VST TILLERS TRACTORS LTD (NSE: VSTT) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Antony Cherukara — Chief Executive Officer
Nitin Agrawal — Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to VST Tillers Practice Limited 3QFY25 post results conference call hosted by BNK securities from VST Titler Practice Limited Management. We have with us today Mr. Anthony Sarikara, Chief Executive Officer. Mr. Nitin Akarbal, Chief Financial Officer. At this point all participant line will be in the lesson only mode. And there will be an opportunity for to ask questions after the management presentations and the opening remarks. Also may I remind you of the safe harbor the company may be making some forward looking statements that have to be understood in conjunction with the uncertainty and the risk that the company faces. Over to you sir.
Antony Cherukara — Chief Executive Officer
Yeah. Good morning everyone. Thank you for being here to attend the Q3FY25 earnings call. I would request our CFO Mr. Nidhi Nagarwal to take you through the financial results. After which we’ll have a question answer session and we’ll be here to answer all of that.
Nitin Agrawal — Chief Financial Officer
Yeah. Hope we are audible.
Unidentified Participant
Yes sir. Yes sir. Yes sir. You are audible sir.
Nitin Agrawal — Chief Financial Officer
Thank you. Yeah. Good morning everyone. Nitin Agrawal here, Chief Financial Officer. I’ll take you through the financial result for the quarter and also the nine month performance. So these are the content of today’s discussion. Some key highlights of the quarter. Then I’ll touch upon the sales volume both for the quarter and nine months. Then performance for quarter three and quarter nine. And we also have some analysis on the pad because this quarter we have mark to market gain and losses both in the previous period. So analysis around that and then we’ll open up for question and answers.
So some of the highlights for the quarter. This quarter has been exceptionally very good for us. We have achieved 29% growth in revenue compared to the same period, same quarter in last year. Also the operational EBITDA is also very good. There’s a jump of around 105% to rupees 19.55 crore from 9.53 crore of the previous quarter. Also despite the challenges faced in quarter one because of monsoon, lower reservoir level, also the general election, the company has recovered in quarter two and quarter three. Moving on to the sales volume. So for the current quarter Power tiller there has been growth of 32% from 5060 numbers in Q3 of last year. We have 6694 numbers overall on a nine month basis there is we. We still have to catch up on this tractors 43% growth in current quarter on 9 monthly basis there is a 2% growth power weeder good growth of 69%. And also on 9 monthly basis we have crossed the 5000 number of weeder mark. Moving on to the income statement for the quarter there are three broad blocks. One is revenue, operational EBITDA and pact revenue there is a growth of 29% from 169.96 crore to 219.1 crore in operational EBITDA. I’ll just mention that the operational EBITDA while calculating operational EBITDA we exclude all other income as well as the fair value gain or losses. And that’s how we have been calculating our operational EBITDA Quarter on quarter and reporting. So there is a increase from 9.53 crore to 19.55 crore. At a path level however from 16.95 crore of quarter 3 FY24 we are at 1.7 crore 1.69 crore. This is mainly because of the mark to market loss in the current quarter of 11.04 crore. In the last period there was a gain of 15 crore. So I’ll come back to this in the analysis. What happens if we exclude from the both period on a 9 monthly basis. This slides talk about the performance for 9 months overall. So on our revenue we are at 693.12 crore for 9 month year to date at an operational EBITDA level 84 crore 84.36 crore versus 70.73 crore. Because of the some of the strategic investment in the manpower I would say to fuel the future growth which we may be covering in the Q and A session. Also at a PAT level we are at 69.49 crore PAT. Again here also there is a mark to market impact on a YTD basis. In the current year it is 28.5. Crore which was 41.15 crore in the last year same period. Moving on to the next slide, the pat analysis which I just referred a few minutes back. So if we exclude the mark to market impact on our pat both for quarter as well as nine months. This is how it look like that for last year our PAT would be 1.53 crore versus current year 12.74 crore. Because in the current period there is a loss and in the last year there was a gain of 15.42 crore. Similarly on a 9 monthly basis if we exclude the mark to market gain and losses both from Same period again 45.24 crore of PAT will be 40.95 crore PAT. Yeah. So that’s all I have to present. We can now open up for question and answers.
