Ladies and gentlemen, good day, and welcome to the Schaeffler India Limited Q3 CY '24 earnings conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Gauri Gawde. Thank you, and over to you, ma'am. Good morning, everyone, and welcome to Schaeffler India Limited's Q3 earnings conference call for the third quarter and nine months ended 30 September, 2024. Today, we have with us Mr. Harsha Kadam, our Managing Director and Chief Executive Officer, and Ms. Hardevi Vazirani, our Director of Finance and Chief Financial Officer. Mr. Kadam will first take us through a short presentation on the results, after which we can open the floor for questions. Thank you, and over to you, Mr. Kadam. Thank you. Good morning. Good morning to all of you. Good morning. I'm Harsha Kadam, the Indian CEO of Schaeffler India, and I would like to now take you briefly through the presentation, and I hope you all are referring to the file that was already uploaded. As always, I would like to start off my presentation by sharing the recognitions that we have received from our esteemed customers and some of the business partners that we engage with. I am on slide number two, and in the quarter, we were recognized by five awards. To start with, the first one was from Toyota for Zero PPM award, which means that in that quarter, for the year 2023, whatever we have supplied so far was zero defect products. This is something that we cherish as an award coming from Toyota means a lot to us, and this was mainly for their parts that we supply to their engine and transmission. The second award was from another esteemed customer, ŠKODA Volkswagen, and ŠKODA Volkswagen recognized Schaeffler for completing the Eco Edge Assessment 2024, which was organized jointly with Confederation of Indian Industry on September 2024. This was in the area of sustainability in our operation. This EcoEdge assessment evaluates various environmental, social, and governance parameters integrated into the Schaeffler's operation. This recognition signifies that Schaeffler's sustainability initiatives are regarded as exemplary within the ŠKODA Volkswagen network of value chain partners. The other award, the third one in line, is from a new customer called Elin Motoren, and this was awarded for the outstanding performance and execution of the project to start the business by developing bearings, you know, at good speed. And it is a Volk group company based in Austria, and they are into manufacturing gearboxes and generators, sorry, motors and generators for the wind application as such. The fourth award that we got in this quarter was from the CSR network for one of our plants under our Schaeffler Technical Enhancement Program, which is a skill development program that we run under our corporate social responsibility initiatives. The Hosur plant received the award in recognizing the excellence in CSR and ESG leadership for the skill development initiatives, which has been creating a significantly good impact in the community that we operate in. The last award that came in the quarter was from the Institute of Supply Chain Management, and Schaeffler India has been named as one of the top 30 supply chain champions by the Institute of Supply Chain Management, underscoring the company's resilience, agility, and its strong customer focus. Through their evaluation process, assessment on the performance of over 400 companies was carried out, and the digitalization initiatives that we have driven in our supply chain process is something that was arguably pointed. As Schaeffler, we have been recognized for that. Also, the integration of the digital ecosystem that we have created, both on the back end and the front end, is something that has been well appreciated and recognized by ISM. I'd like for now to throw some light on the economy and the industry, and I'm on slide four. Talking about the GDP rate, growth rate in India, the... While many of these external agencies have been raising India's growth story on the GDP, the Reserve Bank of India's Monetary Policy Committee also continues to forecast around 7-7.2% growth rate for the Indian economy in the fiscal year 2025 as well. Although it has moderated a bit from the previous number of 7.2 coming down to 7, but then it's still one of the fastest growing countries, comes out clearly, and the growth momentum continues to be sustained. When one looks at the Index of Industrial Production in 2024, due to the healthy run of the metal products, the electrical equipments and also the furniture industry, while on the other hand, we did see some softening on the mining industry, mainly due to very heavy rainfall during the monsoon. So, overall, the growth in the manufacturing as such, the basic metals did pretty well, computer and electronics doing well. So overall, mining was just about 4.8%, manufacturing sector grew by about 3.6%, whereas the energy or electricity, around 7-7.5%. Inflation, on the other hand, when the CPI inflation did moderate, but the food inflation continues to be a point of concern in the country, and which hit an all-time high during the month of September. So, the year-on-year inflation rate, based on the all-India Consumer Price Index number, is at 5.49% for the month of September. So it still continues to remain within the Reserve Bank of India's tolerance band of 2%-6% as such. On the other hand, when one looks at the automotive industry and the production number, that unfortunately has seen some sluggishness in the production. Overall production degrowth in the third quarter in the automotive space was about 2.5%. The year-on-year degrowth in the third quarter for the passenger vehicles, if one were to look at it, which is the largest volume contributor in the automotive space, is at 0.7%. While on the other hand, the commercial vehicles declined by 16% in the quarter, and tractors, they certainly showed a bit on the uptick with about a 3.2% growth. Moving on, one looks at the core sectoral performance, and what you see is if one