Good morning, ladies and gentlemen. Welcome to Cummins India Limited Q2 FY 2024-25 earnings conference call. We hope you all are kee ping safe and healthy. 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 commentary concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I will now hand the conference over to Ms. Shveta Arya, Managing Director, Cummins India Limited. Thank you, and over to you, ma'am. Thank you. Good morning, ladies and gentlemen. I hope all of you are doing well and staying safe and healthy. Welcome to the Cummins India Limited Q2 FY 2024-25 earnings conference call. I am Shveta Arya, Managing Director of Cummins India Limited. Joining me on the call today is Ajay Patil, Chief Financial Officer of Cummins India Limited. Thank you, all of you, for joining us today. Now, I would like to share the financial results of Q2 FY 2024-25. For the quarter ended September 30, 2024, with respect to the same quarter last year, our sales at INR 2,444 crores are higher by 31% compared to INR 1,871 crores recorded in the same quarter last year. Domestic sales at INR 2,008 crores are higher by 47%. Exports at INR 440 crores are lower by 13%. Profit before tax at INR 594 crores is higher by 39% compared to the same quarter last year. For the quarter ended September 30, 2024, with respect to the previous quarter, our sales at INR 2,448 crores are higher by 8% compared to INR 2,262 crores recorded in the last quarter. Domestic sales at INR 2,008 crores are higher by 7%. Exports at INR 440 crores are higher by 13%. Profit before tax at INR 594 crores is higher by 8% compared to the previous quarter. I would now like to share the segment-wise sales breakup for the quarter ended September 30, 2024. For the domestic business, power generation domestic sales were INR 896 crores, 84% higher compared to last year and 12% higher compared to last quarter. Distribution business sales were INR 658 crores, 20% higher compared to last year and 1% higher compared to last quarter. Industrial domestic business sales were at INR 406 crores, 35% higher compared to last year and 9% higher compared to last quarter. For the exports business, high horsepower exports were at INR 200 crores, 24% lower compared to last year and 1% lower compared to last quarter. Low horsepower exports were INR 198 crores, 5% lower compared to last quarter and to last year and 28% higher compared to last quarter. [Uncertain] Financial Guidance, regarding the sales outlook for the full year 2024-25, we expect to have double-digit revenue growth over the fiscal year. That's it from my side. I'll now open the session for questions. Thank you. Thank you very much, ma'am. We will now begin with the question-and-answer session. Anyone who wishes to ask questions may press star and one on their touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use the handset only while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead. Yeah, hi, Shveta. Congratulations on a great quarter. Ma'am, my first question is on the pricing of the CPCB 4 Plus engines. So now we have almost two quarters now. And, so from the starting point when you had introduced these engines, and then there was a deferral. So from that point to this point, have you seen any correction in prices? So you're right. CPCB 4 Plus was announced last year, and then we transitioned to full CPCB 4 Plus this year, first of July. We are watching this space. We had launched our products last year. We are seeing all the other products from other players getting launched now. And so I think we will see what happens to pricing in the coming two quarters. That's how I would think it will play out in the next two quarters. But your own pricing when it was introduced, engines was introduced until now, so have you seen any correction in price or are you still maintaining those prices? We are mostly maintaining those prices as of now, since we launched. Okay, and the second question is on the nodes. I think you have some advantage, and you have more nodes in the market versus the competition. I know you said that more nodes are coming from the competition. So do you think you have some fair advantage because you have more nodes in the market and hence you are able to capture a larger share of the market? And as competition introduces more product, do you think that potentially there's a case that you may lose some of this market share again? I would say that customers will now have more choices in the market, for sure. We were amongst one of the first few players to launch the full range of products in the market. In the meantime, we have continuously worked on improving our supply chain, making sure that our product is well accepted in the market. We do have a strong brand in the market. So we do think we are pretty well positioned in the CPCB 4 Plus space in the market. Okay. And, what will be the differential between the competition prices and our prices in the market now? We are watching the space. Pricing will play out, in our view, in the next few quarters. We have seen products getting launched, so we are watching this space. Okay. This is the last question on the exports market. Now, this is the fourth consecutive quarter of recovering exports. If you can help us understand the demand from the end markets and which geographies have recovered, and how do you see this demand panning out for us today? So from an export perspective, specifically speaking about the quarter that went by, we saw some good orders coming in from Latin America and from Europe. The Middle East, Asia-Pacific, Africa regions remained muted. So these are mixed signals. There are geopolitical situations around us. We provide our products to a wide range of countries. So we do see mixed signals. But for the quarter gone by, we definitely saw great orders coming from Latin America and Europe region. Okay. Sure, Shveta. Thank you. Those were my questions. I wish you the best. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Shubhadeep Mitra from Nuvama. Please go ahead. Good morning, and thank you for the opportunity. Congratulations for an excellent set of results. My first question is, what we're trying to understand is out of the overall INR 2,400 crores of top line that you have come up with, what rough percentage of that would be CPCB 4 sales? Thank you for the question, and thank you for the begin. I can share with you that in the domestic power gen market, out of the INR 2,448 crores, the overall domestic market number I shared with you at INR 2,008 crores, of which our power gen number is around INR 896 crores for the quarter. That is power gen and the mix continues to be, in the last quarter, mostly CPCB 4 Plus, some CPCB 2, but mostly CPCB 4 Plus. As you will understand, CPCB 4 Plus is below 800 kilowatts, and above that is CPCB 2 range. So, there is a mix there for CPCB 2 and CPCB 4 Plus. Understood. Secondly, I think in your parent's commentary for this particular quarter, it was mentioned that there is still some lingering benefit of CPCB 2 presales. So, has there been any CPCB 2 related presale benefit that has still continued in 2Q? No. No. CPCB presale is all over, and we flushed out all the inventory now. So in this quarter, there is no CPCB 2 presale benefit. Perfect. Perfect. That is understandable. Secondly, I just wanted to understand that, in this particular quarter, clearly gross margin numbers have seen a bit of an impact. Is this largely because of higher imports that we're seeing for CPCB 4? No, this is largely due to the mix that plays out for us. In this quarter, there is a large share of the project business, as we call it, where we do installation and commissioning for some of our gensets in the. And so because of that, it's the mix playing out. Understood. So you anticipate gross margins to kind of revert back to normalized levels, once this project business execution is done? It's the regular part of the business. Projects business continues for us, as do the other sales. So there are some quarters where we do a larger share of those that kind of business. We do sometimes larger share of the other sales. So it's a continuous part of our business. Understood. Understood. Last question from my side is I understand there is a good component of operating leverage benefit also, which would have probably come in this quarter leading to these kind of EBITDA margins. So would you believe that this range of EBITDA margin can continue? And, and what kind of capacity utilization are we sitting on right now? So from a margin perspective, we've been putting continuous effort, really. We do have good volumes. There are cost management and material margin improvement programs that we continuously work on. So all of that is ongoing work for us, which is mostly to provide the right value to our customers in the market. And that is going to continue for us. In terms of capacity utilization, any number you would like to talk about? So there's a wide range of products that we manufacture in our plant. Our capacities are utilized quite well at this point in time, on an average more than 60%-65% utilization. Understood. One last question, and within that, in terms of data centers, is there a large potential market that you're looking at, and what quantum of your sales would data centers comprise? Data centers around the world as a segment is doing very well given the AI boom across the world, as is the case in India. And we have products which are rightfully positioned for that segment. So most definitely, we are quite focused on that segment, and we see the growth of that segment around the world as we see it in India. So that's where we have the data centers. Any particular percentage of sales today that you're seeing data centers comprise of? Not really. Data centers are spread across. We don't have this specific segment-wise information. I mean, data center space, we do first-fit sales as well as we do some project work. So it's spread out across different kinds of work that we do. So we can't share that segment-specific information. Understood, madam. Thanks so much for answering my questions. Thank you. Thank you. We'll take the next question from the line of Jason Soans from IDBI Capital. Please go ahead. Yeah, ma'am. Thanks for taking my question. So I'm glad you're on taking charge on your new role. I was just going to ask you, first. Industrial segment business. Now, I believe January 2025 is a emission norm change for the construction equipment industry, in terms of engines. So are we looking in this in the Q3 quarter for some pre-buy? Could you give some color on this aspect in terms of the emission norm change? How are we playing, and how are we getting ready for, you know, this change coming along from January 2025? Thank you. Thank you for your question. Yes, there will be an emission norm change in that segment. The construction segment from a demand perspective has been doing well. So, in the quarter gone by and in the coming quarter, given the construction activity going on in the country, as it is, the segment has been doing well. This particular space has been doing well. As with any other emission change, there is some pre-buy that happens in the market, plus the demand is strong. So, there would be mostly some pre-buy before the emission change, as happens in every segment. Sure, ma'am. Oh, oh. And, Shveta, I also wanted to understand. I mean, I understand you earlier. Mr. Soans, your voice is breaking, so. Hello? Yeah. Can you come in the network area? And, there is a background noise as well from your end. Hello? Can is it better now? Yes, sir. Much better. Please continue. Yeah, sure, sure. I will, I'll try and continue. Yeah. So I just wanted to ask. I understand that an earlier participant did ask this question. Now, just wanted to understand this GM, the gross margin dip, which happened. It was around 220 basis points on a consolidated basis. So just wanted to understand. You did explain about the larger share of the projects. Could you just explain a bit? Could you throw more color on this, like, and also now, since we have completely shifted to the CPCB 4 Plus regime, what could be sustainable options going forward for Cummins? I did explain this, that this did happen due to the mix of the products, and it's a continuous part of the business. Other than that, there is nothing specific in this space. There's just continuous work going on, improving our material margins, which is an internal program called ACE that we run. Other than that, there is nothing unusual here than the mix. So and which plays out based on how we get those projects and how we execute them, as I mentioned earlier. Okay. Sure. Sure. Ma'am, those were all my questions. I'll join back with you. Thank you so much. Thank you. Thank you. We'll take the next question from the line of Umesh Raut from Nomura, India. Please go ahead. Hi, ma'am. Good morning. Congratulations for the strong domestic performance on sales side. My question again is more on the gross margin side, so if I look at overall mix for the company on a quarter-on-quarter basis or on a year-on-year basis, I think it is largely remaining same, but we have observed about closer to 200 basis point gross margin drop on a quarter-on-quarter basis, so is it primarily because, in your view, whatever cost increase that was there on the CPCB 4 Plus product side that is fully not yet passed on to the customer, and that is how incremental CPCB 4 Plus product line is kind of impacting on the