Ladies and gentlemen, good day and welcome to SKF India Limited Q2 FY27 earnings conference call. 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 then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Cilvina Pereira. Thank you, and over to you, Ms. Pereira. Good morning, everyone. Thank you for joining us today for SKF India Limited investors call for Q2 FY26. 27. With us, we have SKF India CFO, Mr. Mayank Holani, our strategy head— our strategy and business development head, Mr. Girish Kumar, and company secretary, Ms. Mayuri Kulkarni. Our Managing Director, Mr. Shailesh Sharma, is unable to join the call today due to some personal situation. The purpose of today's call is to share our Q2 and H1 results. Talk about our performance and answer your questions. Please note that financial information for the corresponding period of previous year as reported in the presentation shared has been extracted from the financial statements of erstwhile combined entity. And may involve some assumptions by the management pertaining to the demerged industrial undertaking. These were prepared in accordance with the appendix. of Ind-AS 105 Business Combinations by using the financial information maintained by the SKF India Limited. Before I turn over the call to the management, I would like to remind you that in this call some of the remarks contain forward-looking statements. Which are subject to risks and uncertainties, and actual results may differ materially. Such statements are based on management beliefs as well as assumptions made by and on the information currently available to the management. The audience is cautioned not to place any undue reliance on these forward-looking statements and make any investment decisions. The purpose of today's call is to purely educate and bring awareness about the company's fundamental business and the financial quarter under review. Let me now turn over the call to Mr. Mayank Holani. Over to you, Mayank. Thank you, Silvina. And welcome everyone to our Q2 FY27 investor call. I am Mayank Holani, Chief Financial Officer of SKF India Limited. Let me start with the agenda. Which is on slide 3. We will first cover macro key indicators, then executive summary, followed by quarterly and half-yearly results and analysis. A success story, and last but not the least, our new brand launch globally. In the end, we'll take all your questions. Now moving on to— moving ahead with key macro indicators, refer slide 5. GDP for last quarter is projected to have grown by about 7.35%. While the CPI is continuing its upward trend and reaching around 4.9%. On next slide, please. Uh, slide 6. Here, if you see, IIP is expected to continue the upward trend since seen since last few quarters. While manufacturing PMI jumped to 55.1 on September 26th, breaking the downward trends seen for last 3 months. Automotive production has also seen an upward trend during last quarter for all the categories, unlike the previous quarter where there was a jump in one category and drop in other couple of other categories. Now we move to slide 8, uh, executive summary. You will see, we are glad to inform you that we had a strong year-on-year revenue growth during the last quarter, while quarter-on-quarter it was marginally positive. Sales figures quoted in the slide do not include other operating income, and these are purely the sales numbers of the products. So we have a sales growth of 16% year-on-year, while it is 2% quarter-on-quarter. EBITDA for the quarter improved by 155 basis points. Year-on-year, while it dropped by 255 basis points versus last quarter. Profit before tax is higher by 181 basis points EYOY, while it dropped by 252 bps quarter on quarter. And here I am referring to the profit before tax number. Without exceptional items. Further, our net working capital is at 18.8% of sales, which is 2.9% lower than the last year same period. Also, I would like to mention here that our net working capital, when compared to the March end, the last financial year end, that has also seen significant improvement. Now we move to slide 10, uh, regarding our sales performance. You— here you will see the bit of, uh, I mean, which is on split of our sales performance, and you'll see that both for the quarter as well as half year our sales growth is driven primarily by volume increase, with marginal impact coming due to price or mix. Now we move to slide 11. Uh, here you will see a bit of the mix in within the sales of different components of our business. of this quarter. IE business accounted for 66% of our sales, while vehicle aftermarket was 19%. Exports had a 10% share. And say business with SKF Industrial had about 5% share. When we look at the half year, H1, OE share was 63%, aftermarket 20%, exports 9%, and industrial about 7%. So this gives you a fair idea of the mix and how it compares with the previous quarters. So broadly, this mix is in line with the mix we had in the last financial year also, except for the addition of industrial business and a bit of decline in the aftermarket business. Now we move to the next slide, which is on profitability. Here you see a quarter-on-quarter movement of EBITDA and PBT for last 5 quarters. EBITDA for this quarter is higher year on year, primarily due to contribution from higher volumes, cost leverage, and other income as well. However, when compared to previous quarter, there is a drop primarily because of the high cost of goods sold contributed by steel price inflation as well as price increase given to suppliers. to its value addition. Profit before tax is also impacted due to the same reason, by around the similar range. And in spite of higher COGS during current quarter, both EBITDA