Ladies and gentlemen, good day and welcome to Automotive Axles Limited Q2 FY25 Post Results Earnings Conference Call hosted by Batlivala & Karani Securities India Pvt. Ltd. As a reminder, all participants' 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shailesh Raja from Batlivala & Karani Securities India Pvt. Ltd. Thank you, and over to you, sir. Yes, thanks, Neha. Good afternoon, and thanks to everyone who has joined the Automotive Axles Q2 FY25 earnings conference call. Let me introduce you to the management participating with us in today's earnings call. We have with us Mr. Nagaraja, President and Whole-Time Director of Automotive Axles, Mr. Ranganathan, CFO of Automotive Axles, and Mr. Sushant Kumar, GM Director of India. I would now like to turn the call to Mr. Nagaraja for the opening remarks following the Q&A. Sir, you may begin now. Thank you, Shailesh. Am I audible? Yes, sir. Yes, thank you. Good afternoon, everyone. I'm Nagaraja Gargeshwari, President and Whole-Time Director of Automotive Axles Limited. I warmly welcome all of our investors and shareholders to this investor call Q2 financial year 24 and 25. I hope you had a great Diwali along with your family and friends. On this call, this time also, I have with me our CFO, Mr. S. Ranganathan, and welcome, Ranga. We also have Mr. Kishan Urupi, who is the President and Whole-Time Director of Meritor HVS India Pvt. Ltd. As you are aware, last week we concluded our board meeting and updated the board on our company's second quarter performance. A couple of highlights here I would like to share with you. As you are aware, the market still looks a little bit soft, and in spite of that, we were able to continue to execute on optimizing our operational cost and thereby achieving a very strong performance. This will be discussed by Ranganathan later. And also, as we mentioned in the previous quarter, we introduced our new axles MS185 to Ashok Leyland. And not only did we start the SOP, but we were also able to ramp up the production very well. And from the investment perspective, we continue to upgrade our plants with new machines and automation. With that, now I would request Kishan to give a market update, followed by a financial results review by Ranga. Thanks again for calling into this meeting. Over to you, Kishan. Right. Thank you, Nagaraja. I hope I'm audible. Yes. Yes, sir. Yeah. So good afternoon and welcome again. So a quick update on the M&HCV market, 7.5-ton and above, where we play a major role. Like Nagaraja mentioned, we continued seeing softening of markets from Q1 into Q2 as well. Most of this was expected to some extent after the general elections and the monsoon. And the recent Q2 has shown some uptick in the retail sales, which is a positive trend. And also, we have seen the OEMs being very moderate about their inventory and not carrying much, which means from starting now onward, we should see Q3 as well as Q4 being much stronger like the last year. Having said that, we also have been following. There is not much of a significant change or market share shift among the major OEMs that we serve. So in all likelihood, we should end up Q3 and then around 90 to 95,000. That is our current forecast. And Q4 will be like last year at a higher note, around 100 plus thousand. This will still be a dip compared to last year, about 5%, which is expected after we see in every time there is an election and we see that infrastructure and other things having a say on that. So that's a quick update on the market, and of course, we can take more questions during the question and answer session. And over to you, Ranganathan. Thank you. Yeah, very good morning to all of you. I'm Ranganathan here. I'll just give a quick update on the financial performance for the quarter. So, for the quarter, sales have just crossed over the INR 500 crores. Sales, compared to last year's same quarter, sorry, we are about 15% down in terms of overall revenue. Last year's same quarter, we did about INR 588 crores, and EBITDA, by and large, you look at it, we are at 11.4% versus 11.9%. Though the drop in sales is about 15%, the drop in the EBITDA is lower. However, it's not as low as the drop in the sales. That's mainly due to the better operating performance and mix performance during this quarter, and EBIT stands at 9.7% compared to 10.3% same quarter last year. What is the first six months' performance is concerned, we are close to INR 1,000 crores in sales for the first six months compared to INR 1,122 crores. The first six months of last year is about 11% down. EBITDA is about 11.6% for the first six months. And compared to 11.2% last year, the overall, if we look at it, the EBIT is 9.7% first six months against 10.3% last year, the first six months. So largely, if you see the impact on the EBITDA largely because of the fixed cost and absorption is more than anything else. The operating performance for this quarter and overall for the first six months is comparatively much better compared to last year. So it's a larger update on the financial performance. If there are any questions, we can take it up during the question and answer. Thank you. 