Ladies and gentlemen, good day and welcome to Balkrishna Industries Limited Q2 and H1FY26 earnings conference call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. 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. Rajiv Poddar, Joint Managing Director of Balkrishna Industries Ltd. Thank you. Over to you, sir. Thank you, Ikra. Good morning, everyone, and thank you for joining us today. Along with me, I have Mr. Bajaj, Senior President and Director–Commercial, and our CFO, Mr. Satish Sharma, Senior President and Director of Strategy and Business Development, Mr. Ravi Joshi, our Deputy CFO, and Mr. Sushil Mishra, our Head of Accounts, and SGA, our IR advisors. Let me begin with performance updates. We continue to navigate through a period of significant challenges during the quarter. Tariff-related headwinds intensified with the U.S. increasing import duties on India to 50%. This development has a severe impact on our U.S. sales, which accounted for approximately 10% of our last year sales volume. Consequently, the overall sales volume and sales performance for this quarter reflect the decline in shipments to U.S. markets. We would also like to take this opportunity to express our gratitude to the Government of India for the reduction of GST rates, a measure that is expected to stimulate end consumer demand and positively influence the broader market sentiment. Additionally, what we hear from the public domain, there is growing optimism regarding the early conclusions of the trade agreement between India and the U.S., which once realized is expected to ease the current tariff challenges and support our medium-term outlook for the United States. While the geopolitical and macro environment, particularly outside India, continues to remain uncertain and warrants cautious optimism, we believe that such short-term headwinds will ultimately strengthen our foundations and create opportunities for sustainable growth in the mid and long term. Our strategic focus remains to strengthening our market position in India and Europe while driving incremental growth from rest of the world markets. We will keep endeavoring to increase our share in the U.S., which should regain momentum once the tariff situation eases. Our foresight in anticipating geographic and segment concentration risks has, however, mitigated part of this impact. The strategic initiatives undertaken, such as enhancing our presence in the Indian market and expanding our carbon black business, were key elements of our de-risking framework. Building on the strong foundation, we remain cautiously optimistic in the near term but are confident about the long-term outlook. With continued expansion of our market reach, additional product lines and expectations of a more favorable macro environment and tariff environment, we are well positioned for a long term growth momentum and move steadily towards our long term vision of achieving INR 23,000 crore in revenue by 2013. Let me now share some highlights of our business. In the last quarter BKT received the Excellence Level Award from Caterpillar’s Global Supplier Excellence Recognition Program for outstanding performance in quality delivery and customer support of mining tires. This is our fourth consecutive year of this recognition for our commercial vehicle and passenger vehicle. We inaugurated a dedicated vehicle dynamics and testing base at the Nettrex in Indore, Asia’s second largest and longest test track facility. This will help us for our tire testing and further improving quality parameters in these tires for these vehicles. It also gives me immense pleasure to share that BKT Bhuj plant achieved a five star grading and a Sword of Honor award for 2025 by the British Safety Council reflecting best in class standards in workplace safety, health management and risk control systems. BKT has been named the title sponsor for the Australia India Men’s ODI and T20 International series. This is testimony of our commitment to continuously invest in our brand building. We have further strengthened our leadership across regions and end segments. These appointments will create a sharper focus with an aim to increase market share across all segments across the globe. With this I now move on to operational highlights. For the quarter our volume stood at 70,252, a degrowth of 4% year on year. For the first half of this year our volume stood at 150,916, a degrowth again of 4% year on year. Our standalone revenue for the quarter stood at INR 2,360 crore. This includes realized loss of foreign exchange pertaining to sales of INR 68 crore. For the first half of this year standalone revenue stood at INR 5,079 crore, registering a marginal decline on year on year basis. This includes realized loss on foreign exchange pertaining to the sales of INR 70 crore. The standalone EBITDA for the quarter was at INR 500 crore with a margin of 21.5%. Like last quarter we were impacted by low American sales and higher India sales. Additionally, we created inventory of raw materials to comply with EUDR regulations which will come into effect from January 1, 2026. For the first half of