were to just look at the quarter, and here the September numbers are still to come in, hence I'm just looking at the two months of July and August, and what you would see is the softening even in the cement production numbers when compared to the first quarter or the beginning of the year. We have seen more or less status quo on the steel production numbers, whereas mining, I did mention, has seen a drop due to the heavy rainfall and monsoon in the mining areas as such. Energy, on the other hand, continues to be on the increase, clearly indicating that the manufacturing and the rest of the services economy continues to still do well. I move to the next slide, slide number six, which is on the automotive sector performance, and here we see some different pictures unfolding. When one looks at the two and three-wheeler production numbers in the last quarter, certainly the production numbers registered a strong growth of 13.9% in the quarter, and even the electric vehicles sales have certainly grown in the third quarter due to better penetration and higher adoption rate as such. While on the other hand, the passenger vehicles I already talked about, if one were to look at the July, August, September trend, it has slowed down a bit, and certainly it is not even at the level of the first quarter of this year. Now, indications are that we will continue to see some sluggishness in the passenger vehicle segment in the quarters to come as well. Commercial vehicles, on the other hand, also tried to show some uptick in the month of September, but it is still at the very low levels when compared to the first quarters of quarter two and quarter three. We have registered lower numbers of production in commercial vehicles. Tractors on the other hand, saw an uptick, as I said, close to about 2.5% growth. What you see here is, the months of July over September, registering, roughly about 90,000 tractors being produced in the country, per month, and which has been significantly much better, than in the previous quarters of this year as such. Still at an annual, annualized level, the tractor production is still 3.5% lower than the same period last year. With that, I move to the business highlights, and I move to slide number 8. The snapshot of how did we perform in the quarter, looking at the sales revenue that, we have generated in the quarter, we registered a flat growth over the preceding quarter, but still have posted a good double-digit growth over the same quarter last year, with a 12.1% improvement in our sales revenue. Obviously, while the automotive sector did show some sluggishness in the demand, on the industrial sectors, we did see some very strong traction coming primarily in the renewable energy, wind energy sector, the railways, the two-wheelers, the raw material sectors have all helped in kind of trying to manage the challenges that we faced in the quarter. On this backdrop of a challenging quarter, we were able to yet deliver a sustained profitability performance with improved performance on the working capital side, which helped us to bring in better margins into, and the cash flow definitely, as you can see, has improved, registering a positive cash flow of 100 crores coming into the system in the quarter. And we ended the quarter with an EBITDA of INR 382 crores coming into the system as such, with an 18.5% EBITDA margin, and the profit after tax stood at INR 247 crores at 11.9%. Our CapEx strategy remains a long-term strategy, and we have consistently continued to invest every quarter, and quarter three was no exception. We continue to invest judiciously in the areas where we believe growth opportunities are visible to us, and we will continue to follow that strategy going forward as well. So all in all, it was a challenging quarter, Q3. However, as Schaeffler, we as a team were able to demonstrate resilience and ensure that we try and sustain the growth momentum, which is something that we are highly focused upon. That said, I move to slide number nine, and as always, our successes and our growth story continues on the back of the consistent and sustained new businesses that we capture in the market. And yet again, in the quarter, Automotive Technologies, as you can see, we were able to garner a lot of new businesses, predominantly in the clutch applications and the dampers and the clutch release systems, particularly in the transmission application as such, and both in the commercial vehicles and some of it in the passenger vehicle segment as such. Talking of the aftermarket business, which we call it as the vehicle lifetime solution, here again, the new products that we launched in terms of steering and suspension have begun to, you know, show good traction in the marketplace, good acceptance level in the marketplace, and some new business wins for the front-end auxiliary drive timing kits. The wipers and the lubricants as well continued, and we will continue with our strategy in the aftermarkets to continue to bring more products as the vehicles come back for servicing, so our portfolio expansion as a strategy remains strong. Moving to the industrial solutions and bearings, where bearings is the mainstay of the portfolio here. So we have garnered some new business wins in the two-wheeler space as such. Plus, we have also garnered strategically strong projects, which we have won in the raw material sector, and both, both on the spherical roller bearings as well as on the cylindrical roller bearings. So all in all, it was a strong quarter in terms of creating a pipeline of business continuity, which bodes well for the succeeding quarters as we come into those quarters as well. I move to slide number 10, and there, where I will talk about the financial highlights going forward. So on slide 11, what you see is the total revenue growth. As I said, the quarter on quarter was at 0%, more or less at the same level, but the year on year growth was at about 12.2%. Now, where did this growth come from? As you can see from the to the