting. And so we are going to drive a lot of the revenues, you know, out of, you know, selected plants, you know, abroad. And here I am not talking so here on I’m talking about a forging business.
Forging business. We have to look at what to do going forward. You know, it’s a non core area for us at the moment. You know, we don’t know about the growth but the rest will definitely drive more growth. And you will see that the share of the foreign business will grow as we go along. Not that India will, India will. India also. We are looking at a good double digit growth, you know, year on year. But then it will be augmented by quite a large growth abroad where the, you know, where the abroad business of course percentage of a total overall goes up, you know to a decent percentage.
Mahendra Kumar
Also a negative growth which has been affecting us in the last two years will now become a positive growth. So that will also bring in good improvement.
Priya Ranjan
Sure. Just one clarification on this. The three chart you have shown India business overseas and four wheeler R D side. So overseas business include this four and four wheeler R and D and all or is it, it doesn’t include the overseas.
Mahendra Kumar
Yeah, the four wheel R&D in is the last box, third box.
Priya Ranjan
Okay, so that is separate. So that is over and above the overseas business losses. Right? Oh got it. Thank you. All the best.
operator
Thank you sir. Ladies and gentlemen, to ask a question please press star and one. Now participants who wish to ask questions may please press star and one at this time. The next question is from the line of Harshal from AM Investment. Please go ahead.
Unidentified Participant
Hello.
operator
Yes sir. Please go ahead.
Unidentified Participant
Yes sir. So based on the order wins in both India and overseas markets, what kind of revenue growth are we projecting going forward? Sir.
Mahendra Kumar
I think we mentioned earlier also our target is to grow between 15 to 20% ahead of the market. At least 4 to 5% ahead of the market. So that direction still remains.
Unidentified Participant
Okay sir, that is from my side. Thank you.
operator
Thank you sir. A reminder to all participants to ask a question. Please press star and one. Now the next question is from the line of Mihir Vora from Aquarius Securities Private Ltd. Please go ahead.
Mihir Vora
Yeah, so sir, just a clarificatory question. So on a steady state basis the R and D expenditure which we are mentioning in the overseas part, the lighting and electronics, so what will be that amount in a steady state basis as such? Because we are seeing that amount increasing right now around 28 odd crore, 25 crore. So some color on that part.
Mahendra Kumar
No, see the Oasis R and D investment will more or less be around these levels for the near future. So there should not be a significant increase in the overseas R and D spending.
Mihir Vora
Okay. And okay, and last second one is on basically, you know there’s a note in your financial. With the arbitration case with the op, mobility is still going on right now which is roughly around 66 million euro. So sir, what is basically the issue we are facing there and what do we think about that part? Like when do we close on that? Some color on that?
Mahendra Kumar
Yeah. So basically the dispute has two parts. One is about the, the supply agreement which PO terminated abruptly without enough notice and without proper justification. So for that we filed a court case against them which is going through the process now. And then this arbitration is something which they initiated saying that some of the divestment agreement conditions have not been met and there are some warranty obligations, etc. So it’s a combination of many issues. So in terms of timeline, if you ask me it’s difficult to put a timeline because these arbitrations go on for two to three years.
But we will see how to actually manage this in the coming quarters.
Mihir Vora
And we haven’t made any provision for that, right?
Mahendra Kumar
No, it has meant this. First of all claims itself are getting disputed. So the no question of claim.
Mihir Vora
Okay.
Tarang Jain
We feel that these claims are very unreasonable and yeah, some of them are frivolous. So we provide for that.
Mihir Vora
Right. Okay sir, thank you.
operator
Thank you sir. The next question is from the line of Hrithik Chopra from Beyond Capital. Please go ahead.
Unidentified Participant
Hello sir. So you mentioned in your opening remark. That you’re doing towards non auto site. So what are we doing over there and how much CAPEX are we putting. In and what is the size of. Opportunity that we are trying to cater?
Tarang Jain
Yeah, so I would say from a. Non auto perspective I think our primary interest in the space is also to drive alternate utilization for capacities that we’ve already built for ICE powertrain which means primary target applications would be would be lower wattage motors. And the business wins that we have so far are also really in these motors and in plastic. In terms of an incremental CAPEX commitment. I would expect it to follow similar, similar economics to what we would have if we were driving automotive growth, for example. And again I will say I think it’s really because the products we pursue in non auto are very similar to products or very similar is not the right word because every application is unique.