this year the standalone EBITDA was at INR 1,155 crore. The margin for this year, this first half stood at 22.7%. Profit after tax stood for the quarter was recorded at INR 256 crore while for H1 it was INR 552 crore. Our capex spend for the first half of this year was approximately INR 1,737 crore. The announced projects are going as per schedule and are expected to be completed as per planned timelines. As on 30th September 2025, the gross debt and cash equivalents were at INR 3,615 crore and INR 3,159 crore respectively. Accordingly, we have a net debt of INR 456 crore. The Board of Directors has declared a second interim dividend of INR 4 per equity share in addition to the INR 4 per share paid for the previous quarter. With this I conclude my opening remarks and leave the floor open for Q & A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 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 Siddharth Beira from Nomura. Please go ahead. Yeah, thanks for the opportunity. First of all, on the side. W e can't hear you. Hello? Yeah, is it better now, sir? Hello? Yes, yes, it's better. Go ahead. Okay, so sir, just wanted to understand first on the U.S. market. I mean, we have seen that impact of tariff coming through. Assuming, I mean if it normalizes at some point, how soon can we sort of see the volumes coming back? How are the inventory levels as of now and how do you think that sort of quickly turns around going ahead? Second is on Europe also. We have seen a bit of a softness there. What is happening in that market? Is it also related to the trade uncertainty or why demand is slow there and when do you see that recovering as well? For the US, once the situation eases out, we should be able to, and we start seeing normalization, I think within, hopefully within a couple of weeks, we should start seeing some turnaround. Also, what we are anticipating is there may be some pent-up demand. In the short term, it may kick start something. We are ready for servicing that market. We will be ready in about a couple of weeks from once you start getting the orders. Regarding the EU market, there are challenges over there which we are seeing in the overall market. We are hopeful these things will ease out as we move forward. Understood. Sir, on the capex side, I mean we have already done about INR 17 billion in the first half and you have guided for close to maybe INR 35 billion over the next three years earlier when we sort of started the TBR PCR plan. Where should we sort of think about the capex for this year and how does the three-year plan look now? We envisage the year end to be close to INR 2,000 crore-INR 2,200 crore and the balance to be in the coming years. Okay. So this year CapEx will be about INR 2,200 crore. Is that your thing? Sorry, can you repeat your question? No, I said that we have already done INR 17 billion in the first half. Where do we see the capex for this year and how should we look at the next two years given the plan of INR 35 billion we had guided for. We are as, that's what I mentioned. This year we see the year ending close to about INR 2,000-2,200 crore. The balance will come in the next year, and in the next two years we will see the whole money being utilized. Okay. Okay. So this year first half capex has been a lot higher. Second half we will see some much lesser capex. Yes. As the plant and machines are getting ready, they will keep on replying. Okay. Will there be any maintenance capex on top of it, or is this the total capex we are talking about? This includes the maintenance. Includes the maintenance. Okay. Lastly, on the ASP and margin side also we have seen a bit of a correction this quarter. If you can just highlight a couple of reasons for that. Is it only the US share reduction or anything else here which has impacted the franchise? Yeah, so that is because of the geographic mix and the product mix mainly contributed by these two factors. Understood. Lastly, on this plan of TBR and PCR, can you sort of highlight now, like we are probably starting the pilot from Q4, so next year how much do you think we can produce for the TBR sort of project? It will be a slow start and we will start somewhere in the second half of the next. Okay, second half of next. Okay, thank you, sir. I'll come back in the queue. Thank you. The next question is from the line of Raghunandhan NL from Nuvama Research. Please go ahead. Thank you, sir. Congratulations on the Caterpillar recognition. On my questions for the US, in Q2 the applicable tariff was 25% and in Q3 the applicable tariff will be 50%. Would that be right, or was 50% already in place for part of Q2? For the second, I mean, second half of Q2, the 50% was already in place. Understood. And just to clarify, you are absorbing part of the impact in Q2? No, at the moment we are not selling. We are not absorbing anything. So, not selling anything. Understood, sir. There is a tailwind of Euro INR. How is the realization for Q2 versus Q1, and what is the hedge rate for the remaining part of the year? Q2 was almost at par with Q1 in the numbers. I'm not Andy, so I may not be able to comment for