ZF Commercial Vehicle Control Systems India Limited (NSE: ZFCVINDIA) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Kaniappan — Managing Director
Sweta Agarwal — Chief Financial Officer
Analysts:
Annamalai Jayaraj — Analyst
Mumuksh Mandlesha — Analyst
Himanshu Singh — Analyst
Rakesh Jain — Analyst
Mukesh Saraf — Analyst
Viraj — Analyst
Presentation:
Operator
Good day, and welcome to ZF Commercial Vehicle Control System India Limited Q3 FY ’25 Earnings Conference Call hosted by Batliwala and Karani Securities India Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star zero on your touchstone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr Annamalai Jayaraj from Batliwala and Karani Securities India Private Limited. Thank you, and over to you, sir.
Annamalai Jayaraj — Analyst
Thank you, sir. Yousuf. Good morning, all participants. Thank you for joining us today, and welcome to set of Commercial Vehicle Control Systems India Limited’s call to brief you on the quarterly earnings. Today, the 3rd-quarter earnings for FY ’24-’25 will be presented by the management team of of Commercial Vegional Control Systems India Limited. Your host today from of Commercial Vehicle Control Systems India Limited are Mr Pique and Managing Director; and Ms Smetha Agarwal, our Chief Financial Officer; and Mr Akshmi, Company Secretary. I’ll now hand over Over the call to Mr, who will provide further insights into the results. Over to you, sir.
Kaniappan — Managing Director
Thank you, Mr. Good morning to all of you. I warmly welcome you all to Commercial Vehicles Control Systems India Limited’s 3rd-quarter results for FY 2024-’25. Certain forward-looking statements that we will make today are based on management’s good faith expectations and beliefs concerning future developments. As you know, actual results may differ materially from these expectations as a result of many factors.
Commercial Vehicle Control Systems India Limited’s results for the quarter-ending, 31st 31, 2024 were published on February 6, 2025. They are available on the website, under the eduf CV India Investor Relations section. We hope that you have had an opportunity to go through them. A transcript and recorded audio of this call will also be made available on the website at www.pirat.com under the CV India Investor Relations section. I’m happy to talk to you today as we give you an update about the business of the company. First, economic update.
I would like to start with a quick update on our operating environment, which is influenced by economic factors and the development of the commercial vehicle industry. The global economy remains stable with growth holding up amid amidst inflation, albeit at a slow space. Geopolitical risks and policy uncertainty, especially with respect to trade policies have imported heightened volatility to global financial markets.
On the domestic front, real GDP registered a lower-than-expected growth of 5.4% in Q2 FY 2024-’25 as consumption and investment decelerated even while government spending recovered from a contraction to the previous quarter — in the previous quarter. On the supply-side, the growth in gross value-added during Q2 was aided by resilient services and improving agriculture sector, but weakness in industrial activity and that is manufacturing, electricity and mining tempered overall growth.
Headwinds from geopolitical uncertainties, volatility in international commodity prices and geo economic fragmentation continued to post risk to the outlook. Taking all these factors into consideration, real GDP growth for FY 2024, ’25 is projected at 6.6% with Q3 at 6.8% and Q4 at — 7.2%. Growth for Q1 FY 2025-’26 is projected at 6.9% and Q2 at 7.3%. There risks are evenly balanced. Going-forward, economic activity is set to improve along with rising business and consumer sentiment as reflected in the Sir Bank of India survey. Source RBI’s Monetary Policy Committee December 4, 6, 2024.
Now about the Indian commercial vehicle industry. The commercial vehicle industry demonstrated growth on a sequential basis compared to Q2 FY 2024, ’25, fueled by the resurgence of construction and mining activities further supported by festive demand. However, on quarter-on-quarter basis, the industry experienced a 9.5% decline due to a broader economic slowdown and delayed government capex spend. Despite this, the shift towards the ICV segment in intermediate commercial vehicle segment continued in this quarter.
The commercial vehicle production that is CV more than six ton decreased from 1 lakh 5,025 in Q3 FY 2023 ’24 to 95,082 vehicles in Q3 FY ’24 ’25. Looking-forward, with the government’s focus on infrastructure spending, anticipated improvements in rural demand and growth in end-use segment, the CE industry is expected to grow yeah. OE sales. The company’s OE sales for the quarter stood at INR409 crores compared to INR483.1 crores in the corresponding period in FY ’23-’24, reflecting a decline of 15.3%.
This was primarily driven by a reduction in-vehicle production and a shift in the vehicle mix towards buses and ICV segments, resulting in lower content per vehicle. While we anticipated a lower-value per vehicle due to these market dynamics and our strategic exit from low-margin products, we partially offset this impact through targeted product launches electronic the I would like to list three such focus areas.
So one is electronically controlled air suspension for coaches and electric buses, expanded penetration of drive AMT, MT Automated manual transmission across additional value vehicle platforms, strengthened the focus on safety solutions, driving a 5% increase in trailer ABS adoption. These initiatives underscore our commitment to innovation and value-creation, positioning us well for future growth. The recent budget, store, that is the one that was launched on April 2025, aims to boost economic growth by focusing primarily on stimulating demand in both urban and rural area.
This will be achieved through increasing the income tax threshold and investing in agriculture with additional emphasis on infrastructure, innovation and technology. Aftermarket decline. Turning to the aftermarket, we are pleased to report a good performance in Q3 FY ’24-’25. The aftermarket revenue was at INR132.4 crores, making a 20.6% 6% quarter-on-quarter growth compared to INR1.69.8 crores in the corresponding period in the previous fiscal year. Key highlights of the aftermarket business.