gross margins for you? Thank you for the question, but no, that is not how it is playing out in the gross margin. The gross margin, as I explained, is mostly a function of the mix, really, so that's not what's playing out. Got it. Thank you for that clarity. Second question, when you are saying that project business, contribution for this quarter was relatively on a higher side, are you referring to project business which is coming under industrial segment or any particular project order that you have received in the power generation side? This is a separate business. This is not from the industrial business. This is the execution of sites at the data center where we do installation and commissioning of heavy genset applications tailored to the customer's demands. So that's what this project business is. Got it. I'm sure your restructuring exercises like VRS and all have contributed in controlling employee cost for you. But for this quarter, we have observed more of about flat employee cost on a year-on-year basis. Any reason over here what kind of employee cost trend that we can assume going forward? I'll put Ajay for you to take this question, please. Hi, Umesh. Thank you for joining the call. I think the function of what you see on the people cost has some amount of runoff item impact that has played out in the quarter. There's a certain reclassification that we reported. So therefore, the numbers seem flat when you see it on a year-on-year basis. However, when you see it on a YTD basis, on a six-monthly basis, you will find that people cost has the impact of runoff plus the merit. So overall, you should expect the people cost to inflate at a normal rate what you're seeing historically. Okay. Could you please quantify the numbers for first half or for this quarter? There was some one-off adjustment to the cumulative of about 42 plus. This is for the quarter, right? Yeah. Quarter and YTD, both. Okay. Got it. And is there any one-off on the other expenses side as well in the quarter? Because we have seen about 32% jump in other expenses as compared to 31% sales growth. Was there any promotional expenses around new product launches related to CPCB 4 Plus? No, I think the other expense, Umesh, was the function of how the volume has played out for us. We have seen on an accumulative basis, revenues of 16%. Obviously, there is an impact of some volume-based variable expenses there, besides some of the recurring other expenses as well. And plus, of course, there are certain investments that we have made when it comes to our front-end, infrastructure on computers. So some cost associated with those, technology expenses, those are coming through, in the other aspects. Got it, sir. Thank you so much. I'll join back with you. All the very best. Thank you. Thank you. We'll take the next question from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead. Hi. Thank you so much for the opportunity. Ma'am, what is your current capacity utilization in our genset factory, in terms of engine manufacturing facility? Yeah. I think would you like to ask? I think when it's related to capacity utilization, as you looked at it, it isn't too much. Only from the manpower capacity side, we are in excess of 90%. However, when you look at our installed capacity, relating to that, we are about 60% or thereabouts. So from a capacity availability point of view, we have ample capacity available in order to address any potential uptick that may come. Yeah. Thank you. Yeah. Basically, the waiting period for genset has gone up? No, the waiting period for genset has not gone up. We are maintaining our lead times. In fact, we've been able to work on our supply chain, and we have been able to improve our lead times. Okay. And so, last question from my end is about distribution side. I mean, this business has been doing really well, 20% growth. So, how should we look at it in terms of the genset population we are currently addressing? I mean, or, I mean, if someone has to imagine about the business, in terms of growth, how should we look at this? So this is a parts and service business for us. And, where we are focused on is, increasing the penetration with our customers, across the board. And we continuously, provide, service contracts as well as parts to our customers, for them to be able to maintain their assets over a long period of time. So our endeavor is to provide that right kind of maintenance and the right kind of value adds for the customer. And that's how this business has been growing for us, and it continues to be a focus area for us. So, I mean, the genset, as long as genset population grows up from our end, this business will continue to build up, right? The genset population growth, our penetration with the customers, both of those, help with growing this business. Sure. Thank you. Thank you, ma'am. Thank you. Thank you. We'll take the next question from the line of Priyankar Biswas from BNP Paribas. Please go ahead. Congratulations, ma'am, for your new responsibilities. So my first question is on the power gen side. If I recall, in the last phone call, what we heard was that there was a lack of channel inventory for CPCB 4+ because there was a lot of pre-buy. So what is the inventory level at the channel right now? And also parallelly on that question, I would add on one more thing is what I understand is that most of the players are offering two years comprehensive warranty, and then on top of that, three years critical parts warranty. So isn't it going to lead to higher warranty provisionings at your end in case if you are following the same trend? So that's my question. Okay. Thank you for the question. I'll first answer the inventory question. We continuously evaluate inventory in the channel, and for CPCB 4 Plus as well, we have evaluated the inventory, and we are at adequate, adequate stock availability in our channel for CPCB 4 Plus. So that's where the inventory levels are. In terms of your question around warranty, this is a very, very, careful calculation at our end where we work through what does the customer need, how can we provide the best value to the customer. And that's how we provide them these kind of warranty options. This does not lead to any excess provisions. It's the usual course of business, and we have, you know, quantified that in our notes as well. Okay. So, ma'am, one more question, parallelly that I have is, recently what we are seeing is that the, at least from the data shared by ICEMA, that the construction equipment sales growth has been falling. For example, in 4Q, what used to be 21% is now like 1% construction equipment sales growth in September. How confident are we that our construction segment, or the industrial sales will continue on their growth