and PBT for H1 are higher than the corresponding period of previous year. This is also one point I would like to highlight that there is a kind of timing gap which is impacting the profitability. While the, the price increase or value addition increase has been given to the vendors or suppliers The same for— with our customers is under negotiation and could not be concluded last quarter, which is giving this impact, and we expect that to be corrected in subsequent quarter. This brings us to the end of financials part of the presentation, and now I'll request Mr. Girish Kumar to talk about the success story which we have for you. As well as our new brand launch. Over to you, Girish. Thank you. Thank you, Mayank. So, um, I'm in slide number 14. Um, we have had several success customer wins and customer acquisitions during quarter 3. The significant one is actually what you hear from, from me on the Driveline business win. which is a major India OEM introducing the hybrid transmission technology for the first time. And we are chosen partners to develop the bearings for the transmission applications there. And the significance of this then is primarily the new technology that we have introduced there. By the way of offering the ceramic bearings and also the conductive brush, which are primarily our electric vehicle offerings. And these are some of the high technology, high precision, high speed bearings which are providing insulation solutions, conductive solutions. to the electric motor. The key win here is primarily due to our ability to provide technical solutions from the nearshore, partnering with customer development in India. And also, this is also providing a portfolio expansion into our offering for the new products that we have introduced globally and more specifically in India as well. And this business is At the most position that we have about 100% business on the bearing position and the new technology solutions, we are roughly about 50% share that we have. So this is putting us very strongly into the forefront of for the electric vehicle offering that we are releasing into the product. So this particular business will have the start of production sometime in Q2 2028. And we look forward to expanding this business win into more wins as well. Now, now on the brand launch, slide number 16. Few days back, we officially launched the new identity and the brand across the organization, customers, and the stakeholders. For us, as you can appreciate, the brand launch is much more than a visual identity. The brand is the face of our company and it shows our personality, essentially a new identity, a new personality. which represents what we stand for, what we are passionate about, and what our customers can really expect from us. We are building our identity based on our contribution into the automotive innovations for decades. Coming from more than 70 years of our association with Ferrari. So all the technologies that we put in here are primarily coming from our legacy as well, and that's why we basically keep our connection on our long heritage and the expertise. which for the future signal our ambition to help accelerate the future of mobility, co-creating with our customers. So this is the essence of the brand launch that we did and the new identity is to really futuristic while anchoring our values to the legacy brand identity that we already have. That's it from my side. Over to you, Cilvina. Thank you. Now we would come to the close of the presentation, so I will request to open the forum for question and answer session. Moderator, let us know who's first in the queue. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Varun Jain from Dolat Capital. Please go ahead. Mr. Jain, your line has been unmuted. Please go ahead with your question. Am I audible now? Hello? Hello, hello. Yeah, uh, yeah, so, uh, so my first question was on, uh, margins. So we have previously, uh, indicated 15% as the sustainable EBITDA margins, but this quarter it fell to 9.6%. So what happened in this quarter on the EBITDA margins? Secondly, other income was elevated. So, uh, these 2 Yeah, hi Varun, uh, thanks for your question and I touched upon it in my presentation. So you see EBITDA margin is impacted by the cost inflation which is coming from the steel price as well as the inflation on value addition which has been given to the vendors. So now what happens is some of them was effective April also, those which were negotiations were going on, and the impact has come in July to September quarter. Now on the other side, our negotiations or discussions with the customers are also continuing, and somewhere some had even been concluded, but the purchase request, or so you say purchase orders were not yet received, so we could not bill them. So those, uh, and are expected in current quarter, in October to December quarter. So those, once those purchase amendments come and some of them will be from the areas for covering the areas part also, effective from July or maybe earlier period. So that will cover— that will get covered in December quarter. And we should see the impact in the next quarter. So primarily it's a timing gap between the 2 quarters in terms of the, you know, the cost impact coming and the pricing part coming. Other income had a couple of one-off items. Like, you know, the forex gain was there plus one or two scrap sales. So those kind of items, nothing extraordinary and usual as such. But, but yeah, from last year, if you see other income, uh, since last couple of quarters is up because, you know, you— we have this, uh, the contractual manufacturing with the industrial and also the rental and those kind of things are also