Welcome to Timken India FY 2027 earnings hosted by Avendus. As a reminder, lines will be in the listen-only mode. There will be an opportunity after the presentation. Should you need assistance, please by pressing star then on phone. This conference is being. I now over to Mr. Krupashankar and over to you, sir. Good evening, in quarter two conference call of [inaudible] Also half year ended September 30, 2026. When we entered the FY 2027, it was on a positive note, as you know, and I am pleased to report that the momentum is continued into the second quarter as well. During Q2, we delivered, I think, a strong double-digit revenue growth accompanied by a nice level of growth in profitability. The performance reflects continued demand across all the key end markets, and a little bit delay in the rail. The contribution from our expanded capacity and the disciplined execution across both domestic and export businesses. Update on this Q2 FY 2026-2027 standalone. Revenue from operations stood at INR 969 crore, representing a growth of 25.4% over the corresponding quarter last year. Quarter compared to the last year was 25%. Revenue also grew almost 4.3% over Q1 2027. PBT for the quarter stood at INR 156 crore compared to INR 120 crore in Q2 2026, representing a growth of almost 29.5%. PBT margin for the quarter stood at 16.1% compared with 15.6% in the corresponding quarter last year. That is a 50 basis point improvement. Net profit after tax for the quarter stood at INR 116 crore compared with INR 89 crore in Q2, representing a nice growth of 29.7%. EBITDA margin for the quarter is at approximately 19.2%. I think improvement in profitability is encouraging for the company. Obviously, there are cost pressures that is in the background. We have new assets, so depreciation is there, cost of fuel has gone up, gas has gone up, and against that, this is pretty encouraging. Quickly on the half-year performance. For the first half of FY 2027 standalone, revenue from operations stood at INR 1,898.4 million, an increase of almost 20% year-on-year. Profit before tax was almost INR 306 crore, while profit after tax at INR 231 crore. An increase of 19%. Quickly on the consolidated numbers, the quarter stood at INR 986 crore compared to INR 786 crore in Q2 FY 2026. PBT INR 162 crore, INR 162.9 million, so INR 162 crore, while profit after tax was INR 120 crore, and approximately increase of 29% year-on-year. For the first half of FY 2027, the consolidated revenues are INR 1,929 crore, while consolidated net profit after tax stood at INR 240 crore. Overall, new Bharuch facility continues to progress through its ramp-up phase. With the lines capitalized, we are focused on improving utilization. I am sure that would be a question, but we are progressing on that. We are increasing the utilization. Our investment towards rail expansion at Jamshedpur and train bearing at Bharuch, they are on target. Very soon we should be able to commission and start the PPAPs and things like that. Also, the amalgamation of Timken GGB Technology Private Limited with Timken India Limited is progressing smoothly. That regulatory process is on. The proposed integration is aimed at driving obviously synergies, efficiencies, and simplifying the overall structure. On the cost side, cost is going up, so that is a focus area. We are working on cost reduction, et cetera. As you know, that cost is going to be a challenge in coming months and years also. The external environment remains mixed. Global industry activity continues to be influenced by geopolitics, so that is a challenge, as we all know. Trade-related uncertainties are very much there, and supply chain alignments are happening with every passing week. We are connected to our customers. At the same time, demand from our key customer segment is okay. We continue to monitor development. I would say that domestically, we should be pretty much okay as the demand looks to be solid. Execution remains the key. I would say that overall, it is a fairly nice picture as we walk into the next quarter as well. With that, I would throw the line open for questions, please. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone 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 Raghunandhan NL from Nuvama Research Private Limited. Please go ahead. Thank you, sir, for the opportunity. Congratulations on the strong all-round performance. Sir, can you please share the segment-wise revenue for Q2, which you generally do? Yeah, sure. Why not? On the front-end wise unit, Q2 FY 2027, rail was at INR 156 crore, 156.7. That was 16% of the pie. Mobile others was INR 204 crore, that was 21% of the pie. Distribution remained at INR 148.8 crore, which was 15% of the pie. Process stood at INR 190.9 crore, was 20% of the pie. Exports was at INR 262.7, which was 27%. Then we had some export incentives. That is how the Q2 INR 969.3 spread out. Noted, sir. Thank you so much for that. With regards to Bharuch plant, can you indicate how was the revenue utilization for Q2? How do you see the ramp-up going ahead? Have we reached 70% as of now, which was earliest target for September? Yeah. The work is in full bloom, and the capacity utilization is not yet at 70%. But the certification MOCs, because they were served from different plants, MOCs are pretty much dependent on the sales side, which is the customer side. We are roughly at, Sujit, currently at what? Yeah. Overall plant, if we look at it, we are anywhere close to, I would say, 60%. 