momentum? We have seen strong demand from our customers in the construction segment. So that's we do think that this space will show demand in the coming quarters as well. We have not seen any other signals yet. Okay. And then, finally from my end, like, the usual breakdown of power gen like HHP, MHP, LHP, and/or industrial segment in construction, those numbers that you can share? Sure. Let me share the power gen solution first. So for high horsepower for the quarter, we saw INR 452 crores of revenue for MHP, INR 178 crores. For LHP, INR 199 crores, and for exports, it was around 68 crores. That's the breakup of power gen. For the industrial business, the breakup into different segments: construction is INR 146 crores, rail INR 105 crores, mining at INR 32 crores, compressor at INR 58 crores. And those are the major segments that we operate in. Thank you, ma'am. Thank you. Thank you, ma'am. The next question is from the line of Nidhi Shah from ICICI Securities. Please go ahead. Hi. Thank you for taking my question. Just, on the previous part of this question, you gave us the breakup for power gen for domestic. Could you also provide the breakup for export? Yeah. Let me share that with you. For the export, the high horsepower exports for the quarter overall, INR 200 crores, and the low horsepower for the quarter is INR 198 crores spread across the different geographies. All right. Thank you so much. Yeah. Thank you. Thank you. The next question is from the line of Vinod C. from PhillipCapital. Please go ahead. Yeah. Hi. Good morning, and congratulations on your first quarter. I had a question related to data center. So what will be our market share in our addressable market in data center? You know, parallel to that, see, backup is non-negotiable in data center. So are we able to command better pricing in data center sales compared to our regular sales? Thank you for your question. As I mentioned, data center is a focus segment for us. It's a growing segment. We are rightly positioned with the correct product in this market. We have good relationships with all our customers. As you rightly said, backup is very important, as is customer service in this segment. So through both our businesses, we are very well positioned in the data center market to provide the value that our customer needs. So are we seeing better pricing in data center compared to what we normally realize, in the market? We are always very competitively priced in the market, and data center, as any other segment, also, you know, there's obviously competitive pricing in that space as well. We are priced equally. So what would be our market share there? We won't be able to share the market share information, but I can tell you that we are very well positioned because our products are very well accepted in the data center space, and we provide the right kind of service to our customers along with the value adds that that specific segment needs. Sure. So the second question was on exports. You've been mentioning for the past one year that, you know, India has the, you know, the highest standards of emission norms, and if my engines are passed in India, it can be sold anywhere. So where are we on that, you know, in terms of making India hub for CPCB 4? And, at least since you spearheaded the CPCB 4, probably you're apt to answer that. Yes. Thank you for that question. So CPCB 4, if you see, it is. These are rightfully among the most stringent norms across the globe. We do have that technology. There are certain markets who are at these kind of emission levels, and there are certain markets that are not. As markets transition and as they require these products, we are ready with the technology. As we speak, we are tailoring our products for the markets which are getting ready to be able to provide this technology to them. So as and when the markets move, we move, and we are able to provide this technology to them. Sure. Thank you. Thanks, thanks for the reply. Thank you. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead. Thank you for the opportunity for the congratulations for the new role. I'm answering a question for the first time being. Was there any positive benefit that you had in the power gen segment because of, at least something that would have happened for CPCB 4 products? Or can we again just jump right? Hey, we can't hear you clearly. Could you please repeat your question? I'm sorry to interrupt, sir. Your voice is muffled. I will request you to use your handset, please. Is this better now? Yes, sir. Please continue. Great. So the question that I had was, was there any positive effect on the power gen sales because of the restocking that would have happened for CPCB 4 compliant products? Or can we assume this rendered incrementally as well? Sorry. We're still unclear. The voice is still slightly muffled. You're asking about CPCB 4 Plus restocking? Yeah, in the sense that as you flush out CPCB 2 products and go for CPCB 4, was there any inventory filling that led to a higher than usual number in power gen for the quarter? Oh, okay. No. No, no, no. No. We had flushed out all the inventory before 1st of July. So there is no impact of CPCB 2 inventory in this quarter. Understood. The second question that I had was more on your assessment of the market share gain that has happened for you, prior to and now post CPCB 4, in the power gen segment as a whole, if you could give us some sense on that. So in the power gen space, I will tell you in the CPCB 4 Plus range, we launched the product last year. And we have managed to make a lot of improvements in our supply chain till then. We have been able to our product is exceptionally well positioned. We have a great brand in the market. We are pricing competitively, and there is good acceptance of the product in the market. That is the CPCB 4 Plus range. And in the higher ranges, we have seen, because our products are well positioned in the high horsepower range, so we have seen that our market presence has remained stable over the last three quarters, and we have been able to maintain good value to our customers. That's what I would be able to say. Understood. I just want to move on to the data center piece because I think it's important to understand for all of us. Now, if we see the global company's power gen sales, it seems as if data centers command almost a 40% salience inside the power gen number. And they count the distribution piece of power gen inside. Could you give us a sense whether it's a good way to think through the mix of power gen in India for coming maybe three, four years down the line? Global markets and India markets are quite separate in their demand drivers and what drives the market. Different countries are at different spaces