appearing in the P&L. Uh, sure, sir. Uh, so secondly, uh, BS7 is expected to be implemented by 1st April, uh, 2029. So, uh, when will we, uh, getting the BS7 related, you know, demands? And are there any new 4-wheeler programs where we can enter because we have the, uh, you know, BS7 compliant product, whereas, uh, earlier the other supplier does not have Um, Girish, you would like to answer that? See, Varun, currently the passenger vehicle market is dealing with the CAFE 3 norms, which will be a bit more nearer launch. implementation, I would say, rather than the BS7. So there are various programs that we are dealing with on the low efficiency, high performance, you know, products which are already, you know, validated and already under implementation. BS7, uh, discussions are more relevant and more, let's say, at a development stage with the commercial vehicle customers. And our offering essentially on the high efficiency, you know, fuel efficient products are ongoing. And that will come, or rather accelerate, towards, you know, businesses' nominations and other things, probably end of quarter 2 next year. Not earlier than that. So clearly the focus is on the passenger vehicle, on the CAFE III. BS7 comes after that in our view, as we see in the market. Uh, sure, sir. And, uh, so lastly, on your CapEx part, uh, uh, we have guided for ₹140 crore of CapEx. So this is a part of, I think, the ₹500 crore we had earlier guided for FY26 to FY28. Yeah, so Varun, uh, see, there is, uh, as I think if you had attended the earlier call, we had announced the CapEx in our current fiscal of about ₹200 crores. Right, that stands true even as of now. Now what you see is this ₹140 crore as per the CD requirement. Anything— there is a— there are certain thresholds Any CapEx, any capacity addition, not CapEx, anything when capacity addition where the cost is above the certain threshold, which is a mix of you know, your turnover, your net worth, and for last— those kind of things for last 3 years, that has to be announced and informed to the stock exchange. So this announcement we have done in compliance to that. That CapEx, overall CapEx during current year is going to be close to ₹200 crores. But yeah, these, uh, now going forward from this quarter, and this is part of that larger ₹500 crore plus CapEx we had announced. And starting from December quarter, we will have these channels coming in production and getting commissioned, so which will add to the capacity. Sure, sir. So sorry to interrupt, Mr. Jain. May we request you return to the question queue for a follow-up question? Thank you. The next question is from the line of Krupa Shankar NJ from Avendus Spark. Please go ahead. Good morning and thank you for the opportunity. So first question is a bookkeeping question. Just wanted to get a sense of what would be the breakup of passenger vehicles, 2-wheelers, and CVs in the OEM segment. Can Girish, you want to please? Yeah, the, uh, The revenue breakup is what you're asking, uh, Krupa Shankar, isn't it? Yeah, so, so roughly about 45-50%. I'm just saying this at a ballpark, 45-50% of our revenue comes from 2-wheelers. About 30% from passenger vehicle, 25 to 30, and then about 15 to 20 from commercial vehicle. These numbers quarter on quarter do vary, but rather what I just mentioned is how the trending has been on an average. Understood. Um, a couple of aspects I noted in the result. First was on the export side of things, uh, where, uh, second quarter, uh, the growth has been quite robust. Now, you know, what we have in the previous call, we had interacted that exports is not a great focus area. Uh, just wanted to get a sense of whether this momentum will continue or is there any one-offs which one, one I should account for. Yeah, as you see, or as I think we have earlier also, uh, informed, in overall, if you see our exports, uh, our local around 10% of the sales mix or the revenue mix, right, which we look at. And, uh, and that's the range which we expected to remain. Now, quarter on quarter, sometimes you may have, you know, could have one-off transactions, or even if the baseline is a little bit up or down, there could be a— the growth numbers may vary, but we expect it to be around in the range of 10%. Understood. Uh, last question from my side. Uh, you know, I, I did note that the congrats on the new branding. Uh, just a rebrand change the brand fee or a royalty fee which, which is usually charged for us, or does it— no, that doesn't change. That doesn't change. So there is this The— when this automotive and industrial business separation happens, this is going from top to bottom, all the across the board. So the— even the parent company has also got split, and that is going to be listed in, uh, Stockholm from 1st December. So the brand, this royalty trademark, those kind of things remain the same as the percentage, whatever is applicable today will remain applicable. Good. I'll get back in the queue, sir. Thank you. Sure. Thank you. Thank you. The next question is from the line of Aman from Negen Capital. Please go ahead. Hi sir, thank you for the opportunity. Sir, firstly, I mean, our new lines are coming up in FY28, so what is our guidance for traded goods Can you give some figure there also? So, I mean, new lines are starting to come from this quarter itself, not in FY28. So you will see, uh, this Uh, the one line starting in December quarter itself. Right, and then we'll have it coming in the subsequent quarters also. So the one line is coming in this quarter itself, December quarter. On, on traded goods, so you see, on traded goods, and, and there is rather one more is expected to be commissioned in March '27, and then followed