60%. But if you look at it specifically, the SRB plant, which the chairman told in the last meeting, where the capacity is slightly higher than our CRB lines. So, SRB lines, we have already reached 70% for the quarter, what we promised in the last quarter. CRB lines are still below 60%, I would say. So, on an average, it is at 60%. And from a revenue perspective, for this quarter was very close to INR 75 crore. Noted, sir. That's a good improvement compared to Q1. Yeah. And Q3 should be much better. Yeah. SRB lines are getting more traction. Got it, sir. Exports has seen a very strong growth of 60% Y-o-Y and 30% Q-o-Q. Can you indicate how is the traction? Which regions would U.S. be the key driver of growth, and how do you see the momentum continuing? The momentum is going to be pretty healthy in quarters to come, for sure. Very soon, with North American rail market also, The Timken Company, they are getting aligned to the buying behavior of those customers. I think more better days in terms of export are going to be there. That rail piece would have more traction in quarters, it won't be immediate, quarters to come. But overall, on bearings, it is going to be pretty healthy. Good to hear that, sir. Just a last question. On the cost inflation, can you indicate how much was the impact in Q2? We can see that raw material cost quarter-on-quarter has gone up 130 basis points as percentage of revenue. Other costs like fuel, gas has also gone up. Would the entire cost be passed on to customers? Would there be some negotiation? Would there be some absorption expected, especially with the non-auto customers? I'll ask Sujit to reply, but generally, the cost is going up and will still go up, and nobody can absorb it. Bearing industry cannot absorb it. They might absorb it for a quarter or so, but overall, they have to pass it on. The endeavor is actually to pass it on. That is the job of the salespeople in the bearing industry, because this is not a one-time cost or a small cost. Carbides have gone 200% up. Steel is going up. Then your gases have already gone up. Then if you look at the labor is going up. You name the area, the cost is going up and going only up. You can only do that much CI improvement. It has to be passed on. Our endeavor is to pass it on, and we'll continuously work on that. Both auto and non-auto. The industry cannot absorb it, forget about Timken India. Everybody has to, for the sake of survival, pass it on. Our major customer understand it. They are passing on. Automotive, they will kind of delay it little bit here, there. Industry people, otherwise on the industrial side, is coming up. Over to Sujit for a little bit more mathematical equation. Yeah, maybe just one additional point there. That 130 basis point, what we talked about, I think you talked about that gross margin impact. That's not necessarily entire thing is coming because of the input cost inflation. You have a little bit of unfavorable mix also, which is playing the role there. Basically, the mix, the way you sell it in the front-end wise unit. There is a little bit of input cost inflation there, which we are continuously working on to pass it over to the customers. You will always have a timing gap, cost and price difference, but there is also an unfavorable mix there which is playing a role. As I was saying also, probably I would say 50%, 50%. 50% is because of unfavorable mix, and 50% is because of input cost difference between price and cost timing difference. That is very helpful, sir. Just a clarification. Unfavorable mix refers to lower share of railway and distribution? Yeah, rail was low in the quarter. That is the unfavorable mix because the global rail tender was delayed. Got it, sir. Thank you so much. I will call back to with you. Very helpful, sir. You are welcome. Thanks. Thank you. The next question is from the line of Varun Jain from Dolat Capital Private Limited. Please go ahead. Yeah. Hi, sir. Good evening. Yeah, good evening. I have a couple of questions. First question is, sir, in this quarter, your depreciation declined to INR 289 million from INR 314 million in Q1, while your capital work in progress increased, it almost doubled. Why is that? Very good question. If I had a Nobel Prize for a question, I would give it to you. Sujit? Yeah. That depreciation is a little