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 their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset 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 Sunil Kothari from Unique PMS. Please go ahead. Thanks, sir, for the opportunity. As Mr. Nagaraja is here on the call and our Whole-Time Director from Meritor HVS is also there, I would like to understand, sir, from you being a long-term investor of Automotive Axles, the thought process and strategic thinking about the automotive, this American Axle India's CV business, axle sales, which has been done and bought over by Bharat Forge. How do we consider those assets or not? And strategically, what was the reason or what are the reasons we should not go behind those type of deals? That will be really helpful if you can a little elaborate on this. Nagaraja, you take it or do you? Yeah, you take it, Ranganathan. Very good afternoon, Sunil Kothari. How are you doing, sir? Good, sir. Good afternoon, sir. Okay, okay. By and large, we did not participate in the bid because the bid was not offered to us at the beginning. So at this moment of time, we don't have much details about the acquisition other than what is available in the public. For the time being, we are not commenting on this takeover until we get some more details on this. So at this moment of time, that's the only answer we have, sir. Because that company has grown just during this two years, almost by 50% there. Almost any auto component industry, including us, they're not able to grow. They've grown that particular business from INR 900 crore to INR 1,400 crore business. And so that's why you being in industry, I'm sure you'll be looking out for. I'm listening and following you since last four, five years. We are trying very hard to get Tata's forward extended business. But why we miss, I would like to convey that we miss this opportunity. But yeah, it's your thought pROCss and your strategy. Yeah. Yeah, I give my view, and as you mentioned, I don't have much details about this takeover. What are the considerations being considered to bid and take this offer because we don't know the details? But by and large, as we say that we have been talking about last about six, seven years, our focus is basically on medium and heavy commercial vehicles. We'll continue to focus on it. The industry, what we are serving, and we are definitely the leaders, and we are the largest independent axle manufacturer in India. We continue to hold that position for the segment that we serve. And we don't have the details of American Axle. What are the details? We may have bits and pieces. We know the information, but it's not very appropriate to comment on it. But that's the reason I said that initially that without having much details, we don't want to comment at this moment of time. So as we get along the more detailed information, we can be able to see that it might be what is not making value to somebody. It may be making value to somebody else. So at this moment of time, again, I'm reinstating. Kishan or Nagaraja can add value that the industry, what we are focusing, we continue to focus on it. We continue to focus on new product development. We continue to excite the customers with our new products and our performance. And definitely, for an outsider, it may be a value add, but I'm not sure about the, as you said, that we simply do not participate in the bidding. We have no details about the takeover and other information at this moment of time. But definitely, we will be the largest axle manufacturer as we see it, and we'll continue to be leaders in the coming days too. I don't think we're going to do less or more. Definitely, we'll do more, but not less, and we'll continue to maintain our leadership. Okay. This is just the last question or maybe some other reasons. This company has been taken over by one of the major partners, promoter, Bharat Forge. So no information available, no detail available. I think this will create a little bit of issue on the corporate governance side also. So I request you to just give a thought on the point that when our majority partner is taking over this entity, will it not be wrong on somebody's side that it will create a competitive intensity, maybe more? They are a part of the Automotive Axles group, and now they are taking it over. So will it enhance competition? Will it affect our capability with the customer? I think whenever something happens in industry where only two, three players are there, I think normally managements are aware about everything. They are aware about your competitive capability and your products and customers. And I'm sure you must be in this industry since long, so you must be aware about their positioning. I'm really surprised by this non-awareness of the deal and capabilities and products and all these things. Really, this is surprising for me. If you would like to, Mr. Nagaraja, want to comment on this, it will be really helpful. Just a couple of things here. Again, obviously, we are not part of the bidding for this company. Like what Ranganathan mentioned, we don't have all the details. There is just an announcement that has come, but this transaction is not complete. It goes through all the legal proceedings, including anti-competition and everything. So that's why we said that it is probably premature at this point of time to make any comments on this. Once we have all the details, probably we'll be able to answer your questions. Thank you, sir. Yes, thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Sagar Parekh from Bonanza Portfolio Ltd. Please go ahead. Yeah, hi. Good afternoon, sir. I actually just mirror Mr. Kothari's thoughts here that Bharat Forge has been a partner with us, and they are acquiring this company on their own. I mean, I just want to understand the thought pROCss and what are your thoughts on this going forward? And yeah, I just mirror his thoughts, basically. That's all I wanted to understand from you. Sir, I fully respect your views here as an outsider. As Nagaraja, we don't have much details about the takeover. So we only have this announcement, what you have this year. Whatever you heard, we also heard. Individually, we may have our opinion and feedback about this. But officially, before we need to come on, we need to have some proper information before we're commenting on it. So at this moment of time, it's only an announcement made by Bharat Forge. So once probably all approvals are done and we get to know more details, probably we can be able to give answers to some of your questions. At this moment of time, with limited information, we don't want to guess and do something wrong. And so we're consciously saying that we don't have full information and we're not able to comment on. That's the only limitation we are trying to put forward to you. I hope you'll understand it. Yeah, but just add to what Ranganathan mentioned. See, we have two equal promoters or partners. One is