Ladies and gentlemen, good day, and welcome to the CEAT Limited Q2 FY 2025 earnings conference call, hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mitul Shah from DAM Capital. Thank you, and over to you, sir. Thanks, Del. Good afternoon, everyone. On behalf of DAM Capital, I welcome you to the Q2 FY 2025 result conference call of CEAT Limited. From the management side, we have Mr. Arnab Banerjee, Managing Director and CEO, and Mr. Kumar Subbiah, Chief Financial Officer. I would now hand over the call to Mr. Arnab Banerjee for his opening remarks. Over to you, sir. Thank you. Good afternoon, and welcome to CEAT's quarter two of FY 2025 earnings call. I'll be taking you through the business update for the quarter and shall hand over to Kumar for his remarks on financial performance. Post that, we will be opening up for Q&A. The Indian tire market is a dynamic and rapidly growing sector, fueled by country's expanding automotive industry and economic development. We are quite positive on domestic demand overall. Commercial vehicle segment tires are growing in mid-single digits in replacement, while it's de-growing in OE. Passenger car tires demand is flat in OE and growing in low single digits in replacement. Two-wheeler tires are growing in double digit in OEMs and also high single digit in replacement, aided by recovery of demand in rural markets, post a very good monsoon. Investment in infrastructure is leading to creation of opportunities when vehicles are traveling faster and covering longer distances per day. This leads to more trips per month, this leads to faster tire usage, and that's good for the replacement market. Also, consumers in Passenger segment are exploring more on-road and off-road, leading to more tire usage. We are delighted to announce the inauguration of our Truck-Bus Radial Production line at Chennai. This marks a significant milestone in our journey towards global expansion, as this plant is expected to be an export-centric hub, focusing on delivering high-performance tires to international markets such as Europe and the U.S. Coming to performance of Q2, our turnover was highest ever at around INR 3,300 crores, with highest ever volume achievement also. On the revenue front, we grew by 8.4% YoY standalone, and 6.4% was the volume growth. Our Q- on- Q growth was 4.1% by value and about 1.2% by volume. Our EBITDA for quarter two stood at 11.1%, with a gross margin at 37.5%. We continue to face the Red Sea shipping situation, which has extended well beyond the region, not only impacting our transit time, but also creating significant disruptions in the flow of freight around the world, especially from South Asia to Europe. Despite the headwinds, our International business grew by strong double digits on YoY basis in quarter two. We witnessed growth from each geography, and more so from LATAM, along with Europe. However, elevated freight rates did eat into our margins. As we speak, freight rates are cooling down, but still higher compared to pre-crisis stage. Our order base is in excess of a month, and we are looking forward to in quarter three and quarter four with a lot of positivity for international business. Replacement volumes also grew in strong double digits, led by healthy double-digit growth in commercial vehicle tires, in passenger tires, and close to double-digit growth in two-wheeler tires as well. Our brand imagery is working well, with strategic focus on premium categories, positioning us to capture new audiences and enhance our overall premium appeal. Truck and bus, three-wheelers and scooters continue to have a very, very strong growth in the Replacement segment, and this is leading to good capacity utilization in both two-wheeler and four-wheeler factories. OEM was the only soft spot in quarter two, where we have grown, de-grown in single digits, primarily due to tough situation in vehicle growth in both three-wheel category and four-wheeler category, and also a temporary loss of share of business for CEAT as we are exiting some vehicles, and we are entering some new vehicles, which are coming along at a slightly slower pace. As far as margins are concerned, the raw material prices have escalated at a very steep rate of 6%, Q2 over Q1. It's very difficult to pass on the entire increase through finished goods in such a short span of time. In OEMs, we always get the index benefit after a lag of one quarter. In quarter two, we got an index benefit of around 3%, and in quarter three, we shall get an index benefit of around 4%, but it will come with a lag of one quarter. By the end of quarter two, actually, on first of October, we further took a price increase on truck bus radial close to 2% and about 2.5% on passenger car radial also. As we speak, we are contemplating price hikes in truck bus bias and other commercial categories in October third week. As the price increase has been inadequate, as compared to raw material hike in Q1 and Q2 cumulative, we may have to take further hikes in November and December, which we shall do. Capacity utilization overall has been 80%, but close to 100% in truck bus radial. In two-wheeler plant in Nagpur, it is inching up to 90%, but we have capacity at our Outsourcing Partner at Hyderabad. Coming to some future trends, electric vehicles, two-wheeler space, in scooters, particularly, now it is in excess of 20%. 