in terms of their backup power needs and how data centers are progressing. So I will not be able to say that we can draw a parallel right away with those global markets unless we can really analyze them with how similar they are and how similar India will be to some of those market signals. Understood. Just a quick question, and maybe I'll fall back into the queue. Basically, if you see globally this phenomenon of hyperscale data centers are becoming more and more prominent, and these customers typically are probably better served by Cummins because Cummins owns their own kind of distribution network as well, which I think is of importance in this kind of segment. Should one thus be assuming that as share of these kinds of customers goes up, the market share that Cummins would be having in the data center segment and potentially the distribution revenues also start scaling up? I will only say that Cummins has good technology, well-accepted product, and really good service and relationships with these customers. That being said, the data center is absolutely a growing market in India. And us as well as others are present in this market. We do have a great brand presence and great relationship with our customers. Can that lead to an export kind of number happening in the data center market as such? Can that lead to an export number that starts becoming relevant over time? That would be the last question. Thank you. Data centers across the world, the nodes at which they operate are not similar. India operates at a different node, and in the other markets, these are slightly higher nodes at which data centers operate, what they buy. So there could be, but there are, you know, these additional nodes as we speak. Thanks a lot for the responses. Thank you. Those are my questions. Thank you. The next question is from the line of Amit Mahawar from UBS. Please go ahead. Yeah. Thank you. Hi Shveta. I just have one question, and I'm sorry to harp on the competition and the domestic market point. See, on, you know, post the new norms, the competition eventually will catch up. But do you think this time, on GenSet up to 800 kVA, the competitive intensity will make us command the market share similar to what we enjoyed in the older norms? And more importantly, because this time, seemingly competition is taking more time. So three, four of our key local global competition are yet to see the acceptance of even higher norms, particularly in data center or, you know, advanced norms. So do you think the market share will stabilize, even in the data center piece of ours by next year, or it will still remain around 70%-80% plus market share, which earlier in the calls we had shared? So the data center space is outside of the CPCB 4 Plus space. CPCB 4, as you rightly said, is up to 800 kW. If we were to talk about the CPCB 4 space, we were amongst the first few to launch this product about a year ago across the nodes in the power gen market. I did mention that our product has good acceptance, and we have been able to make a lot of improvements in our supply chain and provide better value adds to the customer. Definitely, our customers have more choices now with other products being launched in the market as well. That's with respect to your specific CPCB 4 Plus question. Data center is not a part of the CPCB 4 Plus range. And I didn't answer the data center question, but we definitely see the demand in the data center market to continue, and we, our product is very well positioned along with the relationships that we have with our customers. Okay. And just for clarification for the last few, this third question, did I hear correctly you mentioned, you know, the manufacturing of data center-led products and doing manufacturing particularly fit for India? It is not for the global markets, and I'm also asking this question because some regions saw very strong growth, like China doubled, you know, in power gen revenue this quarter. So did we have any export benefit there? Thank you. So in case of the data center markets, the product that we have for the data center market, India, China, Southeast Asia actually use the same product. It's the U.S. and the U.K. which use different nodes in the data center. So definitely, we export to those kind of markets which use the same product in the data center space. Cool. Thank you, Shveta and Bhutta. Thank you. Thank you. The next question is from the line of Jonas Bhutta from Aditya Birla Sun Life AMC. Please go ahead. Hi, Shveta and Ajay. Thank you for the opportunity and congratulations on a great set of numbers. Thank you, Shveta. Congratulations on the new role. A couple of questions from my side. Firstly, if you can talk about volume growth in the power gen side. You know, while we understand this quarter sort of benefited from a lot of restocking of CPCB 4 Plus engines at the dealer end, you know, for the year as a whole, do you expect volumes in the power gen to grow? You know, given that, you know, what we see as revenues is a function of price and volume, and prices are up 25%-30% for this year. So how should we think through volume growth, particularly in power gen? With a backdrop that last year, FY24 saw 40% growth in megawatt terms in the power gen on the generator sale side, you know, which is what was reported in the annual report. So that's the first question. Thank you, Jonas, for the question. Ajay, do you want to get a volume question? I think. Jonas said, you know, for last year, the original date for migration to CPCB 4 Plus was July 1st of 2023. At the last meeting, that changed. That date was shifted to July 1st, 2024. The consequence was that we had a pre-buy, in quarter two of last year, which was quite significant. And that's the reason when, seeing from unit growth perspective, the FY23, FY24 numbers were to that extent significantly higher than the year before. Now, obviously, for the current year that the migration was clarified, the 12 months that you see from July till June was a combination of both sets of product getting sold in the market. So obviously, the one-time effect of that pre-buy had an obvious impact on the subsequent quarter, and all of us are seeing those numbers softening on an expected line last year. Now, if you take that sort of a phenomenon out, are we based on when we see the unit volume growth that is playing out for the year? To be consistent with what we see the broader, you know, guidance that we have been seeing trending in terms of how we see the growth is, timing out for the year. Number one. Number two, the price that you talked about is really a function of how CPCB sells because we were among the first two data product leaders in the market. And then the other players progressively catching up