Questions and Answers:
Operator
Thank you. Thank you, sir. We will now begin the question and answer session for a moment for the question queue to assemble. First question is from Mr. Arjun Kana. Please unmute and ask your question.
Unidentified Participant
Hello. Thank you for taking my question. So the first question is just in terms of our volumes. So just wanted to understand how do we see the fourth quarter. If you looked at the volumes in the month of Jan numbers.
Nitin Agrawal
What the employee expenses have gone up.
Unidentified Participant
Right, sir. And the majority other expense will be flattish due to the operating leverage. For any particular reason.
Nitin Agrawal
No other expenses are controlled based on. Yeah, you can say operating leverage.
Unidentified Participant
All right. Thank you.
Operator
Thanks Kush. Next in the line will be Mr. Naushad of Birla. Your line is. You can unmute and ask. Your line now sir. Now sir, you can unmute and ask your question. Yeah, you have unmuted. You can ask your question.
Unidentified Participant
Yes. Couple of questions are. Firstly from a direct versus subsidy led revenue mix. If you can share how was. How much was in this quarter direct revenue.
Nitin Agrawal
No, see like I said we never split between direct and subsidy. But again like I have said this before in the earlier calls that the subsidy dependency is continuously coming down. But again I would say this is qualified statement because it is. It depends from state to state. For example, in a state like Tamil Nadu or the or Karnataka the government does not allow purchase and purchase of tiller earlier and claiming subsidy later. That is not allowed in Tamil Nadu and Karnataka. So hence the farmers wait for the subsidy to be declared. But if you look at other states, for example like Orissa or Maharashtra and some other states as well. There they can purchase the power tillers and then claim the subsidy later. So in those markets the subsidy dependency has considerably come down. But if you look at in Tamil Nadu and Karnataka for example the subsidy leads to a spike in sale during those months.
Unidentified Participant
Okay, what was the financing? Let revenue share, Sir. Fin.
Nitin Agrawal
Retail finance is moved up to about 8% of total now. Which used to be zero a couple of years back.
Unidentified Participant
And what was this number last quarter?
Nitin Agrawal
Just give me a second.
Unidentified Participant
What was the retail finance number last quarter?
Nitin Agrawal
It is around 7 to 8%.
Unidentified Participant
Okay. So is it moving as per our expectation?
Nitin Agrawal
Yes. For example last year we did only about 3 to 4% retail finance. This year we are at about 7 to 8% and next year we expect to be at 15 to 20%.
Unidentified Participant
Okay. And what would lead to this exponential jump from 8% to 15% next year.
Nitin Agrawal
We are doing several tie ups. We have just concluded with Chola. We are also in talks with some nationalized banks for tie ups exclusively for power tailors.
Unidentified Participant
This we have been doing from last couple of quarters. Why it is taking so much time? Chola? We have tied I think two, three quarters back. Why others other tires are taking so much time?
Antony Cherukara
So it is a new product for them. Unlike the tractor which is a registered product. You know, the already existing product is a tractor. But they don’t have the similarities in terms of power tiller where the powerteller asset is not registered. So the bankers have to create a completely new product for this category. And that is why it is taking time.
And then they have to get their own boards approving it. And these are the reasons.
Unidentified Participant
Okay. And. And at what stage of approval they would be today. Because I am sure we would have been working with them from very long.
Antony Cherukara
I am hopeful. I’m hopeful this one or two should get closed this quarter. But like I said, it’s not in my hands. Yes, but we are following up continuously with them.
Unidentified Participant
Okay.
Antony Cherukara
And secondly, on.
Unidentified Participant
We were also working on some new category which you had I think earlier indicated.
Antony Cherukara
Yes, we are working on it. We are very, very soon to launch it in the next two quarters. We should be able to launch that in the market. Okay. Anything on the inorganic side as well to speed up the. At this point we have couple of prospects but nothing concrete as yet.
Unidentified Participant
Okay, and are the Weeder in house manufacturing which was expected to start.
Antony Cherukara
It has started. The seeding volume has gone out into the market. We will be ramping up in Q1.