Through the aftermarket, we facilitated the retrofitting of hydraulic ABS, braking system and LCV platform for a leading OEM for export to the Sri Lankan market. This initiative presents growing business opportunity. Increase the penetration of door control systems into northern and western regions. We are actively working towards leveraging multiple growth opportunities in the door control system. We are working closely with the petroleum companies to introduce new safety specifications in our upcoming tenders aimed at preventing rollover accident.
The initiative will begin with the pilot program in four states where its effectiveness in reducing accidents will be assessed. Based on the results, we plan to expand the initiative to all other states nationally. We have launched a Go Green project in partnership with the fleet operator by offering retrofit kits with higher capacity compressors, we aim to enhance fuel efficiency and extend the airbrake life contributing to sustainability and higher car sales.
Our sales to state transport undertaking remained stagnant due to the replacement of aging buses with new vehicles, stronger-than-expected reduction of electric buses in that quarter and state government policies that have affected payment collection. Export of goods. In Q3 of FY ’24 — ’24, ’25, the company delivered export sales of INR290.6 crores. This robust performance was partially attributable to a favorable base effect following reduced uptake in the same quarter of FY due to higher inventory levels.
More importantly, our growth was driven by strategic expansion into new business segments, particularly air compressors and actuators with leading OEMs in Europe. Looking ahead, we anticipate continued growth in volumes for all air — all air compressors and actuators in the coming quarters. To support this demand, we are proactively investing in capacity expansion, ensuring we are well-positioned to capitalize on emerging opportunities.
Export of services. In Q3 FY 2024, ’25, the export of services grew to INR1,45 crores, an increase of 18.5% compared to the same-period in the previous fiscal year. This growth was driven by an increase in engineering and related support activities provided to our global teams. The Digital business. In Q3 FY 2024-’25, our digital business income was at INR9.5 crores. The subscription income, quarter-on-quarter growth of 39% compared to Q3 FY ’23 ’24. This performance was driven by additional business acquisitions in connected advanced driver assistance systems of us and driver behavior and driver monitoring systems from key fleet operators along with the steady increase in customer subscriptions for our existing connected services. Subscription revenue grew by 17% on a quarter-on-quarter basis compared to FY 2023-’24. The growth was further supported by strengthened field support and targeted customer awareness initiatives. R&D and engineering, the company provided pre-home allocation and development support for the implementation of advanced driver assistance systems features for a leading OEM in India. This collaboration enabled the OEM to secure central motor vehicle rule CMR certification for their truck range, making a significant milestone in CV safety and innovation in India. Manufacturing update. The company launched in new twin cylinder compressors from the plant for European OEM customers in September 2024. This marks a significant milestone demonstrating our capability to produce and export high-end twin cylinder pledge compressors. At our Oragadan facility, the company established new assembly lines for dual double dive from spring brake actuator, DDSBA and automatic flag ASA, ramping-up production to meet the full demand for our export customers. As part of our strategic manufacturing footprint optimization, we are — we transferred the production of actuators, brake chambers and exhaust brake assemblies from plant to our other plants in this move enhances operational efficiency by bringing production closer to key customer locations, thereby improving delivery performance to customers. Additionally, we made significant advancements in productivity and quality by indegorating smart automation, robotic technologies, testing, automation and digitalization within our manufacturing cell. These initiatives have strengthened our operational excellence and positioned us to sustain the growth. There are India at Bharak Mobility Global Export 2025. Zeta CVCS India participated in the component show at from January 17 ’21 2025 as part of Group India. They even provided an excellent platform to showcase leading technologies across all product lines including on Guard Mac, which is advanced driver assistance system data, reversing camera, short-range radar, intelligent AMT,, electronic stability control and electronic braking systems among others. Additionally, we introduced new technologies, including the e-compressor, electric compressor, electric compressor, air light. It’s the cylinder. This is nothing but the cylinder decompressor. Scalar, it’s a fleet orchestration platform and track to dual, which is an EV drive, electric vehicle drive. The boot was formally inaugurated by Sri Goel, Honorable Minister for Commerce and Industry, Government of India. He engaged with the CXOs of leading CV OEM and key decision-makers from purchasing R&D and marketing team. Our showcase received a positive response, generating significant interest across all our technologies, which we aim to leverage for future business opportunities. Awards and recognition set of CVCS India has been honored with the Best Supplier Award from JDM Group, underscoring our leadership and commitment to innovation, safety and customer excellence. Set of CVCS India has been honored with the prestigious DNA of Quality Excellence Award for the second time in three years, a testament to our unweavoring commitment to superior quality standards. This distinguished recognition is one of six key awards presented annually across Group and only one dedicated to quality excellence. This recognition highlights the company’s quality transformation journey through successfully implementing the DNA quality framework among our supplier partners. By fostering a zero defect mindset and encouraging ownership of quality with the supplier, the initiative has set new benchmarks for excellence within the supply-chain. This accomplishment underscores of CECS India’s dedication to innovation and continuous improvement the way for our future success. In the 3rd-quarter of FY 2024-’25, the company’s employees received notable recognition in total employee involvement engagement. The product engineering team won the Platinum Award in NIQ, National of Quality and Reliability National Six-Sigma competition and the Amutur site earned a Gold Award in the NIQ competition. Our employees actively participated in an a external total employee involvement and related competitions winning two national awards, three