20% of new vehicles being launched are electric. We have a 30% share of business there, and it could go up further with some new approvals coming on. In four-wheeler, more than 2.5% is electric, another 2.5% is hybrid. In pure electric, we have a share of business of 25% in passenger as well, and we are investing in technology as well as working on close relationship with OEM to maintain or increase this share. As far as international business is concerned, this has been a core focus area for CEAT. Our top three clusters are now EU, Middle East, and LATAM, comprising of almost 2/3 of International business. In Specialty segment, which is Off-Highway segment, I'm glad to share that we could launch about 46+ new SKUs in quarter two. This is margin accretive for us, and some new OEM approvals are coming in. For example, Massey Ferguson in France, CFI in USA, and so on. For the Non-Specialty business also, we have been able to launch significant number of SKUs in truck bus, radial, and passenger, and we have a strong pipeline in half two, quarter three, and quarter four as well. Sri Lanka has been doing pretty well. The macroeconomic situation has improved quite a lot. Economic stability is returning, a new President is in place with popular support. Our company in Sri Lanka has registered 31% volume growth with 19.5% EBITDA in quarter two. As far as premiumization is concerned, our campaign with the Crafted for Curious theme is gaining traction on both digital and television media. We are partnered with KBC as a special partner, and we have launched the second version of our campaign through KBC. We have mounted an Africa to Arabia expedition, which is going on CEAT wheels, CEAT CrossDrive wheels. This not only establishes the credibility of the tire, but creates content for further digital amplification. In quarter two, we had the premium CEAT International Cricket Awards, which was graced by celebrities such as Rahul Dravid, Rohit Sharma, and also Jay Shah, and this was elaborately covered in media. This is the 100 years of CEAT's existence, and we are celebrating in very many ways, internally as well as externally. Our Beyond the Horizon campaign on digital media has about 50 films, aiming at a cumulative 100 million viewership. 15 of them are already mounted, and we already have 35 million viewership. This campaign shall continue till the end of December. We have taken our Enduro Park campaign right up to 3,500 meters above sea level in Ladakh. We have also tied up as a tire partner with Bayer Leverkusen, who were the champions in Bundesliga, Germany, and we continue to be associated with Torino FC, who are part of Serie A in Italy. On the digital front, we continue to engage closely with our channel partners through digital mode. We continue to enhance our efficiency in manufacturing process, and we are investing in collaboration across the supply chain through a new project, which has got important three to four modules, which will establish one source of truth and enhance collaboration across the supply chain from procurement to sales. The Industry 4.0 concepts are helping us improve the efficiency of energy usage, improve manpower productivity, and reduce consumption of resources such as water. The organic traffic on our website grew by 21%, and traffic from premium SUV users increased by 87%. Brand conversation volume moved up by 16%, with a 129% increase in average interactions per post YoY. On CapEx, I think details will be provided by Kumar. Our annual guidelines is around INR 1,000-1,050 crores. As mentioned, we have successfully commissioned our TBR plant in Chennai, and other projects are progressing on schedule. Sustainability, we continue to reduce our carbon footprint. Tonnes of CO2 emissions for MT of production were lower by 3% YoY. 37% of our Plant Power Requirement is tied up to renewable sources, and we will endeavor to increase this contribution further. We have strengthened our commitment to fight global warming by joining the Science Based Targets Initiative. Looking forward, I think we are looking at accelerated growth in second half, with double-digit growth in replacement, double-digit growth in International business, and a bounce back from the OEMs because of clear visibility of vehicles that will be launched on CEAT. The freight rate moderation will also happen, container availability for dispatches is expected to improve, and our GTM to U.S. is expected to scale up, especially for truck bus radial. On raw materials, we expect the inflationary trend to continue, but at a lower rate of 1.5%-2% Q3 on Q2, and therefore, this will create some space for us to enhance our margin progressively. In Q4, with fresh crop coming in, we may see a slightly more flattening of raw material situation. With this, I will now hand over to Kumar for further elaboration. Thank you, Arnab. Good afternoon, ladies and gentlemen, and thank you for joining our Q2 FY 2025 earnings call. I'll share some financial additional data points with you all, post which we can enter the Q&A session. Overall, our consolidated net revenue for the quarter stood at INR 3,304.5 crores. Year-on-year growth of 8.2% and quarter-on-quarter growth of 4.1%, driven by mix of both volume and price growth. While our OEM growth was muted, Replacement and Export segments grew strongly in double digits, and that we are happy to share with you that our unconsolidated revenue of INR 3,304 crores is the highest that we have achieved ever. Coming to our operating margin, our consolidated EBITDA margin for the quarter stood at, in absolute amount, INR 368 crore, translating to 11.1% of our turnover. Which is a contraction of about 400 basis points year-on-year and about 94 basis points quarter-on-quarter, primarily on account of increase in the raw material prices. While our raw material basket increased as compared to previous quarter, in line with our earlier estimate, that we had indicated in the previous earnings call, we were a little surprised with the quantum of increase that we witnessed in the natural rubber prices, particularly within India. While the crude has largely remained stable in the range of $75± $5, natural rubber prices shot up to INR 200 per kg in the local market during the quarter, which was at a premium of about INR 50 per kg over the international prices at a particular point in time. In the last two to three weeks, the local natural rubber prices have come down to around import