Ladies and gentlemen, good day, and welcome to the Automotive Axles Limited Q2 FY 2023 earnings conference call, hosted by Batlivala & Karani Securities India Private Limited. As a reminder, all participant lines will be in the listen-only mode. 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 and then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sailesh Raja from Batlivala & Karani Securities. Thank you, and over to you, sir. Yeah, thanks, Inba. Good afternoon, and thanks to everyone who has logged in to Automotive Axles Q2 FY 2023 earnings conference call. Today we have the senior management team of the company, Mr. Muthukumar N, President and CEO of Meritor HVS India Limited, and Mr. Nagaraja, President and Whole Time Director, Automotive Axles, and Mr. Ranganathan, CFO, Automotive Axles. Now, I, I would now like to turn the call to Mr. Muthukumar for the opening remarks, followed by the Q&A. Sir, you may begin now. Thank you, Sailesh. Good afternoon, ladies and gentlemen. Once again, happy to be back with you, and I'm sure that everyone of you is good and safe. Just wanted to give you, before starting the regular about Meritor, about the Cummins Meritor better together. All of you know that you'd be eager to hear from this. As indicated earlier, the integration process is going on smoothly. We are around day 90 after the official integration between both the companies. And the statements of both Cummins President and CEO, Ms. Jennifer Rumsey, says: "We're excited to welcome Meritor employees into Cummins. Together, Cummins and Meritor will move forward and faster in developing economically viable, decarbonized powertrain solutions." Ladies and gentlemen, you all know that Cummins is targeting towards going to Destination Zero in order to make this Mother Earth a much, much better place to live for the future, and the same is with Meritor. A great combination, team. The chairman of our JV, Dr. Baba Kalyani, conveyed his wishes to the team, and he feels that this is going to be bringing great changes to the organization, and it's also for good for the future. I think both the team, Jennifer and the Group President and CEO Global and Dr. Baba Kalyani, convey their best wishes to the members of the shareholders of Automotive Axles. With that introduction, ladies and gentlemen, I'm sure that you will have a lot of questions at the end. I'm going to answer it back, but I'm requesting Nagaraja to talk about where are we now in terms of our footprint, how the business is, what is the activities that we are doing in our sustainability, and what are the products that we are using, followed by Mr. Ranganathan, who will talk to you about the financials for the quarter and how we are performing. I'll come back to you on the last slide on what is the focus for continuously improve the current situation. With that introduction, ladies and gentlemen, over to Mr. Nagaraja for his general introduction. Over to you, Nagaraja. Hey, thanks, Muthu. Just a question here, which slide we are in? We are in slide three. Slide three, Nagaraja. Snapshot Q2 FY 2023. Okay, thanks, everyone. Again, good afternoon, I'm Nagaraja here. As you can see here, while Ranga is going to touch upon the revenues separately, we've been doing reasonably well in terms of revenue, EBITDA, and PBT. And just to give you a brief background about our manufacturing location and everything, we have four manufacturing locations. Mother plant is in Mysore, and we have satellite plants in both Jamshedpur and Pantnagar, and have a warehouse in Hosur, mainly to support the customer for the last mile. So we have 2,000+ employees. We have customers, you know, all the major OEs, we supply our products. And our products consist of our axles, brakes, and suspension systems. As you can see, as far as independent manufacturer is concerned, excluding the OEs, who have got a backward integration, we are the number one in axle and number two in brakes. Next slide, please. Muthu did mention about you know, the green initiative and especially sustainability roadmap. It's not just that you know, we are supplying the product to meet the market demands, but how do we manufacture them? How do we ensure that there is a good balance between our industrial activities and then still maintain Mother Earth? We started off the journey in 2017. As you can see, we started introducing green energy. We were at about 20% at that point of time. But, over the last five years, there's a significant improvement have been made. Now we are about 70% of, you know, our energy is coming out of renewable energy. And then we are also focusing heavily on, you know, controlling the emissions in all parts of our manufacturing activity. There was one mandate just about a month ago, we talked to the suppliers, and we started engaging our supplier also to, you know, embrace these green technologies in every aspect of manufacturing. So, on the right side, you know, we are looking at how is the, you know, the main six pillars of our model, you know. One is, you know, starting off with, you know, the green energy, what I talked about, and how do we sustainably manufacturing, whether it's the use of water, or elimination of some of the substances which are hazardous to environment. We also started working on the IoT, which is basically Internet of Things. In fact, as we speak, two of our production lines have been completely digitized. And then we continue to work with the society, you know, whether it is education or you know, planting trees or connecting with the you know, other layers in the society, team has been fully engaged. Corporate governance is one thing, our board is very, very, I would say that, very, very focused in that area, and the board has been guiding us to ensure that, not just in our corporate function, but at all levels, including all the stakeholders, you know, we're focusing on that. Next slide, please. Okay, so, as you can see, we are catering to the diverse markets and, you know, almost all the customers, both in India, also globally, whether it's a truck, a trailer, or the after market or even as there's a renewed focus coming on the military, especially, you know, made in India, we continue to support that. Our focus going forward will be more on the off-highway, where we have looking at, you know, developing a specific solution and, having the, as you know, Cummins knowledge and the capability in the off-highway is going to really help us. We continue to Ashok Leyland still remain our largest customer, but, you