BFL. Another one is Cummins. Okay? Cummins is also in automotive. So as far as the government is concerned, you can be very, very sure that everything will be done as per the legal requirement. Again, I want to reiterate it. This is just an announcement that has come. It is not. The transaction is not complete until we have all the details. It is going to be premature for us and also not right on our part to make some assumption and make speculation regarding this particular takeover. So just one color, since it's an unlisted entity, so we are largely present in the seven tons or seven and a half tons and above segment. How big would that segment be for American Axles? Because I understand they would also be on the MCV side. So any sort of color on their business breakup broadly would also help us. Thanks. Yeah. Unfortunately, we don't have because the only thing what we know is that their major customer is Daimler. That is the one thing which is available in the public. But otherwise, we don't know some of our competitors. We know what is our share of business, but we will not be able to know our competitors' share of business because there are captive axles out there, and then also people are supplying. We also have Dana, and then we also have Tata. Ashok, they are doing their own axles. So it's a little bit challenging for us to know what their share of business would be. What would be our share of business in Ashok Leyland? Kishan, you can answer that? Yeah, sure. So our current share is around 63%-65% depending on the product needs. 63 to 65? Yeah, 60%-65%. Typically, that is where we reach. And with the new products that we are planning to launch in a couple of months, we should be 65% plus, which is what we are aiming for. So this new product launch that is the MS185, is what you're saying or something else? MS185 and Bus Axle is coming up only next year, and then also 177, which we are planning, so with all that, it will be around 65%. Sorry, 177, 185, and the third one you said is? The Bus Axle, which we have talked in the last investors' call as well. That is the Bus Axle that we are working on, which is expected to launch sometime mid of next year. Understood. Okay, that's it from my side. And looking forward actually to hear more on this American Axle deal, maybe in the next or once we have more details. That would be really helpful. Sure, sure, sure. Yeah, we'll be sure to follow up with you. Thanks. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Nataraj Shankar from DSP Mutual Fund. Please go ahead. I just wanted to understand on the bus business plan over the next two to three years. We had spoken in detail about in the last quarter. So I just wanted to understand in terms of timelines, when it will start and what is the plan over the next two to three years. And I kind of had a similar question. I guess you answered it. What percentage of the business between American Axles and Automotive Axles? Is there overlap? But I guess you clarified that you don't have the information, but at some point in time, that will be helpful. Thanks. But if you could just answer the bus part, that will be great. Thank you. Yeah, the line was not very clear, but what I heard is the business plan for the next three years. Is that right? No, no. He is asking for the Bus Axle when it gets launched and what is the outlook for the next two to three years' time for the Bus Axles. Okay, okay. Got it. So thanks, Ranga. So in the bus space, we have different categories of buses, nine meter, 12 meter, and then the 13.5 and 15 meter coaches. Today, where we are present is only in the 12 meter. So we have our flagship product, 1497 and 159, which we supply to Ashok Leyland 100%. Now, where we are not present is where Dana, our other competition, is actually supplying. So that is the nine meter bus. So our new product that we are launching sometime in the second quarter of next year, and also the 177, which is in very early stage of discussion for 13.5 and 15 meter coach. We see that the deficit of bus we had after the COVID, it is now taking up. The 9-meter and 12-meter will be more and more in the STUs and also in the public sector. So we see with that, our overall impact due to the product needs, which we see otherwise, like this year and the previous year, that will come down because we'll be able to play where that 2-3% will otherwise make an impact. So in terms of overall market or the penetration into Ashok Leyland, we will probably 2-3% plus more than what we are today because of these two products' introduction. Otherwise, the market itself is pretty small in India for the coaches. When I say coaches, it is 13-13.5 meters. Typically, we see Volvo, where anyway it is our product imported from Europe. So the domestic players are now getting into this segment. Okay. And just on that 65% market share in Ashok Leyland that you have, keeping aside the captive part of the axle sourcing from internally either Ashok and Tata Motors, will American Axles be another competitor for us at all or? I'm sure you had access to their, I think somebody had a comment on this in the beginning, how they have grown, and I've not seen the report in particular, but as we understand, their major share of business comes from Daimler, which is a contract manufacturing, and which is 100% only for Daimler. So other than that, we are not aware of any other product which they will be competing with us, and we have a full range of products that we have a pipeline of introduction in India. Understood. And lastly, just a bookkeeping question. Can you just guide us to over the next two- to three-year CapEx? Could you please repeat that? No. Over the next two to three years, can you just guide us through the CapEx plan? Yeah. As you are aware, last time itself, we mentioned that apart from our typical sustenance CAPEX, the board has approved about INR 70 crores. Once we complete that part of the investment, probably by end of next calendar year, so then we'll be going for phase two and phase three. Again, we are kind of looking at what Kishan mentioned. This year and next year, we are kind of looking at a flat market. So we would like to make sure that we time the investment properly. Our expectation is we should be investing close to about INR 200 crores in the next two to three years' time. Thanks. That's very helpful. All the best. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Rahil Shah from Crown Capital. Please go ahead. Hi. Good afternoon. Can you hear me? Yes. Yes. Hi, sir. So will you be able to guide in terms of top line and EBITDA margins for FY25 and if possible for the next year as well, and some of the key developments the company is working on, which will drive growth for us in the coming years? It is like Kishan was talking in the beginning, the market for this year looks to be flat. Okay? And there may be at this moment in the forecast, what we have is next two quarters, the volume should be the similar line for the first half year. But could be possible that 5%-10% upside can be quite possible. It purely depends on two things and how the market and how the inventory at the volumes. So we are expecting another 10% more than the first half year in the second half. We had to wait and watch. And overall market, if you look at it, we continue to be just marching below 400,000 vehicle level, the 395, around that level it is there. So it's lower than the last year. But we had to wait and watch. So if you see our performance on EBITDA as concerned, we are very concerned. Our EBITDA performance is quite consistent with respect to volume what we generate. As you see, the operating level margin has substantially improved compared to last year. Mainly on our focus, continued focus last six years on the material cost performance is yielding the benefit. Only what we are a little suffocating at this moment of time is basically the fixed cost absorption. So as I said, we continue the market at the same level. We can see the same level of performance of EBITDA in the next six months. If the market improves, as we are expecting an additional 10%-12% the second half of the year, our EBITDA improvement will be much, much, much higher than that. So definitely that absorption benefit will come into the picture. So that will definitely make us a little better EBITDA compared to what we achieved in the first six months. So that's how I would like to present the case. So even in the moderate performance, we are upholding our operating performance at the highest level. As Nagaraja was talking about the investments, the investments is basically meant to automate and deep automate the issues in the production and on towards the suitable investment to the new products and so on and so forth. So basically, the manufacturing automation is the main focus, which is resulting in an operating efficiency, and we'll continue to improve the operating performance. As the market grows, we'll be able to get much better benefits in the overall EBITDA. So what was our volume in H1? H1, I just said in the beginning of the call that we need about close to INR 1,000 crores. We are expecting the similar volumes. I said that could be an upside, but plus 10% more. That could be possible. That depends on, again, how the market and the inventory, what the volume has. Okay. So the next two quarters, we expect it to be flat. But what about FY26? Do you see recovery then? We are expecting conservatively a flat, but always 10% upside is quite possible. But we have to wait and watch. All right. Okay. Thank you and all the best. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Radha. Please go ahead. Hello. So thank you for the opportunity. So my first question was that in this quarter, if you see the overall M&HCV goods carrier volumes, so the industry volume fell by 13%, and a similar number for our key customer, Ashok Leyland, it fell by 22%. And adjusting the sales number that we have reported in second quarter with the lower raw material cost, like you have mentioned in your opening remarks, then estimated volume for Automotive Axles has fallen only by 12%, so which is lower compared to the fall in industry or the fall that we are seeing in Ashok Leyland. So just wanted to know what led to this outperformance compared to the industry and also with respect to Ashok Leyland. Maybe I'll give a little bit of overall what I know, then probably I'll leave the question about giving more details, what we best know from a customer perspective. See, overall, if you look at it, Ashok Leyland is into LCVs and M&HCV in all segments they have. So the overall performance, basically, if you look at it, I'm not sure. I've not looked at the data, but if you look to the all composite, you may be saying it and second is about this quarter, we had some better benefits coming from sales to aftermarket, which was probably the last quarter's backlog, and we completed this quarter and there were some upsides on the brake side for Tata. But is this aftermarket thing a one-off in this quarter, or do we plan to see an increase in aftermarket? That's the backlog of last quarter, and it's probably we completed this quarter. So out of overall sales, on a yearly basis, what percentage of sales is from aftermarket? I know. Generally, we don't share the percentage, but it's close to double digit. Okay. The second question was right in March 2022. So we had announced the Mission 2025. So in that, four key growth levers were discussed. One was exports. So just wanted to know from the exports perspective, currently, how much is exports, and how has that increased compared to FY22 levels? But FY22? Yes, sir. I need to really see what FY22, but FY22, you're talking about 21-22 or 22-23? 