Ladies and gentlemen, good day, and welcome to the Ashok Leyland Limited Q2 FY 2024 Post-Results Conference Call, hosted by Batlivala & Karani Securities India Private 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 the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities. Thank you, and over to you, sir. Thank you. Welcome all the participants to Ashok Leyland Limited Q2 FY 2024 Results Conference Call. From Ashok Leyland management, we have with us today, Mr. Shenu Agarwal, Managing Director and CEO, Mr. Gopal Mahadevan, Director and CFO, and Mr. K. M. Balaji, Deputy CFO. I now hand over the call to Ashok Leyland management for opening remarks to be followed by question and answer. Over to you, sir. Good evening, ladies and gentlemen. It gives me immense pleasure to be with you today. I also thank you very much for the interest shown in Ashok Leyland. I'm happy to share that Ashok Leyland has crossed the milestone of 75 years on 7th September 2023, and we have celebrated this event with the launch of Switch electric LCVs, as well as the flag-off of Ashok Leyland hydrogen fuel cell bus delivered to NTPC. As an icing on the cake, in this landmark year, what gives us more satisfaction is that our performance has touched historic high in the first half, with respect to not only revenue, but also in terms of EBITDA and profits. As guided by us in our earlier interaction, domestic MHCV segment so far in the year has witnessed a 10% growth, backed by a favorable macroeconomic environment and healthy replacement demand. Continued growth in the end user industries like cement, steel, coal, iron ore, and container movements, as well as improvement in general manufacturing activity and consumption trends, remain to act in the favor of demand from fleet operators and other customers. Extraordinary bus demand in all categories, covering tourist and intercity, private carriage, state transport undertaking, as well as school and staff, has also augured well for the industry. The growth trajectory is expected to stay strong going forward. Mining, infrastructure execution, especially roads, and improving industrial output will be the demand drivers for MHCV trucks going forward. Replacement of existing fleet of buses, public transport in cities, and increasing demand for school and staff transportation will drive demand for buses. For MHCV segment, we stick to our earlier estimates of 8%-10% industry growth in full year FY 2024. While our addressable LCV industry has seen a 3% growth in H1, as against our year beginning estimate of 4%-5%, we do think that the situation will improve going forward. We have strong belief in medium and long-term prospects of the LCV market. Healthy growth in agriculture, consumer durables, dairy, and e-commerce, and that of private consumption will drive the LCV demand in the future. Though the steel prices went up marginally in the first few months of the current fiscal year, prices have softened since then and are expected to continue to remain soft for a few more months. This is being closely monitored by us. Ashok Leyland, even while maintaining a steady market share of above 30% in MHCV and close to 20% in LCV segment, we have been able to raise prices consistently. We are also putting unprecedented efforts in reducing our costs, both product costs as well as the overheads. All these efforts are visible in our margin improvements. The EV business housed on the Switch is crucial for future-proofing Ashok Leyland. While we will continue to look at external investments, Ashok Leyland board has approved an equity investment of INR 1,200 crore in Optare, which is the holding company for Switch U.K. and Switch India. We shall be inducting this equity in one or more tranches over the next 3-6 months. Ashok Leyland balance sheet is strong enough to support our vision on electrification of buses and LCVs under the Switch brand. I'm happy to share that our Switch products are performing extremely well in the market. We have an order book of more than 1,100 buses and LOIs for electric LCV for more than 10,000 units. We are very excited about delivering our first batch of electric light commercial vehicles in Q4 of this fiscal. The development work on E1 bus designed for European market is also progressing well. During the quarter, Ashok Leyland has launched several new products, namely, EComet 1950 with wider load body, 1922 CNG, N2825 ED PTO transit mixer, Lynx Smart Chassis, 28-20 with G45 FES, 13.5m Bus, and so on. AL is progressing well on network expansion plans as well. For MPCV, 24 each of authorized service centers and dealers have been added during first half. Now we are at a total of 386 authorized service centers and 471 dealers. We wish to take this number to 1,000 very soon. Similarly, for LCV, 8 dealers and 42 authorized service centers have been added in making our LCV touch point count at 670. I am extremely confident that with these launches and the continued focus on network expansion, we will add on to the market share gain achieved in the last few quarters. I will now quickly run you through our Q2 performance. I'm happy to share that Q2 FY 2024 continued to be a very good quarter for us. In Q2, our MPCV volumes grew in line with industry growth, resulting in market share stability for AL. However, sequentially, our market share has grown from 31.2% in Q1 to 31.9% in Q2. In first half, we have grown our market share from 31.0% last year to 31.6% this year. This is on back of more than 5% market share gain in the last fiscal year. TIV for Bus has grown by 46% in the quarter, and the corresponding