regional awards and 10 state-level awards across various categories. These accolades were yearned through our commitment to excellence and participation in competitions organized by of Indian industry, the autocomponent — autocomponent manufacturers who is and the Quality Control Forum of India, QCFI, National Instrument of Quality and NIQ are among others. We remain dedicated to a pursuit of excellence. CSR. In Q3 FY 2024-’25, we continue to take significant strides and make a meaningful impact in our surrounding communities. At the government middle-school Uper Beira,, we constructed a kitchen facility for the scheme installed a drinking water facility with an overhead tank and solar-powered motor, renovated the school playground and undertook three plantation — three plantation around the location. Strengthening our commitment to road safety, we contributed brake system working models for training drivers and technicians and sponsored workshop equipment to metropolitan MTCs, Metropolitan Transport Corporation, AP CRTC, Transport Corporation and for transport. A part as part of our community outreach efforts, we contributed laptops to students through the government of Tamil Nadu’s school Nama scheme empowering young minds with the digital access and enhancing learning opportunities. Financial update. For your reference, the results was made public at 186 hours, so 66 o’clock in the evening 16 hours on Friday — sorry on February 6, 2025. I hope you have had a chance to go through that. The product sales in Q3 2024, ’25 were INR832 crores against INR797 crores in Q3 FY ’23, ’23-’24. This is a growth of 4.4% driven by an increase in aftermarket sales and exports. The company’s EBITDA operational profit improved 23.3% in this quarter compared to 20.5% in the same quarter in the previous year. The profit before-tax increased by 2.3% to INR161 crores and the profit-after-tax by 2.4% to INR126 crores. This was a result of the management’s continued efforts to effect in improving the business profitability. We will continue to carefully review the environment and our performance to environment and our performance to consider further opportunity. Thank you. We now welcome your questions and feedback.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to withdraw yourself from the question queue you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen we’ll wait for a moment while the question queue assembles.First question is from the line of Mumuksh Mandalsha from Anand Rathi Institutional Equities. Please go-ahead.
Mumuksh Mandlesha
Yeah. Thank you, sir, for the opportunity and congratulations on the strong operational performance. Firstly to Shwetha, ma’am, is there any in this quarter, any one-offs in the margin side, because we have seen a particular good improvement in the gross margin and the other expenses also was lower sequentially. Can you help us understand what happened in this movement of this — both the items sir?
Sweta Agarwal
Good morning, Mumukh. There is a minor one-time impact from the quality cost, which is evaluated on an annual basis. We have talked about us winning the quality — the DNA of quality Awards and this has resulted in a reduction of the claims and warranties and that’s what’s reflected in the books. But the one-time impact is not a major one because and in fact, it is a sustainable one which will be carried forward.
Mumuksh Mandlesha
Got it. So can you explain us just on the other expense, the reduction which we saw despite higher revenues are partly to this one-time saving, which we have from the reduction of the claims. And anything other than that also, anything like freight reduction, etc., which have reduced the cost?
Kaniappan
But just to add to what said. So you know we keep certain provisions for the warranty. So normally we are — we are keeping it based on the earlier rejection warranty climb trend and it’s a three-year type of basket. So the actual trend has been steadily coming down, which is the actual case in the last two, three years. So the excess provision is released. So that was one-timer about INR6 crores. But then this is a sustainable thing because actually it’s based on a trend.
Again, though we have a practice of releasing it end of every year but it’s also sustainable meaning as you keep improving the quality of products the field failure comes down so you reduce your can also reduce your provision. So that is the topic. Other than — other than that there is no one-timer. In fact, we have — we were affected by the forex that’s a negative. It’s a tailwind — sorry headwind.
Mumuksh Mandlesha
Got it. Got it. On the gross margin, the improvement would be sequentially improvement would be largely due to better aftermarket mix and the OEM mix.
Kaniappan
Actually, there are few things contributing to the gross margin. One is we continue to review the bleeder products in our portfolio. And in few cases, of course, we tried to improve our cost side in the supply-chain side and also in the plant, et-cetera. But there are few products in which it’s more like a commodity today. So we buy the products and sell to the customers like air tank type of products where we — we are — it’s a bleeder. So we have — we except that those areas, wherever we are not.
So this is one thing. Unless you improve your overall margin by doing a bleeder management. So in some cases, we go to the customers and peak revision where we believe we have actually achieved the should cost the best-cost level. Still, if you’re bleeding, we go to the customer and seek revision. So this is one thing that we continuously do in the last — in the last two, three years, now we will continue that. Meaning we have certain targets to achieve in terms of customer profitability, product profitability.
And that’s one aspect. The second aspect is, in the supply-chain the purchasing team constantly look at opportunities to really reduce the cost. That again is through value engineering where have value analysis and value engineering initiatives. Again, it’s an ongoing more like a three-year type of pipeline, they keep working and that reduces the purchasing price, we Call-IT purchase organized variance. And so purchase price of the supplier parts. Then also there is a negotiation process where based on the volume, we also get certain you know contribution from the suppliers through the negot route.
This is more or less stabilized. These approaches are more or less getting stabilized. So this is on the — on the supply-chain. And of course, the factories, again, we work on a, we Call-IT controllable factory cost, a. So this again see what improvement you can do in the cost of essentially addressing the productivity, improving the productivity of the plants continuously. So this is also an a lever that continuously — it works, meaning if you are — because sometimes I’ve been always saying that we come from a type of background in which the continuous improvement is the core of our DNA.