But the products we pursue in non auto utilize the same competencies we already have from a design, development and manufacturing perspective.
Mahendra Kumar
Very close adjacencies.
Unidentified Participant
Okay. And are the margins similar to our auto business?
Mahendra Kumar
It’s too early to comment on margin because we are just making a beginning. But yeah, in the long term, yes, there should be.
Tarang Jain
And any how much capacity have you built in any customer over there? Any color? We have one business so there are customers and we will, we will SOP in FY27. And like I said, I think the way we look to mitigate the investment is to redeploy existing capacity. That is the first choice. Of course you cannot 100% do that which will mean there will be a level of delta investment. But the first preference is. The first preference is to deploy existing capacity.
Unidentified Participant
All right, thank you, that was helpful.
operator
Thank you sir. The next question is from the line of Avnish Tiwari from Vicario Change llp. Please go ahead.
Avnish Tiwari
Hi, this image of origin business which is non core for you, would you be open to exit this via sale or other measures?
Tarang Jain
I mean we are see we have not decided anything yet. At present we are trying to see how to make it profitable with the level of business we have. But yes, we will be looking at also all other options in regard to this particular business.
Avnish Tiwari
This US and European deals which we have had at a country level. Does it create any positive environment for you anywhere?
Tarang Jain
Definitely, definitely. I think both the deals will definitely encourage auto components exports to Europe. Europe is a very big market for us for quite a few of our products, you know, which we export. I think, I mean this can be further, you know, we can further grow in with various other customers and existing customers here in Europe and America we don’t have much of a presence today. You know, North America, we don’t have much of a presence today. But then with this new trade deal which has been sided with a lower tariff, I think that we will have a lot of future potential with various customers and some of them we already know we’ve been discussing with but because it had to be stalled because of this 50% tariff by the US but now again we are going to start those discussions and I think we will win business also in the US export business.
Avnish Tiwari
Which products are going to be see.
Tarang Jain
Largely I think a lot of these products are the metallic products, you know including engine valves, which is a very big product for us. A lot of the forged machine products which we do already, we see a huge scope of growth more in these products. And then of course you know there are, we’re looking at selective things would be in electronic space, electrical space, you know so we’re looking at also at this, some of the other of our product portfolio but maximum we see the potential more on the metallic space presently.
Avnish Tiwari
And lastly the decision you are having with non bajaj EV two wheeler customers where you’re confident that something can rectify an FY27. Will that be on motor, motor controller or non EV components?
Tarang Jain
To begin with we’re talking about E components only. We’re talking about motor, motor controllers. The non EV components we already do with multiple non bajaj customers. So lighting, seats, switches, displays. When we talk about early FY27 SOP we’re talking primarily about E powertrain, right?
Avnish Tiwari
That’s right.
Tarang Jain
Yeah. And we are going to, and we are, you know we’re already starting an SOP with one of the customers, you know for the E Powertrain from early next year and also in discussion with others, you know and we are very close to winning an E powertrain business also with one more premium, one more premier customer going forward. So we are very closely aligned.
Avnish Tiwari
Yeah, thank you. And just to conclude this, this would increase your. Let’s say these customers you’re talking about, they have a reasonable market share in electric two wheelers, right? They are not like a smaller guys in the electric two wheeler space.
Tarang Jain
So one of them is actually a newer player but, but, but, but quite a strong player and other one of course is a very established player. I mean among the new people we are going to be dealing with.
Avnish Tiwari
Sorry, I missed the last sentence. What did you say about second player?
Tarang Jain
No, no, let me clarify. One is a fundamental incumbent. The other is a newer player but is not a. You know, is definitely somebody who’s in the top seven eight.
Avnish Tiwari
Okay, so both of these will significantly expand your target addressable electric two wheeler market effectively for motor motor controller.
Tarang Jain
Yes.
Avnish Tiwari
Okay, great. Thank you and wish you really best.
Tarang Jain
Thank you.
operator
Thank you sir. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments.
Tarang Jain
No. So thank you everyone for all your questions and for joining the call and also for your continuing support. See you in the next quarter.
operator
Thank you sir. On behalf of EQUERIOUS Securities Private Limited. That concludes this conference call. Thank you for joining us. And you may now disconnect your lines.
Tarang Jain
Yes, thank you.