growth for Ashok Leyland was 95%. Bus market share has improved from 28.3% last year to 37.8% now. This is 9.5% increase over market share during the same period last year. Trucks volumes for TIV have grown by 15%, and AL volumes have also grown, resulting in 31.1% market share for Ashok Leyland. This is the sixth consecutive quarter of 31% plus market share for Ashok Leyland in trucks. Our Q2 LCV volumes are at the same level of last year. It is noteworthy that in H1, while Ashok Leyland volumes have grown by 1%, which is in line with the growth in the industry. IO sales have registered a 4% increase in Q2 YOY, despite continuing meltdown in many economies around the world. We registered export volume of 2,901 numbers in Q2 current year, versus 2,780 numbers in Q2 in the previous year. Most of our industry peers have registered a sharp decline in their export volume. Good performance in aftermarket sales continued in Q2. Our aftermarket sales at INR 655 crore grew by 35% over the same period last year. Volumes under Power Solution business grew by 15% in Q2 over the same period last year. As I said, AL has recorded an historic high on revenue, EBITDA and PAT in Q2 and H1 of the current financial year. You would have taken a note of the detailed financial results, so with this, I will open the floor for question and answer. Sir, should we, Please move to the Q&A session, please. Yes, sir. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask 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'll wait for a moment while the question queue assembles. The first question is on the line of Gunjan Prithyani from Bank of America. Please go ahead. Yeah, hi, team. Thanks for taking my questions. I had a couple of questions. Firstly, on the RM side, can you give us a little bit color as to how did the steel price reflect in the PNL this quarter? And, you know, the comments that they are expect, you know, it's softening now. So what sort of improvement should we, you know, should we see into the next 2-3 quarters? And again, you know, similar comments and price. I'm just trying to get the direction on the growth margin over the next 2-3 quarters. Yeah, Gunjan, thank you for the question. This is Shenu. So, you know, I mean, like I said in my opening commentary, there was a slight increase in the commodity prices as we started the year. But since then, it has, we have seen a softening trend. Now, going forward, also, we think that this trend of softening in commodity prices will continue, and therefore, it will help us improve our margins further. As far as the price recovery is concerned, you know, we have been able to get better price realization on all our business lines, whether it is MPCV, LCV, or any other. And, you know, that trend, we also hope, should continue going forward. Well, sir, is it possible to get a little bit of quantification as to, you know, how much, sort of this movement that we saw in the steel or commodity impact and discounting into this quarter? Sequentially, Q1 to Q2, how have we seen those sort of metrics changing? Yeah, Gopal, would you, would you like to take that? Hi, Gunjan. How are you? Happy Diwali to all of you. See, basically, Gunjan, what has been happening is, if you look at our material cost as a percentage to sales, we have seen that in Q2 last year it was about 78%, and now it's at 73.5. So what you're seeing is that, you know, as a percentage to sales, we are really about 4.5% lower. In a ratio like this, of course, predominant part of it is coming in on account of material cost, but when you look at the improvement in gross margin or, you know, over material cost, the contributions, right? We will see that there is an impact on account of the realization also. Steel prices, however, sequentially, if you look at it from Q1 to Q2, what we have seen happening is that, you know, we did factor in a little bit of increase in Q1, but that is kind of rolled back. The typical percentage of steel, and steel accounts for maybe 40, 45%, 50%, depending on the vehicle, right? In between Q1 and Q2, the increases/decreases were about, you know, about 8, I would say about 8% or so. But the point is, if you look at it sequentially, right, there was a steep increase in steel prices last year in Q1 and Q2. After that, what we have seen is a deceleration of the price, I mean, the increase, and it came down in Q3, Q4. Q1 of this year had a marginal increase because the settlement of Q4 prices happens in Q1, and then in Q2, again, it has been solved. To give you an idea about what it'll be going forward, I think we'll have to wait and watch, but it looks like the pricing in the industry has been improving pretty typically. Pricing improves by about, you know, 1.5%-2% per quarter, and we hope that this trend will continue. And, see again, these are very general numbers we can share because there is a lot of, you know, the, the actual price increases on each type of variant keeps changing, right? And depending on which market you are in, where you're playing, et cetera. Overall, what we can say is, if you look at the results of Ashok Leyland or competition also, all I can tell, you know, all we can share with you is that the general level of profitability of the industry has gone up on account of three factors. One is very clearly that steel prices have come up. Second one, more importantly, price realizations have started to improve, discounts have started to come out, and net, more importantly, discount, I would say, net realizations have started to improve. And of course, the third one is operating leverage itself. You