Unidentified Participant
So plants. Good response for that. Okay. And from your side plants and everything is stabilized. No teething issue or all the problems would have been gone by this quarter, right?
Antony Cherukara
Absolutely, absolutely. Because see, as you as CFO shared with you, we have grown, grown in power bidder segment to 5,000 plus. Whole of last year we had done 4,000 something. So we have gone beyond last year already. We are expecting close to 100% growth in power readers this year.
Unidentified Participant
Ffor FY25 full year.
Antony Cherukara
Right? 25 full year, correct.
Unidentified Participant
And what do you expect in FY26, sir? That growth will continue. Okay. And this quarter the contribution from in house manufacturing would be how much?
Antony Cherukara
This quarter will be very limited because it is seeding phase. Like I said, the ramp up will happen in quarter one onward.
Unidentified Participant
And how this will benefit to your P and L. Sir,
Antony Cherukara
Two things. One is the average revenue per reader is going up compared to earlier that we were selling. Because it is a much feature rich product and versions which are higher in revenues being launched. And the bottom line is also equal. So overall it is accretive to the company.
Unidentified Participant
But shouldn’t this be a problem, sir? If your average ASP of Weeder goes up, then we are again back to square one. The problem which we face in the tiller because ticket size is high. Financing is the issue if your Weeder prices also goes up.
Antony Cherukara
Not in that sense from the offering. See, we are giving 8 horsepower, 9 horsepower weeders which is we are competitive. We are not higher price compared to competition in that segment. So say for example, I’ll give you a little bit of explanation. See typically. Three to five horsepower weeders come in the range of anywhere between 30 to 50 or 60,000. 50, 55,000 rupees to the customer. We will continue to have offerings in that segment. The India made weeders will be higher at 8 horsepower and 9 horsepower kind of weeders where the offering is much higher and we didn’t have a proper offering earlier. In that segment wherein the typical pricing is anywhere between 60 to 90,000.
Unidentified Participant
Okay. Any financing facility on weeder as well sir?
Antony Cherukara
Yes, the same financiers are willing to finance vers as well.
Unidentified Participant
Okay. Okay. All the best for the feature sir. I’ll come back in the queue.
Antony Cherukara
Thank you.
Operator
Thanks. No sir. Mr. Agam, you can unmute and ask your question please. Yeah, if I unmuted I can ask your question.
Unidentified Participant
Yeah. Hi, I just wanted to give. So in your 1 of participants question you said that you’re expecting power dealers high single digit growth. So that means Feb and March looks to be very high on growth, right?
Antony Cherukara
Feb and Mars. Yes, we are looking at very high growth.
Unidentified Participant
Okay. Okay. And so. So what, what was the issue you faced in this month? Cash flow issue. So can you elaborate there on more?
Antony Cherukara
Yeah. So the markets wherein you know money was expected from the government has not come through. And February and March, before the financial year ending is done, that money will be spent by the respective governments. I specifically mentioned about Tamil Nadu, Karnataka, Assam, Orissa, these governments are all have all launched schemes in February and March. So we are expecting that to come through.
Unidentified Participant
But so far 10 days have you seen little uptake or something? Whatever.
Antony Cherukara
Definitely, definitely.
Unidentified Participant
Okay. Okay, that’s great. And in terms of next two years, how is the growth looking like in whatever terms, Quantitative quality, if you like to say, how is FY26, 27?
Nitin Agrawal
We will continue to chase after our vision which I said earlier that we lost two years due to Covid and we will try and cover it by FY27. So we have not given up on that and we are continuing to chase it. While execution has been a challenge for us on various product categories but things are falling into place. So next year I would say we are looking at about 25 to 30% growth and we should be able to scale up after. After that in FY27 with the launch of US market, EU market and India also the new platforms being launched where we would get a considerable jump in revenue.
Unidentified Participant
And you know one question. On the non operational fund you said there was 11 crores loss. So can you quantify this? So where is this? So how much offer? And So I believe 400 crore of cash is there on a balance sheet. So what is the breakup of the amount invested? So how much is in direct equities or maybe in the bank or debt or whatever can you give a breakup?