So we look at improvement in all aspects of our factory cost as well. So that is also contributed. So these things have helped us to improve the in gross margin.
Mumuksh Mandlesha
And sir, coming to the exports — exports outlook. I think the Dembla order is seeing a good ramp-up. Can you just indicate how — how large this order can be and how — I mean, and for next CY ’25, if one can you want to share any outlook, how do you see the exports growth? And secondly, on the BMW EV order, are you seeing any pickup there?
And thirdly, just on the exports, how is the — how is the different value of a twin cylinder compressor versus normally a regular compressor, how different contain per vehicle for this product
Kaniappan
Yeah. I would have got to give you exact number, sir, but what I can tell you our growth in export is largely driven by the new product launches. One is of course the — the global markets are not that much growing and particularly both Europe and the US, but we expect improvements maybe after two after two quarters. But current — current our focus is to really grow through new products. So the last year, we have launched three new products.
One is we are already supplying to one of the global players, DAF. We are expanding the volume again compressor, high-end compressor, earlier we used to supply compressors at 318c to — and of course, 636 to that type of compressors to one of the global OEMs. Then we based on the success of that, then we extended to DAF. DAF started with 440 compressors, now they are steadily increasing and we have got — now we are supplying the high-end twin cylinder clutch compressor.
This probably is the highest in terms of value content that is in the compressor segment. Again, based on the success and of course, we have also launched for Daimler Global. So that’s again a similar high-end compressor. Compressor that volumes are slowly picking-up increasing exact number I’m not in opportunity in value but typically the content is about 200 EUR200 that’s a fair per compressor. Sorry I put things so more we also expect volume also to pick-up. This is on the compressor side. We are global Center of Excellence for compressor manufacturing in this space.
So it’s a question of how we continue to strengthen our position there in terms of future, which I think we have all ingredients to really strengthen our position there. The second area is you asked a question about the BMW. We are not seeing any big immediate recovery in the product that we are selling. In fact, in that quarter about INR12 million — INR12 crores we have — it is reduced versus the previous year. But we are — again, this is a global target. So we are reviving the evolution in this space.
But one another area where we are growing is in the actuators and brake chambers. So we have launched a new brack chamber to one of our important customers,. So, and in the actuators and brake chambers, we see more opportunities as we are securing a standard position with some of the global OEMs in terms of share-up market, etc. Yeah, it’s a — we see a growth, but one challenge is while we grow through the new products, the demand of some of the existing is moderating because of the global situation — economic situation.
So that’s why we are still in the range of INR100 crores per month type of thing range. But I expect at least going-forward, things should slowly improve.
Mumuksh Mandlesha
Got it. So just on a side, anything there how that is improving?
Kaniappan
Yeah, that’s right. That is recently only we launched. Now maybe during September or October timeframe, we launched their product is taking up well. Customer seems to be quite happy, volumes are increasing more than what they’ve indicated. We see a Growth in that space. So that and other customers, Volvo Dolph and Daimler. So these are the three customers. Now we see a improvement in the situation as we move forward. We are also trying to build additional capacity, expanding — putting some investments, etc. So that work is going on.
Mumuksh Mandlesha
Yeah, just lastly, recently there was a transport committee meeting and they particular Nitin Gatkiri had talked about the upcoming regulation on the EAC and Adas, etc. Just I would just any feedback, how do you see that announcement, I mean that a mention about the regulations?
Kaniappan
Yeah. So in terms of our readiness to support the industry and we are already ready. In the case of ESE, we have we have applicated most of the truck platforms. You might know that in the bus platforms, the ESE adoption has been — USA has been adopted, but to, I would say about 40% of the overall size of the industry because of certain loopholes or whatever in the regulation which but in September — September 2025, the government actually bringing some more key points in the regulation that will allow the ESG to be fitted — that requires ESC to be fitted in maybe 60%, 70% of the overall bus production.
So that will increase. Now the ESE is a technology that is more needed for the — okay, for needed for double-decker buses are the buses which are going very in the forces so whenever they turn — they take a turn, there could be a rollover possibility. So ESE helps to prevent that rollover. That is a technology. So this is much more relevant in India in the truck segment because people overload and that vehicle became unstable because physically the vehicle by physics it becomes very unstable because the center of gravity is moving up. So you need to have technology, you have to solve this through technologies.
Very recently we see there are some few places in India is a tank care accident which are carrying other goods led to some collateral damage to people around, some people died, etc. So this is an urgent requirement for the market because when you deal with the liquid transported through a tank air the vehicle per se becomes unstable. By physics, the driver cannot control because so this is the excellent technology to stop this. So what we have done is we have been working with all the Indian — most of the Indian OEMs and many of their platforms are already home located with ESE technology.
You know, recently, we also came out public that we have invested on a test track in our test track in Chennai. So the — now two things will happen. The market itself, we are seeing some pull from the market even without a regulation for these technologies for the trailer EBS which has got a rollover elimination possibility so in the truck mostly it will come through a regulatory route. So government we are very much ready to support the government with all our capabilities, already we are partnering. Exactly when this will come, we are not because it has notification has not yet come, but it will soon come.