know, the last year, the industry grew at about 48% or so. This year we have all seen a 10% increase in H1, and you know that operating leverage benefit is coming in. In Ashok Leyland, we can't talk about competition, which also Shenu kind of alluded to, and I thought I'd give a slightly longish answer because I'm sure other investors will also have the same question. We have embarked upon a never-before-like cost reduction program. Last year we possibly did about INR 600 crore- INR 675 crore of, around INR 650 crore of saving. We, you know, kind of looking at new materials, new vendors, consolidating vendors, changing the design, where we could optimize it, but not reduce the performance of the vehicle, in fact, enhance it. There's a huge amount of effort that is happening. We will pursue with that effort in the current year also. All of this has resulted in the, you know, the margins. 11.2% is actually a very good result. I mean, we shouldn't be saying it ourselves, but in Q2, if you look at it, I think we have achieved 11.2%. And in Q1, when we actually had forecasted that for the full year, we'll be at, you know, kind of double-digit EBITDA margin. We started off Q1 itself with a 10% EBITDA. Back to you. Okay. Just last one from my side. You know, if you can talk a little bit about the channel inventory, because, I mean, we do start seeing that, you know, dealers talking about inventory being a bit higher. So is there any, you know, is there any comment to be made on demand being relatively, softer than we expected and a little bit of channel, buildup that has happened in last couple of months? Any comments around that? I'll give a quick comment and then also hand it over to Shenu. But you see, the channel inventory, we don't see it as a major concern because what happens is, you know, there is a lot of pull that comes also from the dealers based on the forecast, and, you know, then you've got Diwali time, so they want to ensure that they are having adequate stocks, et cetera. But I think if there is any correction that needs to happen, correction in sense adjustment, correction is a very significant word. I would say that if that needs to happen, we can do it. But see, the basic, you must understand that these are all blips that keep happening, you know, month-on-month, et cetera. Some will go high, some will go low. I have, in the current year itself, you have seen where, you know, channel inventory has come up very sharply, and then it increases. I would look at, you know, what we would need to do is to look at the larger picture, which is, is there raw demand for the vehicles, that is? What is it riding on? It is riding on the back of, you know, macroeconomic factors, where GDP, India continues to be one of the high-growth GDPs. The second one is, the spend on infra by the government is actually leading to, a lot of demand. That's why you're seeing that the larger vehicles, multi-axle vehicles, tractor-trailers, and also tippers are growing. But I will now, you know, request Shenu also to maybe add. Sure. Gopal has already explained that. I think I can just sum it up by saying that there are no, concerns really on the channel inventory, you know, as of now. Okay. All right. Thank you so much. Thank you. The next question is on the line of Pramod Kumar from UBS. Please go ahead. Yeah, thanks a lot for the opportunity. Can you hear me? Yes, Pramod. Yeah. Thanks a lot, Shenu. Shenu, just for clarification, you've been referring to the market share of MFCV being at 30% plus, but if you look at Vahan, last, almost four months, the market share is stagnating at around 26% on MFCV between August to October. Sorry, for the last three months. So I'm just trying to understand, why is there such a big difference between the SIAM wholesale market share and the retail market share, and that too, for, almost four straight months now? So if you can just help us understand, what is missing here. That would be my first question, sir. Yeah, Pramod, so it will be difficult to correlate between the wholesale market shares that we report based on time data and the Vahan, because, you know, Vahan is not yet countrywide. You know, there are three states, and then I think some more districts in some other states that that the Vahan portal does not compile the data with, right? So there will always be a gap. And then you'll see there is also a reporting gap. You know, wholesales will happen, and the registration will happen subsequently, and therefore, this, these things, they keep on shifting quite a bit. Yeah, so it will be very difficult to correlate the wholesale and the retail data on a month-on-month or a quarter-to-quarter basis. Fair enough. Our second question is on the demand trend. If you can just help us understand the product categories in terms of use case, how they're doing? Because what we learned is that tipper continues to be strong, but haulage has started to see some weakness. Even fleet owners have started to talk about weakening trends on the both state demand and freight way as well. So if you can just help understand what categories outside of buses, of course, which you talked about, within the trucking segment, what are the segments which are doing well or which are kind of currently driving demand for you? So, see, overall, even the truck industry has grown in Q2 by 15%, you know, so I think the demand is very strong. I mean, when we speak to these fleet operators and other customers, you know, we don't hear any negative sentiments around the demand. Actually, most of what we hear is the demand is going to be strong, not just for