the rest of it. Got it, sir. Can you share the freight cost as a percentage of sales in Q2? Around 6%-7% of total sales. Got it. That should remain at this level? Yes. Just the last question, sir, on the input cost, how are you seeing the trend in terms of Q2 versus Q1, and what is the expectation for Q3, and also the EUDR regulation impact? What kind of a cost impact can it have? All the raw material prices are on the soften side, but because of the EUDR, we expect a similar cost for the next part. Okay, so Q3 certainly a flat Q. Okay. Yes. G ot it, sir. Thank you so much, sir. I'll fall back to the queue. Thank you. The next question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead. Yeah, thank you sir for the opportunity. This, can you help us understand how the end market U.S. is reacting due to differential tariffs? Are some of the Indian peers putting, or are the, I mean, some other players taking some market share temporarily, sir? In the end market, has there been any price hike being taken, sir? At the moment, what we understand from our local team in the U.S. is that they are consuming, they are depleting their stock inventory from there. There are no fresh supplies coming in and everybody is on more of a wait and watch across the globe. It is not that other players, at least from India, are able to eat in or anything to the best of our knowledge. Okay. Has there been some price hikes in the market by the distributors? No, at the moment, because they are using old inventory, we do not have any update of any price hikes. I mean, they may start feeling some pressure once the older stock is depleted. That time we will have to see, wait. I mean, truly, either the tariffs ease out or then we will have to, you will get a true color of it if it does not ease out in the coming quarters because the inventory would have depleted by then. Got it, sir. Sir, on the new segments, can you update how the progress is happening in terms of the new product development, in terms of sizes, etc., and how the channel building, sir. Yeah. There's the progressive as per plan. I cannot share the plan in complete details on the call, but I can clearly state that the progress is to plan. There is no variation to the plan. Like I mentioned in a previous question, we are set to release our first production in the second half of the next year. Got it, sir. Sir, lastly, how much of the carbon black sales f or the discordancy. I t is around 55% of the total production. If you are asking from the turnover point of view, it is less than 10%. Less than 10%. Thank you so much for the opportunity. Thank you. Thank you. The next question is from the line of Yash Agrawal from Nirmal Bang. Please go ahead. Hello sir. Thank you for the opportunity. I just wanted to understand from the demand side of Europe like how it will turn out in H2, whether it will get better from current situation. We are from what we are hearing from the team that the headwinds are now easing out. Of course it's too early to give a very rosy picture but things seem to be easing out. We are quite confident that the headwinds are easing out. That's what we can say at the moment. Also on the US tariff position after the resolution and negotiation how low we expect the tariff to go from current situation? T hat I think nobody would be able to just advise if I mean how low it should go. I mean as a manufacturer we would like it to be as low as possible. What is the number t hat is for anybody to give you a number? I think as far as it goes, I think our Indian government is also very positively pushing for it. We believe we are in safe hands. Whatever the Indian government concludes with the U.S. team, we will abide by it. Thank you sir. That's from my side. Thank you. The next question is from the line of Joseph George from IIFL Capital. Please go ahead. Hi sir. Good morning. I have three questions. The first one is how much is the margin hit because of the EUDR provisions? Have you already started making it or will you start making it in the fourth quarter? Some color there. We have already started procuring and then material from last quarter and you can see the impact of it. We will not be able to give you the exact breakup of. I do not have the numbers for the exact breakup between the EUDR split and that, but it definitely has started kicking and we see it to be now fully in place this last quarter. Would it be right to assume that this quarter's margins take into account the full impact of these provisions or these procurements or do you expect incremental impact going into the subsequent quarters? This quarter is not impacted fully. Next quarter it will be fully impacted. Whatever implication is there, that will be offset by the shortening of the other raw materials. Okay sir, the second question that I had was on carbon black revenues. When do we expect to see a ramp up in carbon black revenues w ith the specialty carbon black revenues kicking in? That is financially as we should be able to see. Okay, thank you. The last question is I think in the past you had guided to a low single digit kind of a volume