Nitin Agrawal
So right now we will maybe we’ll contact you later and give you the details. But there is some exposure to equity. That is what you see in the mark to market loss that we have experienced which is it to the tune of about 11 crores for this quarter.
Unidentified Participant
How do you recognize it? So this is happens on quarterly basis, half yearly or how do you.
Nitin Agrawal
Yes, yes, we as you know it is a notional loss, it is not a cash loss. It is minus 11 crore a notional mark to market loss that we have taken. But it’s not a cash loss because as you know it is not after a sale of a particular equity that we have realized the loss.
Unidentified Participant
And so what now the cash balance is increasing. So what is the thought process, you know, utilizing it? I mean in terms of dividend payouts or buyback or maybe investing for the business. So how are we looking at that?
Antony Cherukara
Definitely we are going to invest on business. Like I said, we are looking at in the next two years. We expect some inorganic opportunities also to materialize. So we are keeping that reserve for growth. And you will see that happening in the next two years.
Unidentified Participant
Okay, that’s great. And any, any thoughts also on the land parcel which was also on timeline.
Antony Cherukara
Like I have said this before, land parcel is here and we will use it when we need the, the you know, to raise fund or raise cash or raise debt. We will use it appropriately. But at this point in time there is no decision on that.
Unidentified Participant
So next couple of years maybe an acquisition plus use of this land parcel and the cash on balance sheet, everything can take place.
Antony Cherukara
In the next two years. Definitely you can be sure of one inorganic opportunity that we will, you know, we’ll try and close.
Unidentified Participant
Okay. Okay, that helps a lot. Thanks a lot and wish you the best.
Antony Cherukara
Thank you.
Operator
Thanks. Next I have unmuted. Davanchu, please unmute and ask a question.
Unidentified Participant
Hello. Hello. Good morning. Yeah,
Operator
Can you hear me sir?
Antony Cherukara
Yes, yes, yes.
Unidentified Participant
I have three questions. One is on possibly looking at financing through the group itself. What are your thoughts? Is this something that has been discussed internally? Is that something that we exploding?
Antony Cherukara
Yes, we have discussed about it but we have decided to focus on the core which is, you know, ensuring that we look at agri value chain for growth. So we are continuing to do that. We see there is a lot of opportunities in the mechanization space itself. Organically we have been investing quite a bit into new product development, our research capability, the global tech center. So in the last four to five years, cumulatively we have invested 100 to 150 crores in that. In the next five years we will continue to do that probably upwards of what we have done so far.
So organically we are looking at it in terms of getting into a non core business. We have deliberated on that and we have said first we need to exploit and explore tie ups and exclusive tie ups as well. With both NBFCs and nationalized banks we are able to get result out of that. In certain cases we have had to work with them on a certain delinquency fund to build the confidence in the new category, especially in the power tiller that they are coming into. So we have worked on that and we are seeing results. So at this point in time, no intention of looking at floating in nbfc.
Unidentified Participant
Sure, sure. This is second part of this question. So does the VST group also have a financing arm which you know may be done for the, for the other businesses that are there that are part of the group or is that the case?
Antony Cherukara
VST this have a financing arm but that is not a listed entity. It is, they are more into passenger vehicle financing.
Unidentified Participant
So the tie up with them is not something that we’re exploring. They are in completely different segments. The business model is very different and very regionally focused.
Antony Cherukara
They are in completely different segments. The business model is very different and very regionally focused.
Unidentified Participant
Sure, sure. Second question is on our team building efforts and investments into R and D and the team. So on our journey of that, are we sort of done with the hiring and investment? So that will continue over here. In terms of the manpower side especially
Antony Cherukara
I would say R and D&SEM, we have built a team which I would say there is no need to expand in the near term.
Unidentified Participant
Okay.
Antony Cherukara
And on the sales trend as we explore newer markets, especially in the northern market, we will continue to expand but you will not see the same, you know, higher recruitment that we did this year. Because we had to actually expand our research and development capabilities. So we had to bring in experts, which we did. And I’m very happy that we were able to get good engine experts, transmission expert, the best people who have headed in other much larger tractor companies. We have been able to bring them. And I think that will be in good stead for us for the future.