the balance of this year, but also going into next year. Now, in terms of product segments, definitely tractor is one segment which has outgrown everything else. You know, while the overall growth in H1 in the industry of trucks or total MHCV is 10%, but the tractor demand has grown by roughly 50%. You know, so there is a large shift, and we have been talking about this in our previous calls also. You know, there is a large shift from MAV and haulage type of rigid vehicles to tractor-trailer type of vehicles. You know, so that is one segment we think will continue to grow. And Ashok Leyland, of course, in terms of products and in terms of even the numbers that we are reporting, Ashok Leyland is very, very strong in tractors. So actually that is one thing that is helping us quite a lot. Yeah, the other product segment that is growing, what you also, I think, alluded to, was, is, is on the tippers. You know, so overall, while MFCV has grown by 10%, tipper is growing by roughly, let us say, double of the overall MFCV growth, which is about 20%. So these two segments, you know, stand out, and it is not surprising, you know, because like I said in my commentary, you know, the basic, movement that is positive movement that is happening in the core sectors of coal, steel, iron ore, et cetera, or in terms of containerized movement of goods, you know, that is really moving very, very well. And I think that is going to be the trend in future also, so we can expect that tractors and tippers would continue to grow in future as well. Finally, sir, on Switch Mobility, the INR 1,200 crore investment, how do you see that in context of what else would work? How much more would be needed over the course of the remainder of the year and also for FY 2025? Because as you said, you clearly have a strong order book here. So what could be the kind of investment commitments what Leyland may have to make here? And also, in the funding environment, if is it given where interest rates are and the periodic scenario, is it fair that we should not be considering any transaction in terms of equity infusion from outside for this? It should be, it will be incrementally, at least in the near to medium term, Ashok Leyland, which will be leading those initiatives in terms of investment. Is my understanding right? Yeah. Listen, see, we are very keen on getting external investments also, but you know, we want to make sure that we have the right strategic partner with us, you know? I mean, and we do it at the right valuation. You know, so right now the focus is to get Switch into a very, very strong mode by developing the products, by maturing our technology on both the EV side and the LCV side. You know, so whenever we get a good offer, you know, from an external investor, we'll certainly look at that. But until then, you know, we won't shy from investing on our own from the Ashok Leyland side. You know, the balance sheet of Ashok Leyland is very strong right now, so we have no concerns as to, you know, whether or not we can fund this growth in Switch for the future. On investment itself, you know, we have, we are putting in INR 1,200 crore right now into Switch to Optare, you know, and we think that Switch India going forward, you know, on an operating level at least, would be cash neutral or cash positive. You know, if there is any other investment required in Switch India, that would be more or less some smaller amount that would be required for product development, et cetera. You know, on the Switch U.K. side, since the European markets are still not going that strong or the U.K. market is still not going that strong, you know, some more investments may be required into FY 2025. It would be hard to quantify that at this moment of time, but I, but we think that, Switch India, is more or less self-sufficient. You know, if any investment has to be made, that would be for, for some kind of product development or CapEx, but Switch U.K. might need some more help going into next year. Thanks a lot, sir, and wish you, the team a great Diwali. Thank you. Thanks, Pramod. Thank you. The next question is on the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi, good evening, and thank you for taking my question. So my first question is just on the pricing comments that you alluded to earlier in the call, like 1.5%-2% per quarter sort of price benefit that we've seen in the recent past. So I'm just trying to understand this quarter, I think starting October, one of our competitors has taken or announced up to 3% price hike. So just trying to see if we see opportunity to sort of follow. And just in terms of net price realization, net of whatever discounting activity has been happening in the recent past, what the price retention could be there? Yeah, yeah. Thank you for that question. So yes, you are right. There was an announcement of a significant price increase by one of our peers, for quarter three. I mean, on the ground, you know, we don't see that kind of a price increase happening actually in October at least. You know, but I think, you know, what Gopal said, 1% maybe for the quarter, especially for quarter three, is quite visible. You know, so that is our goal, and of course, we are in the beginning of the quarter right now, but we will see if we can make it happen. Got it. That's helpful. Just related to the pricing topic, I had a follow-up. I think the past six successive quarters, we have seen a QOQ improvement in realization for vehicles, but this quarter we've seen a slight decline. So just trying to understand what the factors there could be, which to do with product