parity level, while international prices have inched up by about $200. Currently, local natural rubber prices are in the range of around INR 200 per kg. The rupee has remained stable in the range of about INR 83-84 to a $1 in the similar time frame, and therefore, the impact on raw material and other expenses on account of currency has remained stable. Considering these factors, we'll continue to keep a close watch on RM situation, as Arnab mentioned, and see how it evolves over the next few quarters, and we expect them to continue to move up marginally in quarter three, to the extent of 1.5%-2% over quarter two. After that, could stabilize. Coming to debt, capital expenditure and working capital, we spent approximately 175 crores on capital expenditure during the quarter, and overall, full year basis, we spent about 430 crores. It is, largely in line with the full year capital expenditure estimate that has been shared by Arnab just now. While working capital remained negative during the quarter, it moved up by about INR 290 crores quarter on quarter, largely due to higher inventory level, particularly natural rubber, and which we expected to normalize over the next two to three months. We generated healthy operating cash flow, and the increase in raw material inventory leading to increase in working capital led to increase in our consolidated debt by about INR 238 crores. We also would like to bring it to your attention that our dividend payment of about INR 121 crores happened during the quarter. That also had some impact on cash flow for the quarter. We expect overall working capital to normalize progressively in the next two to three months, as we have already taken steps to bring down our raw material inventory cover, particularly natural rubber, and hopefully, in the next three months, we will be at the normal level. Our debt-to-EBITDA on a consolidated basis, as of thirtieth September, stood at a comfortable level of 1.19, and debt-to-equity at 0.45. With respect to operating expenses, our employee cost was higher by about 12% quarter on quarter on account of annual increments, incentives, and additional salaried expenses incurred on account of higher level of production activity, including a new plant at Chennai to produce truck bus radial tires. Consequent to increase in the raw material prices, we kept a tight control on other expenses, particularly discretionary costs and advertisement costs, leading to drop in overall other expenses to the tune of about INR 24 crores quarter on quarter. So the above step helped in terms of mitigating the impact, partially helped in mitigating the impact of drop in gross margin. Our operating gross margin, as I mentioned, stood at INR 366 crores, translating to 11.1% on turnover. Our consolidated profit after tax stood at INR 121 crores, compared to about INR 154 crores in quarter one, and INR 257 crores in the previous year's same quarter, and the drop is primarily due to increase in the raw material cost, as I mentioned earlier. Coming to Sri Lankan business, the Sri Lankan business witnessed a strong volume as well as profitable growth during the quarter, arising out of economy normalizing and increase in the arrival of tourists in Sri Lanka. We are also happy to share with you during the quarter, credit rating agency, India Ratings, carried out their annual surveillance and affirmed a rating of AA for long term and A1 + for short term, and in case of long term, they've changed the outlook from neutral to positive during the annual exercise. Based on the approval by shareholders in the annual general meeting held towards the end of August, we distributed a dividend of INR 121 crores, amounting to about 300% of our share capital. With that, we can now open the floor for Q&A. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Raghu Nandan from Nuvama Wealth Management. Please go ahead. Thank you, sir, for the opportunity, and festive greetings. Sir, firstly, in terms of the price hikes cumulatively taken so far, how much would be the quantum? And, is there any discounting, whether we are able to retain? How is the retention? So the raw material price hike has been about 4%-5% Q1 over Q4, about 6% Q2 over Q1. As I mentioned, the cumulative price hike has been inadequate. Q2, the overall price hike was higher in commercial category to the extent of around 1%-2%, about 1.5% in passenger. In other commercial, about two-odd%. So you can see, obviously, it was inadequate. In quarter one also, there was a gap. So we are therefore looking at a very steep increase in quarter three. On October 1, there was a price hike of around 1.5% on commercial, 3.5% of passenger. In the third week of October, there will be further hikes in truck bus bias, as well as other commercial vehicles. We will re-look at two-wheeler category also in November or December, maybe in November itself. The evidence of that is in the drop in gross margin, as you can see, which has percolated to a lesser extent in EBITDA, or the drop in gross margin quarter on quarter has been around 1.5%. Thank you for that, sir. So what would be the under-recoveries as of now? Would it still be to the tune of 2%-3%? I would say, around 1.5%-2%, definitely. Sir, because at the beginning of Q3, you are taking this 1.5% TBR hike, 3.5% PCR, and again, TBB and other commercial vehicle, you are going to take a price hike. Q2 to Q3, the RM increase is 1.5%. Is it fair to assume that Q2 gross margin was the tough, and Q3 onwards, you should witness an expansion? We have to see, because you know, the international natural rubber price is going up as we speak, though the domestic natural rubber price has come down. The petroleum-based raw material prices have not yet sobered down, so we'll have to see how it behaves, but we are projecting at 1.5%-2% raw material hike, and it will also depend on our ability to take further hikes in truck in the commercial