would mean that the price discovery is still playing out. Now, whether that price discovery process goes on for another quarter or more, our hypothesis is that maybe it will go on for up until another three to four months. So maybe that's where the clarity will start to emerge. So when you see the revenue number, as you rightly pointed out, I think it's a function of what is happening on the unit side. B, what is happening to the price? Obviously, when the price changed, because we are talking about transition from mechanical to electronic engines. And number three, also, there is a content increase. The configuration of a CPCB 2 GenSet and a CPCB 4 GenSet is very different. Given the emission requirement, we have new products which are aftertreatment and many other electronic components getting added. So the two and four products is really not comparable. So when you put these two things together, you will have to look at this current year more of a transitional year in terms of these changes playing out before we can very clearly say as to what is unit growth, what is, and what the pricing impact is. Thank you, Shveta. Just a follow-up on this. You know, Ajay, so just to close this out, is it fair to say that on a normalized basis, this year we'll still see a 2x GDP volume growth? You know, pricing will obviously yield it a higher ultimate revenue number, but are you on track to do a 2x GDP volume growth this year? Is that what the market is supporting? I think the future question is linked to the guidance, Jonas. I will just reiterate what Shveta said at the start of the call. We continue to maintain our double-digit guidance for the year. On the revenue side, volume is a little bit of a difficult one to see because we are not giving guidance on volume, and you also have to remember that the volume also has a shifting chance in it because the way the volume gets computed, depending on which segments you talk about, for example, telecom, the large volume unit growth at a very low end of the market goes into that segment, which kind of reshapes the number when you think about the volume growth. And because it's a tender-driven business and we participate very selectively into it, that can change the dynamics of what unit volume we had in the previous year compared to what unit volume we have this year. So therefore, I think this year is going to be that way difficult to compare given the sort of hybrid transition that we did, where we had two emission products playing out in the same year. It generally doesn't happen because there is generally a clean cutover taken for emissions. But because this has been a sort of a mixed bag, and we are seeing both the products up until 30th of June, that unit growth is going to get, a little bit impacted as a result of, how the emissions are implemented. So that helps us. The second question was on the value addition, on the CPCB 4 Plus engines. You know, and as you alluded to the first time, there is a content change, and most of that content, you know, typically is going to come from group entities, which is on the FCR side. Given now two normalized quarters on CPCB 4 Plus, you know, do you still hold on to this view that the gross margins on the 4 Plus engine is similar to the two, CPCB 2 engines despite the higher components coming from outside the listed entity? Yeah. So Jonas, I think the question is, and we have already stated that, right? I mean, when you think about the norm change and the way it is playing out, the current year's revenue has a combination of both the products today. Number two is that as we now take a clean cut from July onwards, then we will have, so to speak, a revenue which is predominantly driven by CPCB 4 into our revenue profile. Number three is the mix part, which was explained by Shweta earlier for a different question. It's also how the mix plays out overall because just to remind all of us that the emissions are only up to 800 kW. Above that, which is predominantly an HHP segment, continues to be operating at the old emission norm. If that plays out stronger for any reason, then to that extent, the overall revenue number would be then looking different, as to how the year plays out. Number three, from a supply chain perspective that you asked, I think we continue to sort of optimize, and as you rightly said, now that we are operating for a period of time, our supply chain optimization is a continuous process, and because we are an engineered product, even if we see a cost reduction opportunity, we are not able to deploy it immediately, unless it is clear from engineering point of view, and that process of validation takes time for us, so an opportunity identification, getting the opportunity realized, and getting a sign-off typically can take anything between three months to six months for us. So some of this cost optimization effort, we will continue to see reflecting into our margins, as we go forward. And the quarter-on-quarter numbers, Jonas, as all of us know, have an impact of mix. And therefore, I'm not giving a guidance or anything, but simply saying that generally a year-to-year number or half-yearly number is a better representation in terms of how the figures look like. Sorry, and the last quick one, you know, I know many questions were centered around data center, but, you know, Shveta, like you said, that there is a notable difference between developed markets and developing markets. But typically, you know, as the scale migrates, you know, you know, today the developed markets are setting up 100-megawatt data centers, single location, and probably at some point in time, this migrates to India over the next two, three years. Indian entity because, you know, what we understand, the QSK 60 and the QSK 95, which are the predominant nodes, used abroad, sit in CPIL. So from a clarification perspective, would appreciate that, you know, while the sales is routed through, CIL, which is the listed entity, the manufacturing for QSK 60 and 95 currently sit in, CTIL? So, you know, QSK 60 is the predominant node in the data centers in India and Southeast Asia. And for the global markets like, U.S. and Europe, the predominant nodes are QSK 78 and 95. Now, we've been watching the data center space, and as you rightly said, we were also thinking that probably, the data center nodes in India will move up in the range. But, for now, data centers is a very space-constrained space in our country still, where you see the data center clusters in India, in Mumbai, in Hyderabad, in Gurugram, in Delhi. These are still space-constrained cities, which is unlike the global markets. So for the India market, and predominantly the larger Southeast Asia market, QSK60 continues to be the predominant node, which is