know, we are expanding and adding more products with the other customer, whether it's Tata, Mahindra, o r Daimler. So we also export to UD from India, and we can also continue to do more exports to the other Meritor locations. So with that, I'll pass it on to Ranga to go through the financials. Thank you, Nagaraja. Thank you, Muthu. On the financial results, hopefully, all of you have seen the performance, but just give a quick snapshot. The revenue for the quarter is about INR 475 crore as compared to INR 310 crore the last year, same quarter. The revenue growth of 54%, and EBITDA is about INR 551 crore as compared to INR 23 crore last year, the same quarter. The EBITDA percentage, what we see is about 10.7%, this is 7.5%, which is close to about 48% increase. The EBIT stands at 8.5% as compared to 4.5% last quarter. So EBIT level, you know, the percentage growth is close to about 89%, thanks to the volumes and, and also the cost performance. As far as the half year performance is concerned, the half year revenue growth is INR 977 crores, as compared to INR 566 crores, you know, last year, same quarter. EBITDA is about INR 104 crores for the six months at 10.7% and compared to INR 39 crores last year at 7% this year. EBIT, we are, we were at 8.4% for the first half year with INR 82 crores on absolute values. Last year, the same six months, the EBIT are 3.8% with INR 21.7 crores as an absolute values. On an overall basis, the volume definitely yielded a good amount of leverage, as well as the material cost and other conversion cost performances also driving the bottom line in spite of the heavy commodity impact we need to observe in the last six months. With this introduction, I'll ask Muthu to take over the growth through Mission 2025 strategies, as well as the key actions going forward. Muthu? Thank you, Ranga. One minute we will be able to join back. Maybe I can touch base on the growth, and you can finish up the growth. Okay. As all of you, as far as the growth is concerned, you know, all of you know, 2021-2022, the MHCV market is close to about 300,000 level. As of now, we are anticipating the whole year, 2022-2023, at 375,000-380,000 vehicle level. So definitely, we as an organization is focusing on the grow revenue. We will be at the market. We try to work on to grow beyond the market growth. We try to. Our growth rates, we always try to aim at growing a little ahead of the market growth rate. So our focus continues on that as part of the Mission 2025, enhanced profitability is a very, very, very key initiatives. All of you are noticing when the market goes ups and downs, we are able to control the cost and try to bring the reasonable profitability as the volume divides. So, a new business wing, Muthu and team is continuously working with on almost all segments in terms of enhancing the share of business or focusing on how the aftermarket business or enhancing the export business. So, operational excellence, whether through the material performance or IoT, definitely is a key focus. We are working on it. We are also working on the digitization as well as the paperless office initiative is part of the operational excellence. Every function in Automotive Axles is working on excellence in their own function, which gives an overall operational excellence, which brings a consistent and cost benefits in the long term. Customer focus and customer value is always your key focus area, which comes through the value proposition to the customer in terms of the most of the cost, delivery, as well as the new product introductions. As overall outlook, the market is looking better. We hope the market will be better than the previous quarter, will definitely perform as a market, and the volumes for the Q3. So as I said, the focus will continue as on Industry 4.0. Commodity definitely is getting softened, maybe in the second half of the year, probably will definitely have some advantage going in the second half of this financial year. Our focus continues on the operational excellence, conversion cost, and other material cost performances. There are key actions, broadly, you know, safety our primary focus. We work on all the safety measures, employee first, safety first, and also we are also taking the ESG, as Nagaraja has explained earlier, through the green initiatives. We are continuous focus on those things, make sure that, you know, the green initiatives, not only in Automotive Axle and also the entire value chain. Though COVID is softened and more or less it is got up, settled down, but we are also continuously taking care of the entire system as well as the employees, so that the COVID pressure on the whole system is low. As far as the cost measures are concerned, definitely, you know, our end 2025 initiatives through the operational excellence, definitely we will continue to focus on the cost performance metrics. More importantly, the commodity price changes, we are closely watching on and managing the business. That doesn't really affect our profit performance. As a business growth strategy, all of you have known that, you know, last time, Muthu also mentioned that we have signed up a long-term, you know, agreement with our key supplier, key customer, Ashok Leyland, as well as we won a gold award for a great cost savings as a value proposition to Ashok Leyland. So we got the award last time. Again, as a matter of fact, the focus on export definitely continues. Definitely, we are seeing good opportunities, and definitely our organization will benefit in the coming days. Improve the operational performance, increase the share of business with OE. That's always a focus area for our front-end team, so we are working with all OE customers. We are also constantly looking at the product development as one of the strategic initiatives to give a value proposition, as well as to get a better position with the customers. Digitization and as I said, you know, paperless office drives across the organization as part of the green initiatives. With this brief performance update to all of you, we are open for the questions. Thank you. Thank you, Ranga. Just before we open to questions, ladies and gentlemen, on the slide number five, where the circular economy, where Nagaraj presented, you go to the bottom of the slide, it shows what is the initiative that your company is taking towards migrating to renewable power. There's a small spelling mistake. The replacing of LPG with LNG is not in December 2022, it's by December 2023. I just wanted to bring it to your notice. Sorry for the typing little error. With that, I think, Sailesh, you can take it forward for the question and answer. Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may enter star and one on their touchtone telephones. 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. Anyone who has a question may enter star and one. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Chetan Gindodia from Alf Accurate Advisors. Please go ahead. Thank you. Hello, sir, questions. Congratulations for the good performance. Sir- Mr. Gindodia, if you want to speak, come over, please put your handset. We can't hear you very clearly. Hello? Yes, please go ahead. Yes. I wanted to understand what are the initiatives that looking to grow ahead of the, CV industry and to increase our content for you? That's the first question. Second question is with respect to our, new suspension product and, products to increase our share in the LCV market. What is the update on this? And if you can also share the revenue breakup between brakes and axles, that would be great. Okay, I will thank you for this team. So I'll answer one by one. I think the, in terms of the growing revenue, Ranga explained to you very well on what are the areas we initiated, what we are doing, and we want to be ahead of the market. You would have very well seen that our growth in the market in terms of top line is better than the market growth in commercial vehicle segment, particularly 7.7 x and above. So your company will continue to innovate the products, introduce the products that is needed for the new application, and keep on going. The second question, in terms of addition of the adjacencies or addition of the value, we will continue to improve on the content for axle, content for weight with one content for axle by increasing the, the bracket we belong to the customer. But in terms of adjacencies, we know that we have introduced suspension, which is on the third line. The relaunch of the product at this point of time is doing well, we will continue to do it in that segment. I think maybe next one year, we will see the substantial content of suspensions is being sold from the company b ut sorry, gentlemen, you wanted a split between the brakes and axles, but you know, at the policy, we don't share normally the share of business with the customers or share between different verticals and also our export content. I'm sorry, I regret I'm not able to provide you that information at this point in time. Thank you very much. Hope that clarifies the next question. Yes, yes. Thank you. Just as a follow-up, wanted to understand now with coming up as a partner, is there any change likely to our relationship with the subsidiary, Meritor subsidiary, and, you know, is there a plan for merger or increasing our share of business, wallet share with the other non- Ashok Leyland OEM also? See, this partnership between Cummins and Meritor, it brings a lot of, an enormous opportunity for us to explore the new team. There are many customers where Cummins is present very strongly the relationship where we can penetrate. At the same time, there are a lot of customers where Meritor is present strongly, where we haven't explored what can be done for Cummins. The management team, we are working very strongly. At this point of time, the relationship between both the partners are very, very strong, and we are working on the long-term strategy. We don't have any plans at this point of time of bringing the changes to the existing structure what we have in terms of the JV. Okay. Got it, sir. Thank you so much, and I wish you all the best. Thank you. Before we take our next question, we'd like to remind participants to ask a question, you may enter star and one. The next question is from the line of Sunil Kothari from Unique Portfolio Management. Please go ahead. Thanks for the opportunity, sir. Congratulations for good number. Sir, the presentation, Mr. Ranga, clearly mentioned that commodity price sourcing will definitely help us by second half. Up to now, we were not able to take any benefit. So would you like to talk about the possibility of maybe margin, if not numbers, what the scope of reducing costs and what type of benefits it will give? Yes. Thank you, Mr. Kothari, for asking this question. I can understand your anxiety in getting to see margin standpoint and I really appreciate. I think Ranga touched upon the point that commodity softening and it is going to ease out a little pressure. But all of you know, in the commodity winter, all of you have appreciated that we are able to do back-to-back with the customers and trying to recover the money. The same thing will happen when the commodity comes down, and we'll be passing on to the customers in the commodity. Of course, there is a little time difference, which is going this morning, but I want to be very, very clear that the commodity goes up and down. Other than the base impact in terms of the percentage, it's not going to have a huge impact in terms of bottom line. Ranga, please correct me if I'm wrong on that particular statement. You're absolutely right, Muthu. So, definitely, the commodity as a principle, whether it's going up or going down, we have a specific understanding with the customers to, you know, pass on to them. Definitely, the commodity is soften. Definitely, the rail also had a take, and they completely pass on to them. And, so end of it, it's no gain or no loss for us. Only thing is, other than that, it creates a base impact, either in terms of the percentage, whether a plus or minus, depends on material going up or down, so. Okay. And, so my second question is, with Cummins, coming in, may not be in a very near term, next 12, 18 months, but over a period, do you feel there is a scope to bring some, products which enhance our, market, market size? If you can talk a little bit, what the possibility without mentioning any numbers. Very well then. Thanks for this question, but obviously, at this point of time, I know many of you have Mr. Ashwath the Managing Director of Cummins investor call couple of days before, and it is too early for us to predict that what product we are going to bring in line. Please understand that axles is a different vertical, and engines is a, and components is a different vertical. And while we will be bringing a lot of synergies in terms of scales, in terms of, access, in terms of growth and revenue, it's going to take a little more time for bringing in a product, because both the products are unique by nature, and it's not immediately we can, merge these two. We are discussing on strategically and what all could be the potential opportunity in the short term and in the long term, and continue to work. But rest assured that this is going to bring in great opportunity for the organization, and it's going to make this organization to grow financially. That's for sure. Great, great to hear, sir. And my last question is, looking at the performance, we already, crossing the all-time high numbers of the, our revenue, hopefully by this year, which we have done in 2018, 2019. And looking at the overall economy and the demand, would you like to talk about the, industry demand scenario on the ground, what you are observing, what you are expecting for maybe next year? How, how you see this, image, medium to heavy and other products moving on? As you rightly said, with the current indication of what we have completed for two quarters, we will be crossed about INR 950 crores a nd as you rightly said, looking at the market projections for the next two quarters, we will definitely cross our previous peak of 2018, even though the market has come back only to 70%-75% of 2018 peaks. This itself can answer to many of you that we are growing, outgrowing the market growth, I would say the part. So your organization, your company, will continue to focus on the growth, and we will reach the milestone much before our competition does it. But in terms of the industry growth, as you said, the industry is growing, growing very, very strong and steady. While the commodity prices in India is softening, steel prices is coming down, there are certain. I will talk about some of the factors that could influence the market rather than what we are talking about. The Russian Ukraine war continuing, it's putting a lot of stress onto the European system and the cost of Europe in terms of the power, everything have gone up. This sets up a big advantage for India for doing more and more exports from India to the other countries. You know, the cost of living or the inflation is high in North America and also Europe, which and also the dollar depreciating against dollar, rather appreciating against other currencies, is going to be a distinct advantage for India in terms of exports. But in terms of the local inflation, because of the fleet operator, even though the fleet utilization is not at the peaks now, still the fleet operators are finding it extremely difficult to take a decision to invest money in terms of buying the vehicle. The availability of funds is also a concern for them in terms of the load. These are certain impediment that can be done, but looking at the pent-up demand between 2018 and now, a lot more, so even though we were talking about COVID, even before, six quarters before COVID, the market has come down from levels in commercial, there is a good demand available for this. We need to have the right product. It's not the same product what we sold in 2018 is getting sold now. We're getting a bigger truck, bigger axles, and a new ICV platforms are coming in. So I believe that the market between this year and next year is set to grow at least about 15% in the next year to come into Europe. This is the current prediction. But the recession, the talk about the recession from the global market, particularly in North America and Europe, may have some impact to us, but we strongly believe that the prediction currently, the India GDP is going to drop only by one point, which means the commercial vehicle segment will still continue to grow, is what our prediction. Great, sir. Thanks a lot. You would have seen, you would have seen the latest analysis on the medium and heavy commercial. The industry predicts that by FY 2024 itself, we will reach the previous peak. Originally, in earlier investor call, we are told by FY 2025, we will getting back to the FY 2018 numbers. But the latest prediction in the market, even though with the 1% drop in GDP, the research predicts that in 2014, December, India will touch the 2018 numbers or closer the numbers. But, ladies and gentlemen, just believe me, it's not the question of numbers alone. In terms of the tonnage, we have already crossed it, because we are going for a bigger vehicle, bigger axle, and bigger tonnage. If you calculate again 2018 numbers in terms of the tonnage, we are already on top of that. Right, sir. Thanks a lot. Wish you good luck. Thank you very much. Thank you. Any participant who wishes to ask a question may enter star and one. The next question is from the line of Viraj Kacharia from Securities Investment Managers. Please go ahead. Yeah, so just two questions. First is on the off-highway piece, you know, so with Cummins coming in, you briefly talked about off-highway being an opportunity for growth. Can you elaborate, you know, what is addressable market opportunity? What kind of products, you know, one can kind of look at, and who are the major players who are currently serving on the market? Thank you for this question. It's a very good lead, and I would like to say that we at Cummins do have a very strong presence in off-highway. Forget about the global market, in India market, and that is a big avenue for Automotive Axles to get into this. In terms of the products there will be backward loader in terms of crane, we are continuing to have new products bringing into India and try to see the market. As you see, we have definitely grown in both in terms of exports and off-highway in compared to what we were at about 2013 and in 2018. But the thing is, it takes a lot of time because of lot of new products which is developed, because the Indian volumes of off-highway is much, much lower, whether we are going to do a lot of export from India to outside, that's where. So we will definitely work—already we are working very closely with Cummins to find out what type of opportunities available and how we can go to the customer together. And these are the synergies we will come to know in next two quarters, maybe at some point of time, we may address the investor calls together with the Cummins management. Any perspective you can share, I mean, the off-highway space, I mean, just from an India perspective, what will be the market opportunity, you know, and axles and related products. Who are the other major players competing in the market there? There are few players, somebody from overseas and somebody from India, but I don't want to name those competitors in this investor call. But there are a good presence available in terms of the local players and also global players. But as you said, this market is a quite good market, and definitely the actual market available for the axles is quite good. And even if we capture about 20% of the market, it will give us a substantial increase in our top line. I think that's where. But you see, the biggest challenge here with most of the OEM customers in India, they have a captive axle manufacturing. You know, JTB in India is a big customer, but they have a captive manufacturing. That's where the biggest challenge, BEML has a captive manufacturing. These are the things which puts a very, very difficult, challenging, but it's not that it's not achievable. We'll be able to, definitely able to penetrate and grow because of the product premium or product superiority that Meritor has, Cummins Meritor has. Okay. Second question was largely on the export piece. You know, you briefly talked about the opportunity in terms of the cost of manufacturing here as Europe. You know, so we have been making efforts for the last many years now. But, you know, if I have to look at, say, the new parent, Cummins, they were historically had a very strong focus on exports, and for them, India is one of the most cost competitive markets, you know, globally. So for us, you know, if I were to look at, say, one next, say, five, seven years, kind of a thing, pretty long term, how should one understand our export evolution post coming, Cummins coming in? So typically, like what you said, Cummins is an organization which is very supportive of exports and joint venture, and also they've been a strong believer that India is a great company to do this cost sort of thing. So we will be definitely accelerating our journey towards exports. Earlier, it was a little different because of the product segment that we have been serving. You know, there's a huge logistics lead time, which the customers were looking at, and, you know, we have manufacturing across all over the world. So with this, that definitely there's going to be a lot of shift, a lot of the value addition that's going to come from India in terms of not only the axles and brakes, but also in some of the companies and components that we're going to export from this. Wait for few projects to tell us, because we are not giving you the numbers. You are not able to really see the growth in exports, what we are doing. It's not that we are doing great, but definitely we are inching towards, but this will be an accelerated process. But we'll be able to give you a concrete the plan maybe in about next two quarters to see that how much we are going to do once the entire integration process is over and our strategies is done. But at this point in time, believing the ladies and gentlemen, the management is towards utilizing India for the globe. Just one clarification for exports, or even for new products. Automotive Axles will be the entity for supplying either for India or globally, right? Because, I mean, in case of, say, like, new parent there, you know, they have multiple ventures. Sometimes the product comes in the landscape, sometimes it doesn't. So just trying to understand, you know, the product categories which Meritor is into and probably you also cater to. Will it be the sole entity from that point of view, right? Let's see. If you ask me whether sole entity, the entity has a different meaning because we have from one side of our joint venture partner, Bharat Forge exports, on the other side, Cummins, and another partner exports is there. But one thing please understand, the capabilities what Automotive Axles has in terms of axles manufacturing, none of the other side has. So if it is going to be with related to axles and brakes, you can rest assured that it will be, the manufacturing will be at Automotive Axles company. But the other JV in India, the private entity, they are primarily into servicing and marketing. They don't have any manufacturing base. No, no. They don't have any manufacturing, but they have a strong engineering presence. The product is coming out from them, the IP is controlled by them. And the product application, see, it's not just selling the product manufacturing from India. The application and service support globally for those applications is all being drawn from the other company. It's not just a servicing company, but it's basically a company which designs, develops the product and convert into the manufacturing for India. Okay. Wish you good luck. Thank you very much. Really appreciate your question. Thank you. Thank you. Any participant who wishes to ask a question may enter star and one. The next question is from the line of Shridhar Kallani from Axis Securities. Please go ahead. Thank you for the opportunity. Sir, I just have a few follow-up questions. First, clarify that, I would like to understand is that, if the commodity prices rises, then you have a pass-through effect, which is generally with a lag. Now, now the prices are correcting itself, so in terms of percentage, if you could give us a guidance as to how much your top line will also be affected? Ranga, you want to answer? No, no, I didn't get your last sentence. Commodity top line, can you repeat the question? Sir, if the commodity prices now softens, it corrects, then say, suppose if commodity prices falls by, say, 5%, then your top line, I also believe, will be affected because of the pass-through agreements that you have with your customers? Yeah, quite naturally. You know, that definitely will be there. So, in effect, we had to take into the system, obviously, that you have any correction to the extent in the top line as well as in the material costs. That's. So my question was, like, say, if you say if it's 1%, if it corrects, then your top line shall be affected by...? Equivalent percent or, or little higher because there's obviously a processing cost involved and other costs also involved? No, no, no. It's actually a purely commodity price. There is no other cost you get impacted when the commodity prices changes. And secondly, I just want clarity, I want to give it to you. You must be knowing, but I'm just clarifying it, saying. So we measure it in terms of the number of axles we supply, a number of brakes we supply. The commodity is more a market conditions, okay? But more or less, there will be a very little, a very small fluctuations might be there in the top line, but margins are well protected. I don't think we have any concern on it. So we are more focusing on it in terms of the volumes, and the commodities that's going to match it up to the, you know, the market conditions. So... Okay. Okay. The second question, follow-up, is on the exports. Like, if you could, just, if it's possible, if you could share to which markets you are currently exporting, and once Cummins comes into the picture, to which the possibility of, other markets that will open up? Again, look at the exports from India. You know, Meritor presence is solely there in North America, South America, China, Europe, Australia. Currently, if you ask me, where are we exporting? We are not exporting the full axle, but we are exporting the systems and subsystems to China, to North America, to Europe, and little quantity to South America. South America are very, very competitive, and they are doing really good. But what is happening is, in the last couple of months, the amount of impact that we have seen on the sea freight is having a huge impact for everybody to take the decision. While there are favorable factors, like the cost of living is going up, the fuel prices is going up, the labor price is going up, the logistics cost is had a huge impact in the last couple of years. Of course, that market is softening, so we are doing for every region. Because we are selling the products which are—we have very specific capability that we have developed in Automotive Axle. Okay. Thank you, sir. One last question on the status of open offer from Cummins, since it was at a fairly low price. If you could just say, like, what is the status of that? Any comments on those, if you could make, and, like, if the company, via open offer or in future, is it looking to increase stake? Ranga, you can answer. No, the voice is very, very blurred, so I'm not able to hear the question. Sorry, can you repeat it? Sure, sir. Sir, I just wanted to understand the status of open offer from Cummins, since it was at a fairly low price. Yeah. Like, is there a possibility of they increasing stake in the company more in future? No, we don't have any such information on hand at this point of time. It's a procedure as per the SEBI guidelines they're following it. Obviously, we have to wait and watch. We have no information, nor any kind of guess from outside what they're going to do. Right. Sure. Thank you so much. Thank you. Thank you. Anyone who has a question may enter star and one. Our next question is from the line of Radha. Please go ahead. Hello, am I audible? Yes, you are. Yes, we can hear you. Hello, sir. Congratulations to the entire management team for such good results. So my first question was regarding exports. So I believe in exports, apart from Meritor, we have two major clients, that is Volvo, Thailand, and also you mentioned UD Trucks in your opening remarks. So given that this is one of the, you know, major drivers for our growth, so is there any other customer addition to this list? Okay. We have secured the business of Volvo in Thailand way back in the year 2018 for supplying brakes and axles from our combination. And this is a customer which Meritor globally was not servicing them. If you look at our strategy today, Meritor has plants in China, in Australia, Europe, South America, and we don't go and compete with them in other regions where we want to supply. While we are continuously working, Nagaraj and team is continuously working on innovation to identify the products along with the engineering, to see that what more we can do. Isuzu and Volvo, now you read b oth are same company, ma'am. Volvo has been taken over by Isuzu globally, the UD Trucks brand. Now, the UD Trucks, which was started Volvo, now it has become Isuzu. We are continuing to work with them to find out what... Similar to other customers, which is not Meritor directly, we'll not go and compete with other areas where Meritor is already servicing them. In those cases, we'll be only supplying the components and subsystems from here, so that last mile connectivity can be there. Hope this clarified your question. Yes, sir. Also, continuing the same question, so, from the total revenue, what is the total direct and indirect exports for first half, FY 2023? I wish to be able to share, but normally, as you said, the CFO has expressed in the earlier things, we have a policy of not sharing the segment-wise sales, or we don't give a breakup, ma'am. Okay, sir. So, I believe that we have a lot of new product launches in pipeline, and given that we are venturing into LCV ICD space, so could you give us some comments on how many product launches are expected in FY 2023, and from that, how much has been done in the first half? Let me take back a little from FY 2020, when the BS6 migration was done. You all know that we presented it. We have launched four different platforms, almost more than 35 different part numbers for the customers in the new platform. Almost every other product, what we have been supplying in BS4, we have made that obsolete and gone into the new launches, which are giving more efficiency, better cost, and of course, better reliability for the product. You all know that with migration from BS6, most of the customers' demand for doubling of the warranty has become a mandatory, and Meritor has been successful in launching the product. That is why you are seeing that post BS6, our growth has been steady, and it's almost faster. At this point of time, for some of the ICVs, we are launching the product. There are two more platforms, which the team is working within Nagaraja and our engineering team is working, and we'll be launching those two platforms for the ICV segment to penetrate. The team is doing a preliminary product validation, product application supports and all. Maybe by middle of FY 2023, the first quarter end, we'll be launching those products. Understood, sir. Also, in this quarter, we have seen that there is significant improvement in margins, and a lot of it is also coming from reduction in employee and other expenses. So few of the factors that we have been working on was automation and digitization, and of course, some operational efficiency and also lower freight costs must have contributed to this. But, is there anything else also that has contributed that maybe I'm missing out? Nagara, you want to answer this? I think, the team is doing so many initiatives, including the reducing the scrap in the plant, improving the reliability. I think, Nagaraja, you will give—you can give some, throw some light on the areas, what we are doing for commercial industries. You know, there are a couple of things, you know, as Muthu mentioned, you know, one is we have been continuously working on the productivity improvement. You know, these are all the standard things where we are looking at, can we run the line to the production rate? Can we improve the, you know, automation by, you know, multi-manning the machine? So... And also, we are looking at how we can improve the yield. As a part of, you know, earlier we are talking about, at every step, how can we go out and minimize the wastage or minimize the rejection? Those things, we continuously work on that, and that has really contributed for, you know, maintaining or even optimizing our conversion costs. Okay, sir. Just one last question. With respect to Cummins acquisition, so on the management side, I believe that the Automotive Axles management will continue to remain independent. But apart from that, what kind of, what kind of changes can we expect on the management level? Ranga, you want to address the... Yeah, yeah. See, at this moment of time, Ken Hogan, he's our Cummins Meritor global head, and Muthukumar is, that is India head. And of course, at Automotive Axles level, me and Nagaraja continues in operations, financial respectively. At this moment of time, this is what it is there today. And so as we go along, any changes, all of you naturally become to know. At this moment of time, we don't have any other information for update. Okay, sir. Thank you for keeping me online. I just, yeah, I just wanted to make all the very clear. The management change, changes of acquisition of Cummins Meritor is, it's a different thing, but we have very clearly committed that none of our customers, none of our employees, none of our shareholders will have any impact on this. And I'll continue to focus on customer, focus on continuing on innovation, focus on continuing the various programs that we have for profitability improvement. And of course, people are our key. While the market has seen large amount of exits in the last couple of years, particularly post-COVID on the people, we have highest engagement of people, and our team is working in time. So the management changes can happen at a different level, but in terms of operations, in terms of running the business, in terms of the core system, we continue to be governed by our Cummins Meritor system, and we will continue to work on this. So, I just want to reassure you that these management changes are not going to put us into any of the impact, which will have impact onto our, either our customer deliveries or in terms of the quality, or in terms of running the business efficiently. Very well said. Understood. Yeah, thank you. Thank you. Our next question is from the line of Shashank Kanodia from ICICI Securities. Please go ahead. Yeah, good afternoon, sir. I just wanted to check, you know, incrementally for LCV passenger domain, the orders are flowing in the electric buses domain s o how does our vehicle content change in the electric versus a traditional IC run buses. Maybe you may have to remove your talking from your headphone or something. Your voice is very, a lot more cracking now. Can you repeat it, sir? Yeah. So I'm asking that, you know, in the, in the LCV passenger vehicle domain, a lot of new orders are coming in the electric buses domain, right? So how does our content per vehicle changes, for an electric bus versus a traditional, you know, IC run buses? Got it. There's a government announcement that government is going to buy about 45,000-55,000 buses in this year, and, of course, predominant of that is going to be electrical. At this point of time, if you look at the Indian, the electrical vehicles or buses, most of them are remote mounted, and we are present. Our regular axles is being used. For example, Ashok Leyland electric vehicle, our axles are being used at a remote mounted configuration. We are also working with lot more new companies who are into this business and continuing to see that how we can present. So while we know that the buses are going to come in more, we are continuing to make sure that our, we are not getting impacted because of this, and we continue to grow in that segment also. I can say that today, in India, there are more than about 25 companies which are working on the electrification of the vehicles, be it a truck, be it an LNG or be it buses and all. At least I would probably say that more than 50% of the content we are available. Apart from Tata Motors, we are tied with JBM because JBM is also getting new orders in the electric bus domain. Yeah, Tata Motors make their own axles. JBM, want to say they are importing, but we are working closely to see that how we can penetrate into those markets. But Tata Motors, as you rightly said, they have their own capabilities, and they are using it. However, for E-axle, we are working with all customers because we have a capability, and we are trying to see that how we can penetrate into that. But it's too early for a E-axle market to come in India. Not only in India, globally, and it's going to take its own time. One of the surveys said by 2032, 15% of the market in the E-axle will be in India. So long way to go, but your organization is preparing itself that even if the launch is going to be there. Ladies and gentlemen, for your information, I just wanted to let you all know that we are in every segment of the new power that is going to come, whether it is a hydrogen fuel cell, whether it's a hydrogen, whether it's a remote mounted electrification or battery-operated EV, the company is giving solutions to the customer to see that we are present in the market. You mentioned E-axle as an option is not available in India as of now, so none of the volumes are using it. E-axle as an option is available in India. It is being evaluated, it is being tested. It's an option available in India, but at this point in time, OEMs are contemplating at what time we need to do. See, actually, the government is giving a subsidy, and it's going to be available. See, at the end of the day, whether it's an E-axle or remote mounted, the customers have to decide, and he will decide only when the business case is going to be better. So it becomes a very, very important day made of OEMs, us, the systems provider, to see that it is, it's not only a question of affordable by the people, but at the same time, the business case also should make sense to them. Okay. Sir, can you throw some light on how expensive it is because of the transaction? Sorry, sir, too early. I will refer this question, but at the end of the day, it is going