as well as in the Two-Wheeler segment. Understood, sir. And, my second question was on the demand side. 6.4% was the volume growth YoY. How much, sir, was the fall in OEM and growth in replacement and exports, if you can share the number? So YoY, truck bus bias is a degrowing segment, right? Truck bus radial, we are growing in very healthy double digit, which is what the future is. So overall growth in truck bus is kind of strong single- digit because of the degrowth in truck bus bias. But what you have to note is that radials is where the growth is. Then passenger, we are growing very strong in double digit, very strong double digit passenger car tires. Two-wheeler is little less, but very close to double digit as well. But there are some sundry areas, for example, off-highway. Off-highway, agriculture, specialty tractors, those are growing in low single digits, so overall it works out to around 6.5%. If you break it down to OEM replacement, sir? So OEM will be OEM, we said we have YoY, it's about 3- odd%, 3%-4% down, right? And replacement and exports are in double digit growth. Okay, and within replacement, if you can give a trend for TBR, PCR and two-wheeler? TBR, PCR, two-wheelers in replacement? Yes, sir. Okay. So, it, TBR will be, you asked YoY? YoY, sir. Yeah, so replacement YoY, the growth will be pretty strong in very high double digit TBR. PCR, the growth will be more or less, yes, again in double digit PCR. And two-wheeler also we are growing strong because backed by a strong rural demand. So the three main categories will be growing very healthily. We have downtrend in specialty tractor, which depends on the season, LCVs and those kind of things, truck bus bias. Understood, sir, and just a related question here. In terms of TBR, given that you have seen high double-digit growth and also capacity expansion, how would you see the market share trending here? If you're talking of replacement market, we have low market share. Replacement. We are in double, we are in high- single digits. We have already gained about 1%-1.5% share. We expect to keep gaining share because our base is very small, so that is not an issue. Understood, sir. I'll come back in the queue for more questions. Thank you, and all the best. Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah. Hi, first, thanks for the opportunity. So on the replacement question, a bit more, if you look at, TBR, so we are gaining share. I mean, this is largely driven by, what are the drivers here, which is driving, our market share gain? Is it, pricing or is it network? If you can just elaborate a bit. And, in PCR also, is it something we are gaining share because, or if the industry is growing in double digits, so just some more thoughts there. Replacement, we are gaining share because we are a superior product, and we have been fitting these products into OEMs, which have now been seen by the customer, experienced by the customer, and some of the customers are insisting on the OEMs to supply specially fitted with CEAT tires. So it is the product, and we are gaining share by winning in some markets, not across the country. We are focusing on few markets where this product will be accepted well, and that is how we are gaining share. So excellent products, good channel in some areas and OE segments. That is the summary of PCR in TBR, sorry, that was TBR. And in PCR, we have got some fantastic new line of products like CrossDrive, which is gaining traction across the country. It is not a product for the OEMs. It is a replacement-oriented product for 80% on and 20% off kind of application. We have a top-of-the-line SportDrive product, which is for the Mercs and the BMWs. We have 95% coverage there. New products, and the campaign is doing well, which is crafted for the curious. The hundred year campaign is doing well, which will intensify over the next four to six quarters. New products, good products, OEM segments is low. This will come in and contribute to replacement sales, maybe three to four quarters down the line also. Good channel. Got it. In terms of the mix, sir, if you see the first half mix, export mix has been around that 19% only in last year, even in this year. So, if you look at the growth, then it should be also similar to our overall growth of about 8%. So how are we sort of saying that export is growing in strong double digits? I mean, they're not easily visible in the mix. Yeah, the mix is clear. Double-digit growth in replacement and export and negative growth in OEM. So, that, that's how the mix, overall mix export is around 19%, you're right. And, we would like this to grow to at least 20%-21% as soon as possible. We have the order base, but we have been held back because of certain geopolitical reason in the second quarter, as I mentioned. The containers were not available. We couldn't ship out orders that were already there. We could manufacture, but we couldn't ship out. And, these things, these roadblocks are coming down gradually, so we should look forward to enhancing export growth disproportionately over domestic growth in future. Got it. So overall, to sum it up, given strong replacement growth, a healthy export growth, should we expect a pickup in the overall volume growth trends, which we are doing in the current quarter, in the coming quarters? Will that be a fair assessment? Second half volume growth we are looking at positively. That's a fair assessment. Understood, sir. So lastly, on the commodity, if you look at the domestic rubber prices, they have come down a bit, so quite a bit actually. So don't we expect any benefit out of that to come in the current quarter? I mean, why are we seeing a 1.5%-2% commodity cost increase in the quarter? It is mainly because the material inventory that we have, we have to consume, and while domestic prices have come down from INR 250, it went up to a peak of INR 250 per kg, and now it's hovering around INR 190-INR 200. It is that level. International prices have moved up by $250, okay? So in overall average, ours is two-thirds of the rubber is in import and one-third is local. So from that standpoint, our average natural rubber prices in terms of consumption cost in quarter three is likely to be higher than quarter two. Got it. Got it. Okay, sir, I will come back in case more question. Thank you. The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Yeah, hi, sir. Just some clarification on the Indonesia subsidiary which we are proposing. What is that for? This is part of our International Business approach. And, this is work in progress. We are setting up an entity or intend to set up an entity in Indonesia to explore servicing the market from local. Okay, so it's more like a pilot work in progress. We have got approval from the board for us to move forward to explore any opportunities there. So we will be putting up a local plant there, manufacturing capacity there, or it will be just a sales office? No, it'll be, you know, it's no manufacturing. It is more an entity that will get created so that supply to the local market can be facilitated. Got it. Got it. And, second question pertains to the competitive landscape in the replacement market. So are you seeing similar price hikes by your peers to the level which we have taken? It is different for different categories. But yes, more or less, we see the prices going up in most of the categories. I would say, barring maybe two-wheeler, where the price hike is little muted, but across passenger, across truck bus, across other commercial vehicle, farms, I think the price hikes are happening at different times. The quantum may be different, but it's happening. Okay, that's great to know. And third question pertains to our capacity addition plan going forward. So TBR is now up and running. And from what I understand, it is currently only PCR side CapEx, which is pending. But anything beyond that which we are looking now given the growth which we are looking at? You know, in terms of CapEx, TBR, it is upstream and downstream. We are spending that, we'll be spending that progressively. And in case of specialty or farm radial tire expansion CapEx, intensity has not yet fully started, so that'll be something that we will end up spending some CapEx. Even in Chennai, passenger car radial also, we are not fully spent, okay? So downstream, we are spending based on, you know, the demand. So these three would be the critical ones that we'll continue to spend even going into the next year. Got it. Got it. And lastly, on Mr. Jinesh, please, rejoin the queue for- Sure. Further questions. Thank you. The next question is from the line of Amar Kant Gaur from Axis Capital. Please go ahead. Yeah. Good evening again, thanks for taking my question. I had two questions and then one housekeeping question. So first one was, now that our TBR plant has started, and you are also indicating that this will be primarily utilized for our export, exports to U.S., what kind of incremental growth can we see from this plant or this business alone? And in the context of overall outlook for growth that you expect to be going good for the second half and maybe going into the next year as well. When I said international, it is not just U.S., it is also Latin America and Europe. The growth in these markets, U.S. of course, we are just doing the GTM right now. But the growth in Europe and Latin America to some extent was held back because we had run out of capacity. We are servicing the domestic market, and we'll continue to do that in priority. Now, these taps will be open and margins are good, and the growth in TBR could accelerate if we are able to take up this opportunity utilizing the capacity in Chennai. Our capacity is 45,000 tires per month, so we expect to reach this level by Q1, Q2 of next year, and we expect to utilize that capacity very fast. Okay. That's good to know. The other question that I had was, you have... I mean, I should also congratulate you that you've seen that you have been quite at the forefront of taking the price hikes. Over the last couple of quarters, probably ahead of your peers, and you had also indicated the kind of pricing premium or discounts that you guys have over your peers across segments. Now that you have taken more price hikes probably than your peers, that differential would also have come down, and so how much of a headroom do you see because of that, or your pricing strategy would remain independent, even more so now? The price increase that we have taken is still inadequate. We feel we need to take further price hikes. As I mentioned, on October first, we have taken some. In the third week we are taking some, and some other bases we need to cover. So we're not done with the price increase. We would like to explore more opportunities in the month of November, and if we are not done, maybe in December also. No, I'm asking this from a perspective of, like, from a competitive perspective, right? So, would you say that, regardless of what the competition does, you would continue with your pricing strategy or there is probably a cap to that as well? No, there is, as I have been mentioning, there is increasing independence, but it's not 100%. So in Commercial segment, it's very difficult to become completely independent. The highest degree of independence could probably be in Four-Wheeler segment, and less so in commercial and two-wheelers. Understood. Understood. And one housekeeping question that I had was that typically we see a spike in your ASPs, regardless of what the price hikes have been taken, typically in Q2. Is there one off there that you could probably qualify? Advertising, you mean? No, no, in the ASPs, Sorry. Conditions. Sorry, sorry. Yeah, can you repeat the question? Typically, in Q3, from Q1 to Q2, we have seen about 4%-5% kind of increase in the ASP, while the price hikes would maybe account for 1-1.5%, maybe at most 2%. What is that additional 2% that is leading to those higher ASPs? That is what I'm looking for? Hello? Sorry to interrupt, ladies and gentlemen, the line for the management has been disconnected. Please stay connected. Ladies and gentlemen, the management has been reconnected. Mr. Amar, go ahead with your question. Yeah. So what I was asking was, if you look at from Q1 to Q2, the ASPs have gone up by about 4%, while the price hikes, the impact of price hikes could not be that high, right? One, maybe 1%-2%. So what is accounting for the additional 2% increase in the ASP? I think ASP means, are you referring to revenue? Yes. Okay, so revenue moved up by 4%. Are you asking whether it is on account of price, or is it on account of one-off? Is that what you're asking? Yes. Okay, now, there's no one-off in the revenue of quarter two. Quarter two has a two-thirds of the revenue growth on account of volume, and one-third of the growth is on account of price. So the price impact is small. 1/3 of that 4%, you can say. Quarter on quarter. Okay, maybe I'll take that offline, probably. Thanks. Thanks for that. Thank you. The next question is from the line of Basudeb Banerjee from CLSA. Please go ahead. Yeah, thanks for the opportunity. Couple of questions. So in overall replacement volume growth, I missed out initially, Mukund said, how much was the commercial vehicle replacement? Commercial vehicle replacement, the bias we have had slight degrowth, and we had a very strong growth, a very strong high double-digit growth in truck bus radial, leading to market share gain in replacement, but we are still in single-digit market share. Within your commercial vehicle replacement portfolio, what percentage is radial as of now? In truck bus it is roughly 50/50. Pardon me? Truck Bus Radial is 50% of overall truck tire sales in replacement. Surely. So if truck bus radial is growing at double digits and slight decline, so overall truck bus replacement is seeing positive growth only. Overall, truck bus is also growing in double digits, despite negative growth in truck bus bias. Okay. And, second thing, like lot of negative commentaries with respect to off-highway tire exports out of India to the target market. So how are you seeing, off-take in your, target markets and production from Badlapur ramping up? So any comment on that? Yeah, it's at Ambernath, so we have some headwinds in agri radials, which I've been mentioning. I think now we have started receiving some initial commitments from OEMs. The volumes have been flat. We have been gaining consistently in aftermarket in Europe, U.S., and Latin America, but the drop in OEMs have been absolutely precipitous. In a sense, it could be 50%-60% drop in OEM volumes over the last few quarters. Now, a few OEMs are enhancing their approvals and coming back to some kind of offtake, though at a much lower level. And we'll continue to focus therefore on the replacement market. But overall, I think it has been flattish for some quarters. Any reason you could account for such a huge decline? Is it purely macro or inventory build up, or how you see that? It's a bit of both, because there is inventory build up, and the demand has fallen off. If you talk to farmers there, for example, in the U.S., the farmers are not only not buying new equipments like harvesters or other farming equipments, they're also not buying tires and using the tires for longer duration and usage. So there is a slowdown in offtake. There is a huge inventory which the OEMs are correcting, the replacement distributors are correcting, so it was a double whammy, which is why it was flat. But you see that bottoming out currently? I think the inventory position is easing out. The demand will take some more time to come back. Sure. Thanks. Thank you. The next question is from the line of Ankur Poddar from Swan Investments. Please go ahead. Hello, Vishal here. Thank you for taking my question, sir. Sir, I have one question regarding the exports. We have seen exports steady growth of almost 8%-10%, and the share of export has been around 8%, 19%, 20% last three years or so. You said that you have a visibility of, you know, increasing it to 20%-21% in the near term. Can you share some thoughts and some light on how will you be able to scale up, and what is your strategy on that regard? Yeah, so it's based on the following pillars. One is the truck bus radial facility has come on stream, which will help us in expediting the GTM to U.S. and expand in LATAM and U.S.-EU. That's one. The second one is we have been expanding the range in passenger car tires and expanding our downstream throughput capability in Chennai. That will come in handy for exports. And the third one is we expect the demand to revise gradually in Q3, Q4 for agriculture radial, which will come out of Ambernath, so where there is no capacity issue as of now. So these three we expect to fire, and if they do so, then the export saliency in the overall business will improve from 19%. Great, sir. Sir, with this, new capacities coming in, what kind of, you know, SKUs do we intend to increase from this? How many currently we have, and how do we intend to increase the SKUs in next, maybe couple of years? A couple of years is a long time. But generally, we have been going at about 40+ SKUs for agriculture radials and OTRs, which I think will continue. We have about 1,000-odd SKUs, and there is scope to further leverage the range that is there at the new evolving market, where the margins are usually good. So we have started late, so we were first catching up. I think 1,000 is a good place to start looking at the evolving areas. So 40+ SKUs, agri radial will continue per quarter. And in passenger radials, I can tell you, I can share some numbers maybe in the first next two, three quarters, we have a plan for at least about 30- 40 SKUs overall to be launched. This will not come at that prolific rate as agri radial. And truck bus radial will be slightly more sedate at maybe eight to ten SKUs for the next two, three quarters. Great, sir. Sir, do we plan to, you know, scale up the replacement? Or we are, you know, as we have got some new OEM in this quarter, we also are getting aggressively to get into OEMs in the export market, and what is the plan going ahead, if you can share? So, for agriculture radial, it is both OEM and replacement in export market. And, that's important, because the volumes are very big in OEM. And in OEM, we classifying them into OE, OE1 and OE2, which is the largest, OEM, which are global OEMs like CNH, et cetera, and the local OEMs, which are there in one country or couple of countries. So we look at both, and the margin difference is not much in, in export market for agri radial, for OEM and replacement. For passenger, we are just knocking the doors of OEMs, and, it will be a long haul, maybe two, three, four years from now when we'll get a breakthrough. So 100% is going to be replacement market, and same in TBR. Great, sir. Sir, my last question, small bookkeeping question regarding the debt levels. We see the debt levels have been elevated this quarter because of working capital requirements. So, by the year- end, do you see the debt level coming down as the same scenario we have seen in FY 2024 also, where, H one, we saw that debt levels were elevated, but gradually it got reduced by the end of the year? So we, do we see similar kind of scenarios here also, or, or are you comfortable with keeping the debt levels at similar levels? No, I think the debt levels, as Arnab mentioned in the beginning, our CapEx for the full year is in the range of INR 1,000-INR 1,050. In the first six months of the current year, we have spent about INR 450. So we'll spend a little more in CapEx in the second half of the year. First off, also add this dividend of about INR 120 crores that we paid in the month of September, okay? It's more specific to last quarter. And third, on the working capital side, why it went up was primarily because natural rubber inventory that we had as of 30th September was about significantly higher than the previous quarters. That was mainly because we know that transit time from Southeast Asia to India came down from 60-65 days to around 20 days. So what we had planned over two or three months, many of them, consignments, reached earlier than our original plan. So these three things have contributed to increase in our debt level. Okay, so the comparison of current year versus last year, last year our CapEx was closer to INR 850 crores. This year we'll be spending closer to INR 1,000 to 1,050 crores, so that needs to be funded. Second, working capital, our intention is to normalize it between the current quarter and next quarter, so that there's no incremental impact on account of working capital at the absolute, working, number level. So, debt level, we don't expect it to come down by end of the year. Okay, and however, we are very comfortable at current level of leverage, which is about 1.2 times EBITDA, our current debt level. So we are okay within the current range, but composition of the debt level will change with normalization of working capital and with a higher level of CapEx in the second half of the year. Sure, sir. Thank you. Thank you so much, Kumar. Thank you, Arnab, for answering my question. All the best, sir. Thank you. Thank you. The next question is from the line of Jaimin Desai from Emkay Global. Please go ahead. Thank you, sir, for the opportunity. So you indicated improvement expected in OEM category in second half. This will be more of first half or the second half similarly, or is it growth expected on YoY basis as well? And if you can provide some color on how is the OEM category growth across segments with commercial, passenger, and two-wheelers. There's too much noise there on the line, I think. Too much background noise. Yes. Yes, sorry. Is this better? Yes, sir. Yeah. Sir, you indicated good growth expected in the OEM category in the second half. Can you provide some color based on segments, commercial, passenger, and two-wheelers? And if this growth would be more of second half versus first half, or there would be growth on YoY level as well? Growth will be definitely second half versus first half, because we will be able to deliver more truck-bus radial because of enhanced capacity. Number two, we have visibility of a lot of models that are coming up for either launch or we are going in as second or third source. So we have complete visibility in four-wheeler. So that will come for enhanced fitment in the OEM and not because of OEM growth or anything else. Our share will go up in those cases, which is very much visible. It can be delayed by a month here and so, but it will happen and two-wheeler is purely increase in share of business, old and new, SKUs put together. Understood. Sir, you also touched upon the replacement cycles now shortening across commercial as well as passenger categories. Can you provide some insight on how they would have been, let's say, five years back in terms of number of years or number of months, and where they are now? So we do a once a year long-term planning of about long-term demand planning of five years, where we see a slight reduction of, let's say, creeping reduction of one and a half to two months to three months of the life of the tire because of enhanced usage. In some segments, it's not across segments. It is in some segments which is, let's say, the larger vehicles which travel much out of the city, those kind of segments. In truck tires, again, those who travel long distances, not the ones who are traveling intracity or shorter distances, start and stop traffic, there it is a different scenario, right? So it is not on the end. You can't map it to the entire