It is expected to come the also the or advanced system is the next technology that government will bring in regulation. Lot of talk about it. So generally the Adas needs ESC ESE also to effectively apply the safety in the vehicle, so you need to have ESE also before the ADAS. So these things are the very immediate in the near-term expectation in the market. So also quite ready and in fact one of the big OEMs they even presented in the Bharak mobility that they are ready with level two automation, which is essentially we are working with them, our technologies are.
So advanced fiber assistance systems, there are multiple features are there, but then the government will expect us to will bring notification for some basic minimum that is required to ensure that the vehicle vehicles are safe because that particular advanced that is called advanced emergency braking system, which is a part of the. There essentially the vehicle will have a ability to see, think and act in the sense it will see what is in front through a radar and cameras it will have a software which will actually able to process the data and think and then it will apply brake or otherwise.
So that is that is the way the technology works and in our view these are the next two, three years timeline most of this will come to the market
Mumuksh Mandlesha
Understoostood, sir. Very helpful, sir. I’ll come back to the queue. Thank you so much.
Operator
Thank you. Next question is from the line of Himanshu Singh from Baroda B&P Paribas Mutual Fund. Please go-ahead.
Himanshu Singh
Hi, sir. Just on the impact on ForEx, you mentioned that there is a negative impact of ForEx in — is it accounted in other expenses or other line items?
Kaniappan
Yeah. I will request our CFO to answer so with that.
Sweta Agarwal
I’m assured this is accounted in other expenses.
Himanshu Singh
And would you be able to give the quantum this quarter, previous quarter and last year?
Sweta Agarwal
Yeah. Last year, same quarter, we had a 15 crore positive impact and last quarter last quarter was 9.3 crores of loss as well.
Himanshu Singh
Okay.
Sweta Agarwal
Do you want me to repeat?
Himanshu Singh
No, no, it’s fine. Thank you. And coming to the margins, so like we have seen a substantial increase in margins this quarter from 15% from, let’s say, 14.9 last year to 7 like even if we account for the one-off of $60 million, that comes to around 17.9 to 18.4 this quarter. So do — like do you think this is sustainable and we should — we should see a substantial increase in margins Y-o-Y going ahead as well?
Kaniappan
Yeah. See the mix the mix is one aspect that has been playing — it has played well for us in the last quarter. You see the aftermarket we have grown at 20% and while the OE business is degrown. Export — export we have done well so mix can play a certain impact, otherwise they all sustain. But aftermarket we are seeing the current situation, even in the last 1, 1 month or so also we are seeing a good improvement. We have to see how it will — it will evolve. But for the mix, everything else is sustainable.
Next if it is playing some challenge, it can have an impact, but at least in the near-term, we see most areas to grow, both aftermarket, OE, export, we believe will grow because we’re seeing some signal that OE demand also increasing now. And aftermarket also increasing and export, we have some decent back orders in the pipeline. So these things are looking up.
Himanshu Singh
Okay. And sir, like what is the current mix like and how do you see it going ahead, let’s say, in the next two years or do you see the aftermarket in the overall scheme of things substantially? What is your assessment on that?
Kaniappan
Okay. Typically, if you see our OE business is up about 50%. Typically, right now, but then we can you can always apply your nuts. Aftermarket is about 16%. This is in the last quarter. That is the quarter-on-quarter which we are discussing and exports is about 35%. So 50 OE, 15 aftermarket and exports about 35% so we are — in terms of profitability, aftermarket is very profitable and if any big change in the — after export, if you see, fairly we are in the range of one-third of our production overall — overall sales we do export . I don’t see the very big change in that unless otherwise we have some serious issue on the top-line. On the OE, but now that if the market recovers you can always expect this is the type of mix that can be. Okay, aftermarket is 16%, export is 35% and OE is 49%. That’s the actual percentage in that quarter. And with that, you see some improvement in the bottom-line because if there’s a change, if there’s a change to this, suppose OE, it is increasing and aftermarket it is coming down the impact could be — will be there, unfavorable situation in terms of margin, but not too much, but still you can — for your calculation, you can use that.
Himanshu Singh
Okay. Okay, sure. And sir, just on the revenue side, so we are in the range, as you also mentioned in the INR90 crore to INR100 crore range from like last eight quarters. So when do you think you would be able to like sustainably go above that INR100 crore range INR1,000 crore range substantially?
Kaniappan
Yeah. No, the — you’re talking about export? Overall, I’m seeing I’m seeing the growth starts now probably all areas at least we see an improvement this quarter. But January — April, May we have to see some — because the — now if you say the government statement or RBI statement indicates that the growth is expected to be in the range of 6.5% to 7.3% going-forward next few quarters and because the government has started investing and lot of tender programs for the buses,
Particularly EV buses is already happening and many customers have started producing the electric buses, we are seeing a a positive momentum to start now while the how pronounce it is we have to see, because all of us have to really see the how it is evolving, but we are preparing to to seize this opportunity. So INR1,000 crores in my view, it’s not too far per quarter.
Himanshu Singh
Sure, sir. Thank you so much. I’ll get back-in the queue.
Kaniappan
Yeah.
Operator
Thank you. Next question is from the line of Rakesh Jain from Axis AMC. Please go-ahead.
Rakesh Jain
Yeah, hi, sir. Sir, just wanted to understand you talked about domestic OEM growing next year, you expect that. Is it for you or you’re talking for the industry?