a very, very robust node, made in India and, you know, for made in India for the rest of the world as well. So as of now, we are not seeing a migration towards the higher nodes for the India market, mostly owing to space constraints and also customers being very familiar with the QSK60 nodes and the maintenance of those equipment which have QSK60. So we are not seeing that trend. We are watching it very carefully, for now. And as things change, we will take those calls. Just to clarify, does QSK60 manufacturing sit in CIL? Jonas, QSK60, as we have stated in the past, is an export program that got launched. And therefore, from a pure manufacturing perspective, a significant volume of the QSK60 was for coming export purposes. Domestic volume is fairly low. On its own, therefore, on the competitive side, CIL gets that engine at a certain level of readiness from CPICL, does the subsequent value add in CIL, and then it gets, you know, sold in the domestic market, for various applications, including data centers. Jonas, appreciate all the best. Thank you. Thank you. Thank you. We'll take the next question from the line of Pulkit Patni from Goldman Sachs. Please go ahead. So thank you. Most of my questions are answered. And this is in continuation with Jonas's question. So we've had two consecutive quarters of about INR 800 crore plus revenue in the power gen segment, out of which second quarter clearly was only CPCB 4 Plus, in terms of new implementation. Can we, for our modeling purpose, assume that this is now the new base to model next few quarters from here on, i.e., it has the impact of significant price increases in CPCB 4 Plus, plus that you did not have a large portfolio of CPCB 2 that got sold in the current quarter? And I'm asking this question because there's been a lot of noise and numbers in the past few quarters with meaningful price increases and pre-buying and so on and so forth. So between INR 800 to 900 crore in the last two quarters, is it the right number from a sustainability perspective when we build our models based on that? Is that a right assumption? I'll say two, three things here. You know, the first is that from an overall market demand perspective, the market continues to show demand in the power generation space. The second, the numbers are not completely just CPCB 4 because CPCB 4 Plus is applicable only up to 800 kilowatts or the 910 kVA range. Above that is CPCB 2. So both, these different ranges continue and the continuity of the overall power gen segment sales. Now, the third thing around pricing, as you mentioned, we are seeing this was the first quarter where we saw full CPCB 4 Plus, and we do believe that pricing will take some time to settle in the market, at least three to four months. So, you know, the demand, the pricing, the mix between below 800 and above 800, which can change given where the demand is driven. Higher, if we are selling in the higher than 800 kilowatt range, that is more the CPCB 2 product, and then below is the CPCB 4 Plus product. Those will continue to play out, really, and could give us different results. No, I think all the three points are well taken, and that's exactly what my question was. Thank you for that. Thank you. Thank you. We'll take the next question from the line of Sanjay Satpathy from Ampersand Capital. Please go ahead. Yeah, thanks for the opportunity. Can I just ask what is the level of indigenization in your CPCB 4+ sets? And what is the scope of improvement there? So in the CPCB 4 Plus product range, you will appreciate that we are a global company and we do take advantage of technology and products from around the world. A large part of our CPCB 4 Plus product range and what goes in those products is localized. And we are continuously working on where we do not have indigenized parts yet. So it's a continuous endeavor, but I can tell you that a large part of that product range is already localized at the time of launch. Understood. And does this mean that the scope of margin improvement is not much from current level? I do think margin will be a factor of various things. Other than localization, there are other cost reduction efforts that we take, which is around value engineering, as I was explaining just a while ago. We are continuously working across all CPCB 4 Plus products, even those that are localized today on cost improvement programs, and that plus the pricing settling in the market, so margin is actually a function of those two, so can't say it only depends on localization and such. Understood. And the last thing, if you can just tell us, like, between the gensets, which is like over 800 crore, for you, how much would be data center related and how much would be non-data center? Is that something which you can share? That is, very segmental. At least how much is more than those 800-plus capacity, that mix of that? We won't be able to share that, and like I explained earlier, data center sits in the projects business for us as well as in the actual sale of the product in both different places, so it's difficult to tell you really what would be our penetration. Okay. And can you just also understand from your perspective, like, the previous instance of this emission change was more disruptive for the industry, and the demand took a lot longer to settle? But this time around, the implementation has been a very different way. The things were once staggered one year. So should one expect the normalcy to return to the industry much quicker, and the pricing discovery will be faster than what had happened in the past? And also, now that you are, let's say, globally compliant in global exports in terms of emission norms, should one expect much better export effect for your companies? So on the first question, on whether the market will settle quicker, obviously everyone has learned through the last emission change. But how soon will we settle, in the market, is difficult to say. Will it be quicker than the last emission norms? Difficult to say. All I can say is that everyone has learned through the last emission cycle, and we all have one year or so to learn, on how the product is doing in the market. On the export side, I did answer this question earlier. Yes, we definitely have the technology. We are looking at different markets, some of the markets which need our product, and we can tailor our products for their specific requirements, that work is going on. And for other markets which would move to this emission norm, this is one of the most stringent emission norms around the world. So there are not many markets which are on this level of emission norms. But we closely monitor that. And as markets move, we are ready to provide the, the products for those markets. And you will appreciate