right, the table that tells you the Automotive Technologies over the preceding quarter grew only 0.8%, but over the same period last year grew at about 10.7%. The lifetime solutions, we did have some challenges in the quarter, but it is a pretty contained and a localized matter. As you can see, we registered a negative 2.3% over the preceding quarter, but over the same period last year, we were able to post 7% growth. Bearings and Industrial Solutions on the other hand, we had some good run in some of the specific sectors, which I have already mentioned, registered a 5% growth over the preceding quarter and a 13% growth over the same period last year. While on the other hand, our exports business still continues to remain at a lower level than what we have expected. And as you can see, it registered a 14.6% negative over the preceding quarter, but at a annualized, sorry, over the same period last year, it is still at 17%. So all in all, at an annualized nine-month period, when you look at it, Automotive Technologies, we have grown by 10.4% over the nine-month period last year. The Vehicle Lifetime Solutions at 5.5%. Bearings and Industrial Solutions at 15.2%, a strong growth, and the export business growing at 7.5%. So this has helped us to shore up and sustain the sales mix that we have. Now, what you see here is Bearings and Industrial Solutions, shows an increase from the previous quarters and registering about 45% of the total turnover. One of the reasons here is our reclassification and reallocation of all the bearings into Bearings and Industrial Solutions, which we did the structuring already a couple of quarters back. So overall, I must say reasonably good quarter considering the challenges that we were, we actually gone through the quarter as such. I move to slide number 12, and here I would like to talk about the financial performance and earnings quality, and what you see is the EBITDA. As I did mention earlier, for the quarter three of twenty twenty-four, we were able to bring in INR 3 82.8 crores into the system, registering an EBITDA of 18.5%, which definitely was a little lower compared to the preceding quarter of 18.6%, and even compared to the Q3 of twenty twenty-three, which was at 18.9%. However, the year-on-year growth in absolute numbers, as you can see, has been at 9.7%. And, where has this come from? And obviously, there's a the gross margin improvement has brought in, better EBITDA, while we did have some expenses that we had to do on the employee cost and some of the other income. So all that put together, a much better EBITDA when compared to the same period last year, which resulted in a profit after tax, as you can see, at 247 crores with an PAT of 11.9% for the quarter in Q3. I move to slide number 13, which talks about our working capital management. And, here again, our working capital as a percentage to sales actually went up in the third quarter. Over a nine-month period, as you can see, it stands at 19.8%. However, we were able to, within the quarter, over the preceding quarter, we have been able to sustain or bring it down marginally as well. I talked about the CapEx spend, and in the quarter, what you see is we have invested INR 210.6 crores into our operations, as such, for various reasons in terms of future products that we are localizing here in India, and well, if there is an increase in the quarter, it is more of a timing issue, as some of the equipment had to be booked into the system, and that's what you see. What is important to note is our CapEx as a percentage of sales is comparatively at a much higher level when compared to last year, which was hovering around average 7%. We are now in the range of 8-8.5% as such. On the free cash flow, which was the bane for the previous two quarters, we have been able to get our hands around and focus on the cash flow into the organization, and as you can see, we are able to bring in INR 100 crores into the system in the quarter, and we are expecting the trend to continue in next quarter as well, so that we continue to register a robust free cash flow into the company as such. I move to 14, and just to give you some key performance indicators and on a comparative level. So I did mention that the revenue growth, on in the quarter, Q3 2024, compared to the same period last year, was about 12.1% shown year-on-year. If you were to look over the preceding quarter, it was status quo and flat, yeah. I did touch already on the EBITDA numbers that we are coming at. The nine-month period, we have generated an EBITDA of 1,020 crores as such, with an EBITDA margin. Sorry, 1,106 crores, with an EBITDA margin of 18.5%. This gets us to an EBIT margin of 15.2%, which is 0.8 percentage point lower than what we had recorded, last year, same period. Yes. I just already talked about the profit after tax and the CapEx. The cumulative CapEx for the year 2024 so far, nine-month period, is at INR 536 crores, compared to the INR 410 crores that we spent last year as such. Overall, reasonably, a good quarter, so to say, in spite of all the challenges that we faced in terms of the weakening demand in some of the specific large volume sectors. Yes. I move on to slide number 15, which brings in the consolidated financial results of both Schaeffler India Limited standalone as well as the KRSV Innovative Auto Solutions Private Limited and the consolidated picture. So I already talked about Schaeffler India Limited standalone results, so let me spend some time on KRSV Innovative Auto Solutions Private Limited. For the quarter, even KRSV registered a pretty strong growth at 43.9 crores, which was a clear 20-odd percentage points better than the preceding quarter. So we clearly see the growth momentum picking up in this new venture as such, and over a nine-month period, the revenue stands at about 104 crores. However, on the profitability, we still have to break even, and there are clear action plans drawn up. We are right now on expanding the reach in the marketplace and the connect