Kaniappan
No, I’ll tell you — I’ll give some data point and you can make the actual number of six 10 and above vehicles is something that is what is our space could be buses and so in this, in the quarter that we are discussing and roughly you can see about — we have done about 95,000 vehicles, so it’s about 30,000 32,000 vehicles a month we are talking. In January, the number was 39,000. So you can see there is a growth. There is a growth. We are seeing a growth indication.
Our view is that this growth is not okay, one is this first-quarter — last quarter of the year for the OEMs. Second, also the mix was very unfavorable because the main heavy-duty vehicles or MSCA segment, that mix came down from about 60%, 61%, 62% to 57% in the quarter, the quarter discussion. But now we expect this is also in this quarter and this — now onwards it is likely to increase the next is likely to increase because of again the construction mining, those activities are actually increasing.
And also the electric buses where we have a good content, even though it’s a low-volume, but still it’s a high content type of segment that was not happening in that quarter at all because of the tenders were not there and whatever orders our customers were having, they completed, they were waiting, but now most of the electric bus manufacturers have started the production. We see a growth there. And so in our view, how this will be pronounced, we have to still watch, but at least this quarter we see a at least some indications in the second-half — second month of this quarter, so indications are quite positive.
Lot of pull from all customers. In some area, we are even looking at going for a third ship type of operations to support the market volumes. So — but again, we are more or less connected to the industry, so industry grows and we are also going to grow. And whether it will go continue beyond April, we have to watch. But at least this quarter I’m seeing a very good demand pull from OEMs. Also there’s a very good increase in the bus production also and that we expect it to continue because of the school season and
Rakesh Jain
So is it possible to quantify how much does buses contribute to our overall revenue today?
Kaniappan
We actually in terms of model mix I can tell about 24% of the vehicles are produced with the overall you know in that quarter about 32,000 per month 24% is bus production but to our revenue we don’t know separately, we are not having that number. So we treat that along with the second bus and we consider the value per vehicle as a key thing. So bus production, if it increases again if it is EV bus, it’s a positive value per vehicle, increase volume, but then if it is a normal bus, it is not. It is actually an unfavorable type of mix.
Rakesh Jain
Okay. And sir, just one thing on your export side on the new products which you are adding, those products are just currently being tendered to one single customer or they are more than one customer.
Kaniappan
New products the export is for many customers. But in terms of product lines, we have four important product lines. Compressors is on the may — one of the major product lines. Maybe we will be doing one-fourth of — roughly, you can take one-fourth of our overall export comes from compressors. Compressor area, as I said, but we started at one of one customer and we are expanding to two more customers now. So we have started supplying to two more customers.
Earlier, we were supplying the basic level compressor we are getting into advanced high-end compressors and our view is India may become a center of excellence for these type of compressors. That is that’s the way we are moving because we have a good supply-chain, we have a good engineering capability in India, we have a good manufacturing strength. Then you — the second important product is actuators and brake chambers in a brake system you have a compressor, actuators brake chambers then you have some valves so in actuators and brake chambers again we are emerging stronger and the pipeline is building.
We are supplying to many customers, not only in the truck segment, but also the trailer segment. But in all these cases, the model is we don’t directly supply it to the customers. We supply to our — our parent or region from there, they supply to the customer. So we have a more like an intercompany operation through a transfer price type of logic. But the key point is we are emerging in these places more-and-more the center of excellence. Actually it doesn’t break. The 3rd area is we used to make that electronic control system for the ECAS.
So yeah suspension for BMW type of similar platforms, there is a reduction in the demand. Maybe globally there are the ZV transition there are some challenges so you have to understand the plan of customer, but as such our dem our, our demand has come down there we have to study how this going to evolve then of course we have many valves and component supply, etcetera, but there it’s I would say is not a very strategic type of topic.
So we currently deliver based on the need, but in the in certain areas of the valves we see the volume to slowly pick-up. I mean, yeah, this is a broad-line. So customer wise, it is very widely spread, not because every customer Needs these products because the products are released at a global level. It’s a global product. Again, there is a possibility to keep expanding in this space as well because costs were quite competitive at least in the actuator correction as we are the cost leader in my view.
Rakesh Jain
Okay. Okay. That’s all from my side, sir. Thank you so much and all the best.
Kaniappan
Thank you.
Operator
Thank you. Next question is from the line of Mukesh Sara from Avendus Spark. Please go-ahead.
Mukesh Saraf
Yes, sir, good afternoon and thank you for the opportunity. My first question is just back to the margins part of it. In this quarter, have we got any benefit of pricing negotiations with customers, say, for prior periods, which has kind of cumulatively come in this quarter or any such benefit we’ve got, sir.
Kaniappan
Yeah, Mukesh, no specific topic is a normal. Every quarter we are working with customers pipeline of breeders like that. So that’s nothing specific here.
Mukesh Saraf
Sure, sure. Understood. And secondly is, you know, on the September ’25 timeline that you mentioned for ESC, what is the change there, sir? Is it now that the RTO level before registration, there will be some kind of a check or basically what is the issue now in terms of revenue change the government is going to make?
Kaniappan
If you see the bus production, many customers, they do the body building elsewhere, elsewhere right. So they don’t so they understand that the GSE has to be only for the body, the factory fitted right factory assembled thing. So that is one exclusion the market has taken like that, okay, that is being corrected. Yeah. So from —
Mukesh Saraf
So now the body builders now the non-OEM body builders, even they will have to now kind of mandatory pick the ESG. ESG
Kaniappan
From September onwards. Right now they are not fitting. Sure. Again, depends on their tender to their customers also. But then by and large, it is not that is excluded.