21-22. Okay. I need to really check the data, but I don't have it ready. I'm unable to comment on 2022 to current, but nevertheless, compared to 2022, definitely our export performance would have definitely gone much better as of now because that's definitely my gut at this moment of time. But exactly the quantification, I don't have it before for you to comment on it. And secondly, on the export segment, again, as I mentioned, that we don't give the segmentation, but you can take it. It's also close to the double digit. That is also. And definitely, as I mentioned, that the marginal increase in exports and good increase of the backlog of orders of aftermarket of last quarter definitely has benefited us this quarter. So exports three years back also, we had two customers. If you see them, one is Meritor, Meritor Group, and second was the Volvo Thailand. So apart from this in the last three years, have we added any customers? And if not, then when do you expect to add new customers into export market? Kishan, would you like to take it? Yeah, sure. So when we talk about export, it is also the intra-company export that we do. So what Ranga touched on, what you mentioned is the OEMs that we export. And regionally, the regional business units will be just end of same point. That is how it is done, except for the two cases where we do it directly. And going forward also, our focus is the intra-company export, where all the new investment that we are doing to bring the systems to the upgraded version and also all the business that we are working with other regions like Europe and North America. That is all intra-company. And your question earlier on the growth, I just pulled out some number, which may not be very accurate, but we have grown about 25% compared to 2022 to the current year. All the new products also, what we are now working on, we are bringing them to the global standard. For example, 177, 185, these are global products which are already manufactured somewhere else. So now introducing them in India gives us that advantage to also export to our intra-company elsewhere in the world. Okay, so why are we also focusing on yes, sir? Sorry? I wanted to understand why aren't we also focusing on adding new customers in the export market? Because the products are very unique in those regions, so what we are talking about is only the drive end, but the rest of the architecture is very unique for India. Just like, for example, in Europe, it is all cast housing, and in India, we don't have cast housing other than the heavy-duty subdeck, so the uniqueness of the end product that goes into the OEM vehicle requires a different way of architecture, which is the regional business units too, so what we can supply from here is only the drive side, which is our primary focus and the component. Yes, sir. So continuing with this question of the Mission 2025, the second key target of the mission was that we will be entering into LCV and bus segment. So presently, as per also our previous conversation, we are not present in the LCV segment, and that's also just in one product we have mentioned. We are present. So I wanted to understand that this vision was set a few years back, but still, we are not very largely present in these segments. So why has this taken so long to scale up, and how do you see it pan out from here? Kishan? Yeah, I missed that. I heard LCV, but I was not sure whether you were talking about LCV. Yes, so the LCV segment in our Mission 2025 that we have stated two years back, there one of the key growth drivers was also entry into LCV and bus segment. However, we have not entered into the segment significantly. So just wanted to understand why has it taken so long to scale up this business, and how do you see it pan out from here? Right. So when we talk about LCV, we are still talking about the 7.5-ton and above. We have had no intentions to go below that. So at our axles, the smallest axle that we have is also in the 7.5-ton GVW, which we have a good, I would say, share of business with Mahindra and Ashok Leyland. Beyond that, we do not have any plan to go below the 7.5-ton, and neither we had in the past. Now, coming to the bus, as I explained earlier, there are clear paths, and our core competency is actually in the 7.5-ton and above. There is no need for us globally also to look below that, which is a totally different ballgame altogether, and we have been never in that state. So for that, those two reasons, our focus will be the 7, 7.5 ton core, where we already have products in production. The volumes are slightly lower compared to the lower end, but then the bus is where we are aiming for, and also the ICV. So the new brake that we launched, the 394, that is a very sweet spot in the ICV segment, which we were not present in that year. So our focus will always be 7.5 ton and above and to be strengthening our product in the ICV segment. And that is what we have been working on in the last two to three years. But my question was in the. Yes, sir? Yeah. Just add to what Kishan mentioned. If I understand, your question is why it is taking so much of time. Again, in the last three years, when the BS6, when we moved from BS4 to BS6, we had to really upgrade all our current products. That's why we did mention in our previous investor calls. We have probably launched about four to five new products in the high volume segment, especially for our M and LCV segment, which is really helping us to meet and keep our share of business with all the critical suppliers. So bus axle was a little bit reprioritized, I would say. And that's why now that we have done with all our major high volume products, the focus is coming on the bus axle. So we didn't slack off. The only thing is we kind of reprioritized in the last three years based on the market conditions and the statutory and legal requirements. So my question was in the 7. Yes, sir. Just a bit more clarification. So my question was in the 7.5-14 ton category only. So previously, we were focusing more on greater than 15-ton category. And then we had mentioned that we will enter into 7-15 ton category also. So my question was that in this category specifically, that we have not significantly scaled up in this segment. And you also mentioned something about Mahindra share of business. I just request you to repeat that. I have missed that part. So why has it taken time in this segment only? Maybe, Kishan, I will just add