Unidentified Participant
And last question. When it comes to our acquisitions that we’re looking at, are we looking at something which will be from a brand side? Are we looking at something which will help us with better products, new products on the tech platforms or on the distribution side? So what is the thought process over here when it comes to our M and A strategy?
Antony Cherukara
So clearly in the new markets we are looking at the distribution model as well. Because we don’t intend to look at asset purchases outside of India. So that is definitely a no no for us. If you know. So we are more on the IP and the distribution side. The prospect we are looking at and as far as the brand is concerned, if you look at it organically, I mean as in organically as in Indian market, we are not seeing any opportunity at this point in time in the power tiller or the tractor space. But we are looking at adjacencies in agriculture. Sure, sir. Wishing you and the team all the very best.
Unidentified Participant
Thank you.
Antony Cherukara
Thank you.
Operator
Thanks Davanshu. Mr. Naushat, you can unmute and ask your question.
Unidentified Participant
Yeah. Hi. Thanks for the follow up. Sir, some clarification for Q25. You expecting it to be strong? Strong as against current quarter or on a year? On year basis, sir.
Nitin Agrawal
Current quarter is pretty small, isn’t it? Comparatively quarter four is much higher. So it is more on quarter. On quarter of the previous year which I don’t have the exact figures of quarter four of last year. I think it is in the tune of about 260 to 270 crores. Which we will be much above that this quarter.
Unidentified Participant
Right? Secondly, just clarifying my understanding, sir. I was looking at the raw material prices, especially steel. I am assuming you would be the one of the major raw material for us. And there has been a softness from last 2, 3 quarters. Why? It is not reflecting in our gross margin expansion, sir. Or am I.
Nitin Agrawal
On the material side, you’re right. You would have seen a slight increase on the material cost. It’s mainly because of the product mix change that has happened in tractors wherein we have launched the new products. That has definitely influenced the material cost at this point. But I would say in the next two quarters you will see it normalizing.
Unidentified Participant
No, my question was the steel prices are in our favor. It is I think declining from last two, three quarters on a yoy basis. Shouldn’t this reflect on the gross margin?
Antony Cherukara
It will reflect.
Unidentified Participant
Okay. Okay. And can you touch upon the specific area or pocket where we are thinking of having inorganic.
Antony Cherukara
So like I explained to the previous caller, two opportunities that we are looking at. One is internationally we are looking at the brand and the network. Not so much of any asset buy. And secondly, in India we are looking at adjacencies in agriculture for growth, not necessarily in tractors and tillers.
Unidentified Participant
Okay. Okay. All right, sir, thank you so much.
Operator
Thanks Nomshad. Mr. Arjun Khanna, you can unmute and ask your question.
Unidentified Participant
Sir, thank you for the follow up. So can you give us the revenues for tiller’s tractors, small farm machinery and distribution for the quarter?
Antony Cherukara
For the quarter. Just a second. Yeah. For small farm missionary it is 124.99 crores. Tractors is just 64.23 crores. Distribution it is about 26.42 crores and others is about 3.5 crores. So previous quarter FY24Q3 was 90.32. SFM tractor was 50.86 distribution. So you have seen growth in all segments.
Unidentified Participant
I’m sorry, what did you say for distribution?
Antony Cherukara
Sir, distribution was 22.05 last year. So in all segments we have grown.
Unidentified Participant
Right? Sir, so just a query. I don’t know. Maybe seasonality has an issue here. If you look at power readers, the market potentially can be very large. Yet we see sequentially volumes have fallen from second quarter to third quarter. On power readers, while you did mention for the year we should possibly be double of the previous year. But is this seasonality in power readers also, like we see in practice.
Antony Cherukara
There is a small fluctuation. What you rightly said in in such numbers of 7,000, 8,000 that we are planning to do this year. I do. I wouldn’t say that seasonality would really matter. But there. Has been a little. I, I don’t know whether Q2, Q3 is. The number is not large, definitely. But you will see 100% growth almost in this financial year. Because, because I. What you rightly said, you know, the size of the industry is pretty large, although unorganized, but it’s pretty large. And we expect that to continue to grow exponentially.