with our customers, and that's the key focus area to make our presence felt pan-India. We have started to open up many more dark stores and hubs so as to enable the customers to access the products on our platform, you know, within the shortest time. Hence we are on an expansion mode here, so we will definitely get to that situation where we will see start to post profitability even from this business. So consolidated Schaeffler India numbers, the revenue stands at for the quarter 2024 Q3, stands at INR 2,116 crores, and the nine-month period at INR 6,096 crores, with an EBITDA of 17.7% and 17.9% for the nine-month period. And the EBIT margin going down to 14.3% because of the impact of the KRSV, you know, breaking in. So with that, the earnings before tax, before exceptional items, stands at 15.2% in the quarter, and for the nine-month period, 16.6%. Slide number sixteen, which is my last slide, and in summary, it was a challenging quarter in terms of weakening demand, particularly from the passenger vehicle segment. We have seen that happen in some of the specific sectors. However, some of the sectors like two-wheeler, the wind energy, the raw materials, and railways, definitely had a very positive traction. So we were able to navigate through the challenges, and that also tested our agility, which the team came together to manage it pretty well. Our domestic business definitely performed better than the export business, and that is the proof of the resilience that we have been showing in the domestic market. The quality of earnings we were able to sustain with the continued focus that we have kept on managing the cost as well as the countermeasures that we have put in place, to you know to remain competitive, so with that you know we will continue to focus on new business development, which has always been our imperative, and the working capital management and cost management which definitely is a priority for us, even in the quarter that we are in now, the last quarter of the calendar year, and as a motion technology company, we will definitely continue to keep the focus on generating and adding value to all the stakeholders that we are responsible for. With that, I come to the end of my presentation. 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead. Yes, sir, good morning, and thank you for the opportunity. My first question is on the e-axle order that we had won last year, and I think what we had stated is that the revenues will start flowing in from the second half of this year. So, just trying to understand, have we started commercializing that product? And what's the status of that order? Thank you for the question, Mr. Saraf. As you know, the homologation and validation process is done entirely by the customers. As I'm speaking now, a number of vehicles are being tested already on the road all across the country. In every region you can cover the country, our customers are doing the test. Until all the validation and homologations are completed, the vehicle would definitely not get launched, rightfully. Yes, the initial plan was the vehicles to be launched, but now I hear it's going to be launched sometime in the first quarter of 2025. I'll just leave it like that. Got that. Understood. And second question is, I think on first October now, the parent has now merged Vitesco. So anything that you would want to comment on, what's the plan of action here for Vitesco India Limited? Is there a plan of integrating that, merging that with Schaeffler India? Anything that you can comment on that? Yes, the functional integration of Vitesco globally, as Schaeffler AG, is completed as of first October. Rightfully, we will be able to comment on the timelines only once we get a clear direction from headquarters, from Germany as such. Surely, we will get to read it and hear about it as the time comes. Right. Thank you. Just last question on exports. We have seen some sequential decline in exports. You had also mentioned that in your comments. So, can you give us some outlook there on exports? Because, obviously, CapEx side, we are continuing, you know, our strong CapEx, which also includes some plans for exports. So could you kind of outline what we can expect over the next year or so in terms of exports? So, considering the exports for the quarter, we saw the drop only in the Europe region. And, right, so the group also announced, in its pre-closing call for quarter three, that Bearings and Industrial Solutions have seen some market environment challenges, and that the industrial sales of Europe has seen some challenges. So it is mainly- Right. The Europe market. We had put our efforts on Asia, China, Americas as well, where we did not see any drop. The drop mainly came from Europe. Right. Any sense you have on the kind of, I mean, because of the kind of order book you have in Europe, when can we start improving? When can we start seeing an improvement in European exports? I guess we'll have to wait and watch how the market unfolds in Europe. As you know- Okay. Sure. The market is sluggish currently. Right. Right. Got that. So, uh- Thank you so much for the time, and goodbye. Sure. Thank you. Thank you. The next question is from the line of Harshit Patel from Equirus Securities. Please go ahead. Thank you very much for the opportunity. Sir, Automotive Technologies, industrials, and bearings, these are our two largest segments. Could you give us an approximate idea on the margins or the margin difference between these two segments? Unfortunately, I think, that level of information, we do not disclose. Sure, understood, but at least, directionally, both the VLS as well as exports, would these smaller segments be making substantially higher margins than these two large ones? Would that be right? Sorry, Harshit, if you can repeat that question again. Sure. Sir, our two smaller segments, mainly, Vehicle Lifetime Solutions as well as exports, would these be making substantially higher margins than the two large ones, the VLS and