growth. This year is there a revised number that you can give out based on the one numbers or are things too uncertain to really talk about? We have not given any guidance but we will always maintain that there is too much volatility in the world to give any guidance. We are not giving anything and we have not given the last. Okay, thank you. Thank you. The next question is from the line of Pankaj Tibrewal from Ikigai Asset Managers. Please go ahead. Yeah, good morning Rajiv. I know these are challenging times but if one takes a slightly medium term view on a three, four year basis, how do you see the shape and size of the company changing? I know these are times where both Europe, U.S., everywhere there have been headwinds. You said that headwinds are easy. If one takes a slightly medium term view on a three-four year basis, how the shape and size of the company is likely to change and with the current capacities coming on stream, how do you see things shaping up on the domestic side? These are the two questions. Thank you. Thank you Pankaji for the question. I think as I mentioned that in the short term there are headwinds and there is humongous volatility. That said, we are not shying away from investment either in terms of branding or in terms of infrastructure setup because we believe that these are the times that we have to make our foundation stronger and the more the foundation becomes stronger as these headwinds ease out we will be ready to jump and take use of the opportunity. As far as the midterm view is, we are quite positive both from the export market because we believe Europe headwinds are going to ease out. With the positive statements from our government and the push that they are making, we believe the U.S. scenario should also ease out. We are getting ready for that. That is there on the export market. As far as Indian market is doing, our strategy to enter that in 2016, 2017 is paying good dividends now. Otherwise you know that would have been a little bit more challenging. With the Indian GST as I mentioned, our government has reduced the GST which will have an impact at the end user level. Mid term we are quite positive and long term I have always mentioned the company working towards its vision of INR 23,000 crore turnover by 2030. Mid to long term we see the company shaping up in a very strong way. As I mentioned, these are the times where we are investing in manpower. As I mentioned in my speech, we are recruiting wherever we are seeing the gaps in resources. We are investing in plant and machinery with roughly about INR 1,700 crore already spent in the year and additional money being spent to upgrade and set up new capacities and also on vending. All these activities are being done. We are also setting up testing facilities for our newer products. All these are being done because we see positivity in the mid to long term. That is how we are seeing the company and we are building it towards that with a full intent of capturing the markets as and when it is ready. It is, you know, coming back. F antastic and always being an old tracker of Balkrishna, for the last two decades you have used challenges to overcome, you know, medium term vision. The case in point was the way you entered the domestic market and now you are at a 17%-18% market share which is quite commendable in the agri space. If they take the same purposes to the TBR and the PCR market, what will make the team happy? I'm sure you have recruited Mr. Sharma is there, everybody, t he entire team is there and we have started to get feeders from the ground. Would love to hear your aspiration. What will make the team at Balkrishna satisfied over a five year period on the TBR market? Thank you. Thank you for the compliments on the domestic market. I'd just like to correct you, our agri market share is not 17% but is over 20%. That is what we have been able to do. As far as the consumer business is concerned, we are setting the foundations currently in terms of, as Satish mentioned earlier, the product development program is going as per plan. The manufacturing setup project is going as per plan. We are working towards building the strong foundation over there. As far as the end result is concerned, I think what we are aspiring for is in the next five years to get about INR 5,000 crore revenue from this business by 2030, which would equate to roughly 7-8% of the market share in the midterm. That would make us happy if we were able to achieve that and doing that with, you know, with respectable bottom line and margins. We will always be setting a position of a premium player. That's the view and aspiration. Fantastic. Wish you all the best and I'm sure these challenging times will get over very soon. Wish you all the best. Thank you. Thank you. Thank you, ladies and gentlemen. In order to ensure that the management will be able to add the question from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. The next question is from the line of Basudeb Banerji from CLSA. Go ahead. Morning team. A couple of questions. One, if we see that it's almost a prolonged period that overall annual