Unidentified Participant
Right. Sir, the next question is in terms of to Europe, given Europe is seeing a sort of slowdown. So how has it been for nine months of FY25 in terms of our export volumes and what is the outlook going forward?
Antony Cherukara
Yeah, this year is going to be flat. Flattish. We might see a single digit growth, very small single digit growth, but I would say it would be flattish. The economic turmoil continues in Europe. So we expect growth next year because we are launching new platforms.
Unidentified Participant
Sure, very helpful. And lastly, in terms of our portfolio per se, in terms of our investment book, like you mentioned, if we look at as of March 31, 2024 balance sheet, it’s almost 480 odd crores. But that includes certain investments in our entities such as Zetor, the engine entity, etc. So in terms of the book, is there a thought process that incrementally decrease our equity exposure and increase more in fixed income or we are okay with the volatility that investment in equity brings with it?
Antony Cherukara
See, the last three years it has been a continuous climb and things have kind of reversed in the last one or two quarters. Definitely there will be actions taken to minimalize volatility on equity investments as well.
Unidentified Participant
Sure. And if we look at the size of the book itself, it continues to grow because the company has very strong cash flow generation. So in terms of dividend distribution, is there a thought process that above a certain amount maybe it doesn’t make sense to hold it? I know you talked of M and A going forward, but in terms of the size of the M and A, are we looking at a very large ticket?
Nitin Agrawal
No, we are not looking at a very large ticket, but definitely we are looking at the right opportunity. We won’t be saying no to a very good opportunity even if the size is, you know, is not something we are absolutely comfortable with. But then I think the opportunity is what is more significant today I think we have the bandwidth to manage that compared to, let’s say four years or three years back. Today we have built the leadership team, we have the bandwidth, so we should be looking at tickets. Prices which are in the tune of 150 to 200 crores typically. But if there is something which is a good opportunity and we have to take it up to something like 400 or 450, we will. We will not be saying no to that.
Unidentified Participant
So essentially we are not looking at levering the balance sheet per se.
Antony Cherukara
Not. Not. Yeah, you can, you can say that.
Unidentified Participant
Sure. Thank you and wishing you all the best, Sir.
Operator
Thanks, Arjun. Mr. Romil Jain, you can unmute and ask your question. You have unmuted. I can ask your question, please.
Unidentified Participant
Am I audible?
Antony Cherukara
Yeah, yeah, yeah.
Unidentified Participant
So one question was, I think about a year back we had outlined a vision in FY26 and 27. So just want to understand where do we stand to reach that vision and whether exports as well as acquisitions would be an integral part of achieving this.
Antony Cherukara
Exports definitely is a part of achieving it. Acquisition we have not considered in our original plan. But as I said earlier, we lost two years to Covid, so we will need that two extra years. We expect we will chase it down. Okay, one or one or plus or minus one year might happen, but definitely we are chasing it down. That is why the projects of various platforms getting into new category products, getting into markets both in Scandinavia, in Africa and US as a major project has been launched.
So all of these projects will help us to get to that number that we have planned. So definitely we are chasing that down. There will be ups and downs because of unpredictability. For example, the current scenario in US is unclear to us, so we might delay putting in any fixed expense or any infrastructure into the US market simply because we don’t have to, you know, have a cash flows on our books.
So we don’t want to do that. So we’ll hold on. But all the preparation on the ground is happening to chase down that vision and entry into these markets.
Unidentified Participant
Okay. Just in terms of headwinds, you know, so apart from the domestic competition, what kind of headwinds do we see in each part of the business that we are into and any major risk arising from that?