the auto technologies? You answered the question yourself. And the aftermarket business definitely brings in better margins, yes. And in the export, obviously, because of the foreign exchange effect, will definitely be much better margins as such as well. Understood. So my second question is, we had won that two-in-one E-axle project that you just mentioned as well from an EV customer last year. So subsequent to that, are there any other system-level contracts that we have won in the EV space so far, post that? We are actively working with a number of customers, you know, and we have the capability to give at a component level or a subsystem level or even a system level offering. We have those competencies in India. However, what we find is the fragmentation of the technology in the market space. There are customers who are focused on pure EVs, there are customers who are focused on hybrids, and there are customers who are still focused on ICE engines. So this has its own set of challenges when it comes to investments, because you obviously need that scale of economies, which will come if there are enough volume. So from a competency capability point of view, we are already there. We have started engaging appropriately with customers. Even our hybrid technology products, we have been working very closely, and we have bagged some good, new businesses as well there in the hybrid technology area. Yeah, so the capability exists. We are working with customers, and there are enough opportunities that we are already on the table with which, with the customers with whom we are already engaged. Sure. Just lastly on, is there any update on the Hosur greenfield CapEx? Are we on track to start the production early next year? Also, which products will be manufactured here? I mean, what would be the product range segregation between Pune plant and Hosur plant? Yeah. So the Hosur greenfield project is on track, as scheduled, and certainly we will start to manufacture, you know, early next year. That is on as planned. What we want to start off with is by producing products initially at a component level there, primarily for the transmission application, which is clutches again, that will start off. And we will definitely scale up the plant with all the new products that we are trying to bring in, not to mention the EV as well, because the system level would require motors, it will require gearboxes. So rightly, we have the wherewithal and equipment there. It's a question of having the right volumes in the marketplace so that we can start to make those investments in our new greenfield project segment. Understood. Thank you very much for answering my questions, and all the best. Thank you. Thank you. The next question is from the line of Manish from Nirmal Bang Securities Private Limited. Please go ahead. Yes, sir, thank you for the opportunity. I have only one question. Your comment around the quarter three has been soft in terms of demand. So in the coming second half of the current fiscal, how do you see the demand trend to see, especially in the passenger vehicle as well as the tractor sector? Yeah, thanks for the question, Manish. And, normally, as you know, October, November are the months when, due to festival seasons, the passenger vehicles and the two-wheelers, these are the sectors that tend to peak. What we are not seeing but we are not seeing that happen this year, unfortunately. Fundamentally, the reason is, there's a lot of push sales that was done in the preceding quarter, the dealers, the retailers and the wholesalers are struggling with, very high inventory levels on the passenger vehicles. The inventory level is probably close to eighty days. And, so even if the sale numbers would be very high in the quarter, that is this quarter, October to December, probably it would be due to the liquidation of all the inventory that is lying, yeah? So will the production numbers pick up? Now, that is something we have to wait and see, yeah. Because, unless the inventories start to go down, the production wouldn't definitely be on track as such. So we believe that it is still going to be a little negative quarter when it comes to vehicle production numbers. And, we anticipate this is gonna happen for the next quarter as well. As you know, the first quarter of the calendar year is always a lower note. So what should have happened, should happen in this quarter, and if this quarter the production numbers don't pick up, it's going to be a little negative. What about the tractor? Sorry, I didn't get that, please. Yeah, tractors. I'm talking about tractors. Tractors, yeah. So tractors, we have seen the last three months, the production numbers have slowly started to incrementally go up, which is a good sign. Obviously, it's evident that the good monsoons that the country has had is enabling the production numbers to start going up. However, there are other factors within the tractor segment, which is still, you know, liquidity, cash availability, the finance availability that is going to determine how quickly it's going to pick up. So we believe it's going to grow slowly, but definitely, the indications are that tractors will be on a slow growth path as such. Okay, sir. Thank you. Thank you. The next question is from the line of Rishi Vora from Kotak Bank. Please go ahead. Hi. Hi, thank you for the opportunity. My first question is regarding the industrial bearing segment. So can you give us some color on how some of the segments did during the quarter, especially railways, wind, and anything else you would like to call out? Thanks for the question, Rishi. Let me start off with the industrial segment, where we are very strong, and that's the wind energy as such. We had a strong traction and growth in the wind energy production numbers of the gearboxes and so on. So that has helped us to grow much faster in the quarter as such. Overall, we are seeing a good traction coming from the wind energy. Even the railways, for example, did reasonably well in