Mukesh Saraf
Okay. Got it.
Kaniappan
Also, certain intra-city operations also there is excluded. So that will also — some of that will also come in. So — but mainly the factory fitting versus external bodybuilding.
Mukesh Saraf
Got it. And similar adoption on trailer ABS also is happening, sir. Is that timeline also September ’25? Because there also there seems to be a gap between mandatory regulations versus actual adoption.
Kaniappan
Yeah, here at this very, very good topic because actually government has mandated in 2019, 17 itself that all the trailer produced in our country has to have a trailer ABS. But actual adoption is only about 22% as far as I know till to three months ago.
Mukesh Saraf
So you mentioned this quarter some 5% increase in trailer ABS.
Kaniappan
So what we did, what we did was we spoke to some of the manufacturers. And manufacturers telling us if you supply two options that is without ABS and with ABS, then you — you Denmark, the customers — the trailer manufacturers will only go for without AB. So we do supply without ABS. That was the point of some of the trailer manufacturers. So then we have giantly decided we will work together and then at one stage we have to stop supplying without ABS.
Mukesh Saraf
Okay.
Kaniappan
We don’t want. We don’t want to support you know the unsafe type of practice. But then — so there was some push-pull, but finally, they all agreed, many of them have agreed that steadily they will improve. Have got only 5% improvement in that quarter. But then more-and-more fleets are now adopting because they have to communicate to their customers and make sure the new orders are booked only with the ABS. So ABS, again, as I said, is a very safety-critical topic, government-mandated.
So we also want to support the compliance there what is — so by April I see at least a very significant improvement because that’s the way that we are working with manufacturers of trailers. But what is — what is positive happening in the in the market is many of them choose to go for a trailer EBS even though it is not mandated trailer electronic braking system. Instead of ABS, they go for EBS because EBS has got ABS feature plus also rollover elimination possibility. Also, it has got many functionalities.
Because EBS per se is a very intelligent system. It will also ensure that the tire life also improves. It will apply whatever the amount of air to be applied to whichever wheel, etc as per the need. It was not — whereas ADs will apply blindly you know, but there it break based on the driver demand, okay. So a lot of people are seeing significant improvement in the tire life,
Mukesh Saraf
Okay.
Kaniappan
So on their own, they are adopting their deciding to go for EBS where, of course, it’s a high content and a good — it looks like that’s a win-win type of model. So again, we are working with the industry and trying to support. Support
Mukesh Saraf
Right
Kaniappan
Trying to collect more information. Yeah.
Mukesh Saraf
Got it. Got it. And just lastly, the plant, the subsidiary, we are seeing revenues are more or less around that INR6 crore mark even this quarter, it hasn’t really gone up much. What are we seeing there? Is it entirely driven by exports right now, especially the new line that you mentioned or is there some other domestic products as well that we are going to be starting to manufacture there at?
Kaniappan
Yeah. And what are the number in the subsidiary, we are producing three or four products right now. One is the electric compressor. It’s the main product, electric compressor with the localization more-and-more localization and we are now ready to support the industry in much larger volume. But then the — in that quarter, e-comelectric buses were — were not produced because earlier orders, whatever was there with the — with the OEMs have completed, new tenders were not released because of the election and subsequent delays in the second-half.
Also, in some — I think some OEMs, because there the model is a transport as a service type of model. The OEMs have to invest on the capex. STUs pay the per kilometer rate. There were some issues in solving that part between the — some OEMs and the STUs, etc. So that was another reason why some OEMs did not participate in all that in some tenders, but I understand the government has resolved that.
Mukesh Saraf
Okay.
Kaniappan
But we are seeing already a takeoff in the EV electric compressor production in January onwards, it has been increasing now and we are trying to create capacity to support. So this will increase our glass production of one aspect. The second is another important thing is we manufacture the cartridge — cartridge there. That is getting more-and-more streamlined. It was earlier we started as aftermarket supplies to India, about 5,000 number a month. Now we have launched for the OE to one of the big OEMs, 10,000 number a month is a typical demand.
So that they are ready. Now suppl the production has started of course, organisationally also now we are trying to prepare for a larger you know say production and sales we expect the improvement
Mukesh Saraf
Sure, sir, sure. Great. Thanks for this. I’ll get back-in the queue. Thank you.
Operator
Thank you. Next question is from the line of Viraj from SIMPL. Please go-ahead.
Viraj
Yeah. Hi, am I audible?
Operator
Yes. Yes, go-ahead.
Viraj
So just three questions. First is just a little bit more clarity on the gross margin. And the reason is, if I look at last four years or even longer, this kind of gross margin we have really not earned in last — I mean last — we’re talking about 2014 is when we earn a 43% kind of a contribution margins. Now I understand what you’re saying in terms of export share and aftermarket share, but broadly, even if I look from an annualized basis, exports either go has been around 13% 14% and that’s more up to 16% while in OE in domestic, we talked about a negative impact in terms of the segment of trailers and share reducing towards ICV.
And generally there were no new orders which can come through EV buses which we supplied in Q3. So just still trying to understand, if I have to just understand the major factors, you talked about pruning of the portfolio. So can you just give a more detailed perspective in terms of the major contributors to this kind of a margin profile and how we should understand it going over next two, three years?