bit of accounting noise, I would say. It's a reclassification between last quarter and current quarter, between other expense and depreciation. It has been cleaned off in this quarter. There is no structural reduction in depreciation. It was more of an accounting reclassification from other expense to depreciation. Very close to INR 1.3 crores. Okay, got it, sir. And, sir, the other questions were on Bharuch. What was the Bharuch revenue in this quarter, and what are the margins we are realizing on CRB and SRB versus what we get on TRBs? INR 75 crores. Yeah. In terms of revenue, it is INR 75 crores. We don't disclose separate margin at the plant level. We don't monitor that. It's still one segment. From a revenue perspective, it is INR 75 crores. The plant is ramping up, so as we occupy and the capacity utilization improves quarter- over- quarter, that's definitely going to improve the margin. Yeah. But just generally, the SRB, CRB generally go to the industrial segment. Industrial segment is always better than the automotive segment in terms of holistic margin behavior. Yes, sir. I understand. I directionally understand that they are higher margin, but is the difference like 300, 500 basis points or more than that also? No, that obviously we don't state, so I will just tell you directionally. Sure, sir. Sure. Sir, secondly, That also. Yeah. Go ahead. Yeah, sir. Yeah. Hello? Yeah, sir. Keep going. Keep going. Yeah. Sorry, we lost you. Hello? Hello? Yeah, please go ahead. My other question was that this railway expansion of INR 120 crore, is it still expected to start commercial production by December? Secondly on this- Yes. -there were railway tenders which were delayed. Now have they started converting into orders? The new line would start getting into the trial runs in November and December only. Then the PPAP will start, and then we will qualify those lines. That is all online as per the target. As far as tender is concerned, tender was delayed, and the tender hopefully should get into, in terms of view, because committee has not been set yet. Committee will be set and all that. Stuff will happen in next two to three weeks. But in the meantime, there is some interim orders which are placed on wagon builders. Now the movement and traction on wagons and the tender is pretty much in full swing. Another three weeks for tenders, those things will materialize into orders. Okay, sir. Got it. And just the last one from me. Sorry to interrupt, Mr. Jain. I had requested you follow back the queue for more follow-up questions. Sure. The next question is from the line of Rishi Vora from Kotak Securities Private Limited. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. My first question is just regarding SRB and CRB. While you said that INR 75 crores was the quarterly contribution, what would be the mix between the domestic and the export in this business? Currently, it is heavily tilted towards export. The domestic endeavor is on because those PPAPs and other things are happening. This quarter sales is more tilted towards inter-company, which is exports. Understood. Sir, how should we think about, let's say, year-end utilization levels? Should it reach 80%-85% by end of this financial year, sir? Yeah. When we talk on the last quarter, when we have the investor call after the last quarter of the financial is over, currently CRBs are at roughly 58%- 60%, SRB is 70%. I would say it will be between overall, now it will be between 70%- 75%. Okay. Understood. Sir, just in terms of, obviously, you said that industrial generally makes better margins. When this reaches a certain utilization levels, will the margin overall be accretive to our business, or will it also depend on the domestic and the export mix at that point in time? I am assuming that export would be accretive at this point in time as compared to domestic. Directionally, industrial is always better than the automotive. As we reach that critical mass, you will see a positive effect. How much? All that time will tell us, but overall would be positive. Sujit, any comments? Understood, sir. I can answer, but just one additional Comment point there. For the last quarter, or which is quarter three of the financial year Sorry to interrupt, sir. You sound very distant from the mic. No, I was just telling probably- Okay, one minute. You can come this side. One minute. Sure, sir. Sujit is coming closer to the phone. I was telling just one additional point. Since quarter three of the financial year, we have the year-end as well. Generally, the seasonality for the last quarter of the calendar year is always a little bit of softening because of the export and the year-end of December, so on, so forth. That has to be considered as well while calculating the capacity utilization and the segment. Understood. Sir, just second question on the process industries, X, CRB, SRB, can you just give some color