volume is restricted around this 300,000 tonnes because of tariffs or macro issues. In the meanwhile, India piece has moved up from 12% of revenue to 25-30% of revenue now. GST cut, intra push, etc. As you highlighted, can you see what kind of size of opportunity lies in India market and how further it can go up so that it can de-risk you more from these global uncertainties. That's the first question. For the Indian market, we believe the opportunity is yet quite large across all the off-highway sectors, and with this, when the brand is being created and all, even this will have an effect on the consumer business and will help us there. We are quite upbeat about India and we are very, very positive. We see a huge opportunity here for us to capture. What we are t rying to understand that, can you see like India being 50% of your revenue in the next five years' time? Do you aspire for such a situation or you want to keep it limited as well? We are hopeful that, you know, the European countries and the U.S. would also come back. That would further accelerate the sales. I do not think it would be fair to say we want to keep it at 50% or 30% or anything. We are ready to tackle all the markets. Wherever there is an opportunity, we are going after that. It would be difficult for me to say I want to cap India at 30% or target India at 50%. I mean, if the world also picks up, we are ready to service them and service India. We are not making India at the cost of others or giving priority to one over the other. We are saying we are ready to service whichever market is, you know, currently ready to accelerate our sales. We are ready all over. Second question is, again on the back of this prolonged headwind in the global market, you have like BKT tires, cricket sponsorship in Australia. If you can define what is the outcome of these initiatives in markets like Australia or new market initiatives you are taking to deal with the business. Because if we see India, Europe, and U.S. in your pie chart, rest of the world revenue mix is not moving up despite headwinds in these developed markets. How to look at it from that angle? So I mean if you look at it, if you look at it this way, I mean earlier India was also part of the rest of the world. For us it was Europe and America and then rest of the world. Slowly we have created a niche, I mean made our headwinds in India and that has now become a standalone strength of the company. Like this only, the rest of the world is also growing. As you see, as you rightly mentioned, Australia is a big opportunity for us. Asia is a big opportunity. We are focusing on all these markets. They may be small today but everybody has to start from, I mean when you go to school, you start from kindergarten and then make your way to high school. You know those blocks are starting small, but whenever you start you will have to start small. We are putting in all the efforts to make each block strong to deal with the company from any particular geography. Today they may be small but there is a lot of hope that one day they will also become a standalone block for us to mention in an individual capacity. Also a lot of these markets would give us benefit in the mining sector because Australia, Asia would give, you are predominantly mining sector. With the new setup of mining tires getting in place, these sectors also become, these countries also become very important for us. That's why the blocks are now being looked at as individual blocks. Sorry to interrupt. Basudeb, we are unable to hear you. Please check your network connection and rejoin the queue. The next question is from the line of Mihir Vora from Equirus. Please go ahead. Yeah, thank you for taking my question. My first question was on the US market, where currently we are seeing this 50% tariff. Just on quarter three, do we expect to maintain that 14% share of US business or will it drastically come down at the current tariff level a s such? At the current tariff level, it will definitely come down and be compensated by margin by sales to other geographies. Things would look positively on that. What tariff levels would we see it as a viable option in terms of where we start supplying, any number to that? No, I think we'll refrain from commenting on that. All right, sir. Secondly, on the Europe market, are we seeing some kind of competitor traction, basically from, say, players from China, Thailand, or Europe itself? They are diverting their supplies from US to Europe and due to which we are seeing some headwinds in the market. Any kind of fraction that way? No. No. Overall, the European market is challenged. I mean, it's facing headwinds. We are not seeing any such traction from our competitors. If you see, all the players in Europe have also mentioned that Europe is currently going through headwinds. I think it is just overall volatility and headwinds being faced by them, which is creating this kind of a scenario. Market share remains intact? More or less, yes. Yeah. Lastly, just on the back, circling back t o the U.S. front in terms of competitors, basically, do they have the domestic capacities