by You know, subsequent, uh, year, in the, in the next financial year. As far as traded goods are concerned, uh, the— see, export imports are anyway very few here, and the trading with SKF Industrials which started after this demerger, that we expect to over the next couple of years to reduce it to the minimum level, minimal or negligible level. And that's what, uh, so I mean, both the Tells both, isn't it? All right, sir. All right, sir. Secondly, I mean, our cost, you know, pass-through can happen through FY28. So, uh, If, if we can assume some EBITDA margin, I mean some ballpark figures for FY28. Uh, you mean cost pass-through for what? Uh, cost pass-through that is happening across customers, so I mean, uh, can we revert to normal EBITDA margin levels? No, so we, we expect not, not FY28. We expect to revert to the, the guidance which we had given earlier within this financial year itself. So the discussions with the customers continue. Some have even— I mean, I won't speak about the next quarter as such on the numbers specifically, but some, uh, we— you will see the impact in the subsequent these 2 quarters of the current financial year. That is already going to happen and not, not delaying to the next financial year. Okay, okay. Thank you so much, sir. Thank you so much. Thank you. The next question is from the line of Lakshmi Narayanan from Tunga Investments. Please go ahead. these merger or sort of demerger expenses. Can you just quantify it, and when do you think this would actually water down? That is my first question. Uh, the second question is that, uh, you know, we do— you gave a split between, uh, um, different type of industries you serve. I just want to look at from an application point of view and also from a system point of view, because there are certain bearings which would be sold as a— just a part, whereas some of them would be sold as a system. Right now, in, in our scheme of things, uh, you know, I think we always want to move towards more system-driven and not just part-driven thing. On that journey, where we are as a percentage of revenues or the way in which the management is thinking. If you can just outline which are the segments where we have a pole position in terms of the differentiated product or a solution we offer. What percentage of revenues it is and how we intend to, uh, you know, scale up. And thank you. I have a few questions. Uh, the first is that, um, the other expenses has actually had gone up, and I think that is attributable to, uh, That's the second question. The third question is that you mentioned that whether you are discussing with your customers in terms of price pass-through, etc. And I believe always all these things will happen retrospective from April onwards. Now I want to understand from your entire customer point of view, the revenue point, revenue pool point of view, uh, what percentage of your customers have, uh, I mean, in term— not, not named customer, I mean, I'm talking about total, uh, attribution of the entire revenues of whatever you're getting from OE. How much of that has been agreed to, you know, for a price increase from April, and what percentage are still in negotiation, and what percentage is something which they will not do? I think these are the 3 things which I want to know. Okay, so, uh, so maybe I'll, uh, answer first on the other— see, other expenses, when you see these other expenses, uh, are not all fixed. So you have certain fixed costs, certain variable costs, and certain semi-variable costs, right? And as far as the demerger-related expenses is concerned, we announced earlier in the last call also our demerger-related expenses are over. I mean, some petty expense here and there, you may— they may be there, but those are not significant as such. Now what happens in other expenses, you have a lot of variable expenses. Like, to name a few, consumption of stores and spares, power and fuel. When you are seeing a volume increase of about 20%, that straight away gets increased. Even if you see royalty and trademark fees, or, you know, a lot of these kind of things. So that gets— that is impacted, and that's where you see the increase, because from last quarter to current quarter, there is not much difference in the other expenses, but yes, from previous year there is a movement. Now coming to the price increase part, Uh, not all customers will be from April. There are, you know, price increase— some could be from July, some could be from April. It's not like financial year basis, so it depends on customer to customer. Right, right. And I won't put a number as such at this stage because still everything is not concluded. So probably that we'll speak when we do the next quarter's call. But yeah, discussions are continuing, and you rightly said there would be area billing in most of the cases. Right, it could be from July, it could be from April, depending on customer to customer. And there are even cases, some customers, even for the period before July already some customers, we had got some price increase from respective January as well. But so that is a continuous process. We expect to materialize large part of it in December quarter. Now, Girish, maybe you can answer the, the second question now. Thank you, Mayank. So, uh, So Lakshmi Narayanan, the business lines that we pursue are 2 basically. One is the driveline and another is the wheel ends. So the 2-wheeler is purely driveline, and for the passenger vehicle and commercial vehicle, both driveline as well as wheel end applied. Now, as a strategy, we are going to be only component suppliers. We will not play the system game at all. So that is the current management thinking on how we go to market with our product lines. And currently there are no let's say system-level sub-assemblies or subsystem as a product offering that we are giving it to any of the market. But what we do is we basically do business for the customer outcomes, not just, you know, product as a standalone performance, but rather what product. will create system-level performance outcomes for the customers. So that is our by far strategy that we will pursue in the near future. So by virtue of that, all of our revenues are actually coming from the component sales that we actually do to our OE customers. I hope that answers the question. Yeah, just to engage on that further. So how do you ensure that you are bringing the best innovation products and instead of, you know, more an output-driven, uh, instead of just like a product-based, uh, how do you, how do you kind of elevate yourself as a company, as an innovation partner, uh, with some of your OEs. What— how is that taking place? I just want to understand it. Let's, uh, let's take an example. You know, all the vehicle manufacturers, uh, they are, they are driven by providing efficient you know, vehicles to the market. Uh, less fuel efficiency, longer range, uh, is, is their forte. And the competitive advantage for the OEMs comes from this kind of pursuit while they are complying with the regulatory requirements on the environment or the fuel efficiency, you know, regulations. Now all our engineering, technology development, and also manufacturing process investments that we are doing on the innovation side is to really reduce friction. continuously to the barest minimum that can be done within the packaging that we have for the application, which means you have vehicle weight coming— as an example, sub-example, let's say an OEM wants to make a 100 kg lower car. And by way of budget, you know, the chassis or the transmission weight, you know, can come down by about 20%, 30%. So that means you need to really have a product which is compact. That means a very high power delivery packaging with friction equally reduced. And we basically develop technologies not only on the product side but also on the manufacturing precision to really deliver those products to the customers. toward pursuing those kind of bigger objectives. So that is our, let's say, go-to-market strategy across the 3 vehicle segments that I just mentioned. Just one more question, sir. There is a path towards ceramic bearing, etc., that is taking place, which I see. Uh, now, uh, is it too futuristic for India, or is it that something which you are also working where you can actually offer to the— to your end clients? And second, on the margin front, I just want to understand what kind of margin you can actually recoup either the gross margin level or the contribution level, um, you know, whatever, uh, you know, how much, uh, uh, there has been increase by X percentage. Uh, now of that, how much you can actually recoup, uh, uh, whether it's like 70-80% of it or 90% or even 100%? So I think these are the 2 questions, the ceramic bearings and the margins recoup. I'll answer the ceramic bearing part and then I'll ask Mayank to answer the second one. We are already, you know, offering ceramic bearings in the market. In fact, the customer success that we just showcased is our maiden win with this particular product for the hybrid transmission. It is currently a niche application primarily because the failure mode related to electric current leakages, you know, that might reduce the life of the transmission or, you know, the the drive systems that electric vehicles or the hybrid vehicles that they have The, the nicheness is actually coming from the supply chain for the ceramics. So I think once the volume picks up in the market in the next 3 to 4 years, we will, we will have that, you know, more competitive than what it is today. But the OEMs pursuing high performance in the premium segment, mainly SUVs and the MPVs. do prefer this for the value that this bearing offers. So that is my, let's say, articulation of the question that you actually asked. Mayank, uh, can you— yeah, can you repeat your question on the margin exactly? Uh, your line was not a bit clear. Yeah, yeah, yeah. So the thing, we, we see it as a gross margin and the EBITDA margin, that's how it is reported. But I think that you look at from a contribution point because there is some other expenses which is also variable, which is fixed, right? So, uh, while I don't have access to how the— what are the contribution margin because there is— that's how you actually wouldn't do it. I want to understand from your point of view, uh, how much of contribution margin you have lost because of all these external events, which is prices going up, etc. And how much of that— let's say your margins drop has been, let's say, 100 basis points, uh, or whatever— and how much you think you can recoup by this Um, get back, claw back by, by negotiating, uh, whether it would be 80%, 90% of whatever you have lost, or is it that you can actually push up to almost 100%, uh, because while there are material costs out there, there are also indirect costs which has actually gone up, which could be maybe, uh, gas cost or maybe labor cost or freight cost, etc. So I just want to understand your point of view on that. Sure. So see, as I already mentioned, right, so there was one was the steel price and then there is a value addition component also which is with the suppliers as well. So now if you look at our margin as such We, we expect largely to recover entire part of it. Maybe there could be a slight marginal spillover from current quarter to next quarter, but largely we expect to recover in the December quarter. Got it. Thank you, sir, for this explanation. I come back in queue. Thank you. The next question is from the line of Varun Jain from Dolat Capital. Please go ahead. Uh, yeah, so, uh, sir, a couple of follow-ups on my previous questions. So, sir, firstly, uh, on the cost, but how much have we recovered back? How much price pass-on have we done? And what is the aftermarket? Has it resolved now? Uh, resolved in what sense? That the pricing was an issue because of hyper-competitive behavior of other players. So has that abated? So see, uh, as far as cost, this margin is concerned, I answered it in response to the earlier question also. So we expect to recover larger— largely almost, almost of it. Maybe there could be marginal spillover from current quarter to the next quarter, but largely we expect to recover, and discussions are ongoing with customers as we speak. Now on the VA business part, aftermarket, if you see, uh, now the difference between from last year to this year is sort of stabilized. You know, we, uh, current quarter also you see about 7% degrowth. Last quarter was also about 7% degrowth, and the numbers for current quarter versus last quarter is almost in the same range, just about less than 2% drop from the last quarter. So that volume part is stabilized. Margin, yeah, slowly it's a kind of stabilizing, I would say, not going upward, but it is stabilizing. But see, the VA is a very dynamic and market is scattered market, right? It's not a very few— it's not a few customers where you can manage or control, right? There's hundreds of customers are there. So, but largely it's now a bit stabilized from the major variances what you were seeing till a few quarters back. Now it's a bit of stabilizing, but yes, it's— work remains to be done. On that. I won't say it's completely— the work is done and we don't need to do anything more. It requires further actions. Sure, sir. And sir, on the CapEx front, as I was looking at your schedule, I think most of your CapEx or all of it is being scheduled going live in July 2027. So then is it possible to do a 15-18% revenue growth in FY28 and 15% in FY29? Would that be a reasonable assumption? No, it's not all— it's not going live. So what you see in the announcement, the— these which is made a day before yesterday, so one channel December 26th, one channel going live on March 27th at Haridwar, and then one channel's capacity enhancement going live on March 27th, and then the third new channel is coming from July 27th. That's what is announced. Then there are further plants also. What we have seen is, uh, in the larger 500 crore capacity. But as far as the volume increases, see, yeah, it will I think 15% kind of growth or upward of 15% would be reasonable to expect in the next quarter that we should see. But what will happen, some of these channels, when we look at it, the— it will also replace the trading volumes. Some part of it will end up replacing the trading volumes, but when we look at revenue, again, some, some revenue increase will also come from the price increase which we are getting. Right, so that way 15% would be a reasonable number, or a little bit upward of 15 is what we should be looking at. Sure, sir. And just the last one, sir, on this new hybrid transmission win— this just, just the last one, sir, on the new hybrid transmission win. So, sir, how is the content per vehicle different? AgriShia. The ceramic bearings have high technology, you know, high-valued component within that. In a conventional bearing, you have the steel balls, and then here you have the ceramic balls. To that extent, you know, the, the premium on the pricing will, will be there. So right now the volumes are quite modest, I would say. It's just entering the production in India. We need to really see how does it really progresses beyond that. Okay, so thank you and all the best. Thank you. Thank you. The next question is from the line of Shagun Beria. Anand Rathi, please go ahead. Hello. Yeah, you're right. Yeah, yeah, yeah. Thank you for this opportunity. So just a clarification question. So I think in the last quarter you had indicated that a 15% EBITDA margin is your normal range, and I think you mentioned in this call that you would be returning to the normal range in this year itself. So is 15%, around 15% what we're expecting to return to? No, I think we are already at close to 15%, right? Uh, we are about 14.5%, and definitely we should— we would be— we would be expecting to return to above 15%, not 15% actually. Will be— it should be in the quarter, right? Okay, okay, okay. Thank you, sir. Thank you, ladies and gentlemen. In order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to 2 per participant. The next question is from the line of Vipul Shah from Sumangal Investments. Please go ahead. Hi, thanks for the opportunity. So my question relates to the service business which we used to do in, uh, SKF Limited. Before the demerger for maintenance of bearings. So that business has gone to SKF Industrial, or it is still housed within SKF Limited also? And Uh, if it is there, uh, what is the progress, and if you can share any numbers? Thank you. No, the service business is part of the industrial entity now, so we do not handle in automotive the service business what you are referring to. Okay, thank you, sir. The way in which I understood is that, uh, you talked about the EBITDA margins, right, which is 14.5 or so. But when we look at excluding the other income, the margins are different. So what is the right way as investors, uh, we could look at it, and the right thing in which it has to be aligned to the way in which you look at your own, um, you know, KPIs or KRAs