on which segments during the quarter did well, and what's the outlook in some of the key segments within process industries? Within process industry, wind is doing well. Sorry, sir? Wind. Wind. Okay. And, like, how should we think about the growth rates going forward for this business, excluding CRB, SRB? Yeah, it will be pretty stable, sir. It is in a very nice spot currently. The Chinese and others are moving a lot of production of the gearboxes into India, and we are in a nice spot there. Okay, sir. Thank you. I will get back in the queue. Thank you. Rishi? Thank you. The next question is from the line of Ashish from Leo Capital Limited. Please go ahead. Congratulations on a good set of numbers. I have two questions. The first question will be, how is the overall global demand environment for various parts of the bearing business? Is demand likely to continue to be strong over the next few years, and which segments are seeing maximum demand momentum? That would be my first question. So, one is that the domestic demand is going to remain robust. GDP is at seven infrastructure still is in full swing. Steel, I think last quarter was a little bit down, the steel production, but overall, I would say that the domestic demand in coming years is going to be pretty much good. Geopolitics is there, so nobody can predict that, what is going to have the impact of those things. But otherwise, the American market is also pretty much in a nice spot there. For us, the good attractive market in months and years to come, both domestically, export would be rail for sure, and then the heavy truck segment across the board. Also, the off-highway segment is behaving well globally and also in India. I would say that the demand looks globally, obviously, Indian GDP seven, U.S. would be two, their base is huge. All that is very much there. The ASEAN is at four, GDP growth and all that stuff. So, I would say that domestic demand would be the king maker. But overall, bad days of exports, I think, are slowly getting over. Got it. Secondly, how does the cost of production compare the Indian operation versus some of the global manufacturing in Europe and other parts of the world? Is India meaningfully cost-competitive? Yes. Short answer, yes. By how much? Would that be quantifiable? No. Okay. It is in a good spot, I can tell you, with lot of confidence. All right. All right. Good luck. Thank you. You should also look, not for Timken India, in general, you should look at not only cost, you have to look at the capability, cost, and delivery in one space when you do global export business. It is not only the cost. You can have the best cost, but then you have the worst quality. You have the best cost, but your delivery is not right. All that has to be seen in one. That way, India scores over many, many countries. Got it. Thank you. Thank you, sir. Okay. Thanks. Thank you. The next question is from the line of Rakesh from Axis Asset Management Company. Please go ahead. Yeah. Hi, Tim. Firstly, congratulations to execute the kind of profitability in this environment. First question is on the wind business. Fairly new business, which we have been executing now. I mean, if you can elaborate how to think about our market share for the wind business, either in domestic or the export market going forward. And where do you think you can What kind of capacity expansion would you require maybe three years out? On the wind business, this wind, especially the domestic wind consumption was very sluggish. All these ZF and the Siemens of the world were making gearboxes mostly for export. The good news is that now the domestic wind market is also picking up, and domestic Indian wind companies are also picking up. This market is going to be pretty much relevant in India for some more years, given the fact that we want to reduce the converting electricity through thermal, that has to be reduced. The need of the power is only going to go up and up and up, as you see the data centers coming up and the rest of the stuff coming up. The need of power is going to go up, and the need to have clean energy is also going up, which is no rocket science. The local wind market for local production and consumption is going to go up. That is pretty much okay. Timken India Limited does not make the wind bearings. We buy it from the sister concerns, and sister concerns are investing in large sizes, domestically. Okay. I mean, could you double-click on that and tell us what segment or sub-segment are we addressing today? Where I am coming from is, one of your competitors recently made a comment where they are going very selective on the market they are choosing for the wind due to a lot of low-margin business going on. Yeah. Yeah. That is the whoever has made the comment has made a valid comment. We are also into the gearboxes, and not on the main shaft, generally. If we make money on the main shaft, then