Antony Cherukara
Yeah, so I will go segment by segment. Like if you look at our small farm machines, competitive headwinds are low, but regulatory headwinds are low. Are high in the sense I told you about how subsidy influences in various states. So we are trying to beat that through retail financing by lowering cost of some of our tiller offerings. That is also working. So we are able to climb. We are at about 72% market share. We also supply to various OEMs in the power tiller space. So if you consider that as a manufacturing market share we are almost at 80% plus. So that is the situation on the SFM. So it is all about creating industry and what we believe in that segment the power weeder segment will grow. And hence we have started making India as well. So right now we are the only player with 100% making India power reader products. We will see the ramp up happening next year onwards. We see that as a main growth driver going forward as well. Number one. Number two, if you go to the tractor segment, the scenario, the competitive scenario is different. In both the segments that we are operating. Earlier we used to operate in only the combat tractor segment. The combat four wheel drive typical industry is only 40 to 50,000 while the tractor industry is 10 lakhs. The 40 to 50 to 55,000 four wheel drive compact tracker industry is something that we were existing in and we were not able to grow in it because the industry itself was not growing. And that is why we decided to move into the higher SP segment which is the 40 to 50 HP segment. Here in the competitive scenario is pretty intensive. So we are. That is why we did the jv. We wanted to go with a player who is already in the big tractor space which is Zetor and known as a brand in the big tractor space. So we are working on that. Jv, new offerings are coming. It is going as per plan. So in the next four to five years we feel a large chunk of our revenues will come from that. That is on the tractor segment. Now if I talk about international business, international we have consolidated in Europe. We are expanding further in Europe to Scandinavian countries. There the competition is in the given positioning. It is between Indian players. Now all the Indian players are aiming to move up the value chain and compete with the Japanese tractors on offer in the market. That is also the same case with us. So that is why we are launching the new platforms A, B and C that we will be launching in Europe and the US market. So those products will be equal or better than some of the offerings from the Japanese manufacturers. That is on the international market per se. And of course US is when we launch we will have those new platforms which is as good as any other offering in the market. And the interesting aspect is the compact tractor in the US is 200,000 against 50,000 which is in India. So we expect to make a good headway in the US market. However, we are not in a hurry. We know it’s a very complex market. So we will go state by state. We have identified six states in the U.S. six states that we will operate in. We will consolidate in the six states and then further spread to 15 states in phase two and then only cover the entire US market over a period of six to seven years. So it is going to be a long haul for us in the US market. But we expect to tap into those markets very soon. Then there is the distribution business. Like I have said in distribution, the whole concept is about using our rural infrastructure of distributors and retailers. We have to get products into the rural market. Rural markets are for the first time experiencing availability of electricity and the demand for consumer goods, durables are growing. For example, electric pump industry is growing. Fans, coolers, these kind of segments are growing very fast in the rural India. And with our digital rural distribution reach that we have built, we are seeing signs of growth. And we will expect that business also to grow in the next four to five years to a sizable business. Today it’s at around 100 to 120 crores, which used to be three years back only at about 40 crores. So today it’s at about 100 120 crores. And we expect that to grow exponentially as well with the new business model that we have created. So this. So every segment is a different scenario. We have built the businesses as verticals. Now every vertical has a profit center head who has been brought in from the industry respective industries with considerable experience in operating in those industries. And yeah, that is the overall scenario. I would put it that way.
Unidentified Participant
Okay, thanks. Thanks for the elaborate answer. Just a clarification. I think last quarter as well you mentioned that broadly the tractor and the tillers should grow between I think 15 to 20%. Right? In terms of volumes.
Antony Cherukara
Yeah. What I had said was 15 to 20% for tractors and 10 to 15% for tillers. I expect by the end of this year tractors we should be around 10 to 15 and tillers we will be in the higher single digit.
Unidentified Participant
Okay, and what about 26?
Antony Cherukara
The same guidance, if you can help us with 26. See the situation we are in today. The in FY25. Quarter one hit us badly because quarter one we lost due to elections and the monsoon. Monsoon as in the reservoirs were not full while the monsoon this year was good. But the previous hangover of poor monsoons was there in quarter one and that affected us in quarter one. But quarter two was strong, quarter three was strong and I expect quarter four also to be very good. And I would say that reservoirs and all the demand drivers are looking favorable for going into next financial year. So Q1 will be strong and with all the launches that will happen in Q1, Q2, we expect that Q2, Q3 also will be strong for us. That is why I said that we are expecting that 20 to 25% growth to continue in next financial year also.