mix, or are we passing, passing on some of the commodity benefits that we've been realizing back to customers? Just trying to understand the rationale behind, you know, the realization for vehicle trends. So I think, I think, Chandramouli, we, we, you know, the industry, I think, went a bit aggressive in Q1 on price realization. You know, starting April, you know, we were all hoping that we can probably take about 3% price hike in Q1, you know, so which we could not kind of sustain because like as Gopal also said, you know, I mean, normally, quarter by quarter, you can expect like one, two, maybe 1.5%. You know, but, but because of that, price hike that we were, we, we wanted to take in, quarter one, you know, which we could not sustain, so therefore you would see, you know, some balancing out that has happened in Q2. Going forward, you know, the intent, at least for us, is to take at least 1% price hike in each of the quarters. Of course, it depends a lot of on the other, a lot on other factors as well, you know, but that is at least the intent. Got it. That's helpful. And my last question is just a quick clarification on tax rate. So this quarter, we seem to have had sort of 35%-36% tax rate. So just trying to understand how we should think about tax rate for the full year from here. Yeah, I just... I'll take that one. You know, see, basically what we did in the last quarter was, you know, there is this adjustment of deferred tax that we'll have to do because we plan to, at the moment, if things go right, our intention is to go in for a lower tax rate from next year, which means from next year, you folks should possibly plan for a 25, approximately 25% tax rate, which is an advantage on the PAT and EPS. This year, since we would, you know, we would continue with the 35% tax rate for Q2, Q3, Q4. The adjustment that happened in Q1 was because of the credit that we had to take on deferred tax, which was INR 172 crore. So that is what we have done. So that is why we have seen that reduction in the, you know, the absolute tax rate. I hope that kind of clarifies you. Got it, got it. That's very helpful. Thank you very much, and all the best. Yeah, thank you. Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah. Hi, there, and thanks for the opportunity. So one clarification on the Switch investment. We have another subsidiary, OHM, which operates the buses, so do you think there will be any further investment required in the OHM entity as well? Yeah, see, OHM is on the eMaaS side, you know, so investments in a city would really depend on, you know, the kind of order pipeline that we are able to generate. You know, but right now we are well funded in OHM as well, because essentially we had put an equity of INR 300 crore, and you're also aware that OHM has been moved directly under Ashok Leyland. You know, so I mean, I can't give you a number right now. It really depends on, you know, how, what kind of an order pipeline we can build over the next few quarters. Got it. Sir, what should be the standalone CapEx we should assume in the standalone entity? Second is, on the Hinduja Leyland Finance, can you give us some numbers on what is the book size and what will be any more investment if it is required by us in the current year? Gopal, would you take that, both of those queries? You're talking in terms of the investment in OHM, right? Because there was a call drop. No, no, the CapEx, the CapEx in the standalone entity. Oh, CapEx. You see, CapEx, we have been pretty efficient. For the first half, we have had a CapEx of about INR 200 crore, approximately INR 100 crore, it is INR 95 crore and INR 104 crore or something like that. I think we are reasonably kind of, you know, we are ensuring two, three things at the same time. We want to ensure that we invest in CapEx incrementally, but ensuring that there is a, you know, consistent debottlenecking of facility that happens. At the same time, at Leyland, what is happening is the, you know, the manufacturing teams are looking at how do you keep revisiting the manufacturing footprint to get greater efficiency, productivity, and driving out cost also out of distribution. So when we are doing these exercises, we, you know, we are doing it in a very wholesome way, and that's also one of the reasons why we are seeing the operating costs are coming off. You know, because we have to continuously keep reinventing ourselves. While you ask for CapEx, I also want to add something here. The manufacturing teams have started an initiative, one part, which is called, you know, automation, et cetera, which is happening through Industry 4.0, and we also see productivity happening there. To answer your question specifically, it would be anywhere, I mean, I think it should be around maybe about INR 600 crore or so for the year. Nothing major. And I think our debt position in the balance sheet, debt equity, is extremely comfortable. Yeah. Got it. The second question was on the Hinduja Leyland Finance. What will be the investment and if you can share the loan book and the details? No, we will not have any investment in Hinduja Leyland Finance. I think Hinduja Leyland Finance is adequately funded. Their capital adequacy is, I think, about 21% or so. So they are growing their loan book handsomely. I don't have the exact number with me, but between Hinduja Leyland Finance and Hinduja Housing Finance, which is another excellent company, I think, you know, one of the fastest growing housing finance companies that we have, I think the overall book is around INR 36,000 crore. Got it, sir. Thanks a lot. Thanks. Thank you. The