the quarter. Then the raw material sector, due to some of the infrastructure projects, so obviously there have been quite a lot of investments that customers have started to do. The projects that they execute enable us to grow in the raw material sector, which is the core metal industry. We are seeing some good traction coming from these sectors which have definitely pulled up the bearing business as such. Two-wheeler is another one which we are seeing some good strong traction there. Also, our clear focus on the aftermarket within the industrial space did pretty well, I must say. We have continued our focus in introducing a new partner program that we launched six months back. We have started to consolidate that initiative with our distributor community, and as such, this is starting to pay off, and we are seeing the results. The distribution business too has registered a very strong growth in the quarter. Even at a nine-month period, we believe things are starting to improve. So whether it is over the preceding quarter or the same period last year, Q3 2023, our distribution business has done pretty exceedingly well, I must say. So all in all, there were some sectors which did very strong. Where we could have been better, the performance could have been better from a demand situation, is in our power transmission segment and on the industrial automation segment. We could have been better. We still have not seen a strong uptick like we have seen in some of the other industrial sectors. Understood. So our auto and industrial bearing segment this quarter has grown by 10%. So is it fair to assume that industrial part of the business would have done better than that? Yes. The industrial part of the business definitely has done better. Understood. And just, on exports, right? While you did call out that, the European market was a drag this quarter, but at least in terms of end consumer segments, can you give us some color on which are the key end consumer segments for us in, in all these geographies? And over there, where, in which segment we are seeing, our demand weakness? So, Rishi, I won't clarify here that our export business, you know, we will have no visibility to the end customer, so to say, because what we produce here, we ship it out to our sister plants and sister facilities across the world, and they in turn handle the things that happens to the customers. So my visibility stops at my sister company. But at least by the type of bearings which we supply, we'll have some idea about the end consumer markets, right? Or It's not so easy, because if you were to take a spherical roller bearing, it can go into a cement industry, it can go into a steel industry, it can go into a power sector. So every sector, it's a little difficult. Understood. Just last question, if we, if you look at our nine-month performance, you know, where EBITDA margins have kind of declined by 80-90 basis points. Some part of the reason would be the consolidation of Koovers. But, you know, how should we look at margins going forward? You know, is there about tailwinds for margins to improve from here? Or, you know, where are we seeing some bit of pressure on margins? So if we look at nine months of this year versus nine months of last year, we have seen in EBITDA margin a dip of 0.5 percentage point, and within this, the employee benefit expenses contributed by 0.3 percentage point. Within this 0.5, 0.3 is the employee benefit expense. This is mainly because of the inflationary pressure, that is the increments, the personnel increments, which were given out this year in line with the market, and the second reason is there are some one-time incomes which were booked last year in terms of tooling income, in terms of service income, which we don't see this year coming, because those are all one-time, one-off incomes that were booked last year. So these are the two main reasons of the EBITDA change. Understood. Understood. Thank you. Thank you so much. That was helpful. Thank you. All the best. Thank you. The next question is from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead. Hi, sir. Thank you so much for the opportunity. Sir, despite of the challenging environment, business environment, we have grown double digit almost across. I mean, business segments as well as geographies. So given the current situation where the auto industry is actually struggling for the growth, given the diversified nature of our offerings, is it fair to assume that we will keep outperforming the market growth over the next few quarters? I think that's for you to draw the conclusion, but our performance over the last quarter tells that, yes, our growth story, our growth numbers are definitely ahead of the, you know, some of the sector's growth or the industry growth, so if you take the Index of Industrial Production is falling around 4.5%-5%, but our own industrial performance has been much better than that. Since it is the automotive sector, which is almost half the business that we operate in, while the industry has remained, if you look at passenger vehicles, at a nine-month period, has grown, but, you know, in single digits, but we still continue to do double-digit growth. Our endeavor has always been to continue to grow in double digits. Yes, for that, we will have to be very agile and look at, you know, try and get onto more business opportunities that we keep our focus on, so that we could ensure a continuous pipeline of business flow that happens irrespective of the changes and the vagaries and the dynamics in the marketplace. So that definitely helps us. One other aspect is, at Schaeffler, we have a good balance between our bearings portfolio and non-bearings portfolio. So bearings, as you know, is about 60% of our business, and non-bearings will be roughly about 40%. So this too, the business mix and the portfolio mix definitely helps us to kind of try and sustain. At a company level, it's not at a sector level. Some of the sectors could underperform, some of