a couple of comments, and then maybe you can further explain. We do have three products in the 7- to 14-ton segment, like what Kishan mentioned, our smallest axle, which we supply to Ashok Leyland. That has grown in volumes over the last three years. Apart from that, we also have a 11X product and also the 120 product. So it is not that we don't have the products there. And some of these products have been kind of launched in or upgraded in the last three- to five-year. So again, that particular volume is a bit challenging one. And the volumes are also kind of probably Kishan can comment on that. So whatever the possible share of business, we have got the share of business there. And also penetrating into some of the new products which Mahindra has introduced, we are on that. And also some of these products are also being exported by the OEMs out of India. So in a way, indirectly, we are exporting some of these products. Yeah. Just to add to that, there is also a significant shift in the market. Now, as you see, the higher tonnage vehicles and the high value that our axles provide, that has also been the shift in the market. So we are aligning our strategy along with that. All the new products that we are launching are in the heavy-duty, medium heavy-duty segment, which is where we are seeing the volumes. The 8x2, 10x2, even the 4x2 tractor, where the axle, probably the 185 is the largest axle we have in India. And that is the value we are bringing. And that is also where we can realize more penetration. For example, Ashok Leyland, Mahindra, these are all the non-captive OEMs where we are almost present 100% in these new segments what we are launching. All right. My question, I'll continue with the second question, which will be a continuation of this question only, so broadly, if we take the industry M&HCV goods carrier numbers for first half FY25, so the average monthly production has fallen in the 25 to 34 tons and 46 to 55 ton vehicles in H1 FY25, if you compare that number to FY24, and where we see the production increasing is the 16 to 25 ton and 25 to 49 ton, so hence, my question was in light of this that if the industry is shifting more towards lower tonnage vehicles, then have we been slower in launching products in these segments, and if you could just highlight what is our volume share in the segments 15 to 25, 25 to 49, where we are seeing higher production currently by the industry? Your line was not very clear, but I understood you were saying 15-18 ton is where the highest volume is sitting at for you from the production data, and then you mentioned some other number, 49 ton is what I heard. That is probably what I was telling earlier. The shift is very clearly, and you are probably looking at only the last one, two, three quarters. What we are seeing is the high tonnage, the 43 ton and above. That will be the one where the highest number of vehicles will be sold, including the tractor trailers. Coming to the 15-18, we already have three products in that space, which is in production for a long time. They are catering to most of the applications that we currently do with any of the OEMs. Basically, you wanted to understand if CV market falls, let's say, for example, 20%, how much fall can we expect for Automotive Axles? Can we limit the downside to 10% for us as compared to 20% for the industry? That's a very, very tough question. But what we have done over the years, I think you probably can witness that is when the market is growing at a certain X%, we have always grown more than that. That is by expanding our product portfolio, increasing the share of business with our existing customers. And also, we are being present in all some of the new EV OEMs or startups that are coming in. And our export business in the last three years, it has grown. Of course, this year, all the European and North America markets are a little bit soft. That's why we are kind of flat. But that is the area we are kind of looking at. How do we continue to be competitive with some of the export opportunities to our own intercompany so that we can limit this cyclical effect of the market volumes impact both on our top line and bottom line? As we have demonstrated, in spite of our top line decrease, we have still been able to hold on to our EBITDA margins. We continue to work on that. Our expectation is that as we invest more into our manufacturing plant and then launch some of these critical axles like bus axles, we should be able to minimize the impact. I cannot tell you whether it's going to be less than 10% or more than 10%, but we will try to make it as minimum as possible in spite of adverse market conditions. So can we say it in this way that now we have a lot of growth reasons like aftermarket that you mentioned earlier about performing this quarter? So aftermarket, exports, new products, new segments. So is it a fair understanding that if there is a CV down cycle, then our performance will be much better compared to the historical performance in a down cycle? We will definitely try our level best to be better than our peers. But again, it's very difficult to kind of dimension it because there are different product segments and different OE shares, how it gets affected. But like I said, spreading our product portfolio and then share of business with all these opportunities, exports, aftermarket, and also new potential OEs, we will be minimizing it. And I think we have demonstrated time and again in our last several years. We have always kind of outperformed our peers. So we'll continue to do that. All right. Thanks a lot. Best. Welcome back, Mr. Kishan. Thank you. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Ankit Shah from Electrum PMS. Please go ahead. Hello. Thank you for the opportunity, sir. So could you guide us just a ballpark number of what kind of revenue growth we're seeing in the next three years with sustainable EBITDA margins going ahead? I guess, I don't know. Generally, you don't paint a picture of the EBITDA, but definitely, you see the trend. Today, you can really see the highest volume we've done in terms of number of vehicles in 2018, 2019. Today, if you really look at it, we are much, much lower than in the next 12 months' forecast, the market is continuing to be under 400,000 vehicle level. So we don't expect much of growth in the next year or two. And beyond that, we are expecting the market might grow, but we have to wait and watch. As you said, that as the market grows, our growth will be better than the market, for sure. And if the market touches the volume of 2018, 2019, which is unlikely, in my opinion, because the configuration of the vehicle in the market segment has completely changed in the sense that the type of vehicle what we had in 2018, 2019, which is currently happening, is quite different. But nevertheless, if there's an overall improvement in terms of the vehicle level, definitely, our growth will be better than the market by number one. Our operating performance, if you look at it 2018, 2019 to current, is about we are much, much in a better position with the new improvements what we have done in the shop floor, and our overall operating performance is much higher. And definitely, with the market growth, we can expect further growth. Definitely, leverage benefits will come pretty hugely. Our profitability is already growing year on year. But overall, if you look at the next three years' outlook, Kishan can say that more or less, even if it touches 450,000 vehicles, I think our EBITDA will be at least 20% better than 25% better than what we are doing. Okay, sir. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Muskan Rastogi, an individual investor. Please go ahead. Hello. Thank you for the opportunity, sir. So in a previous con call, you had mentioned that brakes had around 10%-15% of overall volumes for the company. And the company has launched two new models in brakes, as well as receiving more opportunity in the exports market. So in the light of this, please tell us, where do you see 10-15% numbers in the next three years? And do you plan to increase the brakes next to 20% plus? Kishan, would you take it? Yeah. So the first part of the question was on the growth, what you're talking about, and like you said, hello? Can you hear me? Yes. Okay. Yeah. So I think in the previous call, we talked about Mission 25 and Mission 28. Similarly, that is when it is called operation, we also have a product roadmap or technology roadmap for the products. And in the brakes, with the launch of 394, we are already seeing the market, which is not available to us from here. We are seeing that we can easily increase our market share in the brakes by 2%-3%. Our ambition is to come closer to 35%-38% as an overall market share in these segments where we play, which is the medium- and heavy-duty. There are a few more brakes that we are looking at more specifically for EVs, where today, if you see EVs still in the bus space, right? It is still growing in the buses. The brakes that we are supplying is a regular brake, foundation brake. There are opportunities to make modification or improvement in that segment that we are already working globally as well as in India. With that also in place for the next three to five years, when the bus market, electric bus market grows, we believe we can take our overall market share in brakes to about 35%-40%. Okay, sir. Thank you. Sir, my next question is, in the last three to four years, we have been able to grow market share in brakes from 30% to 35% to 40% now. Can you please talk about the challenges we face in terms of getting new business, and how do we address them? And what gives us the confidence to take this to 50% in coming years? Sure. I can probably tell you that you know, right? The only other competition for us in India is Brakes India. And we are a brakes company. But we are as a full product solution provider. So brakes, while we are only talking about the drum brakes, in the drum brake space on the M&HCV side, we have already segmented them to cater to almost all the applications where Brakes India is present. Now, the honest challenge, probably for Brakes India as well, is the friction is always controlled by the OEM here, which means our application of the product is a little bit limited. It is not, in other words, it is not our standalone recommendation, but it is always jointly with the OEM. And OEMs always have a dual policy. They always have a dual policy when it comes to any product, and specifically brakes, because there are two players here. What differentiation we can bring is our global knowledge. Like I gave an example of the brakes specifically for EVs. So we have done a lot of data gathering globally where we understand the EVs operate differently because of the architecture and the regenerative capabilities of the motor. So now we are mapping that back to brakes and making them more optimized, which means that within the operating space, within the M&HCV and the bus space, we can bring up more efficient and more value-adding products, which I wouldn't say Brakes India will not be able to do it. But because we have this global connect, maybe our opportunities there are better. The challenge is always that the highest contributor to the BOM cost is the friction. So that is always in India with the OEM. So that will always be a limiting factor for us. Okay, sir. So could you please talk about your business opportunity in differential gears? And currently, where are Mahindra and Tata sourcing the gears? How is it from? Ranga, you want to take that? Yeah. I think, again, I do not understand what you mean by differential gears. Most of the differential gears, if you are talking about side gears and the pinions, which are all the smaller gears, usually it is always outsourced with the precision forging companies. So I think they should be getting from the same supplier as ours. But as far as if you are talking about crown wheel and pinion, we always, most of the people, they buy this crown wheel and pinion. They don't buy it. We do, at least from the Automotive Axles' perspective, we