to be expensive, but we are working to see that the total cost of ownership is better, is what we are looking at. Okay. The second initial request you mentioned that in the tonnage-wise, you had already hitting a peak this year, right, in the M&HCV domain. So next year, even that growth, adding force of 15% volume growth for the industry. So in that case, can we enter for more, even though the tonnage growth might not be that great? Next year, the number-wise, the 468, what I've achieved in FY 2018, is what people are saying. When I say next year, it's 2023-2024, FY 2024. Right. So we are predicting that it will cross that number. But what I'm saying is, in terms of tonnage, the number of the vehicles which have higher tonnage is substantially gone up, which is definitely. It is even current year, we are talking the FY 2018 tonnage. This is what the prediction is. Okay, sir. We might still grow in line with the industry next year as well, right? So 15%-20%- Mostly moving towards the tractor-trailer, 55-ton vehicle, which were not available earlier. The axle load rating changes have made it all 37-ton to the 41-ton. So if you see that there is a 10%-15% increase in tonnage as an average, it happened to be the FY 2018 to now for the same number of vehicles. Okay. So one last thing. As per your vision, 2025, what is the margin range that you are working with, or you're targeting? I think, Ranga, I showed it in the previous slide. Which one? He's asking about FY 2025 margin. No, I'm asking about FY 2025, your vision document. So what is the margin that you're targeting? Yeah, I know. That's what we are asking about our EBITDA margin in FY 2025. We are very aspirational in terms of the growth. As I said, there are two things, you know, definitely our aspiration to grow is always be there. If you really see the market grows, definitely we will, the margin will go along with the market. So, surely, we have a growth prospect that within the Mission 2025, really driving is all about. All the initiatives to grow revenue as well as the operational excellence to bring the cost competitiveness. You'll definitely see our company is performing well. The market is going up, definitely we are there in terms of expectations. Sure, sir. Thank you so much for the show. Thank you. Our next question is from the line of Sunil Kothari from Unique Portfolio Management. Please go ahead. Thank you. Thanks again for the opportunity. Sir, being on the call, Mr. Muthukumar is there, Cummins Meritor, Chief for India. My request or my message is to convey the way we are taking efforts internally, the way we have our strategy, vision, we have our e-mobility or hydrogen driven vehicles, every products we are having. Look, the market, we as an investor, are not able to get the right valuation. The reason being, you are the only company which is having manufacturing your own base and marketing also done by a parent and other group organization. So it is giving little bit discounting to the valuation. So with the change in parent, Cummins coming in, if you can convey the message from people like us, minority shareholders, because there is a, if there is an IP that can be part in parent company and you can charge technology fees or royalty or whatever. But this local marketing done in a different organization, manufacturing done in different organization, that is not the existing, actually, that type of any example or trend in the Indian stock market. If you look at whether it's a Cummins, they have a 100% subsidiary, but whatever Cummins India is producing, that is being delivered and marketed by Cummins India only. So I would request to convey this message to the board, Cummins board, please. Thank you, Mr. Kothari, for bringing that to our knowledge and your concern. I just wanted to, while we will definitely convey your the message, your perception about this to the board of both the JV partners. I also would like to reiterate that what we are doing is completely as per the process and law, and believe me, it's going to be beneficial for us. I think this process has been evaluated by both the JV partners to make sure that it brings more and more transparency into the business and more and more conversions to India. But however, we have taken note of your concerns and feedback, which we will definitely take it back to the board of the company. Thank you, Mr. Kothari, for your feedback. Basically, sir, you transparently disclose the numbers, so we don't have any doubt on numbers. Point is, this type of arrangement always create discomfort in the minds of minority shareholders. So that's the message I would like to convey. No, actually, I fully understand, and your concerns are definitely we will take it in the right spirit and then take it up with the management. Thanks a lot. Thank you very much. Thank you, ladies and gentlemen, that was the last question. I now hand the floor back to Mr. Sailesh Raja for closing comments. Over to you, sir. Thank you all for attending this session. We especially thank the Automotive Axles team for their time. Muthu Sir, would you like to make any closing comments? Yes, thank you very much. I think, thanks, ladies and gentlemen, for all of you for joining this call. I particularly thank all of you for the confidence that you have kept in this organization and kept on the leadership team, and your continuous support is the one which makes us to perform. Trust me and believe me that this acquisition by Cummins into this company is going to bring lot more technology, lot more turnaround from the organization, which is going to be for good. You all know that Cummins has a very strong aspiration. It is not on the top line, but in the bottom line, everything is there, but the Destination Zero, which makes the Mother Earth a better place to live than what we are today and in our journey. So the company will continue to invest on sustainability. The company will continue to make sure that all the products and services we produce will meet the sustainability standards in the days to come. Once again, thanks, Sailesh, for organizing this. Thanks, everyone, for taking time to join with us. With this small note, I wish to, I wish every one of you a very, very happy and prosperous New Year, and, let's look at that, how the next year is going to, turn around and make all of us much more, profitable and at the same time, much more satisfied, humans. Thank you very much. Thank you. Ladies and gentlemen, on behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.