next question is from the line of Pramod Amte from InCred Capital. Please go ahead. Yeah, hi, thanks for taking my question. So this is with regard to the strong growth which are related to for tractor trailers. Just curious to know, considering that exports are weak and also construction and also the fact that GST is coming up, has already kick-started in the last six months. So where is this usage of tippers happening per se? Because when the GST started, there was a fear that it might be hitting the tipper, the tractor trailer guys more than anybody else. So I wanted to know the customer behavior, what is it driving? Well, so the drive behind the both tractor trailers and tippers is coming mainly from the positive movement that we are seeing in the core segment of coal, steel, and iron ore. Also from a very positive movement in the containerized movement of the goods. Yeah, so that is, I think, what is driving it, really. You know, I mean, this trend is not new, actually. I mean, the same thing we've witnessed in the last year, especially in the last half and more so in quarter four of last year, when we saw the tractor trailers and tippers doing really, I mean, doing really, really well as compared to the rest of the segment. You know, so as I said, you know, we think that this trend will continue, you know, because tractor-trailers, they provide much more flexibility to the fleet operator, you know, in carrying different types of goods and different types of routes, you know. So, yeah, so that is very, very visible, and I think for the future also quite innovative. Any first half update on your Defense business in terms of order wins or any execution plan for the full year? Yeah, Defense business actually has been one of the highlights of our performance this year. You know, I mean, the kind of pipeline that we have on defense actually is at a historic high. You know, we were actually hoping for last 2, 3 years, if not more, to get into a four-digit top line on defense. I think this year we have a very strong chance of doing that. Even if we miss this, I mean, we would be, I think, very positive about positive at looking at about INR 800-odd crores, if not more. Right? So this will be a very good year for defense. Even for the future, for next couple of years, the pipeline seems to be very, very strong. Sure. Thanks a lot for this. Thank you. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead. Yes, good evening, and thank you for the opportunity. My first question is pertaining to all the regulatory changes that we're seeing, like, now we have the electronic stability control mandatorily. And I guess the expectations are of a few more regulations coming in, which can probably lead to price of the vehicle going up. So, first, can you kind of give us a sense of do you expect, you know, such regulatory changes coming in in the near term? And secondly, how will that kind of impact your power to price better? Yeah, Mukesh, you know, I mean, regulatory changes are not new to our industry. We are actually one of the industries which are, I think, more regulated than anything else. You know, but we are used to it, you know, even our customers are used to it. And in a lot of ways, you know, these regulations, although they increase the cost and the price of the vehicles, but they are very, you know, I mean, they are very useful overall in the, at least in the medium term, you know, for the industry. I'm not just saying from a price cost point of view, but I'm also saying from a customer point of view. Because, you know, whether it is safety, you know, or whether it is comfort, you know, or whether it is something else, you know, these are helping raise the standards of the Indian automotive industry or the Indian truck industry. You know, this is very much needed also, right? I mean, so we do welcome actually most of these regulations. Even our customers are looking forward to it. You know, I mean, even our customers have, you know, matured quite a lot when it comes to, you know, actions or initiatives around safety, comfort and other, you know, whether they are coming out of regulations or they are just coming out of initiatives from OEMs. So, for example, you know, like, we are very well, very soon we are going to introduce, you know, a kind of top-level ADAS systems in our trucks, you know, and this is mainly on the basis that there is actually a demand on the part of the customers to make sure that, you know, their drivers and their vehicles are much more safer, you know. So, I mean, my answer is that this is good for the industry, this is good for OEMs, this is good for customers, and we should all welcome these changes. Right. But you still kind of feel that you can take that 1.5% kind of net realization increase, you know, over say, the next one? Yeah. I think when Gopal said 1%-1.5%, he was like giving you a general scenario. You know, I'm not saying that it can happen every quarter, you know. But I mean, in the medium to long run, I think that is at least our intent. You know, I mean, sometimes it will happen, sometimes it may not. You know, like, you know, I mean, sometimes, you know, some extraordinary costs may come in, which we may not be able to pass on. Right. Sometimes we may be able to realize better than the cost increases. You know, but overall, on a medium to long-term basis, and even if you look historically in the last, 6 or 8 or 10 quarters, you know, that is kind of what the industry is, aiming at. Right. Right. Got that. And, my second question is, looking slightly beyond this year, for the industry next year, with