we go after it. That is a little bit commoditized. But the gearboxes is what we always been serving, and we will keep on serving. Any plans to localize this bearing in future? Timken India Limited is not localizing it, but the other Timken entity in India is localizing it, and they are already producing it at certain size range, and they are further doing stuff on that, and we are buying and selling. Got it. Thank you so much. Okay, we can take the last question. We got two minutes left. Any last question, please? Yes, sir. The last question is from the line of Nikhil from ithought PMS. Please go ahead. Yeah. Thanks for the opportunity. I have a couple of questions. First is on wind turbine upsizing. Indian OEMs are moving away from 2 MW, 3 MW to 4 MW, 5 MW platforms. At these sizes, gearbox makers are using hydrodynamic plain bearings instead of roller bearings, and many of them are making them in-house, I believe. How is Timken's bearing content per megawatt changing as these turbines increase in size? Are you seeing any substitution of your TRBs or CRBs in gearboxes made in India? Yeah. On this wind, India used to be a sub-megawatt market. Then they started making 3 MW. There is no 4 MW in India, but 5 MW is coming into picture, and globally it has gone even up to 14 MW, 15 MW. 8 MW is also pretty common, but India, I think 3 MW and 5 MW is going to be a common one for a long, long time. On the gearbox, there are many stages. On the initial stage, where your need on the bearing is lower, is a plain bearing. Now plain bearing can be made out of brass, which is like a sleeve and has no technology in it. But if you have a technology where alternate material can be made, which is called Gen 3, Gen 4, and Timken has a company called GGB, which is pretty much heavily investing in the research for this in global arena. That market is what can become a little bit different than the current plain bearing, which is nothing but a sleeve, does not give you the optimal results out of the gearbox. But when you go to the carrier bearing, tapered rollers cannot be replaced as per the current technology available. As they become 5 MW and 6 MW, bigger gearboxes, bigger, larger tapered roller bearings will be needed, and the lower stage might be and is being done plain bearings. As you know, one of the listed companies who was doing cages, doing plain bearings, and some of the wind, as you rightly said, are doing this plain stuff themselves. But then there is a technology intervention into that, in which hopefully companies like Timken India Limited will be able to sell through alternate. Currently, we are concentrating on the upstage of carrier tapers, which is pretty much going to stay. The plain bearing at the lower stage is a sleeve, was a tapered roller bearing before, has become a sleeve, and can become in future a Gen 3 alternate stuff into that. So, there is further opportunity in that. Okay. Thanks for such a detailed answer. That was very helpful. Just one more question. Has GGB currently won or qualified any orders in this space? We have not yet capitalized it there. The machines are here. We still have to run them, and we are in the process of doing that. But we are already winning orders and supplying from our overseas buy brand. We are buying from them, our GGB brand. But very soon it will be produced here. So, there will be a combination of selling imported product of GGB and produced in India at our Bharuch facility. Okay. And what kind of share do you expect from the wind sector versus the distribution and process once Bharuch reaches full utilization? I did not understand the question. This is regarding- Once Bharuch reaches full utilization, how much of the overall revenue potential is going to be fulfilled by wind compared to your other segments? I lost you. Yeah. Bharuch, when Bharuch becomes overall, what will we do? Yeah. Bharuch, if you look at it, if your question is specific to GGB today, I think if you look at our statement, I think very close to there into INR 70 crore-INR 75 crore. This Bharuch investments for GGB, what is going on for both FRC and metal polymer put together, I think INR 35 crore-INR 70 crore of investments. The asset turn is anywhere we do close to one point five to two. You can do the math. I think that is what the numbers will be coming out with the investment which has been approved and undergoing as we speak. Okay, got it. Thank you very much. All the best. Okay. All right. Thank you. Thank you. We take that as the last question for today. I now hand the conference over to the management for closing comments. Thank you so much for joining us today. It was a pleasure hosting this call for quarter two of the financial year, and we will again catch up for the next quarter. Thank you. Thank you. On behalf of Avendus, that concludes this conference. Thank you for joining us, and you may now disconnect your line.