market. Understood. Understood, and sir, just a final question. Sorry to interrupt, Mr. Desai. Please, rejoin the queue. Sure, sure, sure. Thank you. The next question is from the line of Mitul Shah from DAM Capital Advisors. Please go ahead. Sir, thank you for the opportunity. Sir, I have two questions. First one is on this pricing discipline, which we have seen in past one and half year, so this question is to Arnab, sir. So based on your past experience, what level of industry volume growth or in terms of a utilization have you seen pricing discipline or, at what level of a decline or lower utilization pricing war starts? I think it's not linked to capacity utilization. It is linked to each company's individual stance of what it wants to do with a lower price. So if one thinks that by holding price or lowering price, one can get market share, that's one, that some of the players may try. It may succeed, it may not succeed, but it may try. Some other players, I'm talking of industry in general without naming any player. Some players may decide to invest more in different kind of tires, premium tires, different kind of channel and investing in marketing and technology. They want to take the price hike. There are premium players also in the market, right? Multinational players, which have a different pricing strategy. We have a wide spectrum of pricing here. I think the old notion of just linking it to capacity utilization doesn't really hold right now, because there are examples of low capacity utilization and higher pricing in the market also. Okay. So second question, again, on the pricing side only is, raw material has started going down. Natural rubber almost down by more than 20% from peak. Crude is also down, steel prices. Roughly, entire RM basket is down by more than 10% from peak levels. Of course, from the weighted average price, it may not be significant lower. But going forward in Q4, when we are indicating, possible, raw material decline, so what is would be the scenario in terms of passing on price to the end customer? Do you think there is a possibility of retaining profitability by the industry? I'm not talking only about you, but considering the current environment, and would there be a lag effect in passing on this price benefit, similar to the price hike lag effect, so, industry can retain better margins for one or two quarters? See, I can answer that based on past data. I cannot predict the future. Right. If you look at a couple of cycles in the past five to seven years, or even back till 2015, 2016, I can talk of PCR margins have been holding steady at around 40%, 41%, even 42% gross margin for a significant number of quarters. So when the raw material price has gone down, the margin has gone back up to 40%+. So there is evidence that we have been, PCR has been able to hold prices to enable such kind of gross margin. Now, what will happen in future, I don't know. But there is evidence that this happens. Understood, sir. Thanks a lot, and all the best, sir. Thank you. Thank you. The last two questions are from the line of Raghu Nandan and Jinesh Gandhi. Please limit yourself to one question per participant. The next question is from the line of Raghu Nandan from Nuvama Wealth Management. Please go ahead. Thank you, sir, for the opportunity again. Sir, you have exposure to Europe market in exports, and with regards to the upcoming EU EUDR regulation, how do you think there will be an impact both in terms of the pricing as well as whether there will be any demand impact in terms of pre-buying? Yeah. So, EUDR itself, I think there is a discussion in the European Parliament, towards deferring it by a year. You might have heard about that. But, we had prepared ourselves completely to enable business continuity under EUDR, both in terms of procuring natural rubber from domestic markets as well as from import markets. So there will be an inflation, because the farmer who will comply with EUDR will, for sharing so much information, et cetera, will demand a higher price, and that's what is going to happen. So our cost of procurement is going to go up for, to the extent of EUDR rubber for supplying to EU markets. So we would definitely like to pass this on, because this is a global phenomenon. All players, global players, have to comply to this. There is evidence that people are tending to pass it on, and we would also pass it on, but if this gets deferred, then it gets deferred by a year. Got it, sir. Thank you. Thank you. The last question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Yeah, hi, sir. My question was on the market share. You talked about gain in market share on TBR side. Can you also reflect upon PCR market share in the replacement category, how that has been trending, given the changes in the market? My information is dated as of quarter one, because we have still not laid our hands on the quarter two share, but we are a close number three in PCR share, and the gap between us and number one is not very much, and we would definitely like to see us at number one in two to three years' time, and we have plans capacity-wise and new product-wise and marketing-wise to get there. That is PCR. In two-wheeler, we continue to be number one. This is again quarter one figure, and with a 10% market share in both motorcycle and scooter. Got it. What will be our market share in PCR currently and in two-wheeler currently, in one week? Roughly 35% in two-wheeler and roughly 17% in PCR. Got it. Great. Thank you much. As there are no further questions, I would now like to hand the conference over to the management for closing comments. So thank you very much, for the variety of questions in diverse fields, from raw material to markets. Thanks for your interest, and we hope to see you soon after the end of quarter three. Have a good festival time. Happy Diwali! Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.