elections, I mean, state elections as well as the central elections there, do you think that could have some kind of impact on, say, government spending on infrastructure, et cetera? And, say, your past experience, if at all, could you give some sense on, if that could have an impact on or, say, a temporary pause, on some growth there on CVs? Well, listen, I think fundamentally, you know, the way the macroeconomic factors are moving in favor of the CV industry. You know, I think even if there is an impact of elections or any other geopolitical issues, you know, it will be temporary in nature. You know, there could be an impact. I am not denying that there won't be any impact, you know. Sure. But the way the market is really moving and the way the sentiment is, you know, we are seeing on the ground, I think the impact, if at all, any, it will be very, very temporary in nature. Right. Any growth estimate you want to kind of give us for next year for the industry? So for next year, I think it will be too soon. But as I said, for the current year, for the balance half. Sure. And for the whole, whole of the current year, we are sticking to our guidance of, for LCV between 8%-10% at the industry level. And on the LCV, you know, at the beginning of the year, we gave an estimate of 4%-5% on the industry. So far, the industry has grown by 2.5%, which is slightly lower than what we had predicted in the beginning of the year. But we think there also we are seeing some green shoots, you know, in terms of e-commerce demand and in terms of rural uptick, et cetera. So we are very hopeful that even for LCV, we will see a better, better growth trend in H2 as compared to H1. All right. Thanks a lot for getting back with you. Thank you. The next question is from the line of Raghun andhan from Nuvama Institutional Equities. Please go ahead. Congratulations, sir, on another set of strong numbers and festive season greetings. Sir, firstly, for Q2, can you indicate how was the performance in the non-vehicle revenues, especially if you can highlight how was the performance of Defense? Would it be tracking that INR 200 crore kind of quarterly run rate to reach INR 800 crores for the full year? Yeah, Raghu, firstly, thank you for your kind words. You know, like I already said on the defense side, you know, we think that this year would be a historic year on our defense performance, Defense business performance. The order pipeline is very, very strong. You know, we are aiming at a four-digit revenue this year. You know, but even if I miss, even if we miss it, we are very positive about, you know, touching about INR 800 crore. Maybe Gopal can tell you, let you know more in detail what we have done in H1 exactly on defense. But, yes, going forward, like I said, not just for this year, but for the next year as well, the pipeline is very strong. We are very optimistic about the Defense business. Yeah, domestic defense revenue, normally we don't actually give breakdowns, but since you specifically asked, it's about for H1 is about INR 300 crore. And like Shenu mentioned, you know, I think there's a lot of revenues that are, you know, expected, especially in Q4. So I think we're very positive that the defense revenues are going to be, you know, very, very satisfactory this year. We're gonna have some good, very good defense revenue this year. That's our forecast at the moment. Thank you for that, sir. Secondly, on the electric side, firstly, touching on the electric LCVs and now that you have more than 10,000 bookings, how are you seeing the customer interactions, acceptance, and how do you see the potential for ramp-up ahead? Yeah, see, yeah, I think, we would be the first in the industry to launch an electric LCV in this segment of, you know, in this segment, where we operate. So, so, you, you know, I mean, while the LOIs that we have received, these are not bookings, by the way, these are letter of intent, right? So the LOIs we have received, encourages us, you know, a lot because, like, we were not really expecting to receive 10,000 or more LOIs, you know, for these kind of vehicles. But as we all know, you know, I mean, while we are very positive about the, the electric LCV, which will be launched in Q4 of the year, but you know that a lot of other ecosystem challenges are there in terms of adoption, right? So we are not just looking at creating a product or maturing our technology as far as the LCVs are concerned, but we are also trying to partner with a lot many other players, including the government, in creating the right ecosystem. You know, because a good product, a mature product is one side of the story, but then the ecosystem also has to drive the adoption. But we are, as I said, we are very, very optimistic. We are very encouraged by these 10,000 or more than 10,000 LOIs we have received from many, many customers. And I think, I think there are several reports in the market on eLCV adoption, and I think we would be pleasantly surprised because I really think it will move faster than anyone is expecting. Thank you. Thank you very much for that. On the electric buses side, there is a hope that, and one of your peer also mentioned, that government will include, payment security mechanism in the upcoming tenders. Are you expecting the same? And, if this happens, that should, lead to better profitability, better working capital cycle for Switch Mobility, and eventually, that should also, lead to value unlocking or divestments there. Yeah, definitely. You know, I mean, this has been one of the demands of the industry for a long time, because, you know, these are long-period contracts running into 10, 12 years. You know, and one thing that industry was very worried, was really worried about was the payment security mechanism. You know, given the financial state of many of the STUs that we have in the country. So if you have, if you would have noticed in the new PM eBus Seva scheme, the government has specifically stated that they would come up with a payment security mechanism of some sort. Now, those discussions are still going on between the industry and the government, you know, but I think the intent of the government is very clear, that if this is something that is hindering the adoption of electric buses in the country, government is seriously willing to take a look at it. So we are hoping that some more details will come out. But yes, the government has really stated the intent very clearly that they would come up, they would address this issue. Thank you, sir. Lastly, in terms of the listing of HLF, any timeline? When do we expect that to happen? Well, I think, you know, we are expecting the management. I had a discussion with them as well, and I think they are expecting this to happen sometime in Q4. Because it's a reverse merger, there are a lot of compliances that could be done additionally, other than a standard DRHP. But I think there are certain approvals that they just received very recently, so they are reasonably confident that, you know, the listing will happen in Q4. And I also wanted to just make one correction. I mean, I just don't... I had not told the consolidated number, even though I'd used the term. The total book, both on-book and off-book, for HLFL today is about INR 42,000 crore. Get back to you. Thanks. How would be the H1 profit, sir, if you have it handy? I'll share that with you separately, because we don't give those segments at the moment, you know, so we'll have to wait. Thanks. Thank you so much, sir. Very helpful. I'll get back to the queue. Thank you so much. The next question is from the line of Nirav from Living Root Analytics. Please go ahead. Yeah. Hi, sir. Am I audible? Yes, we are. Please go ahead. Yeah. First, good evening, sir. So I just wanted to know the outlook for buses in H2. The outlook for buses for H2, you said? Yes Yeah, yeah. So see, the bus order pipeline itself is very, very strong as far as STUs is concerned. You know, as you would have noticed in many announcements that we have made, we have won some really large tenders from STUs on the diesel bus side. You know, so we are, I mean, even, I mean, the order book, the order pipeline is so strong that we won't be able to execute even on the orders in H2, right? And therefore, some of these will definitely spill into FY 2025. So we are sure, both on the industry side and definitely from Ashok Leyland side, since Ashok Leyland is the leader in the business right now. You will see a marked improvement in our numbers in, in buses in H2. So if I'm not wrong, the current existing order book for buses is 1,100, right? Oh, no, no, that is for electric buses. You know, that is Switch. Okay. Yeah. Okay. But, I think your question was more on the diesel buses, so my response was on the diesel buses on the Ashok Leyland side. So what's the, order book for diesel bus? I'm sorry? What's the order book for diesel bus? For order book, we don't, we don't give away, but what, what I can tell you is the order book is very strong, and, H2 volumes would be significantly better than H1 volumes as far as diesel buses are concerned. So if possible, you could also shed some light on the industry outlook on all three segments, from a 12-month perspective for FY 2025, if possible. So as I said, you know, FY 2025 would be too soon. You give us a quarter or something like that, you know, in probably in February, around January or February, we would come up with the guidance on FY 2025. So I will just try to rephrase my question. So where do you see the CV cycle peaking out since we are already in the middle of it? Yeah. So, you know, as I said, you know, what we are seeing on the ground is a very, very positive sentiment when we are talking to our fleet operators and other customers, we are I mean, they are of the view that this cycle is going to continue, for not just this year, but even into the next year, and that is our view as well. So definitely we think that there will be a growth trend in FY 2025, but as I said, you know, more precise guidance, we'll be able to give you around January or February. Okay, sir. Thank you so much. Thanks. Thank you. As there are no further questions from the participant, I now hand the conference over to the management for the closing comments. Yeah, thank you very much again. The first half has been very good for Ashok Leyland in terms of M&HCV market share gains as well as the margins. Overall good run continued in Q2. Contribution from defense, LCV, aftermarket, and power solutions was also very supportive in our overall performance. Revenue mix was good. Price recovery and cost savings went as per our plans and were satisfactory. With the robust economic growth outlook as well as increased outlay on infrastructure, we expect a good demand situation going forward as well. Softness in commodity costs and our relentless focus on driving operational efficiency should also help us further going forward. Given this backdrop, we hope to steadily improve our market share in all the segments and continue with a good margin run as well. Thank you once again for the interest shown in Ashok Leyland. On behalf- Thank you. of B&K Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.