the sectors definitely outperform. So we have been able to balance this out well, and I don't see any reason why we cannot continue to deliver the double digits, sustain double-digit growth rate. Sure. And, sir, about the Hosur plant, which will become operational next year, some of the products you mentioned about the clutch and other EV parts, those are not currently, as of now, manufactured for India as of, in our basket as of now, right? Are you talking about the new plant or the existing plant? New plant. Yes. See, we are continuing to localize a lot of our products to be produced in India, more so in the automotive space, and so clutch is no exception. So the new plant, definitely we will continue to bring in the new products as well. Also, with the you know, capacity constraints that we have ran into in our existing plant, there is no more space to bring in more additional machinery. So the new plant is going to help us to you know, complement the demand that is, increased demands that we see even in our existing portfolio. Sure. Thank you so much, sir. Thank you. The next question is from the line of Mayank Bhandari from A M Investments. Please go ahead. Thanks for the opportunity. I have first question regarding nine-month growth rates, if you could provide for the railway, wind, two-wheeler, segments? ... two-wheeler and which sector was that? Railway, wind, two-wheelers, auto aftermarket, and maybe you can give us the overall breakup in terms of the end markets that took for you. All I can say, you know, we did register all the three sectors that you touched upon. At the nine-month period, we definitely have registered a very strong growth. Yeah, double digits. It's a double-digit growth coming from all the three sectors, the railways, two-wheelers, I will say even raw material, the core metal industry sector as such, and the wind energy as such. Distribution in the quarter, I talked about the aftermarket industrial distribution. In the quarter, has registered a strong performance and still at an annualized nine-month period, it is still at a single digits, but we expect we'll keep continuing with the focus to ensure that the distribution part of our business, which is a very important part of growth strategy, continues to be in the double-digit growth rate. Okay. On, particularly on the wind side, sir, how is the market, both in overseas and India? And we had seen some imbalance due to the Chinese competition. So how is it ending now? If you look at the market, a large part of the market for the wind equipment manufacturers is predominantly Europe, Latin America and the U.S. With all that is happening in Europe, with the two wars, ongoing wars, and with all the impositions of sanctions, yes, we see. I guess all the inventory levels that were sitting there has all been now used up, so we are seeing a strong resurgence in the demand. Obviously, in spite of what is happening there, the geopolitical developments, I guess people are finding ways how to still continue to execute the projects, and so we are seeing a strong demand both for the wind equipment manufacturers as well as for the gearbox manufacturers. The good thing is, at Schaeffler, we have a very strong presence globally with these, you know, key customers and the same flows into India as well. So we are able to leverage the relationships and the, you know, engagement level that we have established in Europe as well with these customers here in India as well. well. That certainly is helping us. Talking about the Chinese competition, there are a few that have started to come into India. Here again, some of them have started to set up manufacturing, but right at this point in time, they are still very small. We will have to wait and watch how that competition would develop as such. Okay. And lastly, sir, I mean, out of more nine months or in this quarter, could you just categorize, could you differentiate between volume growth and value growth? I don't think we can give that information now. Sorry. Okay, okay, no issues. That's it from my side. Thank you. Thank you. The next question is from the line of Deepesh Agarwal from UTI AMC. Please go ahead. Yeah, good morning, team. My first question is, you mentioned there is- Sorry to interrupt you, sir. I would request you to please use your handset. Yeah. Am I audible? Yes, better. Yeah. So, sir, my first question is, you have mentioned the weakness in exports is due to Europe. Can you help us understand how is the inventory levels out there? Are you talking about the inventory levels in Europe? Yes, for your product, sir. So is there still [crosstalk]? Yeah, unfortunately, you know, as I said earlier in the, when the question was asked, we do not have the visibility of either the end customer nor the stocks that they carry there. Our role ends once we ship the material out, alright? Based on the order books that we get. So that's where it stops. So I'm afraid I don't have an answer beyond that. Sure. And sir, when you are looking to grow exports in Southeast Asia, where are we in that journey, how large that business can become? Can it become a similar size to your European exports in few years? Difficult to say. For one, because the portfolio of the products that we make, which Europe needs, we see that either the volumes are not there for some of the products in Southeast Asia, because the players, the customers, the design of equipment are all different. Yeah, that is one challenge. Two, also, when you look at sector level, you will find some of the sectors are very different. You'll find two-wheelers is a very strong sector in Southeast Asian market. That is something we are also trying to see, can we now start to enter those markets as such? That's an evaluation that we are trying to do. So, it has a little bit of a different demography when compared to the European market. So, yes, we are making sincere efforts to get into the Southeast Asian market. We have seen some successes already in terms of getting new