that, you know, if import reduces, will they be able to cater to the market in terms of domestic capacities or they will have to rely on import in the shorter term? I mean, what we see from the numbers of imports, U.S. was and will remain net importer country. So that's what we can comment on that. All right. Okay. That's all from my side. Thank you. Thank you. The next question is from the line of Jinesh Gandhi from Oakland Cap. Please go ahead. Initial line is unmuted. Please proceed with your question. Yeah, can you hear me? Hello? Yes, we can hear you. Yeah, hi, Rajiv. Two part question. Obviously what is happening in the U.S. today is one could not have foreseen, but we obviously, a few years back, had thought of putting up a capacity locally in the U.S., which in hindsight would have been a great initiative. Given the importance of the U.S. market and HD market globally and our aspirations in the U.S., does it make sense to reevaluate that kind of initiative to actually be offensive in the U.S. market and aim for a much larger market share than what we would be getting organically through India right now, through India supplies right now? How do you think about that? We yet see that any such move will come at the cost of economics, and that is why we have shelved the program and we continue to hold the same stand at the moment. Okay. Second question pertains to, given the uncertainty, the longer it stays in the global market, one may see some of your weaker competitors or even bigger competitors defocusing on this segment. Are we open to M and A to strengthen either in areas of our weakness in terms of product or geography? We are, as I mentioned at BKT, we are always open to opportunities. Whichever comes, we will evaluate them, and if we see positivity, we will grab them. Whether this could be in terms of any of the options that you have mentioned or otherwise. We will continue to do our work, which is on building the brand, building the product portfolio, building the infrastructure, and waiting for an opportunity to come which we are able to grab. Got it. Lastly, just to understand, what was the benefit of RM cost in this quarter and how do we see that playing out at least for 3Q given the trends in the spot prices? There is no benefit that we have got for RM. Our cost is higher a little bit because of the EUDR. As Mr. Bajaj mentioned earlier, the EUDR impact would fully come in, but that would be offset by some of the other raw materials which are softened. Overall impact should be stable. Okay, but net, I mean, forget the EUDR implications, but the natural rubber prices and synthetic rubber prices would see a reasonable decline in 3Q, which will get offset by EUDR impact. But gross basis, commodity should be a tangent, right? Yes, it will be same. Got it. Great, Rajiv. T hanks and all the best. Thank you. The next question is from the line of Rishi Vora from Kotak Securities. Please go ahead. Yeah. So just one question from my side on this EUDR regulations. Is there any impact which you could quantify for this quarter? I remember when, you know, a couple of quarters that you had highlighted that the procurement cost of natural rubber will go up by 10%. So that's the ballpark number which we should work with. We don't have that readily available. We are working on it because the other commodities are also going down. So we are trying to see the impact. We don't have that exact number. Okay, but the procurement cost would be around 10% higher than whatever the spot prices for the natural rubber. No, that is also reduced. That is why it's a, it's a moving, a moving number every day. It's difficult to give a fixed number because every day. See, the last time when the EUDR had come in it was too new so people were not ready. Now in the one year a lot of people have got ready. That's why the impact will be lower. It is, you know, every day there is a movement on that so difficult to comment on a fixed number. Understood. Sir, just secondly on the EU market, you know, at least we have seen that the agri replacement over the last couple of quarters have been not declining but kind of have steadied at a slow single digit growth and still we are witnessing a decline over there. It's just that we are doing some inventory destocking and detail level things are okay or is there anything else? Because at least at an industry level we are not seeing this much of a decline which the company is reporting at least in first half. Sorry, can you repeat the question? We missed that question. As in the agri replacement in. Ladies and gentlemen, we have lost the line for the current participants due to time constraint. This would be the last question for today and now hand the conference over to the management for closing comments. Hello. Yes sir. Hello. Yeah, so I think thank you to everybody for taking the time out for coming up on this call and we hope to see you all in the next year, in the new year and wishing you best for the coming season. Thank you. Thank you very much on behalf of Balkrishna Industries Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines.