Ladies and gentlemen, good day, and welcome to JK Tyre & Industries Limited Q2 FY 2027 conference call, hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen- only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand over to Mr. Chirag Jain from Emkay Global Financial Services Limited. Thank you, and over to you, sir. Thank you, Anna. Good evening, everyone. On behalf of Emkay Global Financial Services, I welcome you all to the 2Q FY 2027 earnings conference call of JK Tyre & Industries Limited. Today from the management team, we have with us Mr. Anshuman Singhania, Managing Director, Mr. Arun K. Bajoria, Director and President, International, Mr. Mandar Deo, President, India, Mr. A.K. Kinra, Financial Advisor, and Mr. Sanjeev Aggarwal, Chief Financial Officer. I will now hand over the call to the management team for their opening remarks, post which we will open the floor for Q&A. Over to you, sir. Yeah. Thank you very much. I welcome you all to the JK Tyre Q2 FY 2027 earnings conference call. I would like to take this opportunity to wish you and the family a very happy Diwali and a festive season. I am glad I am here, and with me, there is Dr. Arun Bajoria, Director and President, International; Dr. Mandar Deo, President, India; Mr. A.K. Kinra, Financial Advisor; and Mr. Sanjeev Aggarwal, CFO. Let me start with the macroeconomic prospect. Despite supply chain disruption, high commodity prices, and geopolitical uncertainties, Indian economy has outperformed the global economic growth, showing a resilience with real GDP growth of 7.8% in Q1 FY 2027 and expected 7%+ growth in Q2 FY 2027. This global growth has been driven by rising domestic consumption, high emphasis on infrastructure investment by government, and strong macroeconomic fundamentals. Continued strength in the service sector along with steady manufacturing growth is helping to sustain the growth momentum. However, in recent developments around the surge of West Asia conflict remains a critical factor given their implication for India's inflation. In my call, can you call Dinesh? External balance and corporate profitability. Can you call Dinesh in my call? Overall— Dinesh group call. Just join him. Overall, India's economic backdrop remains supportive to growth with GDP forecast for the full year FY 2027 revised up to 7.1% from the erstwhile projection of 6.7% by RBI. India's automotive industry is currently passing through a healthy demand cycle with broad-based growth visible across segments, and is good indicator of sustained growth momentum across industries. Policy leverage support from government vis-à-vis introduction of GST 2.0, PLI scheme, Automotive Mission Plan 2026, Vehicle Scrappage Policy have played a defining role in accelerating the auto sector's transformation. Indian auto industry delivered a robust performance in the first half of FY 2027, including Q2, as the consumer confidence remained high, with CV witnessed a sale growth of 30%. Passenger vehicle saw a growth of 26%, Two-Three Wheeler 27% on a year-on-year basis. The growth in this quarter has come on the back of GST reform, onset of festive season, resilient rural and urban markets, and increased freight movement, which is growing constantly at a CAGR of 5%-7%. We see that the Indian auto industry has significant long-term growth potential on the back of low vehicle penetration, increasing customer aspiration, rapid traction in premiumization. Coming to JK Tyre, in Q2 FY 2027, we have achieved our highest ever turnover of INR 4,850 crore, up by 20% on a year-on-year basis. This performance was broad-based across markets and product segments. India's business has picked up significantly growth momentum post the GST 2.0, with an increase in OE sales of 65%, resulting in 32% growth in the overall domestic sale on a year-on-year basis. This has been delivered through a disciplined execution across markets and segments. The steep increase in price of the key raw materials due to West Asia crisis and continued volatility have triggered the inflationary pressures, impacting the profitability margins in the near term. During this quarter, as a result of these headwinds, the average raw material cost has increased by 9% over the previous quarter. In addition, 22% increase since Q1 FY 2027. However, these cost pressures are being managed through a combination of improvement in product mix, collaborative price actions, and internal efficiencies. Collaborative price actions and internal efficiencies. Our TBR segment continued to remain a cornerstone for our product strategy with extremely robust double-digit volume growth of 76% and 35% respectfully on a year-on-year basis, thereby reinforcing OEMs high confidence and strong interest in JK Tyre's technology and brand positioning. Premiumization continued to act as a key enabler of sustained earning growth, particularly within the passenger car category. At JK Tyre, nearly 30% of passenger line volume sold in H1 are towards the premium SKUs, that is 16 in and above tires. This segment has maintained a high CAGR of nearly 20% over the past two, three years, underscoring the shift in the consumer preferences. India's transition to electric mobility is accelerating rapidly on back of strong consumer demand. At JK Tyre, electrification continues to drive a meaningful surge in overall volume sold across the segment. In line with this, we are proud to share that our EV volume has surged over 24% over the previous quarter. I would like to specially mention our leadership position in the electric truck and bus segment. We are delighted to announce that the recently launched MG Hector Tomahawk has been introduced on our EV specific tires. That is on Ranger HPe, reinforcing the strong trust placed by us by the leading OEMs. I would like to reiterate that with our diverse range of products, JK Tyre is committed to deliver excellence through its innovation and advanced mobility solution. In order to strengthen our customer reach, we have further added numerous brand shops, 250+ fit shops and several mobility fleet accounts during the quarter. Apart from the above, 80+ new dealers have been onboarded in Q2, out of which nearly 50% are in rural dealers and distributors. We are proud to announce that JK Tyre has further expanded the OTR range of tires by introducing premium and application-specific products. The automotive landscape is undergoing a rapid transformation as digital technologies continue to redefine how vehicles and tires are designed, manufactured, and sold. JK Tyre remains deeply committed to embedding emerging technologies, including IoT, AI, and ML, into how we design and manufacture products, optimize supply chain, and serve consumers across geographies. We continue to remain confident about the opportunities ahead, supported by our dedicated R&D and innovation capabilities, a robust product portfolio, sizable CapEx plans, and unwavering commitment to creating enduring value for all stakeholders. It is with utmost pride, we announce that JK Tyre has been awarded with the momentous Mahatma Award for Community Initiatives 2026 for the fourth time in a row. This receipt of this prestigious award is a strong demonstration of the company's sustained efforts towards community development and social welfare. Now, I would like to take you through some of the key operational highlights for Q2. OTR market recorded a healthy volume of 22%, driven by a robust 25% in the OE market and similarly, 20% in the replacement market. TBR volume in the OEM grew by 76% and in the replacement market by 9% on a YoY basis. TLR volume witnessed an overall growth of 14%, led by OEM market growth of 35% on a year-on-year basis. Farm category volume saw significant growth of 16% in the replacement market and 6% in the OEM market. Further export of vans also saw an increase of 11% on a year-on-year basis. Two-Three Wheeler volumes in the replacement market jumped more than 2x, while OEM volume grew by 11%. Overall growth in this segment was 34% on a year-on-year basis. Now I would like to request Bajoria-ji to talk about the performance of JK Tyre. Thank you very much, MD sir. I will begin with a brief overview of the operating environment in Mexico. The Mexican economy has shown signs of stabilization in recent months. While inflation has edged slightly above the Bank of Mexico's target of 3% for the period ending September 2026, the central bank is expected to maintain a hawkish monetary stance to keep inflation expectations anchored going forward. As per the latest report from International Monetary Fund, Mexico's real GDP for 2026 is projected to grow by 1.5%, reflecting a modest and gradual recovery following an extended period of fiscal consolidation and tight monetary policy. The Mexican peso has appreciated against U.S. dollar by nearly 10% in the last six months, reflecting confidence in the country's macroeconomic fundamentals. Overall, the outlook of Mexican economy remains positive and continues to be shaped by several global factors, including U.S. trade policies, review of USMCA, growth in domestic manufacturing and services sector. Coming to JK Tornel, the second quarter of FY 2027 marked an important phase in the company's recovery journey as it progressively resumed operations with a sharp focus on operational excellence, cost optimization, and quality enhancement initiatives. I am pleased to share that our financial performance witnessed a significant improvement during the quarter, with total revenues reaching INR 479 crore and an EBITDA of INR 23 crore, reflecting the positive impact of the measures undertaken by the management. Due to geopolitical disturbances and supply chain constraints, there has been a constant pressure from the increasing raw material prices. However, the company is implementing necessary corrective actions to mitigate this impact. Parallelly, our upgradation cum modernization expansion project at JK Tornel is now progressing, which will help in improving the revenue and profitability. Wish you and your families a very happy Deepavali. With that, I would now like to invite Sanjeev Aggarwal-ji to take you through the financial performance of JK Tornel for the second quarter, FY 2027. Thank you. Thank you very much, Mr. Arun K. Bajoria. Let me briefly share the key highlights for Q2 FY 2027. The company has recorded its highest-ever consolidated revenue of INR 4,850 crore in the quarter, up by 20% on year-over-year basis as against INR 4,026 crore. Consolidated EBITDA for the quarter was recorded at INR 343 crore as compared to INR 268 crore in Q1 of FY 2027 on 28%, which is up by 28% sequentially. EBITDA margins on consolidated basis were recorded at 7.1%, vis-à-vis 6.8% in the previous quarter. Average raw material cost in Q2 were up by 9% on sequential basis, in addition to 22% which was seen in Q1. Cumulatively, this is 31% increase in raw material prices. Cash profit for the quarter was INR 234 crore as against INR 169 crore in the previous quarter, which is up by 39%. Profit after tax for Q2 stood at INR 60 crore, up by 40% on sequential basis. Capacity utilization levels in India remains high at above 90% across key segments, including for Truck and Bus Radial, Passenger Line Radial, Two-Three Wheeler, and other segments. Despite geopolitical uncertainties, exports from India were up by 14% on sequential basis over the previous quarter. Consolidated EPS in Q2 stood at INR 2.29 as against INR 1.55 recorded in Q1 of the financial year. Consolidated net debt as on September 30 stood at INR 5,696 crore, which is up by INR 751 crore on quarter-on-quarter basis. The overall debt of the company has moved primarily on account of increased CapEx, less long-term working capital borrowing, and additional working capital requirements for higher raw material prices and higher volumes. The balance sheet of the company continues to remain healthy, with key financial ratios remaining in acceptable levels. Net debt to equity was recorded at 0.94x as on 30th of 2026. We have already circulated our Q2 earnings presentation, which is available on our website as well as on the website of stock exchanges. We now open the forum for question- and- answers. 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 the 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sarthak Jain from Desvelado Advisory. Please go ahead. Sir, you are not audible. Hello. Yes, sir. You are audible. Good afternoon, and thank you for the opportunity. The management has previously identified Can you please speak a little louder? We cannot hear you. Hello. Please come closer to the microphone. Hello. Yes, please. Go ahead. The management has previously identified Europe as a long-term export market, highlighted the development of Europe-specific products. With import duty from Indian tires in the U.K. now eliminated under the India-U.K. trade agreement, have you seen any tangible increase in the U.K. orders or shipments since July? I will answer that. Yes, we are also evaluating that U.K. tariff right now, and as I had mentioned earlier in the call, that we are developing and developed many SKUs Europe-specific. That, we will be definitely taking advantage of the welcoming FTA, and we are already supplying parts of Europe through our exports. Okay. Thank you so much. Thank you. Thank you. The next question comes from the line of Deepak Malhotra from CapGrow Capital Advisors LLP. Please go ahead. Hi. Am I audible? Yes, sir. Thank you. My question is regarding the raw material costs. About 60% basically of the tire is the raw material cost. There we have typically three, four key items, which is carbon black, natural or synthetic rubber, and steel and tire cord. My question is basically what kind of inflation you are basically seeing in each of these items, and your ability to pass on it to the ultimate consumer. Thank you. Sorry, can you repeat? Did you say that what kind of acceleration you are seeing in the raw material prices? Yeah, I am seeing like carbon black prices have gone up. Yeah. When you see the— Yeah. That is the— Yeah. Yeah, sure. We have seen the raw material whole basket to increase by 9% on a QoQ basis, which is on a Q1 to Q2 basis. We have seen obviously because of the inflationary pressure and supply chain constraint because of the West Asia. Cumulatively, we have seen a staggering 30% increase in the last six months. Our guidance going ahead for Q3 would be a further increase of about 4%-5%. Now, coming to your price increase in terms of our net selling realization. We have been able to increase by 7% QoQ basis, in addition to 4%-5% in Q1. So in six months, we have been able to increase it by 11%-12%. Going ahead in Q3, we are planning a further increase in our NSR of 4%-5%. Thank you. Just a little more granularity in terms of the raw material, because I see the inflation running through all balance sheets, all companies. I mean if you could provide a bit more granularity in terms of carbon black, I mean, where you are sourcing from on natural and synthetic rubber. How is the scenario looking over, you mentioned only about 5% further increase you expect. But since, nobody really has a clue when the war is going to end. How is it really looking in terms of the availability and its consequent effect on the prices? Sorry for probing this further. Thanks. No. Okay. But, as you know that crude oil-based raw material is almost in the tune of about 65%-70%. There, definitely carbon black, synthetic rubber, butadiene, steel cord, they have all increased on a YoY basis and even on a Q-on-Q basis. As the crude oil prices will get softened, these will get softened. So at a very conservative, we have taken as a basket of 4%-5% further increase in Q3. We see that price range would remain, hopefully in the Q4 as well. In terms of the availability, there is no scarcity or availability issue right now. Okay. One follow-up in terms of when you see the general automobile numbers for the industry, they have been quite upbeat in spite of this challenging background. Yeah. How do you see the demand situation developing both in India and globally? Thank you. Well, the demand is quite healthy and the growth momentum is maintained as we go along in Q3 as well. In Q2, because of several reasons which I stated in the speech, GST, infrastructure, festive season, we see the demand being steady in Q3 and Q4. As we know, that will be the year-end closing for most of the OEMs. Also, there will be good demand coming in. I don't see much of a disruption or any problem coming in terms of the demand. Okay. Thank you so much. I wish you all the v ery best. Thank you. Thank you. The next question comes from the line of Vijay Pandey from Axis Capital. Please go ahead. Hi, sir. Thank you for taking my question. Sir, if I see standalone revenues, our standalone revenues increased 14% quarter-on-quarter. You said that realization was up 7% quarter-on-quarter in Q1. So that means that volume increase was around 7.5%, right? Is this the right way to look? Well, the volume increase in the domestic, volume increased by 22% year-on-year basis. OE increased by 25%, and 20% we had a growth in the replacement market. The volume increased of 7% in the export on a Q-on-Q basis. Quarter-on-quarter in the domestic market, h ow was the volume? On a quarter-on-quarter basis, there is an overall growth of about 13%, and out of that, the volume growth is equal. 50% is coming in from volume, and 50% is coming in from the NSR increase. Okay. On a quarter basis. Secondly, sir, our RM, one thing I want to see, what is the deviation? Where is the deviation coming from between the standalone and consolidated? Because for consolidated, further expenses has increased quarter-on-quarter by around INR 200 crore, but at the standalone, it's broadly flat. In the standalone business, our RM basket has increased in percentage of sales by around 270 basis points, but at consolidated level, it's broadly flat. Can you help us understand, are we manufacturing something for Mexico and then selling it to Mexico? How is the billing being done? Is it at arm's length, or what is the profitability here? There has been, of course, some manufacturing is done in India for some of the products like TBR and all that, which are exported to Mexico. The billing is done from Mexico only for the exports into the LATAM exports and into the domestic market requirement. But the overall volume growth and the NSR increase, which we have told you, this is volume increases in terms of the percentages tons increase. You might be looking at maybe the numbers and all, but this is the volume growth in tonnage we have told you. No, sir. I am not talking about the volume growth. I am talking about the other expenses. Is it that we manufacture for the Mexico business and then directly sell it to the customers and the billing is done by Mexico? Am I right in this thinking, or we sell it to the Mexico subsidiary and then Mexico sells it to the customers? To Mexico subsidiary. It is being sent to the Mexico subsidiary, and subsequently, Mexico subsidiary is selling in the market. The transaction is that the pricing will be similar for the Mexico business as well as to other customers. Like consider if we sell the same product to Europe and we sell the same product to Mexico, the pricing will be similar or? The pricing is done on arm's length basis. There are transfer pricing formulas which are actually guiding the prices to be decided for both the parties. Okay. And sir, lastly, our net debt level has increased, and our FCF was pretty negative in the first half. Do you expect it to come down or will it remain elevated? Any particular reason for the negative FCF, and also how should we look at the CapEx and the net debt going forward? No, so two things. One is to be very clear about the FCF. Why this net debt is going up is because of the 30% increase in the raw material prices and therefore the value of the raw material inventory and the final product inventory has gone up. So in order to finance that kind of increase in raw material prices, the requirement for working capital has gone up. One. Second is the operating leverages, because the volumes have also gone up significantly in the last six months, and I'm talking about whether it is quarter one to quarter two. The overall increase has gone up because of the increased volumes. And the third one, because we have been implementing projects and we have taken up projects for INR 1,130 crore now, again, in TBR and PCR expansions, in addition to what we have completed recently for INR 1,400 crore projects. There has been some increase on account of the CapEx. The large CapEx which we have undertaken either or is now again under implementation. So that is the reason. These are the reasons for the increase, but the major increase has happened because of the levels of inventory. And if we can, let's just see in the future if the prices are stabilizing, the chances of anything going up on the working capital requirement rather is remote and it should come down, because I think the operating efficiencies will kick in and we will be able to manage the working capital better in terms of the pricing or maybe in terms of the volumes. And sir, CapEx guidance, I think last quarter we guided for around INR 1,200 crore for full year. We have already done INR 800 crore. Could you help us, the remaining will be INR 400 crore or this will increase? Yeah, this is going to be roughly around INR 500 crore for the remaining period. Okay, sir. Thank you. Thank you. The next question comes from the line of Sanish Nahar from Nahar Finance and Investments. Please go ahead. Hello. Am I audible? Yes, sir. My question is regarding, can you give us a future volume guidance after the CapEx? Also have the price escalation speed for non-crude raw materials. The volume growth on account of the CapEx would be roughly around 1:1, the effect on which we are expecting. Rather 1.1:1, you can consider, because we are now taking up expansions immediately for INR 1,130 crore, which is going on, and then thereafter in phases, roughly around INR 5,000 crore piece of CapEx. If it is 1 to 1.1 multiple, then that much of turnover will get added to the future revenues. The second point which you mentioned, sorry, if you can repeat. Have the non-crude raw material prices peaked or do you further see any escalation in them? Overall, we give guidance broadly what we see in every quarter, 4%-5% increase in the basket. This is mainly on account of the increase in crude-based raw material and also, of course, the natural rubber, which is also to some extent move in tandem with what the synthetic rubber prices are going or maybe the carbon black. Okay. Thank you. Thank you. Thank you. The next question comes from the line of Aman Kay, an I ndividual Investor. Please go ahead. Sir, this quarter we recorded an inventory of INR 743 crore. Any particular reason why the inventory has gone up? Inventory has gone up for two reasons. One is that we have, as we discussed just now, there has been an increase in the raw material prices to the extent of about 30% in the last six months— Okay. —since the West Asia prices started, also because of volume increase. We have also kept some strategic inventory in raw material. Got it. Since you mentioned that in the last six months, RM prices are up by 30%, is that a correct forecast to account for the rest of the year? No, for the rest of the year, I think we are expecting further increase by 4%-5%. That kind of steep price hike is not expected, but we can only see maybe in the third quarter we can talk about. We cannot comment much on the further increase beyond that. Got it. Last question was on the farm and tractor segment, sir. I think from this month onwards, we have started seeing some pressure in terms of tractor sales and agri machinery sales. Is there any outlook that you are seeing in this particular sector that the volumes are going to be under pressure? Because we also have a higher base for the second half of the year. Yeah. So there, we are seeing some traction coming in from the farm sector, and there definitely some increase in terms of rural income has also seen some positive offshoots. But also, simultaneously, there has been some deficit in terms of rain in some agriculture sector. So that might put a little bit of pressure on farm season which could go on. But we are very ready with our products and we are also supplying to OEMs at large. Got it. And sir, just a last question for the JK Tyre business. Since we recorded a turnaround this quarter, is there any particular timeline when we can see the OEM volumes then ramping up, let's say, for our supplies to U.S.? Sorry. Please go ahead, sir. Please go ahead. Please go ahead. Please go ahead [inaudible]. You will observe in Q3 and then again in Q4, we are hoping that we will come back to the normal sales, which would be comparable to last year's sales. Just to add that from Mexico, U.S., which we call it as an export from Mexico, there we have had a triple digit growth in terms of volume push. Definitely, as we go along, we will definitely see that traction coming in. Sir, this is on a year-over-year basis? Yes. Quarter-on-quarter basis. Quarter-on-quarter basis. Two on all. Okay. Thank you so much, sir, for your time. Thanks. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question comes from the line of Abhishek Maheshwari from SkyRidge Fund Managers LLP. Please go ahead. Thank you for taking my question. Sir, I wanted to talk about the EBITDA margins. We have seen it improve from 6.8% in Q1 to 7.1% in Q2. As you rightly said, there will be more inflation in Q3 and you will be taking price corrective measures also. Can we see some gradual improvement, let us say, from 7.1% to 8.5% and 8.5% to 10% in Q3, Q4? Can we expect gradual improvement there or will there be pressure on EBITDA margin? You see that as I told you that there is also an unabsorbed cost which has leading from increase in raw material and the ability to pass through. There is a delta which has been unabsorbed, and we are seeing another hike of raw material prices in Q3 as we talk about 4%-5%. We do have plans to increase our selling price. There we have two elements. One is the OEM element, which is index linked, which has come in Q2 and some will be coming in Q3. There is always a lag effect. In the replacement, there has been naturally a challenge in terms of the whole pass-through, and we have to be competitive. As we are seeing cost pressures, the good part is that our demand has been quite good, underlying demand. Our utilization has been very healthy in terms of the radial utilization across the plants. Plus, we are setting also a very focused manner in terms of the cost efficiencies and cost improvements. I see that some basic points going forward in Q3, definitely there would be some improvement in terms of the margins. Okay. Thank you, sir. Thank you. Thank you. The next question comes from the line of Disha Shah from Shah Capitals. Please go ahead. Good afternoon, sir. I have two questions. One is on CE demand outlook for replacements market, and second is on what is your view on category mix on a standalone basis for Q2? Replacement market, we are seeing a healthy growth momentum which would continue. Q2 has definitely shown that. Category-wise, we are seeing a high single digit coming in the TBR. We are seeing a mid-single digit in the passenger car coming in for the medium-term outlook. What was your other question, please? Your BU and category mix on a standalone basis. I did not follow. Sanjeev, would you like to B and U, I didn't understand that. No, it's the same here. I have not understood. What is B and U, you said? The category mix and market mix. Market mix. Okay. Market mix is remaining almost the same as it was in quarter one, and the replacement market mix is 60% of the total revenue on a standalone basis. And then the OEM is 30%, export is 10%. Thank you. What about category mix? Category-wise, Truck and Bus is around 56%. PLR is 28%, 6% is Two-Wheeler, Three-Wheeler, and 10% is non-Truck and Bus. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, we will take this as the last question for today. I now hand over to the management for closing comments. Over to you, sir. Thank you very much for joining this call. I hope that we were able to provide necessary clarifications on your questions. Thank you once again. Have a good and prosperous Diwali and festive season. Thank you all. Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.