or scorecard. Can you just throw some light on what, what is the margin as investors we should look at? Is it a Thank you. The next question is from the line of Lakshmi Narayanan from Tunga Investments. Please go ahead. Okay, again, sorry on the margins, uh, PBT or an EBITDA or a gross margin, uh, which is including other income or excluding other income? Just help us. See, you are very, very good question. And, uh, see, when we look at gross margin, obviously we should be looking at without other income and Uh, this quarter also, if you see, the gross margin is impacted by almost 5%, right, excluding other incomes with the revenue from operations. But now, from the entity per company perspective, uh, other income is also significant. Not to be ignored because what is happening, other income, a big part is related to the services or the space given to the industrial rights. So as and when that gets secured, one way to look at it, you may think, uh, once SKF Industrial moves out, we'll lose that income, but then we will be utilizing that space space or those facilities for our own business, and that could be much more productive commercially, right? So it won't be the right assessment to— because you have your capital, you have your assets in place. So we need to look at it, uh, including other income, in my view. And that's what— how we look at it. And in that 29 crores, how much is actually this, uh, rental or the usage income we get, and how much is actually, uh, Uh, treasury income. Treasury income is not very significant. As you see, we are, uh, cash in hand at the end of this quarter is about 100 crores. Right? So it's largely because there are multiple things. One is the income from SKF Industrial. Now another is we also host a lot of these men, people who are on global roles, right? Like finance shared services which serves other countries in southeastern region. Then there are certain other resources also which work on global roles, and their cost gets charged to the parent company or to the respective countries. And we— and as per the transfer pricing rules on the cost. These are invoiced at cost plus markup as per the transfer pricing guidelines. So those, they also give income to the legal entity, right? So more and more people we are hosting here in India, Indian legal entity, that is also providing us income. Okay, okay, okay. So 100 crores, so that means— because for example, I mean, I see that some of the large multinational companies also take these other income as operating income. And they actually give rental, uh, you know, I mean, I think Bosch does it, the rental income, they take it as part of an operating income. So as a management, what is, what is, what do you look at, sir, so that we can also align ourselves? So no, that's what— see, if you look at our P&L, so you have these, uh, you have sales, uh, you have revenue from operations, right? And you get revenue from operations you get also include other operating income, right? So you have a sales part and then there is other operating income. So other income is separate and then you have other operating income is considered in revenue from operations only. So there are 2 parts in that, yeah. So revenue from operations has pure, uh, this product sales and then other operating income as well. Okay, so this 29 crores which you talked about, so that is maybe— this is a continuation of that. I just want to get clarification. So there's 29 crores which you talked about, right? So that has, uh, less of treasury and more of, uh, all these other, other operating income, right? Which is rental. So it is treasury. See, see, it is, uh, the treasury income, it is rental income, it is exchange, forex exchange difference kind of things also. It is miscellaneous income, it is like asset sales also. So there are multiple items. And some quarter it may happen is like you have some asset sales, scrap or asset, old asset sales. So those kind of things also come into it. Okay, okay, thank you, thank you. Thank you. The next question is from the line of Sachin Banyar from 3P Investment Managers. Please go ahead. Yeah, hi sir, thanks for taking my question. First one is continuation with the previous question. So can you, uh, spell out what are the related party transaction with SKF Industrials? In— see, apart from the sales, there is another income ISA agreement Um, what will be there in that part of it? Uh, see, uh, the expense or, or in all the P&L item, if you can highlight, that would be helpful. Uh, see, uh, which would be tapered off in next 2 years, I'm supposed to see. One is, one is your product sales and purchase, right? We both have trading with each other, so there are certain products which we are producing and selling to industrial and we are buying from industrial. Then you have— I, I cannot cover each and the entire agreement, broadly I will give you an idea. So then the, uh, they are operating from SKF India plant, right? So certain part of premises are leased to them. So those debt, uh, part is rental is charged to them. Then there are other certain common services, right? Certain common services, be it say security, canteen, electric power, and all. So those kind of things are also invoiced to them. So you have a cost on one hand, and then the invoice, it's billed to the other entity. So there are multiple kind of these, these kind of things which are part of it. Okay, so when this taper-off, uh, would be margins or anything, numbers impact would be there in next 2 years? Suppose how it will impact when there's— no, I don't think, uh, see I don't think it's, uh, it will be an impact on margin as such because once this goes off, see this space, suppose if you take, right? So the space when it goes off and we'll replace it with our own channels, that space. And that channels would be— I would say it would be much more productive because today you are charging a rental for that space alone, right? There is no other But then when you are doing production on that space and selling that in the markets, that is going to give much more value. And, and certain other parts like, say, the cost charge-off to them. So the cost which you are incurring, say security, now it's, say, or say power and fuel, there it is straight away goes to them because the, as per the transfer pricing guidelines, markup is hardly anything. It's not very big number that you are charging 20% markup or 15% markup on the cost. So that would be a— it would be— I would say it will be much more positive. Because we'll be generating operationally better, better revenue from it. Correct. Okay. And lastly, sir, on— you have few business wins in the EV side. You just previous one mentioned, how is the content per vehicle would change, uh, in EV was eyes for you in next couple of years with this new business? Yeah. Obviously there will be a marginal reduction in the number of bearing positions compared to, you know, the internal combustion engine, but what we see is due to the high performance requirements for the bearings that goes into EV. Ceramic bearing is one example that we talked about. Conductive brushes, another example, which is actually offsetting the reduction in, you know, the value content of the ICE engine. bearings. So we see a marginal increase in the value per EV vehicle compared to the, the other ICE I would say. Okay, so it's marginal increase only, no reduction in terms of— no reduction, absolutely no reduction in value, but rather it will be marginal increase. But that would be traded goods current, uh, currently for next few years, uh, was, uh, manufactured goods. It's all manufactured. It is manufactured. It is manufactured. The ceramic bearings and all. Ceramic bearings are manufactured in India plants. The component which I mentioned, the ceramic ball, is a purchased part, not the complete bearing. Sure, sir. Get it. Thank you, sir. Thanks. Thank you. The next question is from the line of Pankaj Agarwal from Anidhujar Investor. Please go ahead. Hi, I have 2 questions. One is with respect to the ambition of transitioning into specialized high-performance EV platform architecture that was supposed to happen by late 2028 and its current impact on current depreciation or interest outgo or current margin pressure, etc. And the second question is with respect to the Haridwar component backward integration, uh, current status and how much it is going to contribute to our top line or bottom line as of now. Thank you. Yeah, so maybe Girish, you first one, you can answer. No, I, I didn't get the question. Maybe, uh, can you repeat please? Put the question. The, the first question is with respect to our, uh, development towards the EV platform architecture or related components. Uh, which we do have ambition of getting by late 2028, so 2 years to 3 years down the line, and Exchange or to mitigate the exchange, local manufacturing, uh, let's say at Haridwar, uh, or backward integration, any development in that direction? Not sure I fully understood, but let me make an attempt. Your voice is not coming clearly. See, uh, let me try to answer and see if we move forward there now. The EV products, I mean, the EV 2-wheelers and passenger vehicles are being manufactured. It's not that, you know, all of them will start producing in 2028. So we are in the business of EV product portfolio. Some of the high technology new products that we are introducing— ceramic bearings, conductive brushes that we mentioned— is the one that will get into mainstream market around '28 is what I mentioned. Uh, that is the status of EV business that we have, and, and there are revenue streams coming into the books as we speak in this quarter as well. Now, uh, EV bearings are, you know, goes into driveline as well as in the wheel ends. So all 3 factories are involved, but very specifically we have called out in the previous calls about, uh, you know, Haridwar anchoring a bit more in lead role in the 2-wheeler traction motor bearings. per se, but that we wouldn't call it as backward integration. It is just the capacity expansion and the investment specifically for producing electric vehicle kind of specific bearings there. Uh, yeah, I think, uh, we are going to answer your question. Yeah, yeah, yeah. The only thing to explain that It's the extension of the same thing, uh, regarding EV platform. Just one minor question, are we, uh, on track along with the competitive scenario of the market, or are we delayed? So there is Yeah, we are in line and we are ahead in few, few high technology, you know, products. No reason to really believe that, you know, we are behind. Sure, thank you. Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for the day. And now I would like to hand over the conference to Mr. Mayank Holani for closing comments. Oh, uh, I think this brings us to the close of today's call, and I'm very happy to see the excitement and the engagement from all of you. And if any of your questions remain unanswered or we were not able to provide clarification, feel free to write to our investor relations email ID. You can send your queries and we'll be happy to respond to that. And look forward to the next quarter's call to again speak to all of you. And thanks once again for all your engagement and enthusiasm in joining this call. Thank you. Thank you. On behalf of SKF India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.