Unidentified Participant
Okay. And just lastly a clarification on the earlier question, I think on the equity investments where we saw the end to end, what is the thought process there? I mean can we slowly start shifting out of the equity book and go more on the, on the debt funds, liquid funds where the volatility would not be there too much and probably we don’t see, you know, much bothering from the, from the M2M part. Of course I agree last two years have been good and we have seen a positive impact. But of course there are both sides to it. So just some thoughts on that.
Antony Cherukara
Yeah, just to clarify, I mean I have the figures now the earlier speaker also had asked me for what is exposure to equity and liquid funds and stuff. So equity, both mutual funds and stocks, the total exposure is roughly about 80, 80 to 100 crores. Liquid funds, mutual funds are almost 300 crores plus and other investments in JVs and Monarch etc are in the tune of about 30 to 35 crores.
So this is broadly it. So equity as you say, as you see, is limited but compared to the previous financial year and this particular quarter, comparing quarter on quarter, the loss was there. So we will I think keep equities at a lower share of the total investments that we are doing.
Unidentified Participant
Okay. Okay. Okay sir, great. Thank you so much and wish you good luck.
Operator
Yeah, thanks. Romil Jain Now Shad, I think you have a follow up question. You can unmute and ask your question.
Unidentified Participant
Yeah, hi, just one on a consolidated revenue size of 1000 crore rupees, we are putting I think so much time, effort and energy on the international market. And does this mean the India market, India addressable market for us is mature and not offering much growth. How.
Unidentified Participant
Should we read this thing, sir?
Antony Cherukara
No. Two aspects to international market. There is no defocus on India and more focus on international. That is not. That is not the impression I wanted to create. Definitely not. But what I am trying to emphasize is whatever platforms we are developing today is not only meant for India but also the international market. So. So the platform that we are developing for the US market will be launched first in India, in Europe and in the us.
So previously we would have approached a product with the launch plan only for India. The shift that has happened is we will be launching globally. So it is not a defocus on India. So I hope I have clarified.
Unidentified Participant
And the guidance for 26 which we are giving. Do you think international market would be the major support to that number?
Antony Cherukara
No, not at all. The Indian market, power tiller segment and all will continue to grow. The vaz, the VST Zittor on the higher HP will continue to grow. The compact tractor segment is limited by the industry growth itself because it’s a niche application area. So we see the higher Osprey tractors continuing to grow. We are creating new category of products between power tiller and tractor which I’ve announced earlier that is specifically meant only for the Indian market that will continue to grow.
We are looking at the northern market where VST has never been present which is up MP Rajasthan. We have made considerable presence this year with about 64 dealers. Now we will continue to grow that market. So the India focus will continue.
Unidentified Participant
And what are the import duties on power dealers?
Antony Cherukara
There is no import possible for power dealers.
Unidentified Participant
Okay. Okay. All right, sir. Thank you so much.
Antony Cherukara
Thank you.
Operator
Thank you. Yeah, thanks. Naval. Due to lack of time, we’ll take the last question from Mr. Umesh. Please unmute and ask your question.
Unidentified Participant
I would like to know how many dealers have you added in Q3 and how was. How has been your experience in North India with regards to tractors?
Antony Cherukara
Yeah. In Q3 in small farm machines we have added 35 dealers. And in tractors we have added 26 dealers. We are in the initial phase of establishing these dealers in North India. With the offerings of higher horsepower tractors. We have a 8 to 10 dealers in UP around 8 to 10 dealers in Rajasthan and 8 to 10 dealers in Madhya Pradesh. So these are the initial set of dealers that we have started. And also in Bihar, also in. Punjab, I think one dealer. So we have a set of dealers. We are consolidating those set of dealers. We are establishing the product. The experience so far has been good.
Operator
Hello. Yeah, I think. Yeah, I think that was only his question. Sir, do you want to make any closing remarks?
Antony Cherukara
Sir, thank you so much for everyone for being here and hearing us out. And look forward to meeting you again in the next quarter. Thank you so much.
Operator
Okay. On behalf of BNK securities, we thank all the participants for joining the call. And special thanks to VST Management for taking time out for the call. Have a good day.