Kaniappan
Yeah. Okay. So see, our focus there is more-and-more margin. If you see in last few quarters or seven, eight quarters, if you see, we are now continuously driving margin expansion. It’s a matter of focus . And so we are taking many actions, whether it’s OE, whether it’s aftermarket, whether it’s export, in all areas, we are trying to see how we can drive margin expansion. So our performance in this quarter is not a one — maybe it’s not a one-time. If you see a trend in the last eight quarters, we have been steadily improving. Number-one. Number two, what do we do to improve if you see in the OE? There were products because we have taken a conscious decision that individual customers’ profitability will have to look at, individual product profitability will have to look at. And wherever we are not making, we are seriously looking at anything that we cando in terms of production — production or supply-chain cost and then we also work on a food cost-type of analysis. If you are able to at least able to reach a food cost, then we should be keep bleeding and supplying. So we go to the customer and then recoast them to the reset. Some cases customers say no, we, this is a commodity I can buy from elsewhere, then we take a call. Some cases, customers are agreeing because these are all — in our views, the products are and the quality of the products are extremely important because this is a safety-critical product and we are able to demonstrate that these products have been working very well in many areas, of course, giantly developed with the customer over many years. So we cannot bleed and sustain. We giantly quite a few areas we are trying to reset and this is one-side. You constantly look at how do we how do we get a better realization for our sales to OEMs.
Viraj
And what percentage of portfolio you would have seen a churn either in terms of pruning or resetting the price. So just to give a perspective — get a perspective, so if I look at 50% of business is domestic OE and what I understood is a major part would have — pruning or resetting would have been in that part of the business. So just to get a perspective, what share of that business would have seen a reset or pruning in terms of the portfolio.
Kaniappan
No, we don’t have — maybe we don’t have the exact number, then this is the direction we are moving. We are still protecting our overall business because as I said, there are many new advanced products we also simultaneously we are launching. And this is the direction. I’m saying the directionally this is how we move. On the aftermarket, again, assess the market is it’s a profitable business. Our scope is to expand with new revenue streams. Some of the products which you are launching now — what we are selling now is completely different from what we used to do.
Typically, as we said, we have a digital business in which a subscription revenue we are getting, which is for very many advanced technology products in the digital route. And doors and door control systems are something that in new product we have been looking — we are selling. So like that, we are seeing many new opportunities. As such, margin is a good margin, but the focus is how do we increase our thing. So like that, overall, even as I — as I said earlier, the factory productivity year-on-year we are trying to improve, improve and we have been — so it’s overall and our focus is continuous improvement on the margin front.
Of course, there are a lot of headwinds as well. There’s a lot of challenges, not that every customer is going to give what we ask. But we are working on that. I don’t know because what you asked the question also was not very exactly clear. I don’t know if I answered your question. I’m not sure.
Viraj
No, I’ll probably take this offline. Mike, I just have two, three more questions. One is, if I look at the manufacturing subsidiary which we set-up for Advance Products, it also nine months, the sales contribution seems to be much lesser than the year before. And just in the previous participants commentary, you were talking about new products ramp-up and localization. So I’m just trying to understand, if I look in next two, three years, how should one see you know, scale-up of those advanced products to through the said subsidiary.
Kaniappan
Yeah, yeah. So that’s the plan. More products also will follow. Right now the products we are producing. So and that a lot of — we have created more space and some one of the products it also has the potential to get to be exported so our idea is to really stabilise the production to India to Indian customers and then because we are that man we are able to localize or produce at a much more cost-effective manner. But we have to see, maybe every quarter we can review this.
But as such the side, our focus is to really ramp-up production and then market is supporting right now in all this in the electric compressor area. But then in the other area we are able to stabilize the production now I expect things to improve the of volumes.
Viraj
Okay. Just last query, then I’ll come back-in queue. This is largely related to the portfolio which —
Kaniappan
I need to closely at all, but maybe I’ll take your question quickly. Yeah.
Viraj
Sure.
Kaniappan
I’m not sure of the new on the call are as well. But question is largely in terms of the portfolio, which the India used to have and now CV as we see a steady expansion in the portfolio over the last two, three years, largely in the CV and selectively in the passenger vehicle for export. So going-forward, if I could look at next three to four years, you see any such more opportunities in terms of portfolio additions or additions through the both in CV and both in PV.
I hope not, but I remember this part we have more or less clarified earlier also. So the we will have only APCO portfolio plus the ADAS and Advance technologies are now into the listed company, which was earlier also having its own ADASAP also was having its own. So in — this is one. Number two, we are Zeda of us permitted at the global level, they have given a special permission to use CVC as listed company to support the LCV segment.
LCV segment is basically the more like those lender Tata AS type of product lines, particularly to the EV transition. So we have got quite a few portfolio. There is a separate initiative there that next two, three years time-frame that will also start getting, we will start seeing revenue flowing from that as well. These are the two major additional areas other than the original portfolio and LCV segment
Viraj
Okay. Thank you.
Kaniappan
Thank you. Thank you.
Operator
Thank you. Ladies and gentlemen, we will take this as the last question for the day. I would now like to hand the conference over to the management for the closing comments.
Kaniappan
Yeah. Thank you. Thank you for all your interest and for the participation in this earnings call. And any more details, you can always reach-out to our CFO and Company Secretary, so we will try to clarify as much as possible. Thank you. Thank you very much.
Operator
Thank you. On behalf of Batliwala &arani Securities, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.