manufacture it in-house because that's where our IP is. That's where we do the value addition. So I believe maybe our competitors are also, most of them, they probably do in-house. Okay, sir. That was helpful. So in terms of ROC, what is the delta between ROC from axle business versus brakes? And what is the CAPEX cost per unit for axle and brake if someone is creating a fresh capacity? The last one is very difficult because it depends on what kind of technology you are going to bring in, and definitely, it will be very, very expensive, I would say, because it requires quite a bit of CAPEX, and that also acts as a high-entry barrier for the new entrants. It's from our technology. I mean, from our technology, what would be the CAPEX cost per unit for axle and brake? Probably, maybe Ranga, you should talk about it because I think we have invested over the 40 years. So we don't have a one single ballpark number to say what should be the CAPEX. So I think probably that's where I would stop. Like I say, just upgrading and then doing an automation next three to five years, that's what we are telling that we are just investing 200 crores just for upgrading our existing lines. Between axles and brakes, the majority of investment happens in axles for sure. And definitely, we are also focusing on, in terms of automating the pROCss, debottlenecking some of the areas as far as brakes too. But you can see the majority of investment is on axles only. And see, it's a very complementary product both. We consciously. How much would it be? No, we don't give a split. But you can say, I tell you about major investments in whatever the CAPEX, which Nagaraja indicated earlier in the call. We have assistance, and also the board has approved 70-plus crores to invest overall basis. Majority, I'll say, that would be in the axle business, axle shaft manufacturing lines. That requires more automation and all this. So our focus at this moment of time is on that. Definitely, we have investment quality improvement systems, productivity improvements in brakes, brake lines also to make sure that we sustain the capacity, 100,000-plus to cater to the market boost in the future. So as I said, we don't exactly give. I don't have a split to tell you how much it is. But nevertheless, I'd say that the majority is on axles. Okay. So in terms of ROC, what is the delta between front axles and brakes business? No, that's more internal. Sorry, not able to share. But overall basis, you really see that our ROC is at around 21%. As the volume grows, we can look at overall ROC can improve much beyond 24% or 25%. So we are just waiting for the volume. But as I said, axles have more engineering content. The value addition is compared to the brakes. Obviously, the margin grows with the same growth. So we see as a overall business together and see that it will be sustained in the market, both are very complementary products to the customer. So that's how we look at the business here. Okay. So one last question. Overall, what is your expectation of the M&HCV industry growth or degrowth in FY25 and FY26? And when do you expect the recovery? Kishan, can you take it? Yeah, so there is a mixed reaction to this. Some people believe this is not a degrowth. This is probably a shift in the overall market analytics, more closer to the Western world, so the idea here is there is a very clear trend that the engine HP are moving. The horsepower of the vehicle is moving from the lower 200 and the mid 250, 250 range. Now we are seeing 300, 350. And with higher power engines, the goods carrying capacity, the tonnage is also increasing, so I think the good comparison everybody can do is the 2018 volume of 476,000, which was about 8.6 billion metric tons, is now catered with 390, 380 market, which means the overall tonnage is now stabilized. We know where we are. Now, in the next two to three years, what is expected is, with all the growth corridors and the natural economy that is growing, the GDP, along with that, we can expect around 15%-20% growth in the next three to four years. And for that, again, what will play a major role is how these high-power engines and the segments will have the mix in the overall volume. So that's how we are also thinking. That's how our entire thought pROCss in terms of product launch is also aligned with that. Okay, sir. Thank you so much, and all the best. Thank you. Thank you. Ladies and gentlemen, we'll take this as the last question. I now hand the conference over to Mr. Shailesh Raja for closing comments. Thank you all for attending this session. Nagaraja, would you like to make any closing comments? Yeah. Once again, thank you very much for calling into this investor call. Really appreciate. I do understand that there were some questions we could not probably answer to your satisfaction, especially related to this acquisition announced by BFL. But as you mentioned that with whatever the information we have, we cannot make any speculation or make any premature comments on that. So we'll wait to see how it turns out because this transaction is not over yet. On the other hand, from the performance perspective, like we mentioned, we are committed. We are always growing better than the market. And then we have always been very prudent when it comes to operational cost, especially the last quarters, the last few quarters. Earlier, we used to invest heavily on the product development. Now we have also started investing and upgrading our operations and the manufacturing capabilities. So with that, we are very sure and very confident that the entire management to meet the growing challenges and demand from the OEMs, shifting the product lines, and also maximize the opportunities that are available in both the aftermarket and exports. So with that, again, I would like to thank Ranganathan and Kishan, and also B&K, Shailesh. Thank you very much, and have a great evening. Thank you, sir. Thank you all. Thank you. Thank you. Thank you. On behalf of Batlivala & Karani Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.