businesses for our exports within the Southeast Asian markets. I think, so we have to keep continuing on this journey to secure more orders and wins. You know, for us to ensure that we try and de-risk or, you know, balance out between the risks and the needs. Sure. And sir, lastly, what would be the roadmap for the turnaround of Koovers? By when do you expect it to turn around? And till then, what is the cash support which it may look from Schaeffler, in terms of funds finding? Yeah, let me start off by answering and then Hardevi can contribute as well. So as you know, Koovers was a very clear strategic acquisition, knowing that it is an e-commerce platform, which is a very different model of business than what we have been doing all these days. Yes. And moreover, the acquisition per se itself was a startup company, so two things are different. One is the business model, and second is the setup of the Koovers as an organization. So this being a startup, it needs to be run as a startup if we have to make this successful. Currently, our focus is on scaling up the operations, and expanding the footprint, which we are, actively working on, to increase the reach as well as the depth of, market reach, by appointing number of, dark stores and hubs across the country. As you know, Koovers was a startup predominantly focused only on two cities, where we acquired Bangalore and Chennai, and now from there, I'm happy to say that over the last one year, since the time of the acquisition, we have expanded into almost close to 12 or 13 new cities, wherein we have started to now set up dark stores and we also set up some hubs, so that we have a hub and spoke arrangement. We are now building up the organization structure there. So we are now augmenting the appropriate functions to enable and facilitate the growth that we want it to happen. So rightly this is requires a different approach altogether than the regular business that we do. And Hardevi, you want to add? Yeah, and, I mean, all of us are aware that any startup business requires three to four years time to break even. So in our business plans, we had planned that break even on earnings will be end of 2026. We are still keeping this projection intact. So they will be starting to generate their own cash in 2027 onwards. Sure. Thank you, and all the best. Thank you. The next question is from the line of Nirali Gopani from Unique Asset Management. Please go ahead. Yeah, hi. Thanks for the opportunity. So my question is on the CapEx. So if I remember correctly, in the beginning of calendar year 2022, we had announced the CapEx of INR 1,000 crores and revised it to INR 1,500. And if I sum up the CapEx until now, I guess we have crossed that 1,500 mark. So how should we look at this number going ahead? So, this year we will realize most of the growth relevant and localization relevant CapEx. And next year we will step back a little bit and ensure that we realize all the benefits for which the CapEx spend has been done. So next year we will slow down a little bit. So INR 1,500 crores that we have announced, we have realized that from 2022 until 2024, and rather slightly over that. And next year we will slow down a little bit on CapEx spend. Nirali, if I may add also now, yes, we did declare that we will be spending INR 1,000 crores in the next year, then we revised to INR 2,500 crores. But we must also factor in that there are being considerable business needs that we have been getting. Take, for example, the Tata e-axles that we have won. Now, the e-axle project that we won was not in the year 2022, when we made that announcement. And accordingly and appropriately, we have to make some additional investment because of the new business. Hence, you see the numbers going beyond what we estimated. And when you say thousand five hundred, it's an estimated number that we keep in mind, but there could be changes depending on the business needs and requirements that would come up, additional investments, or as Hardevi said, there could be a scaling down as we're going forward, depending on the business needs. So that's how. So we definitely will remain agile and flexible here when it comes to investment. Oh, that's great. So if I understand correctly, the part of this CapEx would have been for capacity expansion, partly for localization or to say, improve our efficiency. And when you say that, next year we'll see a little bit of scale down and wait for the results to come on the CapEx, which has been done. So how should we as investors look at this happening, say, from the numbers point of view? Or any directional guidance that you can give on the same? So when Hardevi said that, you know, we, we're going to be kind of judicious and watch the market, the business needs, and then accordingly adjust our investment pattern, it goes without saying that that whatever we have already investments that we have already made, the realization of that, you know, They have to start delivering, and our focus will continue to remain on the investments that we have already made. How do we ensure that these are fungible, that we can use it better, leverage the capacities that we already have? So the focus would remain on ensuring that the commitments that we made when we got the investment is something that we deliver to. So this is going to be the priority going forward as well. Of course, if there is a new business stream which will warrant some new investments to be made, we will definitely make that. Right. I just one last question. What would have been the investment for our Hosur plant? Around roughly approximately INR 300 crores. Okay. Okay. Thank you for answering my question. Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Ms. Gawde for closing comments. Thank you, everyone. Thank you for joining us today. If you have any further questions, please reach out to me at gawde.gauri@schaeffler.com. Thank you and have a good day. On behalf of Schaeffler India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.