that for each different market, while the core technology is there, the products need to be tailored to suit the local market requirements. So, that is the work we are doing currently for some markets which need these products and watching the other markets closely. Okay. And as we know, like, last year, December quarter, you had taken some kind of inventory correction in your exports market. Probably that is not the case. So the double-digit guidance which you were giving, probably I'm assuming it is for domestic market, while, exports probably on that low base will start going much better. Is that correct assumption? Guidance for us is overall guidance, not just for the domestic market. Exports, I shared earlier, we are mixed signals. There are certain markets which have shown some signs of recovery. There are certain markets which we are watching very closely. The geopolitical situation is still volatile. Yet our overall guidance is what we have provided, for the overall business of the company. Thank you so much. Thank you. Thank you. Thank you for your question. Thank you, ma'am. Ladies and gentlemen, this will be the last question for today, which is from the line of Mohit Pandey from Macquarie Capital. Please go ahead. Yeah, ma'am. Thank you for the opportunity. My first question is on the demand outlook specifically. You have mentioned you're cautiously optimistic about the near term, but optimistic about the demand outlook for the medium term. If you could share your thought process around how you're factoring in the impact, if any, from potentially higher adoption of storage solutions on genset demand now. That would be my first question. Sorry, the word for the emission? Okay. Battery storage demand on the impact of that. Well, I would say that in the backup power space in the country, given the way we are in the power situation for a growing economy like ours, one is that we do see this backup power demand growing over the medium to long term for the timing for our country. Second, there are different solutions which are being tried today. But you will appreciate that in the backup power market or the standby market, reliability is extremely important for our customers for different segments that we operate in. So the energy storage solutions, while there are available in the market, from affordability, reliability, ease of use, ease of deployment, I think we all are watching that space. So, remains to be seen how it turns out in the future. But I would only say that reliability of the product, clean products available for the market, is par amount. And for now, we are seeing good demand for us in the market. Okay. Thank you, ma'am. And secondly, with regards to the industrial segment, if you could share a sense of what proportion of the segment will see some impact of the upcoming emission norm changes, that would be very helpful. Yes. That's the construction segment you are referring to, which is going through different emission norms from the 1st of January. I did share that in the last quarter, the construction segment saw about INR 146 crores of revenue. We are seeing strong demand from that segment owing to activity, higher construction activity from our set of customers, and we see that demand continuing for the coming. Okay, and any ballpark indication of what kind of price changes are expected with these norms? Or is that too early? That's too early. That is too early. Okay, ma'am. And no problem. And the last question is on exports. If you could share more color on region-wide trends, that would be very helpful for the key regions. Yeah, on the demand side. On the demand side. Yeah. We have shared in the past that we believe the demand has gotten down but like I said earlier, mixed signals yet. We are trying to watch it really closely. For example, in this quarter, we definitely had great orders from the Middle East, and Africa and Asia-Pacific region, which we were able to execute. From the Middle East, and Africa and Asia-Pacific region, the demand continued to be flat or muted. Watching this space, we're getting mixed signals. We do believe that this should improve. We are watching this very closely. Okay, ma'am. And, a lot of this sluggishness is also linked to higher channel inventory there, or is that understanding not fair? I'm sorry, could you repeat that? Yeah. So this sluggishness is linked to higher channel inventory in some of these markets, or is that understanding not fair? In the exports. Yes. In the exports. Yeah. It's a mix. It, it is really a mix. Different regions, there are certain geopolitical issues in certain regions. There is, for example, better power availability in certain regions. There are certain regions who are dealing with emission changes. There are, you know, different. There is obviously some inventory in the system as well. So there are different reasons. And in fact, if you look at places like Europe or Africa, these are even within those places, every country behaves differently. So very, very different regions in different countries and different regions are to 0.1 or 2 degrees, in this sense. Okay. Sure, ma'am. Thank you. That's it from me. And wish you all the best. Thank you. Thank you so much. Thank you. As that was the last question for today, I would now like to hand the conference over to Ms. Shveta Arya for closing comments. Over to you, ma'am. Thank you. Thank you to all of you for your active participation and engagement during the call today. Comments indicate that the broader economic outlook is stable, and India's GDP is expected to grow by approximately 7% based on various reports. Fiscal and monetary policy stability, supported by government focus on infrastructure development, bodes well for our end markets. Export markets are showing some signs of recovery in a few pockets, and we continue to work with our inter-company partners to create growth opportunities in all the end markets in the world where we supply. The company closely monitors geopolitical events unfolding in various parts of the world and their impact on global demand and supply chain. The company is well-positioned to leverage all opportunities to sustain its growth momentum, and with a strong balance sheet, world-class infrastructure on the ground for manufacturing, our best-in-class talent, we are committed to sustaining our growth trajectory. Thank you for your continued trust and confidence in the Cummins brand. And with this, I would close the call. Thank you so much, everyone. Thank you very much, ma'am. On behalf of Cummins India Limited and the leadership team, we would like to thank you for joining us today and making it an engaging session. We are ending the conference now, and you may disconnect your lines. Thank you.